MINISTERS this week demonstrated their determination to get tough with even the largest of local authorities by insisting Liverpool consider privatising major parts of its service to schools.
Action is already under way to remove at least parts of the education service from the two small London boroughs of Hackney and Islington, but the consultants to be appointed by Education Secretary David Blunkett in Liverpool are likely to be given a wider brief.
The city's report from the Office for Standards in Education says the council is not adequately supporting failing schools or dealing efficiently with truancy.
The contractors will consider whether the school improvement and education welfare services should be run privately and will look at the framework of the education service.
According to Estelle Morris, the school standards minister, measures are needed to improve strategic planning and leadership.
She said: "This is a critical report. It shows the local authority is not doing nearly enough to support its schools in raising the education standards of Liverpool pupils and students ...
"I am glad to say the local authority shares that view and we have agreed an immediate way forward. We are working with Liverpool to identify consultants to start work on the problems."
Liverpool is a city with the highest concentration of deprivation in the country - more than a third of households live in poverty and children face problems of poor nutrition, indifferent heath and limited job prospects. However, in all but one of the past five years, the council has spent significantly less on education than the Government estimates is required.
OFSTED blames councillors for low funding and the failure to tackle structural problems. For the past 13 months, the Liberal Democrats have had a majority on the council, but for the previous decade there had been no overall political control, with Labour as the largest party.
School standards are below national averages, but not out of line with similar areas, says the report. However, the education service has failed to identify and provide adequate support for its weakest schools. Liverpool currently has 13 failing schools and OFSTED says a further 12 have serious weaknesses.
School attendance is lower than average and the rise in permanent exclusions in secondaries well above, yet the city's education welfare service is the most expensive of all metropolitan areas, with the most favourable staff: pupil ratio.
The report says the local authority has yet to produce a coherent and well-structured strategy, setting out how it will realise its plans and monitor and evaluate its own performance. Its education development plan has been approved for just a year on condition that it is modified to take account of concerns identified by the Department for Education and Employment.
The authority is also criticised for failure to tackle maintenance of school buildings or to press ahead with integrating children with special educational needs into mainstream schools.
However, OFSTED's report praises the work of the education service in improving literacy in primary schools and for its implementation of the National Literacy Strategy.
The city's chief executive, Peter Boundes, said the council would work with the consultants to prepare a plan to tackle the deficiencies identified by OFSTED. "We see this an an opportunity to deal with the issues in partnership with the DFEE," he said.