THE Government’s drive to privatise struggling education authorities was dealt a dramatic blow this week as it was forced to abandon long-running plans to contract out schools services in Haringey, north London.

Fifteen months after inspectors first identified problems in the borough, ministers have concluded that the bids from potential contractors are simply not good enough.

They have gone back to the drawing board and are inviting more private-sector bids. But wholesale privatisation is no longer on the cards.

Instead of taking over all schools services, any successful new firm will provide a management team, advice on areas of weakness and will overhaul some council structures.

And, unlike the original plans, there will be no transfer of local authority staff to the private firm. An independent management board will oversee the new arrangements, which the Government promises will be in place by the summer.

Both firms whose bids were rejected - Cambridge Education Associates, which is already running services i neighbouring Islington, and Ensign, a consortium that includes security company Group 4 - said they were “disappointed”.

A spokesman for Ensign said: “We felt we were in the process of putting forward some sound solutions to address the educational difficulties in Haringey.”

But several local “stakeholder” groups had criticised the bids for lacking a vision to improve the borough. Parents’ groups joined unions in opposing the plans.

The first indication of problems with the Haringey bids came last October when ministers sent back proposals from CEA, Ensign and a third company Serco, which later dropped out, for improvements.

Earlier this month, it is understood that the borough’s controlling Labour group, which had initially backed privatisation, told ministers it could no longer support the bids.

Julie Davies, secretary of the National Union of Teachers in Haringey, said: “We thought this would happen all the way along.

“The real scandal is that so much effort, time and public money have been wasted on this, when all the Government needed to do was to listen to what people were telling them in Haringey.”