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Nervous companies wait in the wings

MINISTERS may want private companies to take over LEA services, but so far firms have not been rushing to do so.

Arthur Andersen, the only major non-education company to make it onto the Government's list of 10 approved bidders for local authority services, pulled out of the running to take over Islington's services.

Others have been deterred by the risk involved, their lack of experience in education and fears of harming their reputation by a high-profile failure.

James Tooley, who has acted as a British consultant for the American education company, Edison, says there are major disincentives for firms to become involved. He points out that LEAs will remain ultimately responsible for the services and that although contactors will be penalised if they fail to hit performance targets, schools do not necessarily have to use the contractors services. "There is a real question over where accountability lies," he said.

Neil McIntosh, chif executive of CfBT, one of the Government's approved bidders, agrees: "There is a lot of doubt about the tendering process. There has to be a simpler form of contract and firms need to have access to the books of the authority when they prepare their bid."

However, at least two companies involved in privatisations of other public services are keeping a close eye on the situation. Some education companies in the United States are also scrutinising the progress (page 25). The success of the privatisation project could hinge on attracting these companies. Consultants PriceWaterhouseCoopers warned ministers in the summer that some firms on the Government's list of bidders are too small and inexperienced to cope.

Much depends on the experiences of Hackney and Islington. Only if Nord Anglia and Cambridge Education Associates show it is possible to help schools improve and make a profit will the companies on the sidelines join the game.

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