PRIVATE firms will be hired by the Government to set up city academies in a radical twist to its flagship failing schools policy, just as scheme trailblazers are running into problems.

One academy, in Haringey, north London - with the hostage-to-fortune name First City Academy - has lost four-fifths of its teachers in the past year and has seen its funding plans rejected by the Charity Commission. The commission has also raised concerns about the transfer of the grounds of St David’s and St Katherine’s school which it will replace.

A commission spokesman warned that, unless new plans were submitted soon and met no objections, approval could not be granted before the planned September launch. Another academy in Leeds has been put back at least a year from September 2003.

Ministers are now drawing up plans for massive deregulation which will mean governing bodies are slimmed down and successful heads allowed to tear up national pay structures.

Companies such as Nord Anglia will be urged to bid to take over “tough nut” schools - typically inner-city secondaries which failed to respond to LEA intervention.

The schools will become independent, set up along city academy lines with firms signing five-to-seven year contracts direct with ministers - but they will not be required to put in the pound;2 million demanded of the first wave of academies. Instead, they will be paid for their work.

Neil McIntosh, chief executive of the Centre for British Teachers, said his company would be interested in taking on a city academy on these terms.

The proposal is expected in a schools White Paper next month, leading to autumn legislation.

A report by the Institute for Public Policy Research think-tank, which has close ties to Labour, this week warned against privatisation just for the sake of it in public services. In schools, it says, there must be clear accountability.

It criticises agreements where firms are contracted to run schools, such as Kings’ College in Guildford, and at the same time appoint members of their governing bodies.

“The danger (is) that the governing body represents the interests of the provider organisation rather than those of the wider community,” the report warns.

Safeguards may be built into legislation, but that arrangement will continue in the new academy contracts. Firms will not directly employ staff, but will have proxy powers to hire and fire by influencing governors.

Other moves will see successful schools - designated on the basis of inspection reports and better results - allowed to bring in the private sector to run all or part of the school.

Schools will have greater freedom to shop around for advice and support - and some LEAs could band together to offer schools across the country the best of their services.

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