Local education authorities forced to surrender services to the private sector have improved less than those who failed an inspection but were allowed to retain control.

Five of the nine LEAs with privatised services were rated as poor improvers by the Office for Standards in Education under grading introduced last December.

Southwark, Swindon, Walsall, Waltham Forest and Hackney got the lowest grade, indicating little improvement or capacity to make gains in future.

The lack of progress in Hackney, east London, led to contractors Nord Anglia being replaced by a not-for-profit trust.

Swindon became the latest LEAto contract out services last May. Serco’s role in Walsall was extended last November after inspectors noted progress in the authority’s school improvement service Of the other four partly-privatised authorities, three - Bradford, Haringey and Islington - were rated unsatisfactory and just one, Leeds, is satisfactory.

Ten of the 15 LEAs that escaped privatisation were judged to be good improvers, with Bristol and Leicester seen as unsatisfactory. In ratings of current performance rather than improvement, only Haringey and Leeds were regarded as satisfactory.

Ratings were reached using a mixture of inspection evidence and performance data, including test scores, from each authority. Some LEAs were rated as “poor”, despite GCSE results that are improving faster than the national average.

The poor results add to a list of failures in Tony Blair’s embrace of the private sector. Education action zones have been dropped and the private finance initiative building programme is problematic.

Labour gained a second landslide election victory in 2001 on a platform of using the private sector to reform public services. Since then, one council - Swindon - has contracted out services after a failed inspection, and firms involved have attracted controversy.

Cambridge Education Associates was fined part of its management fee after failing to meet targets in the London borough of Islington. In Waltham Forest, a partnership between Amey and Nord Anglia has led to staff being forced to re-apply for their jobs.

“Strategic partnerships of this nature are about sustainable improvement, not quick fixes,” said Rosamund Marshall, Nord Anglia Education’s Director of Outsourcing. “We are firmly focused on continual improvement and the best possible support for schools and their pupils.”

Companies also pointed out that some of the indicators used by Ofsted, such as those for early-years education, fall outside the remit of some individual contracts.

A spokeswoman for the Department for Education and Skills said: “For LEAs in which the Government has intervened by putting in place private sector solutions, Ofsted has commented favourably on work done by contractors in the short time since their appointment.”

Graham Lane, chair of the Local Government Association, said: “This is the latest proof that those of us who opposed privatisation were right.”

* COUNCILS must do better in promoting social inclusion and ensure money reaches the most needy areas, says the Audit Commission. Patterns for Improvement, published yesterday, identifies five areas where improvement has been weak since 1997.

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