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Big companies are willing to contribute to education but they want something in return. Francis Beckett and Ian Nash report

The deal on offer couldn't be clearer. Tesco has pound;100,000 earmarked for technology colleges in London and Liverpool. The money will come once planning permission has been approved for the new stores Tesco intends to build in the vicinity of these schools.

Fiona Archer, who manages the supermarket chain's corporate social responsibility department, says that putting money into technology colleges is dependent on the company's "regeneration schemes" being accepted. If Tesco is allowed to build a new store then it will put something back into the community.

It is the sort of deal that local and national government is having to consider when looking to retain business interest in education spending. Tesco is not alone in demanding such a quid-pro-quo - all big chains take the same view and insist that there is nothing cynical about such enlightened self-interest.

Similarly, with lifelong learning, Tesco has taken a long-term view of investment and has become the first such company to appoint a full-time lifelong learning director for staff development. It is a huge challenge, particularly since the ban on greenfield site development. There is a dire shortage of skilled personnel around brownfield sites. The company will do the training, but only if it gets planning permission.

Fiona Archer says that the company "supports education projects where they fit into our strategy". Other business leaders concur and point out that investment in education is part of the business, but not the "core" business. They are increasingly concerned that ministers seem to want something for nothing. Will Hutton, chief executive of the Industrial Society, says that "the Government does not understand what motivates businesses to become involved, and hopes that private sector involvement will be a free lunch".

The new government could fall foul of problems that bedevilled the Tories under both Margaret Thatcher and John Major. Fifteen years ago when a Conservative Secretary of State, Kenneth Baker, launched his city technology college scheme, BP refused to contribute, despite Mrs Thatcher's repeated efforts to twist the arm of the company's chairman.

Three reasons were given. First, the chairman rejected CTCs as too politically controversial. Second, as the firm's educational adviser said, educating Britain's children to a higher level was "a matter for the general taxpayer, not the BP shareholder". Third, BP was already investing in education-business links at record levels. Tens of thousands of pupils and students were benefiting from resources in kind: work-experience, mentors, curriculum materials and staff and management support programmes.

Baker's 20 industry-funded beacons of excellence were never realised. Instead, pound;1 million or more from a firm or individual and the rest from taxpayers created 15 CTCs (and secured the odd knighthood). These led to the specialist colleges that now proliferate, created with much lower levels of extra funding. David Blunkett's call for industry to part-fund city academies is a direct descendent of the watered down CTCs.

Mike McCann, chairman of the National Education Business Partnership Network, is worried that the Government thinks that business has an open wallet for education. "The Government needs to be careful about going to the same well on too many occasions," he says.

Much of Blunkett's strategy for school improvement rests on the disinterested generosity of business. Indeed, with more tan pound;23bn invested in schools, colleges and workplace training, company commitments are at record levels.

But Paul McKelvie, director of Scottish Power Learning, sounds a note of warning: "Money is not the most important thing business can contribute," he says. "We can give an added perspective on learning. We can innovatively share our expertise with schools. We intervene where we can contribute value, and influence the overall learning agenda. But we are an energy company - education is not our core business."

Scottish Power spends pound;2m a year on corporate social responsibility. A city academy would use up its entire budget. Mr McCann says most firms are like Scottish Power in that they cannot afford the money required. Business in the Community is also concerned. Representing the interests of 650 leading companies, it says that like BP, a BITC member, all its companies want to get to the heart of their community. BITC does not pronounce on government policy, but senior officials express concerns privately. One said: "We don't want to take schools over. Business at present is trying to get back to its core, and that is not education."

CBI education officer Margaret Murray echoed BITC's sentiments. She has found that multinational companies are preoccupied by the recession in the US, while national and local firms are just concerned about surviving. Most companies are not considering city academies, which rely on private sponsors coming up with up to pound;2m before the Government will stump up money.

The former construction company Amey plc intends to sponsor the Middlesbrough academy. Amey has reinvented itself as a support services company whose main business is providing outsourced services for health, education and local government. It is bidding in the fiercely controversial privatisation of education services in Waltham Forest, in partnership with education consultants Nord Anglia.

Tom MacQuillan, Amey's group communications director, said: "We are serious about the education market. There is great potential to improve standards and there is also a business driver. The market has great potential and we want to be seen as a key player in it." The Centre for British Education, a charity, is considering sponsorship of a city academy in Lambeth.

For these firms - a new breed of private enterprise whose core business includes education - the city academy might be pound;2m well spent. Mr MacQuillan says some of it will be "in kind", as was the case in the funding of the Government's action zone initiative.

In Bradford, the chief executive of a local company advised on the development of the zone bid - judged to be equivalent to a donation of pound;5,000. The Blue Planet Aquarium in Ellesmere Port agreed to let action zone pupils in for half price, a concession estimated to be worth pound;12,500.

Other sponsors of city academies are the Church of England, the Corporation of London, and the Mercers Company. In some cases, business moguls are putting up money personally, either because they see it as part of their charitable nature, or because they have been persuaded by the Prime Minister's educational adviser Andrew Adonis - or both.

Frank Lowe, chairman of the Lowe Group of advertising and communications companies and a Labour sympathiser, is personally sponsoring the Brent city academy. David Garrard, chairman of Minerva PLC, is doing the same in Bexley. Lord Harris, of carpet fame, who sponsored the Croydon CTC, is sponsoring an academy in Peckham, and stockbroker Barry Townsley will sponsor an academy in Hillingdon.

Will Hutton, page 27

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