Sweeping changes to the way inspectors judge schools are needed to stop unfair criticism of those in deprived areas, Parliament’s spending watchdog said today.

In a report on the exam performance of more than 1 million pupils, the National Audit Office calls for an overhaul of league tables and says the use of raw scores as traditional tables were of “limited value” in judging schools.

The NAO has produced its own measure for key stage 3 and GCSE performance which takes account of pupil backgrounds in 3,100 English secondaries. One in 10 of the bottom 20 per cent in 2002 should have been rated among the top 20 per cent, it calculates.

The report warns that the Office for Standards in Education pays too much attention to raw scores and not enough to pupils’ background.

“Decisions to place a school in special measures might also be influenced more by the unadjusted academic achievements of pupils,” it says.

Of the 72 schools in special measures during 20012, 78 per cent were ranked higher by the NAO at KS3 and 65 per cent at GCSE.

Seven years ago, Chris Woodhead, the then chief inspector, stopped inspectors taking more account of pupils’ social background.

The auditor’s report raises serious questions about the Government’s use of exam results as an indicator of school performance.

Of the 624 schools ranked in the bottom 20 per cent of performers in KS3 tests, just 196 remained there when scores were adjusted for external factors and 87 moved into the top 20 per cent.

It also calls into question whether setting the same minimum targets for schools and councils, regardless of external factors, is sensible or equitable.

When external factors such as pupils’ previous attainment, social deprivation, ethnicity and gender are taken into account, schools which appear at the bottom of league tables are among the country’s best, it found.

Hackney, Haringey, Islington Lambeth and Southwark, five London authorities normally judged as among the worst in the country, all perform better than the national average at KS3.

Islington schools, rejected by Tony Blair for his older children, had the ninth best KS3 results in the country, according to the Nao analysis.

The five did less well at GCSE but only one, Haringey, appeared in the auditor’s list of the lowest performing 50 authorities.

David Bell, chief inspector of schools, and David Normington, permanent secretary at the Department for Education and Skills, will be expected to justify their approach to MPs on the public accounts committee next month.

The NAO called for the Government to make adjusted results the key measure of school performance. Paul Dimblebee, manager of the study, admitted that the NAO’s measure was not perfect.

“It is not possible at the moment to take account of all external factors such as parental occupation and education level. But just because the Government has gone one step along the path with value-added does not mean they should not take more.”

The Department for Education and Skills said the Government already publishes more sophisticated information alongside raw test scores. For the first time this year value-added measures will be included in all three tables - primary, key stage 3 and GCSEpost 16.

Ofsted said it would take the NAO’s recommendations into account during its consultation on inspection arrangements.

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Making a difference: Performance of maintained secondary schools in England is available from www.tso.co.ukbookshop pound;10.75