LABOUR will change the law to allow businesses to take over failing schools and run them for profit under contract for a fixed period of time.
The new "contract schools", modelled on charter schools in the United States, would be part of the transformation of secondary education to be outlined in a White Paper.
Businesses would take over failing or weak schools on five or seven-year contracts. Renewal would be subject to performance.
The arrangements would be similar to those for King's Manor school in Guildford, a failing school which is being run by the not-for-profit 3Es Enterprises company. Under existing law, King's Manor had to become a voluntary-aided school before 3Es could step in.
Stanley Goodchild, managing director of 3Es, said: "I have always said that increased private-public partnership is the way forward. If a school is failing, a private company can go in and concentrate on the particular needs and problems of that school in a way which a local education authority cannot because it has to be seen to be treating all their schools equally."
Margaret Murray, head of learning and skills at the Cnfederation of British Industry, said: "In principle, the CBI is in favour of the opportunity to innovate and experiment in raising standards, particularly among disaffected learners. In reality, however, I think it is going to be a very specialist kind of company that is likely to want to get involved in this area."
The 2,000 charter schools in the United States are publicly-funded. State or school boards (local education authorities) appoint managers who try to run them for profit. The first charter schools opened in 1992.
The Centre for British Teachers, an education services company devoted to showing that the profit-motive can serve the public interest, is already running a private school in Kent charging fees below the level of state funding, to show that companies could run English charter schools. Nord Anglia, a public company involved in education, also runs schools in the UK and abroad.
Teacher unions oppose business input in running schools. They say that there is no evidence that companies are better at raising standards than local authorities.
Next week: full briefing on US charter schools