Local authorities have welcomed the takeover of the failing Kings' Manor school in Guildford, describing it as "an imaginative twinning arrangement" rather than as privatisation.
Surrey County Council this week selected 3E's Ltd, the commercial wing of Kingshurst City Technology College in Solihull, to act as consultants in the school's regeneration.
Kings' Manor will be relaunched in 2000 with a new name, provisionally the Guildford College of the Arts and Technology.
While union reaction has been mainly hostile, the Local Government Association welcomed the development, saying fears that the school will be privatised are unfounded.
Graham Lane, chair of the LGA education committee, said: "It's not privatisation, it's twinning, albeit with a CTC 130 miles away. It looks like a very imaginative scheme.
"There's no private ownership of the property and there's no profit." Kings' Manor will be recreated as a voluntary-aided school where the governors, rather than 3E's, employ the teaching staff.
But Mr Lane warned that seeking aided status could involve 3E's in legal delays.
3E's, managed by Stanley Goodchild (see profile left), already has the backing of Kings' Manor parents and has promised to plough any profits back into the school and Kingshurst CTC.
The company beat off challenges from Nord Anglia, a major commercial education company, and the non-profit-making CfBT.
Unions reacted angrily as the education minister Estelle Morris said that she would have "no problem" with thousands of other failing schools following suit:
"We have made it crystal clear to local authorities - and we mean it very, very seriously - that if there are other people who can provide a service for schools which is in the best interests of that school then we will allow them to do so," she said.
Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, called the move a "dangerous precedent". He said: "Surrey is the first LEA to say that it is incapable of managing one of its own schools".
National Union of Teachers' leader Doug McAvoy accused the authority of "reneging on its duties and promises" to Surrey taxpayers.
The teachers at Kings' Manor will have to apply for jobs at the re-launched school, which closes then reopens on September 1, 2000. There will also be a new head.
Mr Goodchild praised the existing teaching staff and said that many would continue to be employed. Others, he said, would be offered help to find alternative work. "There will be some who don't fit in. That's human nature."