MPs say Ofsted must prove it is value for money. Warwick Mansell reports.
England's inspection regime was this week accused of contributing to the problems facing some of the country's toughest schools.
Being branded failing can send schools into a spiral of decline, making it harder to recruit good staff and high-achieving pupils, an influential committee of MPs said.
It urged the Government to do more to help schools with problems and welcomed moves towards more self-assessment which are being introduced next September.
The House of Commons education select committee said the Office for Standards in Education, which costs taxpayers pound;207 million a year, must prove that it offers value for money.
MPs also criticised the inspectorate for not employing enough ethnic-minority staff in their annual review of the watchdog, which now employs 2,500 people.
Their findings come amid concern over the number of schools where standards appear to have deteriorated even after inspectors have identified problems.
Some 43 schools judged to have been in serious weaknesses, the second worst category, in 20012, had declined further and were placed in special measures the following year, said the committee.
It highlighted the case of Cathedral high in Wakefield, west Yorkshire, which replaced a failing school on the same site, but had difficulties recruiting staff because of its predecessor's reputation.
MPs said: "We are concerned that the negative judgement bestowed on failing schools by a critical Ofsted report leaves some unable to attract high-achieving pupils or well-qualified staff, making improvement more difficult."
They recognised that standards had risen overall since Ofsted's introduction in 1992, and that inspectors had to identify schools which offered a poor education.
But the committee said that schools which were criticised had to be given help to improve. Barry Sheerman, committee chairman and Labour MP for Huddersfield, said: "We are concerned that these schools are not given adequate support after inspection."
An Ofsted spokeswoman said most schools placed in serious weaknesses had improved. Since 1992, 1,231 schools had been taken out of special measures, of which 60 per cent had been judged to be good within two years.
Local authorities already had a duty to support schools in special measures, and inspectors visited these schools termly, to help them improve.
MPs recommended that ministers guarantee that failing schools are supported by local authorities and other organisations such as learning and skills councils.
They expressed surprise that Ofsted, which carried out value-for-money assessments on schools, colleges and local authorities, had only assessed its own efficiency for the first time in July.
They said even this was insufficiently rigorous, with little information on how costs compared with other inspection agencies.
The 2002 Race Relations Amendment Act requires Ofsted to promote racial equality. But inspectors were "overwhelmingly white", said the report. Some 5,180 out of 5,573, or 93 per cent, were white. Census figures put the proportion nationally at 92 per cent.
The work of Ofsted is available from the Stationery Office: www.tso.co.ukbookshop