THE PRIVATE company that will take over education services in Islington faces tough financial penalties of up to half its profit if it fails to raise standards in the London borough's schools.
The contract, due to be signed today, is the first large-scale contracting out of support services to schools.
Cambridge Education Associates will run them for a maximum of seven years.
The agreed management fee of pound;600,000 per year will only be paid in full if GCSE results improve at a faster rate than the national average and also if primary schools achieve higher
literacy and numeracy scores.
In total, CEA has agreed that the contract will cost Islington pound;11.5 million a year and will include school improvement, personnel, finance, payroll, governor support and special educational needs.
As part of interim arrangements, CEA has recruited Vincent McDonnell, chief education officer in the London borough of Richmond, as a stopgap director of schools services until CEA takes over.
Political control in Islington passed from Labour to the Liberal Democrats following a by-election last month and already the signs are clear that the new administration is far more opposed to contracting out than its predecessor.
The Liberal Democrats have scrapped plans to transfer education policy powers to an education trust, but they are planning to create a commission, which will then be charged with the challenge of deveoping a new vision and strategy for the service.
The commission is to be chaired by Tim Brighouse, the chief education officer in Birmingham.
At an earlier stage, Birmingham City Council was involved in a consortium with Arthur Andersen, the accountants, which withdrew its bid for the contract.
Islington council is also to appoint is own director of education. He is Jonathan Slater, currently deputy chief executive. He will be part of the team monitoring the performance of CEA and will be responsible for running the council's services for under-fives; play; youth and lifelong learning.
For the term of the contract, the council retains strategic powers in areas such as budget setting and admission arrangements for schools, but the day-to-day operation of the service will be the responsibility of CEA.
The company has accepted that its profits will be reduced if it fails to meet any of these 11 targets. The percentage of children achieving five higher grade GCSEs has to rise over three years from the 28 per cent this year to at least 39 per cent, under the terms of the contract.
CEA will face penalties if any school fails its inspection and if any of the four failing schools are not removed from the list within two years.
CEA will employ existing Islington staff, but it is also being required to make efficiency savings. The senior management team will be on performance-