Blair faces backlash over drive for academy schools

Tony Blair will today face a backlash from his most senior Labour MPs over the drive to create the city academy schools which has fuelled the "cash for peerages" scandal.

The Prime Minister will be warned by the Labour MPs at a private meeting in the Commons that there is growing opposition to his flagship education policy. He will also face the first question time in the House of Commons since it became known he could be interviewed by Scotland Yard over the alleged offering of peerages to businessmen prepared to financially back the schools.

"A lot of Labour MPs are unhappy about the city academies, and the row about peerages has made it worse. It is definitely going to be raised when we see the Prime Minister," said one senior Labour MP.

Labour MPs privately said they would be keeping their powder dry until after the local elections to renew calls for Mr Blair to go sooner rather than later. But Lord Kinnock, the former Labour leader, warned that city academies would lead to schools selecting pupils, and lead to a "seller's market".

Britain's biggest teachers' union, the NUT, has condemned the "sleaze and cronyism" at the heart of Mr Blair's embattled city academies programme.

The pressure on the Prime Minister over his role in nominating academy sponsors was increased last night when Des Smith, who was responsible for recruiting sponsors for the academies, protested his innocence over allegations that the Government breached the 1925 Act banning the sale of honours.

Mr Smith, a respected head teacher, was arrested and questioned by Scotland Yard last Thursday before being released on bail over claims he made to an undercover reporter for The Sunday Times. It was reported that he said anyone paying £10m towards a city academy would be a "certainty" for a peerage and he also named the former schools minister, David Miliband, as someone who should be contacted regarding nominations for honours in return for supporting the schools.

Mr Smith's solicitors said in a statement: "We have advised our client that in the light of the police investigation it would be quite inappropriate for him to make any statement at the present time, other than to state that he categorically denies the allegations and will be contesting them vigorously.''

The police are expected to interview key advisers from No 10, including Mr Miliband, Jonathan Powell, Mr Blair's chief of staff, and Baroness Morgan, a former Downing Street aide in charge of liaison with the party. They will also question Lord Levy, the party's chief fundraiser.