Selected private schools will be nationalised under Blair plan

Downing Street and the Department for Education are working on a secret blueprint to "nationalise" schools to expand state school capacity and tackle overcrowding. The plan, which comes ahead of an education White Paper to be published later this month, is likely to raise fears about the establishment of a two-tier education system.

The Department for Education is believed to be resisting any return to selection. But the plan to voluntarily "nationalise" small independent schools that are close to overcrowded state schools will ring alarm bells among backbench Labour MPs.

The Government believes lack of capacity in the state sector could be addressed by taking over neighbouring private or faith schools. These voluntarily "nationalised" schools could then be expanded, as well as sharing their playing fields and facilities.

In a radical reform of education policy, the Government is also looking at extending the use of private sector involvement in schools with a plan for "city academies lite", dubbed "Boots schools" by Whitehall. Companies such as Boots, Kellogg's or Toyota could be given a stake in the success of the school, while not running them.

Private schools that agree to be taken over by the state sector "would not be able to select", according to sources at the Department for Eduction. But private faith schools that come into the state sector "could give some preference" to pupils of a particular religion.

"We are looking at taking independent schools into the state sector," one source said. "A lot of independent schools might not be interested, but a lot might. It would be voluntary. We would take the school over. They would run it but we would fund it."

Private schools that came into the state system would take new pupils for free while existing pupils would no longer pay fees.

In a major speech yesterday, Mr Blair said that being in government meant making "tough decisions that offend people", as he signalled his intention to press ahead with the next stage of reform.

"It means aiming for respect rather than affection. It means asking people to change not in theory but in reality. It means decision weighted not in argument and counter-argument, but in the pounds in people's pockets," he said.

The White Paper is also expected to include proposals to give free bus and train tickets to children from low-income backgrounds, helping them to travel to good schools.

Ruth Kelly, the Secretary of State for Education, will tomorrow make a keynote speech stressing the need for more one-to-one tuition to improve standards in English and maths.

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