Private firm fined £300,000 for failing to improve results

The first private company to run a state education authority is to be "fined" £300,000 after failing to meet its target for improving GCSE results.

The cash ­ almost half the management fee ­ will be withheld from Cambridge Education Associates, which took over the running of schools in Islington, north London.

It had agreed to raise the percentage of pupils getting five or more top grade GCSE passes from 26.5 per cent last year to 35 per cent in 2001. It reached 27.7 per cent. The targets were set out in the contract Cambridge Education Associates (CEA) was asked to sign when it tendered for the running of Islington's schools.

Vincent McDonnell, director of schools services for CEA in Islington, said: "The money will be withheld by the council and re-invested in education services in the borough. We always thought the 35 per cent target figure was unrealistic. There was no way we were going to fulfil that. However, we did have realistic hopes that we would reach 30 per cent. The problem was, we had six of the nine secondary schools showing improvement but three slipped back. If they hadn't, we would be up at the 30 per cent mark. It was disappointing."

The firm's failure to meet its target comes at an embarrassing time for the Government with the launch of its White Paper on education next week. It is expected to call for more private sector involvement in running state schools.

This is the first year CEA's contract has covered GCSE results. It took over control of services in April last year, but it was agreed it could not make much impact in the month before pupils starting taking their exams. However, it already has a target of 39 per cent getting five top grade passes set in stone for next year – a target that now looks daunting.

Figures from Islington Council and CEA showed wide variations in the GCSE results. The Islington Arts and Media Centre, in disarray last year after the country's first "superhead", who was brought in to turn it round, resigned, showed a large increase in the number of pupils getting five top grade passes. The number went up from 5 to 15 per cent. However, at nearby Holloway Boys' School, it slumped from 20 per cent to just over 10 per cent.

James Kempton, the Liberal Democrat chairman of Islington's education committee, said it was "no surprise" the company had failed to reach the target. "It was asking a lot for them to achieve such a rise with pupils who had spent most of their education in the borough at a time when education standards were not at their best," he said.