Firm's pounds 1.4m to shake up schools

PRIVATE CONTRACTORS will be paid pounds 1.4m under a three-year deal to take over key education services in a failing London borough.

Confidential Hackney Council documents show Nord Anglia Education Services also stands to gain a pounds 325,000 performance bonus if it meets targets at the end of the deal, the first in British state education. But the firm will face penalties of up to pounds 217,000 if its performance is poor. Hackney councillors approved details of the contract last week.

The Cheshire-based company, run by Britain's first education multi-millionaire, Kevin McNeany, will run the borough's school improvement and ethnic minority education services from 1 July. The authority had to contract out the two services after a damning report by school inspectors earlier this year.

The Department for Education will pay pounds 224,000 towards the first year's costs. The rest of the contract payments will be met by the borough's council taxpayers.

Liberal Democrats on the council said council tax rates would have to rise to pay for the private contractors. Philip Pearson, the local-education spokesman, accused the Government of making no more than a token payment.

But a spokesman for the Department for Education said Hackney was spending below government guidelines on improving schools and the extra payments were needed. "This is the price of failure. It's absolutely right that more resources should be diverted to school improvement." Last week the Government published figures on local authority spending to "name and shame" councils that failed to spend enough on education.

Mr McNeany declined to discuss the value of the Hackney contract and "did not recognise" the council's figures. He said the company would be providing extra services and insisted the council would get value for money.