Failing schools should be handed over to private firms to run as a final attempt to raise standards, a former adviser to the Prime Minister has suggested.

Five times as many schools could be told they are under-performing in the future as Ofsted changes its inspection regime, and a new system will be needed to turn them round, according to James O'Shaughnessy.

In a report for the Policy Exchange, O'Shaughnessy, who previously worked as a policy adviser to David Cameron, calls for the Government to introduce a new regime to deal with failing schools, with clear consequences for those that do not improve.

This should include using private companies, both for-profit and not-for-profit, to "tackle intractable failure".

The report says that in the last decade academy chains have begun to spring up.

Academies are semi-independent state schools that receive funding directly, rather than through a local authority, and have more freedom over areas such as pay and conditions and the curriculum. Some of these schools are grouped together to form "chains".

In his report, O'Shaughnessy argues that the rise of these chains is timely because "England faces a serious educational problem."

It says that measures for dealing with failure over the past 20 years have been aimed at around 5% of under-performing schools, and this was what the original academy programme, established under Tony Blair's Labour government was designed for.

But it adds: "In the next five years the challenge is to cope with a much bigger and more publicly contested seam of chronic failure in which mediocrity is the norm."

Ofsted has suggested that two fifths of schools are not better than satisfactory, the report says, and the inspectorate has now scrapped the "satisfactory" and replaced it with "requires improvement."

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The report calls for a new "industrial policy" for schools that will help academy chains to expand, and to crack down on under-performance.

It adds Ofsted's inspection changes "could lead to a fivefold increase in the number of schools being told they need to improve."

This increase, combined with a rise in academies, means a new system is needed to deal with failing schools, the report says.
It suggests that the first time a school receives a "requires improvement" rating from Ofsted it should be made to become an academy.

If the school or academy gets a second "requires improvement" rating it should be made to join a successful academy chain.
And if standards are still not raised, the school should be handed over to a proven "education management organisation" (EMO) to run.

"EMOs - both for-profit and not-for-profit companies, including the best chain providers - should be brought in to run schools on performance-based contracts where transformation into an academy and subsequent placement into a chain have failed to improve outcomes," the report says.

Publishing his report, O'Shaughnessy said: "We know that so-called sponsored academies are effective in raising standards, so that should be the first option for turning around these schools. But if that doesn't work then the academy should be forced to join a successful academy chain. Evidence from home and abroad now suggests that these groups of schools can be even more effective at raising standards than standalone academies.

"However, the dramatic increase in schools being told to improve requires more capacity than the academy and chain sectors can provide.

"So where local authority control has failed, and turning a school into an academy and then placing it into a chain have not been enough to break the cycle of underachievement, we must see whether private companies can help.

"Any objections to the private sector attempting to succeed where the state and voluntary sectors have failed should be dismissed for what they are - ideological prejudice."

Kevin Courtney, deputy general secretary of the National Union of Teachers, (NUT), said: "The Policy Exchange report is not about school improvement. It is about making profit from the education system. To have education providers whose first responsibility is to shareholders should be beyond the pale.

"There is no evidence to show that private companies will improve school standards. Indeed, this year Sweden announced an inquiry into its free school programme which allows companies to run schools for profit, because standards have dropped since the policy was introduced.

"This report is essentially acknowledging that many academy schools will fail the new Ofsted criteria, but instead of advocating a return to the local authority system in which teachers can collaborate, they are intent on creating a wholly unnecessary and 'for profit' tier to support schools."

Brian Lightman, general secretary of the Association of School and College Leaders (ASCL) said: "Converting to an academy is not in itself a panacea nor a guarantee of improvement, as we know from experience. For schools that are putting all their efforts into improving teaching, often the last thing they need is the additional work and distraction of converting to an academy.

"The key to improvement is school-to-school support and collaboration, not the academy chain itself.

"This report paints a completely misleading and unhelpful picture of an education system in crisis. Ofsted's own evidence is of a school system that is continuing to improve, which is why they continue to raise the bar on inspections.

"Ofsted is an important part of the accountability system and inspections should be focused and rigorous, but a punitive system which labels vast numbers of schools as failures would completely undermine all the good work that is going on in our schools and colleges."