Islington council leader Derek Sawyer: "We need to make a radical change"

The Office for Standards in Education said the London Borough of Islington, whose schools were rejected by the prime minister for his own children, was failing to support schools in the area.

The government immediately called on the council to begin work on contracting out all or most of its education services.

In response, Islington has unveiled radical plans to set up a new board to take over the strategic management of its schools.

Elected councillors would have only minor representation, with the board dominated by businessmen, headteachers, school governors, parents and church nominees.

Estelle Morris: "The Ofsted report highlights a catalogue of educational failure"

The council hopes to find private sector partners to deliver all remaining services for schools through a new joint venture company, in which it would a minority stake. Existing council staff would become employees of the new company.

Islington's Chief Executive, Leisha Fullick, said: "We acknowledge that mistakes have been made and that we have failed to deliver the high standard education service that parents have a right to expect."

The Ofsted report is one of the most critical documents about an education authority ever published.

Seven of the Labour-run borough's 70 schools have been declared "failing" and a further seven identified as having "serious weaknesses". Last year, only 23.3% of pupils in the borough achieved five good GCSE grades, while the national average was 44.4%.

The report acknowledges the poor social and economic background of many Islington pupils, and says schools in the borough are having some success in raising educational standards. But this is despite the efforts of the local education authority, not because of them.

"We do not believe that, as an organisation, Islington is currently in a condition to achieve more than limited, piecemeal, improvement and while that would be welcome, it is not sufficient," concludes the report.

George Orwell school, one of Islington's failing schools, is to close this summer

The School Standards Minister, Estelle Morris, responded to the Ofsted report by saying she expected most or all of the borough's services for schools to be placed in the hands of private contractors.

She said ministers saw this solution as the only hope for Islington's failing schools.

"This damning Ofsted report must be the lever for a complete overhaul of Islington's education service," said Ms Morris. "Children and parents in Islington deserve better."

The government has already ordered the neighbouring borough of Hackney to contract out two key areas of its education service.

The General Secretary of the National Association of Head Teachers, David Hart, said his members in Islington were only too aware of the need for a "crisis solution" to the situation in the borough's schools.

"Islington heads will support radical measures to solve the current serious problems, but they must produce a better deal for schools than the existing set-up," he said.

The Shadow Schools Minister, Theresa May, said: "We already knew that schools in Islington were in such a bad state that Labour MPs would not send their children to them.

"It is but one of many Labour councils that have failed the children of this country."