The Schools Standards Minister, Estelle Morris, announced on Friday that Nord Anglia would be taking over the services for school improvement and ethnic minority achievement.

Estelle Morris has welcomed such "decisive action"

These services were put out to private tender by the government after a report by school inspectors found serious weaknesses in the support offered to schools by the local authority.

"This is the first time we have been able to take such decisive action," said the minister. "I expect the company to adopt new and more rigorous approaches to the challenge of school improvement in Hackney."

'Horrified'

But the awarding of the contract to a commercial bidder has angered a teachers' union leader.

"I am horrified that an important public service should be contracted out to an organisation which is unashamedly and blatantly in it for the money," said Peter Smith, General Secretary of the Association of Teachers and Lecturers.

"We are not opposed to services being contracted out, on the understanding that it would be on a not-for-profit basis. But for Nord Anglia, the bottom line is profit, not the improvement of services for Hackney children.

"I am amazed that a Labour government has pursued a policy which the Tories would not even have contemplated."

The east London borough became the first council to lose control of part of its education services, as the secretary of state for education used new powers to intervene in failing local authorities.

More to come?

The company awarded the contract, Nord Anglia, already runs inspection and training services and was the first UK education company to be floated on the stock exchange. It is run by a former teacher, Kevin McNeany.

He is delighted to have won the contract.

"It is good news for the company. We are well-placed to bid for similar contracts as and when the government policies on intervention in state education are rolled out," he said.