Think-tank says investing in academies is risky business

Tony Blair's flagship city academies will face fresh criticism today with an influential think-tank calling them a "high-risk" investment for wealthy donors.

The charge will come as a blow to Birmingham City Council's drive to attract sponsors to back its proposed seven "customised" academies.

A report published by the New Philanthropy Capital (NPC), raised serious doubts over the "cost- effectiveness" of the scheme.

It also urged potential sponsors to consider the possibility of negative publicity arising from the controversial nature of the scheme.

Martin Brookes, head of research at NPC, which advises donors how to give money effectively, said: "There simply isn't enough evidence to make a conclusive assessment on whether academies are a good investment for donors.

City academies represent the Government's radical answer to under-achieving schools in urban areas.

The programme involves closing and rebuilding failing schools at a cost of £25 million, £2 million of which comes from a private sector backer.

In return, the sponsor gains influence over the curriculum of the new "independent state" school which is no longer under local authority control.

The NPC maintained the £25 million price tag looked "very expensive" when compared to about £17 million for a conventional state school.

"Undoubtedly, the case for academies would be stronger if they did not cost so much to build," said the report.

It continued: "Whilst there is a lack of evidence to assess the effectiveness of academies, there is clear evidence to support many of the other options for donors."

In a move set to anger Ministers, the think tank urged potential academy sponsors to think about the effect on their reputation.

"Sponsors should also consider that supporting an academy, given the controversy that surrounds the programme, is a commitment that is likely to be played out very publicly," said the report.

The Department for Education insisted that academies did not represent poor value for money and claimed they cost "exactly the same as similar-sized school".

"Academies are doing better than the schools they replaced and have improved results in GCSE exams and tests for 14-year-olds three times faster than other schools."