THE £36 million city academy described by Tony Blair as “the future” of secondary education has been failed by Ofsted.

The watchdog’s highly critical report of the Business Academy in Bexley, Kent, was released as it emerged that last year only 16 per cent of pupils achieved five good GCSEs, including mathematics and English.

The failure of a second academy in a year to offer an adequate education, in spite of the vast investment, raises questions about the viability of the £5 billion programme to open 200 academies by 2010. The report will be seized on by Labour backbenchers. They fear that the impending Education Bill will produce more “independent state schools” that fail to live up to the promise of a better education for inner-city children.

Designed by Lord Foster of Thames Bank, in steel and glass, and boasting a “City trading floor”, the Business Academy cost taxpayers £35.9 million to build — three times the price of a standard secondary.

Inspectors who visited last November served the academy with a “notice to improve”, condemned its teaching as unsatisfactory in nearly a fifth of lessons, and said it did not provide value for money.

They decided the school would not require special measures, judging staff able to sort out the problems. But in awarding a Grade 4, they made clear that standards were “exceptionally low”. They are to revisit within a year. “Teaching and learning are inadequate overall. They are at least satisfactory in the primary section. There are, however, weaknesses in the secondary phase and not enough of it is good,” the inspectors wrote.

“The academy’s monitoring of teaching in the secondary section this year disclosed that the proportion of unsatisfactory teaching was roughly one lesson in six.”

The school serves 1,400 children aged 4 to 19 in the poorest area of the borough. When Tony Blair officially opened it in 2003 he pronounced it “a beacon of hope and inspiration”. But it has been beset by problems. In the latest report, Ofsted condemned the poor sixth-form education, where the highly academic curriculum was not tailored to pupils’ needs. “Of 20 pupils taking the International Baccalaureate only four passed all six subjects and only two achieved a full diploma. Out of six pupils taking an Advanced Vocational Certificate of Education in business only one achieved a grade E and four did not pass any units,” the authors wrote.

The inspectors found standards “disappointingly” weak in business studies and ICT (information and communications technology).

Inspectors praised governors for their role in supporting the academy and said students were positive in their attitude. Their criticisms were directed largely at the teaching.

The report is a blow to the Government, which has opened 27 academies. In return for donating up to £2 million to a school’s capital costs, sponsors appoint the governing body and control the curriculum, staffing and ethos.

Bexley’s sponsor, Sir David Garrard, who last year was nominated for a peerage, is protective about his school’s reputation. In 2004 he hired Cherie Booth, QC, after Ofsted reported “serious weaknesses”. Her chambers threatened to seek a judicial review. Ofsted agreed not to publish the report and issued a “monitoring letter” referring to “significant” weaknesses, that was sent only to the academy.

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