TONY BLAIR insists his plan for 200 city academies sponsored by rich donors is the way to create good schools in the inner cities, although this has come at a hefty cost and has so far produced mixed academic results.

One academy in a tough part of Hackney, east London, was designed by Lord Rogers, the architect, and cost £35m. Another, in Bexley in south London, boasts its own stock-exchange trading floor.

The prime minister hosts breakfasts for potential sponsors in Downing Street where he tells them that for £2m — the down payment required from donors — they can put something back into society. The government foots the remaining £25m-plus for the building as well as the £5m annual running costs.

For Blair and Lord Adonis, his former adviser on education and now a junior minister, these schools are the key to prising education away from local councils in traditionalist Labour-dominated cities.

Academies get their funding direct from Whitehall. The governors are appointed by the sponsors, who can “brand” the schools. They also decide what the pupils should study and what teachers should be paid.

The plan has been controversial and plagued by setbacks as some academies have turned out to be worse than the schools they replaced. The Unity city academy in Middlesbrough, sponsored by the construction company Amey, has been judged by Ofsted, the national schools inspectorate, to be a failing institution. It has run up debts of more than £1m and has had to be bailed out by the education department.

Last week the National Audit Office (NAO), the government’s spending watchdog, pointed out that academies — which on average cost £27m to build — are £4m more expensive than other new schools. It was, said the NAO, too early to say whether the academies provided value for money.

It was the kind of verdict that pleases Labour traditionalists. City academies are seen by them as glitzy new Labour projects which, with their state-of-the-art facilities, are overly expensive and offer no guarantee of success. They also claim they damage neighbouring comprehensives by attracting the brighter pupils in the area.

A touch of glamour for the scheme has been provided by such potential sponsors as Arpad “Arki” Busson, the millionaire philanthropist. His charity, Absolute Return for Kids, wants to sponsor seven academies in London.

Other sponsors have been more controversial. One of the leading backers of academies is the car dealer Sir Peter Vardy, an evangelical Christian. One of his schools, the Emmanuel college in Gateshead, teaches creationism alongside the theory of evolution.

Cynics have suggested that sponsors hand over their money in anticipation of honours. The peerage for which Sir David Garrard, the property developer behind the Bexley academy, has been nominated by Blair is to be examined by the Lords Appointments Commission, which vets peerages. Garrard, who has donated £200,000 to Labour, has put £2.4m into the academy.

Others complain that the academies are not open to public scrutiny. They are created as charitable companies, and information about their accounts and the composition of the governing bodies is not published.

Within Whitehall the recruitment of wealthy sponsors is secret. Sir Cyril Taylor, the veteran government education adviser who heads the Specialist Schools and Academies Trust, has since last January been asked to find sponsors. His trust gets £19m a year from the government and raises another £2.5m in subscriptions from specialist schools.

In addition 26 civil servants in the education department’s new projects unit recruit sponsors and select the schools that will be replaced by academies.

This unit is headed by Sir Bruce Liddington, the former head of a state school, who is employed on a freelance contract, earning around £170,000 a year in fees and expenses. Liddington is one of a group of head teachers and former heads, many of them linked to Taylor and the specialist schools trust, who provide informal advice to Blair.

Liddington and Taylor preside at dinners arranged for potential sponsors. They have to find sponsors willing to put in £2m over five years, though large-scale donors appear to get “discounts”. Philanthropists willing to back three academies only have to put in £4m.

Big business is starting to come into the scheme. This week the Honda car company is to announce it wants to sponsor a city academy to replace a failing school near its plant in Swindon.

Blair refers to the academies as independent state schools, by which he means they do not come within the remit of local councils. He takes the view that the independence given to academies is the key to making them a success.

His response to critics is that the academies are being tried in areas “where everything else has failed”.

However, the NAO last week gave ammunition to his critics when it reported that 1,557 schools — with almost 1m children — in England and Wales are not providing a satisfactory education.

The programme to build 200 academies will cost £5 billion. The Treasury may need to find much more to bring all schools up to scratch.

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