Row over Atkins' £2m schools fee

A FLAGSHIP £100m privatisation of education services in Southwark has finally collapsed amid recriminations that its troubled contractor WS Atkins is picking up £2m of taxpayers' money in compensation.

Atkins won the the contract to run schools in the south London borough after a highly critical Ofsted report in 1999. It took on the five-year contract in 2001 in a deal that was seen as revolutionising the provision of local authority education.

But Atkins says it is now walking away because it can not make enough money out of it. In a statement today, it said the contract now ends this month with 'a satisfactory agreement'.

That is understood to include a £2m pay-off for early termination. Though the Department for Education is picking up £500,000 of that, the rest is coming from council coffers.

Southwark council officials have damned that as 'unacceptable', saying that in the current nationwide schools funding crisis, it cannot afford to pay £1.5m out of its education budget.

The collapse of the contract has reignited fears that such public-private partnerships in the health, education and transport sectors are at grave risk if private contractors unilaterally decide they are no longer commercially viable.