The division of Serco responsible for turning around the educational fortunes of what was once dubbed the worst council in England, has been praised by the Office for Standards in Education (OSE).

The Government forced Walsall to outsource the management of its schools in 2002, in just three years Serco has reversed the performance from "very poor" to "highly satisfactory", according to the OSE.

This accolade is expected to encourage the Government to make greater use of private companies where councils are not tackling serious failures in education services.

In the report, Serco was praised for its attempts to offer leadership and support to the 130 local schools and build "a sense of common purpose".

It stated that the £20 million a year contract had delivered "good progress in a short time". 

Elaine Simpson, managing director of Education Walsall, said: "People always worry about the private sector in education.

"But it need not be the sacred cow."