Blair retreat likely as Prescott breaks rank on education

Tony Blair is on the brink of retreat over his school reforms after John Prescott dealt a wounding blow to the Prime Minister's authority with an outspoken public condemnation of the proposals.

Mr Blair looks certain to be forced to water down his plans following his deputy's bluntly worded criticism of moves to create more city academies and to give new freedoms to school trusts. Mr Prescott, usually fiercely loyal in interviews, said he feared the proposals could herald a return to the 11-plus with working-class children losing out in a "first- class/second-class system".

The Prime Minister also faces cabinet disquiet on a second front as strains emerged over his heavily criticised agreement on the European Union's future funding. It emerged that Gordon Brown, the Chancellor, was not consulted at the final stages of the deal to cut the British rebate by £1b a year for seven years. Treasury sources also confirmed that the agreement could affect Mr Brown's domestic spending plans.

Opposition to Mr Blair's flagship education reforms is rapidly gathering pace. More than 50 Labour backbenchers, including several former ministers, have condemned the Education White Paper and as many as 100 are said to be ready to rebel on the issue.

A rebellion on that scale, which could be joined by Mr Brown's close allies, would wipe out Labour's majority and leave Mr Blair relying on Tory support to push through the plans. With Mr Prescott joining the criticism, the Prime Minister looks certain to be forced into a humiliating reverse on the proposals when the Government publishes an education Bill in February.

The Deputy Prime Minister has told colleagues that school reforms should benefit "the many not the few" and raised fears that the middle classes would benefit because city academies were more likely to be established in the suburbs than inner cities.

In an interview for The Sunday Telegraph, Mr Prescott confirmed he had opposed the White Paper's proposals to give trust schools more freedom over their admissions and added: "I'm not totally convinced major reform is necessary."

He said: "Since I was an 11-plus failure, since I do believe that produced a 'first-class/second-class' education system, I fear this is a framework that may do the same. I'm somewhat critical of it." He warned there was "a great danger" the new city academies could become grammar schools as they were dominated by better-off families.

"My argument is that middle-class parents are concerned, and rightly so, about the quality of education for their children, which sadly is not the same for working-class parents," he added. "If you set up a school and it becomes a good school, the great danger is that's the place they want to go to."

Just five days ago, Mr Blair insisted he stood by his reform proposals, telling MPs: "We will stick with the changes in the White Paper because they are the right changes to make."

But there were signs yesterday of a recognition in government ranks that the loyalty of Labour MPs, who are being consulted by ministers on the issue, had been stretched to breaking-point.

Peter Hain, the Northern Ireland Secretary, acknowledged the depth of Labour opposition and hinted that the White Paper could be modified. He said: " The significant thing about this particular debate is that it is not just the usual rebels who have opposed Tony Blair on most things."

Douglas Alexander, the minister for Europe, said it was right to go ahead with reforms but promised they would be "informed by the discussions we have with parliamentary colleagues".

The Labour MP Martin Salter, who quit as a parliamentary aide to the Education minister Jacqui Smith in protest over the White Paper, welcomed the intervention. He said: "I can't believe Tony Blair won't listen to people who are on his side over education."

In a statement yesterday, Mr Prescott stood by his concerns but insisted they should not been seen as "fundamental opposition" to the White Paper. He said: "I am simply making the point, as I did in Cabinet, that the benchmark against which any reform should be judged is whether it helps children from the most disadvantaged background."