An extra £1.5 million of taxpayers' cash could be poured into the private company which runs Bradford schools to help it balance its books.

An independent report revealed that Education Bradford has run up a deficit of £8.5 million since it took on the contract from Bradford Council in 2001.

Now the Council is set to increase the amount of cash it pays to the firm, operated by multi-national giant Serco, to prevent it having to cut services.

The financial report was produced by the Audit Commission which was asked by the Council to investigate the way it financed its contract with Education Bradford.

Senior officers from Bradford Council and Education Bradford are set to meet Schools Minister Jacqui Smith next month to discuss their response to the report.

Last night Bradford's Educa-tion Policy Partnership (EPP) committee supported plans for an extra £1.5 million to be paid to Education Bradford to help it close its deficit by the end of its contract in five years' time.

The EPP committee includes Bradford teachers, councillors, education officers, religious groups and school governors.

Education Bradford had lost £8.7 million by the end of 2004 but made £200,000 during 2005.

The Council's director of education Phil Green told last night's meeting that based on the firm making £200,000 annually for the remainder of the contract, £7.5 million would need to be found to bridge the gap.

Serco's contract funding from the Council is split with 55 per cent coming from the dedicated schools grant and 45 per cent from a central local education authority funding block. The dedicated-schools-grant part of the contract helps provide direct services to children such as pupil referral units and special educational needs provision.

Mr Green said to continue providing services at the same level Education Bradford needed to find £1.5 million a year for the rest of the contract.

The Schools Forum has agreed to put in £825,000 next year - 55 per cent of the £1.5 million.

And Bradford Council's executive is recommending that a further £675,000 is provided to Education Bradford next year when the authority sets its budget next month. This figure would make up the remaining 45 per cent of the £1.5 million.

Last night the EPP committee voted to support extra funding for the next financial year.

However, this vote was opposed by councillors Ralph Berry and David Ward who are education spokesmen for their respective parties.

Coun Berry (Lab, Wibsey) said: "I think we are being put between a rock and a hard place because if we don't put the extra money in we are faced with losing services the schools needs."

Coun Ward (Lib Dem, Idle and Thackley) was the education portfolio holder on Bradford Council when Education Bradford was awarded the contract.

He called on Serco to help meet the costs needed.

He said: "One of the strong arguments put forward by Serco to be awarded the contract was that they were a very large organisation and we would benefit from that support."