Bradford Council has agreed new, easier targets for its privatised education service, it was confirmed today.

Education Bradford, owned by global firm Serco, only earned £8,450 of a possible £870,000 bonus in its first year, and claimed the targets were set unrealistically high.

Now after negotiations lasting almost a year the Council has agreed to make them easier. The new targets will apply retrospectively to tests and exams sat by pupils this summer.

Councillor David Ward, executive member for education, said: "The basic principle has not changed. We are still demanding that achievement levels match national averages by 2006.

"People talk about us 'caving in' or 'giving in' but the length of the negotiations is testimony to the work we have done in arriving at a fair set of targets."

The old targets were hard and fast - for example that 45 per cent of pupils get at least five A*-C grades at GCSE this summer, a tall order as last year's actual figure was only 37 per cent.

The 45pc target has been abandoned, along with similar ones covering children's results at seven, 11 and 14; truancy, and the performance of under-achieving minority groups.

The new targets - published next month - will not give actual figures. Instead EB must hit a proportion of the national figure to earn its bonus, and narrow the gap each year to 2006.

Serco took over most of the responsibilities of the education authority in 2001, and is paid around £36 million per year to do the job previously done by the Council. The profitability of the business relies on incentive payments. The company says it was assumed results would continue to rise nationally when the original targets were set, but they have levelled out.

The targets must be ratified by the ruling executive in September, but are likely to be rubber-stamped.

Teaching unions are more critical along with members of the Green group on the Council who oppose education privatisation, and 'backbench' councillors on the Education Scrutiny committee who will debate the issue on September 3.

Councillor David Ford (Green) said it was wrong to 'backdate' targets to include this summer's results: "The Council should be setting targets for Serco to reach, not agreeing targets we already have sight of".

Teresa Whitfield, Education Bradford's director of achievement, declined to give details of the revised targets.