The multi-national giant which runs Bradford schools has been warned by councillors that it must cover its own financial losses.

Education Bradford, operated by Serco, has built up a deficit of £8.5 million since it took on the contract to run Bradford's education authority five years ago.

But councillors have refused to give the company an extra £675,000 in next financial year's budget to help it claw back the cash.

The decision leaves Education Bradford needing to make savings to recover its costs for the remaining five years of the contract.

When contacted by the Telegraph & Argus, Education Bradford would only issue an 18-word statement.

It said: "We are considering the implications of the Council's decision and so it would be inappropriate to comment further."

Councillor Dale Smith, the Council's executive member for education, said the authority would now be holding talks with Education Bradford to discuss the situation.

But opposition councillors today warned the firm not to make any cuts to the services it provides to Bradford schools.

Councillor Ralph Berry, Labour's spokesman for education, said: "It was morally unacceptable for the Council to be asked to cover the burden of Serco's losses.

"Why should the taxpayer bear the risk which Serco agreed to?"

Bradford Schools Forum, which is made up of representatives of education officers, teachers and governors has agreed to provide Education Bradford with an extra £825,000 next year.

If Bradford Council had agreed to provide a further £675,000 this would have made the £1.5 million Education Bradford needs to find every year for the remainder of its contract to clear its deficit.

Coun Berry (Wibsey) said: "The entire Council has now said that we do not think it is right that taxpayers and schools of Bradford should be asked to find this money."

"If an electrician rewired my house and then found it cost him more than he had charged he couldn't come back to me and ask for more."

Coun Berry said that if Education Bradford did look to reduce services then the authority should pull out of its contract.

Councillor David Ward (Lib Dem, Idle and Thackley) was the Council's portfolio holder for education when the deal to bring in Education Bradford was signed. He has called on Education Bradford's owner Serco to meet the costs of the £8.5million deficit

He said: "Before this contract was signed Education Bradford did not exist, there was not a single employee, but Serco said: 'Trust us we will be able to recruit the very best people and we will have a massive multi-national organisation behind us which will be able to back us up."

Serco announced profits of £91 million and an overall revenue of more than £2 billion last week. And Coun Ward said: "The amount of money we are talking about is peanuts for Serco."

Coun Ward said he believed there was no question of Education Bradford cutting services because of the cash deficit.

Education Bradford's loss of £8.5 million was revealed last month following an independent investigation by the Audit Commission.