The government's drive to improve public services through increasing use of public interest companies could bypass local democracy.
Ministers are considering increasing the use of non-profit firms to find a solution to problems concerning the private finance initiative, but these could circumvent local government.
Tony Travers, director of the Greater London Group at the London Schools of Economics, said: 'The government could end up creating an entirely new form of democracy that bypasses local councils.'
A number of such firms are being considered, which will concentrate on 'community interest' rather than profit motive. But they are likely to be run by boards of separately elected members rather than by councillors.
Paul Maltby, public interest companies research fellow for the Institute for Public Policy Research, said: 'Public interest companies can bring benefits by putting people, not government or business, in the driving seat.'
Professor Stephen Glaister, from Imperial College, said it is unlikely that public interest companies would seek to bypass councillors but this could be the result of boards made up of members from outside local government.
Charity school link
Lincolnshire CC has signed a deal worth£50m with a not-for-profit charity to run a programme of school improvements.
The Centre for British Teachers will run the education department's advice and inspection functions, and design a training programme for teachers and governors.
Maureen Spencer-Gregson (Con) said: 'The school improvement support service is an important part of our education programme. With the Centre for British Teachers, we are confident of developing the best support for schools and pupils.'