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The struggling Marlowe Academy in Ramsgate is to merge with The Ellington and Hereson School, it's been announced.
The new school will be called The Augustus Pugin Academy, and will in time become part of the Coastal Academies Trust.
The executive principal of the academy Sean Heslop admitted the school had come close to closing.
"By October, the money would have completely run out, and closure would have been wrong for our 600 students who would have been distributed to other Thanet schools and our staff would have faced redundancy."
Consultation on the plans will now get underway with parents and others before the proposal is formally submitted to the Department for Education for approval.
It is thought to be the first case of an academy returning to council control for a temporary period before re-applying to become a 'new' academy in partnership with another.
The merged school could see some staff lose their jobs but for pupils, it could mean a broader curriculum and greater choice of subjects. There are 150 staff at The Marlowe and 100 at Ellington and Hereson.
In a statement issued at a press conference today, the school said: "Although some overall progress has been made in improving academic performance since the Marlowe Academy was established in 2005, student numbers have declined, resulting in financial challenges that require a fresh approach."
The secondary school has suffered from mixed fortunes in recent years and saw its results drop in official league tables last month.
It faced renewed criticism from school inspectors who said they had serious concerns about a dramatic decline in classroom standards.
A mile down the road, the Ellington and Hereson School was formed in 2009 - but can only accommodate up to 600 students.
Education chiefs say merging the schools will cater for existing student numbers and allow for the predicted increase in demand for places by 2018.
"We believe this is an excellent way forward for pupils, staff and community..." - Chair of governors Tony Carpenter
The statement also says the two sites combined will provide students with a more varied curriculum and access to more facilities.
Chairman of the Ellington and Hereson governors, Tony Carpenter, said: "Combining the resources of two schools in this way will bring significant benefits and allow us to share amenities and good practice across a broader student base.
"We believe this is an excellent way forward for pupils, staff and community."
Ofsted said its inspection of The Marlowe Academy in November flagged up “serious concerns about the effectiveness of the actions being taken to address the need to improve the achievement of students”.
It said leaders, trustees and the academy sponsor had not done enough to address shortcomings identified in the last inspection.
The report also highlighted a worrying decline in the number of pupils joining the school, saying that there are just 32 pupils in Year 7 - when there is room for a planned intake of 180.
Current head teacher of The Ellington and Hereson School Simon Pullen will lead the newly-merged schools from September.
A consultation with pupils and parents will now begin.