This study makes a contribution to the body of work on the impact of education policy aimed at improving schools on the identities of school leaders. It uses the National Challenge as an example of how New Labour attempted to solve the perceived problem of school failure particularly in areas of economic hardship. The aim of the study is to investigate the identities of senior school leaders as they position themselves in relation to the discourses that arise from the neoliberal ideology that has dominated education policy making since the 1980s. These schools are often officially measured and labelled as failing.A literature review locates the research in the political context of education reform over the last thirty years. A review of literature relating to the work of senior leaders in areas of economic hardship traces how knowledge claims and leadership development have shaped their roles throughout this period of post-welfarist reform. It is argued that the policies that have been enacted give rise to discourses which construct some schools as being successful and others as being failures and that the notion of failure is particularly prevalent in area of economic hardship. It is within this environment that senior leaders construct their professional identities meaning that they are required to balance their beliefs and values about the nature and purpose of education with those inherent in the dominant discourses. How these school leaders both shape and are shaped by the policies that they are required to implement is central to the effectiveness of attempts to improve their schools. The work has been structured around three research questions. What are the dominant discourses and models of change in education and how do these both impact on and define schools serving areas of economic hardship? How are senior leaders constructing their professional identity in relation to these discourses and models of change? What are the implications of senior leader identity for development and change in those schools serving areas of economic hardship?The work is a policy scholarship which aims to place the research within its wider historical and sociological context. A discourse analysis of key documents which relate to the National Challenge was carried out and then interviews were conducted with twenty senior leaders. The analysis of the findings include a largely descriptive account of the main themes that emerged and then a more detailed analysis that describes identity in terms of dialogic interactions and conceptualises them using the thinking tools of Bourdieu. Findings from the study make a contribution to the body of knowledge relating to the interaction between education policy influencing school improvement and the identity of those who implement it particularly in areas of economic hardship. The research problematises and challenges some of the assumptions and some of the value inherent in the policies and provides a body of work that will inform future improvement strategies particularly if these are to fully engage and value those who lead these schools. The long term aim would be to ensure that improvement strategies are effective in specific contexts and that there is a shared understanding of both what effective means and what are the desired outcomes of education in these areas. The study reveals how school failure is a construct arising from neoliberal education policy strategy and describes the position of the school leaders using Bourdieu's concept of hysteresis.