It is a mark of the growing confidence of the private education sector that within days of the Government announcing unprecedented moves to let it run groups of schools, it was saying it wanted more.

While council leaders, education officers and teachers saw apocalyptic visions of the end of local democracy, businessmen such as Kevin McNeany of Nord Anglia (see opposite) were claiming ministers had set hurdles by imposing tight deadlines and a requirement to raise pound;250,000 a year.

That seemed to sum up the confusion this week as everyone tried to work out the real significance of the Government’s decision to set up education action zones. Did they herald the start of privatisation, or not?

Dr James Tooley, director of the right-wing Institute of Economic Affairs’ education unit, is under no doubt that a Rubicon has been crossed, however it has been dressed up by the Government.

“The stark fact is the Government has accepted there is no matter of principle that government should be delivering education,” he said. It was an “incremental step” along the path embarked on by the Tories, but a significant one nevertheless.

Dr Tooley, an ardent campaigner for the privatisation of education, is a long-time intellectual sparring partner of Professor Michael Barber, who heads the Government’s school standards and effectiveness unit - the two taught together in Zimbabwe many years ago and it was Dr Tooley who introduced Professor Barber to Nord Anglia.

It is Professor Barber who apparently found himself in hot water over last week’s announcement.

Eyebrows have already been raised that it was he and not his political masters David Blunkett or Stephen Byers who announced the launch of bids for zones. And senior Labour figures were reportedly furious that the standards-raising initiative had become a privatisation story.

One Labour insider said of Professor Barber: “He won’t be let out on his own again for a while.”

Meanwhile, Education Secretary Mr Blunkett has moved to calm the fears of local government and stress that the zones are a purely pragmatic move to find new ways of raising standards.

He wrote this week to Graham Lane, education chairman of the Local Government Association, to assure him that the zones were not back-door privatisation, and that there was “no fuel to feed the conspiracy theorists”.

He said LEAs would not be the only bodies to lead action zones, but nor were businesses guaranteed a zone. “In all cases they would work with . . . the LEA.”

That somewhat calmed Mr Lane, whose own authority, Newham in east London, is well advanced in its bid. But the LGA, when it meets Mr Blunkett, will still demand an assurance that zones are non-profit and run by a genuine partnership.

All of which leads some commentators to suggest Labour has been flying a kite - hinting to local government what could happen if it fails to raise its game. Or that the confusion is the result of creating policies to fit soundbites instead of vice-versa, a way of working that leaves Labour wide open to being hijacked by those of a more ideological bent.

Certainly if the decision to invite the private sector in is purely pragmatic - and not a fundamental ideological shift - free-marketeers argue it makes no difference. “A very important principle has been conceded,” Dr Tooley says.

Local authorities, meanwhile, are left studying the Department for Education and Employment’s guidance notes and accompanying letter, which clearly states ministers would like “to support one zone in the first five led and run by a business”. Some potential candidates, such as Manchester and Hampshire, keen to tackle deprivation and underachievement, particularly among boys, find their ardour has distinctly cooled.

Hampshire’s director of education, Peter Coles, considering a bid for the deprived Leigh Park estate near Portsmouth, said the county was thinking again. “We are very happy to work with people but very unhappy with the notion that busness can take over and do better,” he said.

But others, such as David Bell at Newcastle City Council, believe it will be difficult for the private sector to take over - especially as school governors would have to give up their powers voluntarily. The very concept of zones suggested the Government viewed schools not as individual islands but as part of an education community. That was encouraging for LEAs.

“We have got to be very bullish and say this is the way local democracy can work effectively to raise standards. Government will look at us with contempt if all we do is complain,” he said.

And Neil McIntosh, chief executive of the Centre for British Teachers, tantalisingly hinted that some LEAs - especially smaller ones unable to provide a comprehensive service - were already building bridges with private education businesses.

Mr McIntosh, whose company sells education services, said: “There are LEAs looking more radically at the issue than the reaction at Bradford suggested. How far they are prepared to go remains to be seen.”