Proposals to give schools the power to shop around for key services could make it impossible to guarantee the level of demand for private contractors who take over those services.

Hackney schools have just taken control of their ethnic-minority support budgets and Fair Funding will see council services like finance and personnel follow. But these are among the services Education Secretary David Blunkett has asked consultants KPMG to evaluate for privatisation. A 13-strong KPMG team has been in Hackney since April 1.

Fewer than half of Hackney’s schools are expected to buy-in the ethnic-minority support previously provided by the council under Section 11, and none has yet signed a formal agreement.

Andrew Bridgewater, Hackney Liberal Democrats’ education spokesman, said:

“If the decision lies with the school, neither the council nor the Secretary of State can make any commitment (to contractors) unless there are signed and sealed agreements in place. Even if there are, the school only signs up for a year at a time.”

Observers say the problem adds to the impression the process has been ill-thought-out. Mr Blunkett first announced he wanted the consultants’ report today. That would have given them just three weeks. As soon as KPMG was appointed it demanded and received an extra week. It reportedly said a complete evaluation would take two to three months.