Critics yesterday accused the Government of a U-turn. They said the privatisation in the north-east London borough fell far short of the takeover the Government had threatened under its new powers to intervene in failing local authorities.
But government sources said David Blunkett, the Secretary of State for Education and Employment, was simply carrying forward proposals he outlined two months ago after a damning report on Hackney from school inspectors at the Office for Standards in Education.
He said then that he was "minded" to force the Labour-led council to contract out its school improvement service, which inspects and advises schools, and its language and learning service, which helps ethnic minority pupils.
He sent in KPMG, the management consultants, to draw up specifications for the new contracts and to advise on the future of Hackney services.
Personnel, information and communications technology and finance were also under review after criticisms in the inspectors' report.
Now he has told councillorsthe school improvement service will be put out to tender but the takeover of the language and learning service will be postponed for a year. By law, staff in the school improvement service would keep their jobs initially.
The three other services will remain with the council.
Plans to improve the three, he says, "provide a sound basis for moving forward". But he warns that if new targets are not met "I will not hesitate to reconsider my decision on contracting out".
Kevin Daws, leader of the Liberal Democrats on the council, said: "Politically this is very difficult for the Government after all the hullabaloo they made about taking over a local authority. This is as near a total U-turn as you can get. The Government is playing politics. When they have looked at services in Hackney they have found they are not as bad as they have been made out to be."
Graham Lane, who chairs the Local Government Association's education committee, said the Government had not gone as far in privatising the authority as they had feared. "There is no one in the country capable of taking over the language and learning service."
He said he remained unconvinced that private contractors would help Hackney's schools.