A contingency fund will be needed to pave the way for Bradford Council to take back control of running the district’s schools, according to a new report.

Some £612,000 of the local authority’s education budget has already been earmarked from this year’s budget for the review of the Council’s ten-year contract with Serco, as well as a portion of £1.4 million set aside for financial, legal and human resources support for major Council projects.

Private firm Serco, trading as Education Bradford, signed a £360m deal to provide education support services to the district’s schools in 2001, which expires at the end of next July. The Government had demanded the intervention after the Council received a damning Ofsted report.

But in December then Schools Secretary Ed Balls said the Council could regain control after support from head teachers and the community. Council officers have worked with head teachers to recommend how individual aspects of the education service should be handled once the contract with Serco expires.

A report will be considered by the Council’s children’s services scrutiny committee next week. Final decisions will be reserved for executive members in September before the Council asks new Education Secretary Michael Gove to approve its preferred options.

But the transfer of education services will be carried out in a weakened financial climate. Area-based grants to the Council in this financial year have fallen by £3.86m.

The exact costs of the transfer are unclear, according to the Council’s report, because some of the financial information requested from Education Bradford has been withheld for commercial confidentiality and data-protection reasons.

In the report, Sue Colman, assistant director for learning services, said: “It has not been possible to undertake a detailed cost analysis to arrive at a final cost to the Council.

“There is likely to be a requirement for resources to meet the one-off costs of transition and a contingency fund for these costs.”

Cindy Peek, deputy director of services to children and young people, said: “Bringing services back in-house will allow us to look at how we can work with schools at a more local level.”