Hope, optimism, break-through, sea change ... not words immediately associated with the country’s worst-performing education authority. But visit schools in the string of towns which make up Knowsley, the area north of Liverpool where indicators of deprivation ping off the dial, and you might think you are in some born-again revivalist rally.

In 1999, Knowsley was in the first handful of authorities targeted by the Government’s multi-million pound Excellence in Cities plan. Three years on, the impact can be seen throughout the borough: in sophisticated computer suites and newly-built learning support units, in mentors, support teachers, and co-ordinators for gifted and talented children. But most apparent is the upsurge of energy and confidence that even though Knowsley pupils’ results are not yet leaping up, everybody seems sure that they will.

“Excellence in Cities came to us like manna from heaven,” says head Brendan McLoughlin, whose All Saints Catholic high school has a learning support unit and team of mentors in place as a result of it. “It gave us the resources to put in the structures to give us the time to do the things we needed to do.”

“You don’t know what you haven’t got until you’ve got it,” agrees Phil Newton, whose beacon Simonswood primary school - thanks to the scheme - now has a mentor who takes on a myriad roles from chasing non-attenders to running groups to help children cope with friendship and other problems. And Louise Corbett, who takes young children out of the classrooms of four schools into her learning support unit at Park View school, says teachers and parents appreciate the way her work allows behavioural issues to be tackled early, before they become insoluble.

Excellence in Cities was launched three years ago with the aim of reviving education in failing city schools. This year pound;200 million will be spent on it, and pound;300m in the next financial year. It now covers 58 local authority areas, with 96 action zones tackling smaller pockets of deprivation in towns and suburbs. The programme has seven main strands:

* in-school learning mentors

* learning support units for difficult pupils

* programmes to stretch the most able 5 to 10 per cent of pupils

* city learning centres to promote school and community learning through state-of-the-art technology lencouraging schools to become beacons and specialists

* action zones, where a cluster of schools works together.

On paper, the programme is all about raising attainment and early results look mostly good. Last summer, the percentage point increase in pupils achieving five GCSEs A*-Cs in Excellence in City schools was almost double that of schools not in the programme. Education Secretary Estelle Morris says the initiative is “improving discipline, tackling disaffection and bringing out the best in gifted pupils. Standards are rising in these inner-city schools faster than anywhere.”

The scheme has been embraced by many inner-city teachers, who say it allows schools to address children’s differing needs; acknowledges that social problems hinder learning; gives teachers more time to teach; and encourages schools to work together in ways that they clearly find energising.

“An awful lot of it,” says Sheila Jones, a former year head and now the senior learning mentor in Knowsley’s All Saints Catholic high school, “is being able to go back to how we used to do things before (league tables were published)”.

John Dunford, general secretary of the Secondary Heads Association, agrees that the injection of money and collaboration has changed the culture from one where schools in deprived areas “felt stuffed from all angles” to one where they feel renewed confidence in their ability to tackle problems.

Margaret Maden, professor of education at Keele University, who has been following the fortunes of a cohort of schools serving disadvantaged areas says she was surprised at “what an early sense of encouragement” she found coming from schools involved in Excellence in Cities.

As the scheme appeared to have been introduced at the same time as moves to improve housing and the environment, people saw it as an attempt to improve the morale of the whole community, she said.

But while it is true that the initiative is doing much to help struggling schools in many blighted communities, it also contributes hugely to the spending gulf that has opened up between schools. So wide has this gap become that one local education authority can be getting a mere pound;410 per year per pupil, while a neighbour gets pound;702.

Marion Barton is head of Trinity high school and sixth-form college, in Redditch, whose catchment area goes up to the borders of Birmingham, an Excellence in Cities area, but who is unlucky enough to come under Worcestershire.

She says:“I don’t begrudge the cities what they’ve got because they need it, but we have exactly the same sorts of levels of deprivation - in fact more so than some of the schools in Birmingham. Yet we can’t offer anywhere like the same levels of support. We see advertisements for pound;18,000-pound;19,000-a-year mentors, while we’re scratching around to get one or two hours of learning support.”

Schools in a similar position may find redress via changes to local authority funding due next year, when entitlements are likely to be tied more closely to disadvantage. Meanwhile, an acknowledgement that poverty is not the sole preserve of the big cities has also come in the spread of Excellence in Cities to clusters of schools in rural areas such as West Cumbria and towns such as Folkestone and Croydon.

Croydon is near the immigration section of the Home Office which makes it an area of high pupil turbulence with many families living in temporary accommodation. A total of pound;250,000 will support a cluster of seven secondaries and their associated primaries for three years as the local authority brings on stream Excellence in Cities policies honed elsewhere. Some teachers still resist the “elitist” idea of stretching more able children, and in most areas the gifted and talented programme is more a question of out-of-hours activities.

The community-based city learning centres have also attracted critics who say the logistics of sharing them are too difficult, and that resources should have been spread more evenly between schools.

Critics also argue that the programme does nothing to tackle the fundamental problems of class sizes or teacher shortages, raising the question of whether schools will ever be able to capitalise fully on all the additional support Excellence in Cities provides. And no one yet knows how well - or not - it will succeed in attracting more poor children into higher education.

And then there’s the question of what happens to the funding of the programme beyond 2004. Sceptics can point to the earlier experiment with education action zones, which are now being either wound up or subsumed into the Excellence in Cities scheme.

For Nick Page, Excellence in Cities co-ordinator in Knowsley, this means having good “exit strategies” in place.

“The Government has put so much into this. It would be madness for them to just walk away.” But if he could only hang on to one small part of the programme, which one would it be?

“Learning mentors. What they bring to a school is beyond anything you can calculate.”

Future plans are likely to include a greater spread into primary schools, more work with parents, closer lateral links between Excellence in Cities areas, and greater efforts to make sure schools collaborate and share resources effectively.

It is an ambitious agenda for a policy which most agree is bringing much-needed benefits to inner-city schools. But the big question is whether there is enough money to go round.

KNOWSLEY IN FIGURES

* 32 per cent children live in one-parent households.

* 30 per cent of young adults are unemployed.

* 44 per cent of children receive free school meals.

* 51 per cent of children receive clothing grants.

lSpending on Excellence in Cities this financial year:pound;3.5m for primary and secondary schools, pound;270,000 on the small action zone within the authority, pound;2.6m on city learning centres.

* Learning mentors - 65 funded by the initiative.

* Learning support units - one in each secondary; two in primaries.

* An action zone involving one secondary and six primaries in north Huyton.

* All secondaries and 18 primary schools have gifted and talented programmes. All primary children have access to gifted and talented activities. The Excellence Challenge programme stretches able post-16s.

* At key stage 3 the percentage of pupils attaining level 5 or above was maths: 1999, 44; 2001, 50 (national figures 62 and 66); English 1999, 44; 2001, 47 (national figures 64 and 64); science 1999, 34; 2001, 49 (national figures 54 and 66).