Labour’s election anthem of “things can only get better” has been reworked in Aberdeen. “Things could have been a lot worse” is the current refrain. Education has taken a 5 per cent hit of pound;4.3 million, proportionately the highest in Scotland, resulting in the loss of 13 teacher posts, on top of 50 last year.

Crisis was predicted last November when John Stodter, the city’s director of education, warned Brian Wilson, the Education Minister, at the directors’ conference in Dunblane that cuts would go deep.

New deal money has been going into city schools through the Chancellor’s munificence - pound;1.7 million - but the reality is further cuts, with for the fifth successive year no extra for teachers’ salary increases.

In the event, the city’s number-crunchers were out by a mere pound;200,000: pound;17.3 million was cut, or the difference between what it currently costs to run the city and the Government’s capping limit on Aberdeen’s spending. You need more to stand still with inflation of 2.5 per cent and wage increases running at about 3 per cent.

Aberdeen believes it has among the lowest levels of central support in Scotland and the only areas left to trim are staffing and materials. “The cupboard is bare,” the director says. Cherished elements of education such as free music tuition, a particular preference of Mr Wilson, have disappeared. Aberdeen rakes in pound;300,000 by charges. “That’s 12 teachers’ jobs,” Mr Stodter said.

So why is the city suffering disproportionately? It is a complex financial tale that began with splitting Grampian Region into the three north-east councils. “It is historical,” Jim Wyness, the education convener, said. “There was never enough money to get over reorganisation and we have been digging into balances since then.”

Not in dispute are the council cuts of the past three years. In the first and second years, 10 per cent cuts led to pound;24 million and pound;22 million coming out of the budget. This coming year, it is down to pound;17.3 million, or 7.5 per cent.

Education has been protected, yet the figures are still substantial. The arts department is to take a pound;4 million cut, a fifth of its budget.

Mr Stodter argues the city would be pound;30 million better off if it was able to keep its taxes on local businesses. These are currently collected by the Scottish Office and redistributed. Aberdeen is the hub of communications, business and facilities in the north-east but is being penalised financially.

Since the city is relatively affluent, it does not benefit from the share-out to compensate for areas of disadvantage. Aberdeen has its troubled communities and “relative deprivation is hard felt”, Mr Stodter said. That forces up spending for which money is not recognised by central government.

Mr Wyness said: “If that pound;30 million a year stayed in Aberdeen we would not have a problem.”

Extra burdens such as the Children Act and the loss of income through the new landfill tax on open rubbish tips have exacerbated the situation. Ironically, Mr Wyness says, traditionally low spending authorities are hit hardest by the Scottish Office .

Aberdeen wants the rules changed and will ask the Scottish parliament to review procedures it claims are demonstrably unfair. The other cities share that view.

The independent commission, set up by the Scottish Office into the relationship between the new parliament and the local authorities, is unlikely to look at the details of grant-aided funding, despite pressure from the Convention of Scottish Local Authorities.

Meanwhile, council taxes are lower in the more rural and buoyant Aberdeenshire which encircles the city and staffing levels in schools are better. After reorganisation, Mr Stodter said, the city was left with the same staffing formula but less cash to fund it.

In the past year, Aberdeen has spent around pound;4 million more on education than the Government estimates it should have. Next year, it will be virtually on target. The Government thinks pound;85.6 million should be spent, against the city’s headline figure of pound;86.2 million.

If it sometimes seems broad local authority funding issues are semi-detached from the classroom, that is set to change now that ministers have introduced target-setting in schools. Mr Stodter wonders if the level of resourcing will become a significant school characteristic, joining free meals as an indicator of advantage. “There is a serious equity issue, here,” he said, a point put to Mr Wilson and his senior advisers. The more teachers and materials, the better the results.

For all that ministers talk about investing into education, the reality is altogether different in the north-east capital. “Things could have been a lot worse” - but will they get better?