DAVID Blunkett has lost the battle to tie local authorities’ hands over the amount of money they pass on to schools.

The Education Secretary fought behind-the-scenes battles with John Prescott’s local government ministry to ring-fence school spending - at present councils can decide how much of the money meant for schools they pass on.

But the Green Paper on local government finance published by Mr Prescott’s Department for the Environment Transport and the Regions this week raises “ring-fencing” only as an option, unlikely to be pursued unless councils fail to deliver more cash to schools.

The DETR is understood to be dead set against ring-fencing. Environment ministers fear that other services would demand such budgets, leaving councils powerless over spending.

Heads should get a clearer idea of how their budgets are calculated, under a new, simpler formula. But ministers have retreated from root-and-branch reforms in the way the cash reaches the classroom.

Instead, councils’ standard spending assessments - the amount the Government thinks they should spend on education - will be split, with around 90 per cent for the schools’ budget and the rest for central services.

But it will still be up to local authorities to decide how all the cash is spent.

Council leaders welcomed their continuing independence but teachers said the Government had missed a golden opportunity to guarantee schools got the cash intended for them. David Hart, general secretary of the National Association of Head Teachers, said: “Moral pressure on local authorities is not good enough - we want a legal requirement.”

Ministers want to define more tightly the role of local authorities - a discussion paper is expected soon. The paper says key duties would include school places, home-school transport, special needs, under-fives an exclusions.

But Chris Waterman, general secretary of the Society for Education Officers, said the omission of standards from this list was “staggering”.

Education ministers have long admitted the need to end wide inequalities in school funding, but say they have been unable to do anything as council funding is the responsibility of the DETR. Although the department paper begins to address the problem it contains no date for potential reform, no formula for funding schools more fairly.

A vital pledge in the paper is that funding for schools will be “levelled up”, with the under-funded catching up with the rest. Ministers have previously said it would cost pound;511 million to raise the “floor” on spending per pupil to the level of the authority in the middle of the funding table.

The consultation ends on December 8.

“Modernising Local Government Finance: a Green Paper”. For copies ring 0870 1226 236, or see the DETR website: www.local.detr.gov.ukgreenpap Consultations end on December 8

GREEN PAPER

ISSUES

How should money be split between local authorities and schools?

How can you ensure local authorities spend the money as intended?

How can money be fairly

allocated among local authorities, and among schools?

PROPOSALS

Split local authority education budget into a ‘schools’ budget and a ‘central services’ budget

Devise a transparent, simple formula to work out what schools should get (see below)

Ring-fence authorities’ ‘schools’ budget OR force authorities to tell the public how much of that budget they are passing on

PRINCIPLES

No school or authority should lose out

Under-funded authorities will catch up with the rest

NEW FUNDING FORMULA

National funding entitlement per pupil

Additional allowances for deprivation and recruitment difficulties

DATE

Some reforms from April 2002, but any changes requiring legislation (eg ring-fencing) would not happen till at least a year later