THE Government's crisis over school funding has sparked an internecine Whitehall battle over how to resolve the issue.
Worringly for New Labour the battle lines seem to be drawn along the classic Blair-Brown divide. At the centre of the split is the issue of how much of a role local government should play in distributing school funds.
In one corner sits Charles Clarke, Education Secretary, pushing for a national funding formula with the backing of his Prime Minister. But he is pitted against the Cabinet's other bruiser, John Prescott, Deputy Prime Minister, who is keen to preserve the role of local councils and is said to have the backing of the Chancellor.
The row comes as pressure is mounting on the Government to do something quickly to end the politically damaging crisis. An ICM opinion poll, for the News of the World, has revealed that 79 per cent of parents believed that schools were under-funded and that only 16 per cent thought the quality of state education had improved since Labour came to power in 1997.
And this week the traditionally measured Association of Teachers and Lecturers wrote to Mr Clarke warning that there would be problems delivering "even an adequate education service" next year.
The first signs of a Cabinet split came last week as Mr Prescott announced the formation of an emergency committee to examine what went wrong this year and look at how to avoid similar problems in the future.
The group, which holds its first meeting on June 10, is expected to include David Miliband, schools minister, Nick Raynsford, local government minister and a treasury minister.
But, crucially, there is also significant LEA representation with Sir Jeremy Beecham, Local Government Association chair, and Sir Sandy Bruce-Lockhart and Chris Clarke, the Conservative and Liberal Democrat LGA leaders, expected to be included.
Depending on the degree of influence wielded by the committee it has the potential to pull the rug out from underneath the Department for Education and Skills' continued efforts to pin the blame for the crisis on town halls.
Local authorities are determined that the DfES should not win total control of schools funding. Sir Jeremy said: "For years the tendency of the DfES has been to downplay local government and sideline it.
"It would be unacceptable if the long-term solution came simply from central government. It has got to come through partnership."
But the DfES played down the group's importance, saying that it was only looking at next year's arrangements. Control over the long term remained with Charles Clarke who continued to consider radical reform of the system.
As The TES revealed last week the idea of guaranteed minimum funding levels for every school has already been floated by the DfES and reports have since surfaced of a proposed new national schools funding agency that would bypass local government altogether.
Ministers will be hoping that some consensus can be reached quickly. But with nearly a thousand teachers set to lose their jobs and no extra cash expected before the redundancy deadline passes this weekend, the funding crisis story is not going to go away.