Repeated assurances by the Prime Minister and Gillian Shephard that education is a top priority need to be translated into cash if the Conservatives are to avoid confrontation with parents and governors this autumn. The Government will find considerable public sympathy for teachers over pay rises and for local authorities who have struggled to protect schools from the worst effects of education cuts of more than Pounds 500 million this year.

“All this business about cuts in education being down to bureaucracy and teachers getting paid too much just doesn’t wash with parents any more, ” said Margaret Morrissey, from the National Confederation of Parent-Teacher Associations.

“Parents know what is happening, particularly those with children in primary schools. They can see 10 years ahead . . . local authority services cut, no advisers, no library service. They are not going to sit back and let that happen.”

Parents, governors, local authority leaders and the six teacher unions are now understood to be seeking a round-table meeting with Mrs Shephard. Tory MPs from Cornwall and Devon, two authorities which between them cut Pounds 15 million from education this year, met the Education and Employment Secretary yesterday.

The leaking of Mrs Shephard’s briefing paper for the Cabinet meeting at Chequers last week will have heightened tensions.

Earlier this summer she promised headteachers “all the support I can give you” in the battle for more funds and has often echoed John Major’s pledge that “education will be at the top of our priorities as the economy delivers further growth”.

But Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, said: “I fear that it will be not more of the same, but worse of the same.”

As the Cabinet committee met yesterday to examine local authority spending for 199697, the Association of County Councils said the Government needs to inject Pounds 1.3 billion into education next year to undo the damage done by three consecutive years of cuts in grants to councils.

Local authorities are spending more than Pounds 600 million above the Government’s allocation for education this year and claim they need Pounds 18.516bn for next year, when there will be 86,000 more pupils in schools. That figure does not include inflation (currently running at 3.6 per cent) or the teachers’ pay award.

In Oxfordshire, Conservative, Liberal and Labour councillors have joined forces to press for an increase in the authority’s standard spending assessment - the Government’s estimate of what needs to be spent - and its capping limit. The county faces an estimated shortfall of Pounds 20mand a Pounds 11.5m cut to education if it fails.

This year 150 teachers were lost across the county as a result of cuts and Pounds 2m has been spent on redundancy payments alone.

Headteachers are running an advertisement about the cuts in a local paper - paid for with their own money - and governors will march through the streets of Oxford on Saturday.

In East Sussex, schools have been told to expect cuts of around 10 per cent. A three-year projection by the authority on the effect of the squeeze predicts there will be 614 fewer teachers by 1998 than the number needed to maintain present standards. Primary French, the school library service and the art gallery and museum and music services could be axed.

The imponderable thrown into this year’s annual spending round is what the Government will do with capping. Michael Forsyth, the Scottish Secretary, has already told Scottish councils that he wants to reduce his level of control.

Removing the cap in England would put the onus on councils to decide their own spending. If they spend more than this year, council-tax bills will almost certainly rise above the rate of inflation.

Getting rid of capping has political appeal for the Government. Tony Travers, director ofa research centre at the London School of Economics, says: “It will provide it with a stick to beat Labour in May next year.”