East Lothian wants Donald Dewar, using powers under the 1980 Education (Scotland) Act, to intervene and fix charging levels for students with learning and behavioural problems who are sent to special schools in Edinburgh, following the breakdown of a local agreement.

The Scottish Office has ruled out immediate action but says the Secretary of State may step in if the agreement between Edinburgh and the three other Lothian councils is found to be flawed.

Special needs is the last major area of unfinished business left over from local government reorganisation, which has led to thousands of pupils crossing council boundaries to be educated elsewhere because their own council is too small to have specialist provision. Settlements agreed at the outset now look like descending into acrimony as hard-pressed councils seek to cover the full costs of educating children. Edinburgh claims it is owed more than #163;326,000 of the #163;3 million charged to East Lothian, West Lothian and Midlothian for 1996-97.

Colin Dalrymple, Edinburgh’s head of pupil support services, says the city feels “deeply unhappy and let down by the authorities who have reneged on our agreement, particularly since our charges compare hugely favourably with rates in other parts of Scotland”. The city’s fees are #163;8, 000-#163;8,500 a child.

Glasgow, which has angered some of its neighbours by upping its charges, wants to move away from the average #163;10,500 fee levied on each incoming special school child to one reflecting actual costs. The council educates 400 special needs pupils from outside the city at a net cost of #163;3.6 million. “It is not a small matter for us,” Ian McDonald, Glasgow’s depute director of education, said. “It is also worth pointing out that Strathclyde’s disaggregated budget allocated to us only two-thirds of what the region spent on special needs in Glasgow and we did not receive a penny for any youngster coming into the city.”

Mr McDonald denies that Glasgow is reneging on the deal under which all Strathclyde’s 12 successors agreed on the #163;10,500 flat fee, plus a 2 per cent element for inflation. “The figures were based on September 1995 prices and all we have done is apply a 3 per cent inflation factor for 1996 and 1997,” he says. This has increased the charge to #163;11,192.

The effects have been to force the smaller councils to stand firm against the prospect of increased payments and to look more urgently at developing their own provision.

West Lothian, which sends 101 pupils to other local authority schools and 95 on residential placements to independent schools, estimates that it could have to find #163;200,000 if Edinburgh adopts a new charging regime currently being considered by the Convention of Scottish Local Authorities.

The convention’s draft proposals suggest that special needs fees should be banded to reflect variable property costs. This could involve payments as low as #163;7,500 for a special school pupil with moderate learning problems, and up to #163;49,000 for a child with complex needs in a residential school.

David Ferguson, head of policy development for the Convention of Scottish Local Authorities, says an agreed scheme could be in place by the end of November at the latest, in time for councils’ budgetary negotiations. The deal would allow revised fee levels to be introduced from April next year.