Schools which fail to co-operate on issues such as sharing excluded pupils could face financial penalties, Charles Clarke, the Education Secretary, has threatened.

He confirmed the plan this week as the Government published its Education Bill, which aims to give schools greater autonomy.

Measures in the Bil which have been previously announced include guaranteed three-year budgets and short-notice inspections for schools.

MPs and council leaders told ministers that aspects of the Bill and the Government’s five-year strategy could undermine the work local authorities do with schools.

Schools will be able to gain foundation status, giving them control over admissions and recruitment, after a single vote in a governors’ meeting.

Mr Clarke told MPs on the education select committee that he was confident schools would collaborate more as they became more independent, citing successes in the specialist school movement. If they did not co-operate they could have their funding cut, he said.

Barry Sheerman, Labour MP for Huddersfield and chairman of the select committee, earlier told the House of Commons that he was not convinced schools would become more collaborative.

He said: “Mr Clarke should be cautious about riding the horse of greater independence for schools and diminishing the power of local education authorities while desiring more co-operation across the piste because it will probably all end in tears.”

A Department for Education and Skills official said the Government preferred to talk about giving collaborative schools extra money than about reducing funding for others.

Steve Sinnott, general secretary of the National Union of Teachers, said the idea could lead to a “funding mess” and would give urban schools an advantage over rural ones with few neighbours.

The Bill will enable the Office for Standards in Education to introduce a new system of on-the-spot inspections designed to reduce the burden on schools. Schools will get just a few days notice of inspectors’ visit compared to the six to 10 weeks given at present.

Under the new system, inspectors will focus on the core subjects, reports will be just four to six pages of text and the gap between inspections will be cut to three years from up to six at present.

But it emerged this week that the new regime could mean schools facing three visits from inspectors in little more than three years. Ofsted will need to make additional visits to assess the teaching of individual curriculum subjects if inspections focus on core subjects.

Ministers need the Bill to reach the statute book before the general election, expected in May, if the changes are to be introduced as planned next September.

The Bill will rename the Teacher Training Agency as the Training and Development Agency for Schools and teaching assistants could receive “golden hellos”.

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