Why do some schools spend ten times more per pupil than similar neighbouring schools on books and materials, or in-service training for staff, or 20 times more on classroom assistants? Information that can answer questions such as this can help schools get more for their money, give managers confidence that they know what they are doing and improve overall effectiveness.

That is the conclusion of a pilot scheme involving 37 primary schools, five London education authorities and the Department for Education and Employment. A leaflet soon to be sent to all schools and local authorities by the DFEE’s School Effectiveness Division aims to spread the practice known as financial benchmarking; comparisons between schools of expenditure under different cost headings.

The study revealed that some schools spend twice as much per pupil as others on telephones or three times as much on electricity or heating. In one school water costs per pupil were five times what they were in another in the same borough. Cleaning costs in some schools were 20 times that in others (see box below).

Findings such as these clearly gave the heads involved a great deal to talk about. One head described the exercise as “the best LMS in-service possible”. Another commented: “I am now more confident in setting budgets - it is not just a question of squeezing costs but being bolder in taking positive decisions. ”

The DFEE leaflet says “Benchmarking is not only about saving money: it is about ensuring every pound is spent in the most effective way. By comparing your own spending patterns with those of similar schools and drawing on their practical experience you can identify alternative and perhaps innovative approaches. ”

The department also wants schools to use benchmarking to identify links between budget decisions and school effectiveness. Would spending more on classroom assistants produce better learning or behaviour? And how would such benefits be measured? “There are no simple links between budget decisions and improving school effectiveness but it is important to be able to judge the impact of particular changes,” says the leaflet.

The aim is not to produce a standard model for all schools: it is acknowledged that each school will have different circumstances and priorities.

But heads clearly found the information useful in rethinking their spending decisions and reassuring and confidence building when it was clear that similar decisions had been reached in other schools.

Lynn Haward, head of Kender primary school, Lewisham, says: “It confirmed and validated the decisions we had already made.” Schools were able to learn from one another about the greater effectiveness of classroom helpers or administrative staff.

The DFEE’s contribution was to help the pilot schools and authorities devise a common form to record spending to make school-by-school comparisons possible. It took between half an hour and three hours to complete, according to head, though most found it easier the second time round.

Most clearly thought the time spent was worthwhile and now the DFEE wants benchmarking networks of schools throughout the country. Local authorities are being encouraged to take the lead and provide overall organisation and figures where necessary.

But the heads involved emphasised that simply producing comparative figures, as some local authorities have already done, is not enough. There also have to be opportunities for those responsible for school finance to talk to one another to understand what lies behind the differences.

John Lynch, head of Parish Church junior school, Croydon, said: “It was useful to be able to discuss allocations to particular areas and to find the same justifiable decisions being made.” Authorities could help compile the information but, “It is better if the intiative comes from schools. The benefits come from looking with colleagues at how we spend the money. Heads need to retain ownership of benchmarking.”

The DFEE acknowledges this. The School Teachers’ Review Body called for this kind of benchmarking in schools earlier this year and in its recent evidence to the pay body the Department says it works best in small clusters of similar schools sharing a similar background. “A scheme imposed on schools by an outside body collating the data from an outside source would be less likely to inspire ownership and participation.”

Benchmarking School Budgets: Sharing Good Practice will be sent free to all schools soon. Additional copies can be obtained from DFEE Publications Centre, PO Box 6927, London E3 3NZ (telephone 0171 510 0150).