COUNCILS are slashing planned increases to their education budgets after discovering the Government is to siphon off almost pound;500 million to pay for its teachers’ pay reforms.

About pound;430m will be removed from education authority budgets over the next two years. Additional grants from the Standards Fund to support the reforms, requiring matched funding from councils, are set to drain a further pound;70m from budgets next year.

The misunderstanding has forced councils to rethink their education budgets.

Cambridgeshire says it will only be able to increase its education budget by pound;1.5m instead of pound;3m next year. Staffordshire estimates it will lose about pound;1.725m, cutting growth in its education budget from 6.1 per cent to 5.4 per cent, and in Dorset, the loss is estimated at just under pound;1m, again cutting the increase from 6.1 per cent to 5.4 per cent.

Although plans to top-slice council budgets were first mooted when the Chancellor published his comprehensive spending review last summer, councils were only alerted when they read the small print of the Government’s submission to the teachers’ pay review body last month.

The submission said pound;150m would be removed from local government funding in 2000-2001, to pay teachers who crossed the performance-pay threshold. A further pound;280m would be siphoned off in 2001-2002.

Council leaders and headteachers now say they were misled by headlines insisting that the Green Paper reforms would be paid for with extra money from the Government.

John Dunford, general secretary of the Secondary Heads Association, said: “We were promised pound;1 billion of new money from the Treasury with no suggestion that it was buried elsewhere in education authority budgets.

“It has come as a huge shock to heads to hear that they are going to have to cut their budgets in other areas in order to provide this pound;430m.”

Andrew Baxter, director of education in Cambridgeshire, said the discovery that half its planned growth of pound;3m would be snatched back had come as an unpleasant shock.

Christine Whatford, president of the Society of Education Officers, said she had received a large number of replies to a letter, reported in The TES last week, warning her members about the top-slicing.

“They are all saying the same thing: that education authorities had not realised that the money was going to be top-sliced and that most of them were going to be in difficulties with their budget planning.”