“We are where we are and we have to do the best with what we have got. I don’t know a country in the world where teachers say they have enough money to spend,” she told senior local education authority officials last week.

As far as the Education and Employment Secretary is concerned it is time to stop talking about money - or the lack of it - and time to start talking about quality, output and achievement.

She will have a tough time convincing parents, teachers, governors and local authorities whose schools and services face the prospect of yet another round of cuts.

Warnings of the grimmest budget rounds ever are already being heard from Kent, where thousands of adult education and youth workers are set to lose their jobs, to Northumberland, where the cash crisis hitting libraries means no adult fiction will be bought this year.

Somerset, which has been given #163;5 million extra by Government to spend from April, claims it needs #163;17m and has asked for its capping limit to be extended. It has yet to receive an answer.

Across the country, more than #163;61m cuts have already been identified by 41 local authorities.

The picture could be even worse because some of those councils have not calculated the cost of such unavoidable pressures as pay, transport and special needs.

Nationally local authorities claim they will have to spend an extra #163;600m next year to meet inescapable costs. These include safer school buses, security and administering nursery vouchers.

The 41 authorities who responded to the survey of local authorities by the Standing Conference of Chief Education Officers said they had to find at least #163;100m extra to meet unavoidable costs.

The survey revealed the axe will fall heavily on the non-statutory services such as outdoor education, music and swimming.

Building maintenance programmes will almost certainly be cut back while local authorities’ central administrations can expect cuts of at least #163;10m across the 41 authorities.

Kent is preparing to almost wipe out its adult education and youth services by closing 40 youth clubs and 20 adult education centres with the combined loss of 4, 000 jobs.

Schools in the county are bracing themselves for a cut to the delegated budget of between #163;3.4m and #163;3.8m.

Kent is also proposing to end discretionary awards to save #163;640,000, grants to voluntary groups (#163;750, 000) and help with fares to school or college for the over-16s (#163;300,000).

It also proposes to cut #163;352,000 from spending on the school library service and #163;2.6m from the school building programme.

“It is the worst situation I have faced in 25 years in education management,” said Roy Pryke, Kent’s education director.

“We have had bad years before but never have I had to put forward proposals that cut as much into the service and reduce school budgets.”

There are no proposals to cut adult education funding in Northumberland from April - all the cash available for the service has already been cut in the current financial year.

The authority now proposesto close its two outdoor education centres which are used by thousands of children annually, to end support for its youth orchestra, peripatetic music, youth drama, museums, library service and to abolish post-18 discretionary awards.

Between 1991 and 1996 Northumberland has lost the equivalent of 116 full-time teachers while pupil numbers have risen by more than 2,000.

Schools, which had a 1 per cent budget cut this year, are looking at a 2.7 per cent reduction from April.

“It is the worst position we have been in,” said Chris Tipple, Northumberland’s education director.

“I met last week with 200 heads and chairs of governors to talk about the budget. In previous years they have been really angry, sometimes rather rude, but this time the feeling was just of despair. It is really appalling, dreadful.”

Authorities have warned the Government that a pay rise for teachers of more than 3 per cent would be financially disastrous.

Shire counties told the Standing Conference that they were budgeting for pay rises of between 0 per cent and 3.5 per cent.

The range of assumptions on pay made by the metropolitan and unitary authorities were between 1.3 per cent and 3.9 per cent.

Education authorities are already spending hundreds of millions of pounds more on schools this year than the Government has allocated for 199798.

But Mrs Shephard urged the Society of Education Officers meeting in Harrogate last week: “Ask yourself what we get for the nearly #163;30 billion we spend on education.

“Is there widespread admiration for what is being paid for by the taxpayer? I have to tell you there is not.”