The country’s worst-funded local education authorities this week warned that they were sitting on a financial timebomb with schools facing the prospect of larger classes and fewer teachers.

The councils - who call themselves the E7 group in an ironic reference to the G7 group of the world’s richest nations - said their financial situation was grim. Almost all have already seen a significant increase in the number of primary school classes of 30 or more pupils.

In Derbyshire, six out of every 10 primary children are now in classes of at least 30 - and almost a fifth are in classes or 35 or more.

At least half of the children in primary schools in Northumberland and Dorset are in classes of 30 or more and the picture is only slightly better in Staffordshire and Warwickshire.

Most authorities in the E7 group have lost teachers as a direct result of cuts to budgets and said extra help in the classroom was now an unaffordable luxury for schools.

Reductions in hours of help for youngsters with educational and behavioural difficulties were commonplace while the number of exclusions was rising.

In their annual report, the E7 group said: “With more pupils entering the education system and less money to go around bigger classes are inevitable.

“We believe that’s bad news for the quality of our children’s education. Not only does it make the task of teaching more difficult, it means many classrooms are now overcrowded.”

They said there was strong anecdotal evidence that when selecting a school for their child, parents looked closely at class sizes and that this was often a crucial issue for them despite Government claims that size did not matter.

The councils claimed class sizes had risen despite determined attempts on their part to shield schools from the worst of the Government-imposed cuts to their budgets.

And they added: “We believe smaller classes are vital to improving standards and ensuring a good quality education from early years upwards.”

The E7 group, set up in April 1995, was originally made up of Derbyshire, Hereford and Worcester, Northumberland, North Yorkshire, Staffordshire, Suffolk and Warwickshire.

It has now grown to include Cheshire, Gloucestershire, Northamptonshire, Dorset, Wiltshire and Somerset.

The councils are among the poorest local education authorities in England and the amount of money they received from the Government this year for each primary and secondary school pupil was way below the county average.

If they had spent at levels recommended by ministers, they claimed, their education services would be cut by a further Pounds 87.7 million.

“All of us have continued to spend at or above Government-recommended levels of education services - often at the expense of other council-run activities.

“What is in no doubt is that all of us are feeling the pinch. Some of us have had to make use of cash reserves to meet budget shortfalls - money that can’t be used again.

“And some of us have had no alternative but to cut a range of important services to stay within Government-set spending levels.”

They said the prospect for all councils, education authorities and schools for next year was serious - despite Gillian Shephard’s claim of a 3.6 per cent increase in funding for schools.