Devon and Somerset joined Gloucestershire and Shropshire to defy capping levels while elsewhere in the country counties spent up to their limit. Only Hertfordshire, the Isle of Wight and Durham fixed budgets below the ceiling set by Government, though Durham was under by just a few thousands.

With the county council budgets for the new financial year now settled it is clear that more than Pounds 200 million will be cut from education.

Schools will have to bear the brunt of the cut, with Pounds 12 million being shaved off non-statutory services such as adult and community education, the youth service and discretionary awards.

Contrary to suggestions by Gillian Shephard, the Education Secretary, that authorities should cut funding on under-fives at least a quarter will actually expand nursery services this year.

Cleveland, Essex, Hereford and Worcester, Hertfordshire, Lincolnshire, Nottinghamshire, Norfolk, Shropshire and Surrey will put an extra Pounds 3.8 million in total into nursery education. Between them, they will open at least 44 new nursery units and by March 1996 Cleveland will have a nursery attached to every school.

But Kent, which is looking at education cuts of Pounds 4.5 million, and the Isle of Wight, which is not funding the teachers’ pay award, will shelve plans to expand their nurseries.

Just 13 of the 36 English shire counties responding to a TES survey have fully funded the 2.7 per cent pay award for teachers. Ten have allowed nothing for it. The telephone survey by The TES of the 39 English counties had a 92 per cent response rate, while six out of the eight authorities in Wales replied.

The four counties which have agreed budgets above Government spending limits - along with Newcastle-upon-Tyne, the sole rebel to date among the metropolitan authorities - will have to wait until April at the earliest to see if they are approved by John Gummer, the Environment Secretary.

He has promised to examine each case but, appearing with Gillian Shephard at a news conference on the environment in education this week, gave little hint of any major relaxation of spending restrictions. He said: “In this country, for the past five years, every business has had to find ways of being more efficient. They are paying the bills for what we do. Local government, like national government has to come to terms with that.

“There is not the prospect year-on-year of continually increased resources. We have to use our pounds more effectively.”

Mrs Shephard added: “It is up to local authorities to decide what balances they wish to hold. It is up to them to decide whether they expand non-statutory services at a time when they cannot meet statutory ones.”

While the Government decides whether to allow the authorities to breach their capping limits, schools will be able to do little about their budgets for 199596. If any have to make redundancies, notices will have to be issued straight away.

“What that does for teachers’ morale I don’t know,” said Simon Goodenough, chair of the National Governors’ Council. “It is appalling and it makes people frustrated.”

Devon and Somerset this week agreed to defy the spending limits - Devon by Pounds 4.4m and Somerset by Pounds 2.6m.

Sir John Hannam, the Conservative MP for Exeter, pledged to press Government to raise the capping limit. In Somerset the LEA claimed to have the support of William Waldegrave, the Agriculture Minister, former defence minister Tom King and David Nicholson, Conservative MP forTaunton.

In Gloucestershire, councillors have agreed a budget Pounds 4m above the limit set by Government while Shropshire has set a budget Pounds 6m over its cap.

The focus in most counties will now switch to the governing bodies which have until the end of March to set their budgets. Governors in Oxfordshire and Warwickshire are likely to set needs-related or curriculum-related budgets which could exceed their limits.

The National Association of Governors and Managers (NAGM) has suggested that now may be the time to create a climate of financial crisis while the National Association of Head Teachers (NAHT) has advised governing bodies to run into the red rather than shed staff.

In Cornwall, where the authority built nothing in to its budget for teachers’ pay and which is cutting Pounds 6m from education, the county branch of NAGM said: “We are not prepared to stand back and see the education service spiral into decline through lack of funding.”

The 2.7 per cent rise for teachers adds nearly Pounds 300m on the current pay bill and the 199596 funding problems, caused by the tightest-ever squeeze on local government spending, are exacerbated by rising pupil numbers.

Half of the 36 counties responding to The TES will slash discretionary awards for students with some of the heaviest cuts in Cheshire, Hampshire and Oxfordshire. In total Pounds 7.4m will be cut. Forty-seven per cent of counties will cut adult education by a total Pounds 3.78m with the worst-affected areas being Kent, set to lose Pounds 600,000, Shropshire (Pounds 750,000) and Somerset (Pounds 850,000).

The youth service will be cut in almost a third of the counties, by more than Pounds 1m, while 14 authorities will either introduce or increase charges for post-16 transport.

In Wales five of six councils made cuts to some non-statutory services. With reductions in education budgets of between Pounds 1.2m in Powys and Pounds 5.2m in West Glamorgan most had looked at discretionary awards, community and leisure services, libraries, maintenance budgets or increasing the cost of school meals.

Dyfed, which had to cut Pounds 4.5m from its education budget, took Pounds 370,000 from community and leisure services, Pounds 350,000 from discretionary awards, and increased the price of school meals.

Just one authority, Gwynedd, intended to fund fully the teachers’ pay award, but at the time of going to press the council had not set its overall budget.