As The TES revealed last week, education ministers have warned Downing Street that next year’s funding increase will be the same as this year’s - ie it will be insufficient. Schools are already being advised to go into debt so futher deficits in 12 months would be disastrous.

If ministers want to avoid a repeat they have two options: find more moneyor try to get more of the existing funds to the front-line.

With the Treasury having already coughed up a “record” increase in education spending, the second option looks more likely.

Education Secretary Charles Clarke is now seriously considering guaranteeing that schools get the cash by sending it to them directly from the centre - in other words creating a national funding system.

This would be a U-turn: ministers had rejected the idea of such a system in favour of the one introduced this year.

Heads are hoping Mr Clarke goes through with his threat. They see a national formula as a way of ensuring that all schools get a fair share and that councils do not fritter their money away.

Council leaders unsurprisingly take the opposite stance. They point out that they spend pound;150 million more each year on English schools than the Government says they should, a practice unlikely to continue if they are sidelined.

Also, devising a system to distribute nearly pound;28 billion from Whitehall to 24,000 schools across England is fraught with problems. And, they say, instead of freeing schools, central funding would only increase Government control.

Ministers will be worried that yet another new funding system will once again create some very vocal losers and more damaging headlines. Political necessity might force the launch of a national formula - but such a move would be a gamble.

School management, 27