The Government is edging closer to removing schools’ funding from local authority control. If it does so, schools and local government will be changed forever. Councils will be reduced to little more than half of their existing scale of expenditure, while individual schools will find themselves looking to a quango for funding and oversight.

This would dwarf all the local authority reforms previously made by the present government. It would without doubt raise the question of whether social services and the fire brigade should remain within what was left of local government. County councils would be rendered virtually redundant. There would be massive financial upheavals in 1995-96. Up to Pounds 16 billion (out of Pounds 39bn) would be taken away from council budgets. In short, taking schools out of local government budgets would soon enough lead to a system of capped, weak, single-tier authorities.

But the impact on schools’ administration would be even greater than the changes within local government. First, a new system of financial control and oversight would have to be created. The Funding Agency for Schools would have to be radically changed.

Second, a national funding formula would have to be created to allocate the Pounds 16bn of school funds to individual schools. Third, schools themselves would have to staff up for their new responsibilities. Fourth, inspection and audit arrangements would have to be strengthened.

Financial control and oversight of 24,000 opted-out schools could not be left in the hands of the FAS as it is currently organised. The agency would have to be expanded and would surely need to open regional (if not local) offices. Schools would need areference point for inquiries about funding or legislative requirements and for purposes of accountability.

The Department for Education and Employment and the FAS would have to develop a new funding method for schools. In the short term it might be possible to retain education standard spending assessments as the starting point for allocating resources within the predecessor local authority areas. But pressure would intensify for a national funding formula. Recent efforts to develop a common funding formula for grant-maintained schools have not been crowned with glory. If all schools had opted out, the DFEE and the FAS would have to come up with an answer very quickly.

The development of a national funding formula would require great improvements on the existing SSA system. The method and data used currently allocate resources to local authorities are much disputed and subject to consistent political pressure. DFEE will have to come up with something which will have credibility with the overwhelming majority of the 24,000 schools in England. It will not be easy.

Doubtless the move to national funding of schools would be confused by efforts in some quarters to introduce a voucher system for primary and secondary education, on the grounds that if a radical change were to be made, it might as well be very radical.

Schools themselves would have to prepare for grant-maintained status. Smaller schools might decide to buy in administrative services from private companies, voluntary agencies or even from local authorities (assuming councils were not banned from such activities). Many institutions would have to take on staff to take the place of town hall bureaucrats.

Finally, the agencies with responsibility for overseeing schools would have enormously to beef up their activities. The expansion of the FAS is inevitable. The Office for Standards in Education would also have to devote more time to ensuring standards, while the National Audit Office (or Audit Commission) would have radically to strengthen the audit process.

Back in the deserted town and county halls, what might be left? At present, local authorities have residual responsibilities for services such as school transport, truancy, education welfare and psychology and special needs. The Government would have to decide whether or not to hand these duties to GM schools, the FAS or leave them with local authorities.

If ever there were an argument for reflective pause, there is one now. The transfer of schools from local government to quango control has constitutional, institutional and educational implications that far exceed anything we have seen so far. There is a strong argument for deciding whether central or local government should in future be accountable for schools’ education. But there is also an argument for a proper debate before any major reform takes place.

Tony Travers is a local government analyst and director of the Greater London group at the London School of Economics.