Ministers are redrawing the boundaries of local authority finance in an attempt to force councils to delegate more money to schools.

They are considering redefining the potential schools budget - the pot of money from which local education authorities delegate cash to governing bodies.

Civil servants are also investigating why capital expenditure is excluded from local management schemes.

Ministers may now propose a scheme similar to that which runs in the grant-maintained sector where schools are given Pounds 12,000 plus Pounds 24 per pupil, to a minimum Pounds 17,000 a year for capital projects.

Education junior minister Cheryl Gillan indicated that authorities could be forced to delegate funds for peripatetic music tuition, other peripatetic staff, library and museum services and outdoor activity centres.

She told the LMS national conference in Kent on Friday that funding for IT, payroll, financial, legal and personnel advice may also have to be delegated.

Mrs Gillan was speaking the day after Gillian Shephard, the Education and Employment Secretary, announced a White Paper which would increase the level of money delegated to school.

She said ministers were not set on a particular solution but added: “We will want to think creatively about what might realistically be done in pursuit of the objective of empowering schools rather than automatically assuming that certain items belong in the ‘too difficult’ tray.”

Her comments came as parents in Harrogate and Brixham delivered a further blow to John Major’s ambition to achieve grant-maintained status for all.

Resounding no votes to GMS for Harrogate and Churston grammars made it clear that the key to greater self-government laid with more delegation of council cash to schools.

The promise of the White Paper makes it clear that if parents will not select self-governance for themselves, it will be given to schools through further delegated responsibilities and funding. With the bonus as far as ministers were concerned of further weakening local authorities.

Councils have to delegate 85 per cent of schools spending to governing bodies. On average nationally they do five per cent more.

Options likely to be in the White Paper include forcing the proportion up to 90 per cent - more than half of England’s LEAs are below - or beyond.

Mrs Gillan indicated the potential schools budget could be redefined and said ministers may look again at proposals from the Association of Metropolitan Authorities that schools spending be redefined into one of three categories.

It has suggested these would be spending incurred directly at school level, services clearly outside the remit of individual schools and services of costs which in theory could be managed either centrally or at school level.

Mrs Gillan said the presumption ministers were working from was that support services would be included in delegated budgets, with schools free to buy back what they wanted on full cost basis.

Percentage of potential schools budget delegated Top 10 authorities Dudley 95.8 Hertfordshire 94.1 Solihull 94.0 Waltham Forest 93.9 Islington 93. 9 Knowsley 93.9 Brent 93.5 Leeds 93.4 Berkshire 93.1 Northamptonshire 92. 9 Source: DFEE Bottom 10 authorities Kent 87.5 Camden 87.4 Haringey 87.2 Kirklees 87.1 Hackney 86.9 Gateshead 86.6 Newham 86.5 Lambeth 86.4 Wandsworth 85. 4 Isles of Scilly 85.1