The welcome commitment by the Government to finding more money for education next year must not rest there. It will be one of the greatest missed opportunities of this Government if it does not use its spending review to examine whether its funding strategy works for education.

Today, at the beginning of the UK’s presidency of the European Union, the National Union of Teachers and the Educational Institute of Scotland are publishing a key study by Coopers Lybrand on the funding of schools in Europe.

The report, European Comparisons in Education Funding, reaches conclusions which are as relevant to UK schools as they are to schools across Europe. The study examines trends in the amount spent on education and the methods used to allocate those resources.

It asks fundamental questions on the funding of education. Is it protected? Do funding methods reflect differences in pupil need? Does budgetary devolution affect equality of opportunity for pupils? What should the balance of funding be for the various stages of education?

These are questions which have a direct relevance to the funding of education in the UK; questions which the Government should now be asking itself. The report’s findings confirm their relevance.

European countries do not operate a model which entitles education to a share either of the gross domestic product or of the total public expenditure. When the gross domestic product increases in most countries, the percentage spent on education falls behind. If the GDP falls the protection of education funding is uncertain.

The report states that devolution of budgetary control is “increasingly fashionable in most countries across Europe”. Where devolution takes place there is a real question of whether equality of opportunity can be safeguarded.

The report found near-universal dissatisfaction at the way funding methodologies fail to reflect differences in pupil need. According to Coopers Lybrand, the essentially common nature of the problem means that there is real scope for a pan-European initiative on how needs-based funding systems can work.

There is inequity in the allocation of funding at different levels of education services. The UK and Portugal, for example, spend the least on pre-primary education. Primary education, relative to secondary, is losing out in the allocation of resources.

The report provides a benchmark against which the UK’s record on education funding can be measured; for the Labour Government it signals two opportunities.

The Government should start its first full year with the determination to end the damaging cyclical funding crises which have so bedevilled education during the past 15 years of Conservative government. It should use the opportunity provided by the presidency to start a debate in the European Union on how to achieve a funding system which is both fair and meets needs.

It is only four years since the previous government’s funding policies led to 10,000 teacher redundancies in England and Wales. In the past few years Scotland, too, has seen cuts in teacher numbers and the level of education service provided.

North and south of the border during the Nineties, parents and teachers have become increasingly aware of the vagaries of the education funding system. Protests have greeted each round of cuts. There have been annual stand-offs between local authorities and previous governments. Budgetary crises have sapped morale in many schools.

In the past 10 years governments have introduced initiative after initiative in schools; few of which have been costed. Since 1992, Coopers Lybrand have tracked for the NUT the relationship of government decision-making on education funding to the objective needs of schools. Their studies have found that governments have both failed to cost initiatives such as the national curriculum and have failed to use objective criteria in determining the percentages and amounts spent on each public service. In Scotland, too, there is no evidence to suggest any objective linkage between the growing demands made of schools and the levels of funding.

In 1996, the then Secretary of State for Education in England, Gillian Shephard, dismissed Coopers Lybrand’s proposals for a needs-based funding system. Only six months later, however, a further study found that the ability of local authorities to subsidise education was coming to an end and that, unless the government acted, schools would face a further funding crisis.

To its credit, the new Government acted to forestall this incipient crisis. In England, an additional Pounds 835 million was injected into the education service and comparable increases were allocated to Scotland and Wales.

Yet there is a threat that the gloss on this additional funding will be stripped away. In Scotland, there is deep dissatisfaction at the failure of government to address the real needs of communities; a situation compounded by the break-up of regional authorities and a consequent reduction in capacity to tackle social deprivation.

It is clear that, aside from government priorities such as pre-school, information and communications technology and school maintenance, the rest of school education is as vulnerable to budget cuts as ever.

In England, 54 per cent of LEAs failed to receive the full 5.7 per cent increase in education promised by the Secretary of State. Seventeen local education authorities received a 4 per cent increase or below.

In England, Scotland and Wales the balance of funding between primary and secondary education has long been contested.

Will the dissatisfaction which may be felt by many schools and authorities with their budgets across the United Kingdom be justified? The Government will not think so. It will point to the headline average increase. Yet the practical effects of inequitable budgets are felt not by ministers but in schools. Further, in different parts of the country there are schools which receive vastly differing funding allocations despite having similar intakes and needs.

The UK is one of many European countries identified by Coopers Lybrand where there is dissatisfaction over the way in which funding systems have failed to reflect differences in pupil need.

As yet the Government has taken only a lukewarm interest in reforming the funding of education. The problems, however, will not go away. Welcome as the Government’s raiding of the contingency fund to pay for increased funding in 1998-99 is, it can only be a sticking-plaster unless a proper review of the system is carried out.

Both the NUT and the EIS believe that the Government must establish principles for education funding if its promise to prioritise “education, education, education” is to be honoured. All schools should be entitled to a stable and equitable system which targets and meets their needs.

There are initial steps which the Government must take now.

* The introduction of initiatives must be costed and provision made.

* The Government must set year-on-year targets for increasing the amount of money spent on education to meet the cost of its programmes.

* In partnership with all those involved in education, the Government must start to examine whether the funding system in England, Scotland and Wales is capable of meeting educational need.

* The UK presidency of the European Union must be used to launch a debate on how to achieve stable and effective funding systems in Europe.

These are New Year resolutions which the United Kingdom Government cannot afford not to make.

Doug McAvoy is general secretary of the National Union of Teachers. Ronnie Smith is general secretary of the Educational Institute of Scotland