The Government is to introduce a new funding system for opted-out primary schools within the next two years despite stern warnings from civil servants about the inequalities it will create.

Department for Education officials who have been working on the common funding formula (CFF) for grant-maintained secondary schools are worried about the scheme being extended to primaries. One is understood to have said that it would be introduced into primaries “over my dead body”.

There are fears that the new funding regime could create major winners and losers among primary schools, who already complain about the disparity of funding between themselves and secondaries.

There are also serious anxieties about how the cash will be shared in the English shire counties due to be broken up under the local government review.

For once the counties are disbanded, there will almost certainly have to be a complete restructuring of standard spending assessments - the Government estimates of how much needs to be spent in an authority. These SSAs form the starting point of the common funding formula. Moves to review them could throw school funding systems into complete disarray.

There is also the question of timing, with ministers planning to introduce the primary CFF in “selected areas” in 1997-98.

If John Major delays a general election until the last possible moment, any change of government would find it difficult to dismantle the scheme immediately and it is likely to have to run for one year. If the general election was called earlier, the fate of the scheme would rest on the outcome of the ballot.

Ministers introduced the CFF for secondaries two years ago claiming it would be simple and transparent, but it soon became clear that it was neither and at one time it was estimated that only a handful of people in the country understood it.

It is currently running in almost 400 secondary schools in 22 local education authorities and Secretary of State Gillian Shephard told primary GM heads last week that the Government was “now ready” to start work on extending it to them.

But she acknowledged there would be difficulties and told the National Association of Grant-Maintained Primary Schools meeting in Stratford-upon- Avon: “The factors which should govern primary school funding are not the same as for secondaries. We shall need to be clear about their needs and problems and how a CFF could affect them.”

Councils who use local management to build in cash support for small schools claimed that rural primaries could be hit hard by a change in funding rules.

They say that village schools in authorities such as Essex and Hertfordshire could find themselves on the same financial footing as primaries in urban authorities.

The CFF has already taken away cash earmarked for primary and nursery education in Essex and put the money into secondaries in the county, which has a large number of opted-out schools. And there have been bitter battles between local authorities and the Government over how it has identified the global sum of money shared out between GM secondary schools. “It is infernally complicated and we are deeply suspicious of what is being done,” said Alan Parker, education officer with the Association of Metropolitan Authorities.

GM schools and council officials in Bromley and Essex - already operating the secondary CFF - have been “invited” to contribute to the development of the primary scheme. In the past, when Essex was “invited” to contribute to the development of the secondary system and refused it found the invitation was not optional.

An Essex spokesman said this week that the authority wanted to work constructively with the DFE, but added: “Our past experience does leave us rather dubious about what is in store for our primary schools.”

Meanwhile, the National Primary Headteachers Association called for a national funding formula for primary pupils.