New government attempts to tackle huge inequalities in school budgets could lead to some headteachers receiving less funding, experts have warned.

A major review has said cash should be shared more fairly around England from 2011, with schools in deprived areas no longer automatically receiving additional funding.

In future, the Department for Children, Schools and Families says it will use “more sophisticated” data to award money, and more of the dedicated schools grant - the main source of funding - will be given on a “flat rate” basis according to the number of pupils in each area.

The gap between the best and worst-funded authorities has grown recently, some receiving twice as much as others. The current grant consists of a basic amount per pupil, plus three additions to compensate for local area differences, deprivation and scarcity of schools.

Teachers and local government employers are now being consulted on the changes. The exact amount headteachers will be given to run their schools will be announced in the autumn.

In future, schools will get a basic amount per pupil, funding for the additional educational needs of children, including those associated with deprivation and funding for “high cost” pupils who have disabilities or special educational needs.

Rural local authorities will continue to get the sparsity funding they receive now to enable them to keep open small schools. Schools in areas with higher living and salary costs, such as London, will continue to get extra funding. Additionally, more SEN funding will be given to all local authorities where before it was linked to deprivation.

DCSF bosses said the new way of funding will result in “significant distributional changes” but insist local authorities will have “time to prepare” and that there will be transitional arrangements.

The F40 group, made up of the UK’s lowest-funded councils for education, said it believed the changes should even out regional differences.

“It’s very important that the Government will now use better data when awarding money to local authorities; I believe this will cause big shifts around the country,” the group’s funding consultant Lindsey Wharmby said. “It’s difficult to argue against this when the changes are based on accurate information.”

Mick Brookes, general secretary of heads’ union the NAHT, said: “It’s important this transition is managed carefully. In many ways this review is several years too late - it’s much easier to redistribute budgets during a period of rising funding.

“It’s not true some schools have too much money, but we fully support the narrowing of the gap.”

Chris Keates, general secretary of the NASUWT, said: “Decisions on how schools should respond to additional needs should be made on educational grounds and not on the basis of short-term expediency.

“Protecting teaching and learning in schools means that the mechanism for distributing funding to schools should be as fair and transparent as possible.”

Original paper headline: Funding equality drive could see some schools left short of cash