School funding is a serious problem which must be dealt with quickly, the senior civil servant in charge of English schools has said.
In an interview with The TES, Peter Housden said the twopriorities for this school year were funding and the drive to hit the Government's test targets.
"The thing we will have to get right quickly is the funding question. The measures the Education Secretary announced at the end of last term now require some very careful work with local authorities and LEAs working with heads."
The director general of the schools directorate at the Department for Education and Skills conceded that a series of changes in the way schools were funded had led to "significant problems".
In July, Education Secretary Charles Clarke promised schools an extra pound;800 million and a guarantee of a real-term increase per pupil. The department is trying to establish how the guarantee will work by investigating how many schools used reserves to balance the books and how many used the new rules about capital spending.
Mr Housden said optimism by heads, rather than mismanagement, added to the problems. "Where people had marginal decisions to make, they tended to err on the side of spending."
The fact that separate spending decisions were being taken by the Government, LEAs and schools made the situation very complex. Ministers were keen to see a two-and-a-half-year pay deal for teachers to help resolve schools' funding difficulties, he said. But education was not all about funding. Tests and targets were important in lifting people's sights.
"We want more schools to achieve what the best are doing. We are not asking them to fly to Mars but to achieve on the same level as their peers," he said.
He was "hugely optimistic" about secondary schools' progress. "The real sea change is about collaboration."
Mr Housden caused controversy earlier this year when he told a meeting of grammar school heads that Ofsted's annual budget of pound;207m was a significant amount of public money to spend on inspection.
He said he expected the role of school self-evaluation in inspection to increase. Inspection played an unarguable role in raising school standards but it had to evolve.
The new framework, to be introduced this month, will put more emphasis on self-assessment.