CHARLES Clarke’s statement on funding, reaffirming the central role of local authorities in distributing funds to schools, should lead to much of what local government has been fighting for recently. Stability and longer-term budget planning are welcome. But the measures in place for the coming two years are a short-term solution.

It should also be noted that the statement signals a rejection of calls from some quarters to cut LEAs out of the funding equation. Such a system would be a short-sighted and blinkered approach. National funding will not lend itself to stability, but instead lead to shortfalls in provision. What is needed is a new funding system where there is flexibility for local councils to vary funding to suit local needs. The current system is too heavily focused upon pupil numbers and prevents LEAs from directing money to where it is most needed. A national system cannot match the reality of differing needs of pupils in the same school and of different schools within the same area.

At a time of crisis there is always the temptation to look at centrally increasing costs and the cost of LEA administration. But the reality is that, this year, local councils covered the gap left by a shortfall in government provision, adding pound;186 million and contributing to the Government’s provision for the 10th year in succession. Rather than councils siphoning funds to other services, that additional amount has been found at the expense of other services, or by large increases in council tax.

A longer term solution is not to distribute funds from the centre, because this would erode local discretion and lead to less money raised locally being given to education. Rather, it is to change the system so that councils receive more of their money from local sources and less in grant from the Government. Spending increases lead to large council tax increases because the council tax is the only source of local income. Councils need a larger local taxbase; which means another source of local income. Options include returning business rates to local control or a local income tax.

In the immediate future, we all have a responsibility not to raise expectations that changes will lead to a pot of gold at the end of the rainbow. Many schools have to tackle the harsh reality of falling rolls.

Many LEAs are being squeezed to ensure every penny intended for education is spent in schools. Councils are taking tough decisions and cutting other services to ensure government “passporting” levels - the amount Whitehall expects LEAs to pass on to schools - are met. But the amount of money held centrally has to be balanced with the local decisions that schools make.

The proposed per-pupil increase next year must cover the cost of educating our youngsters, including all the additional pressures.

The role of the LEA should be enhanced, not weakened. If there is a job to be done at a national level, then it is working with the LGA to co-ordinate peer support for both local authorities and schools to develop our front-line abilities to tackle the hard financial responsibilities that we all face. LEAs need a clear role in monitoring and managing costs in schools, helping heads and governors plan for the future. If Charles Clarke’s postbag has been filled in the past few months, it will be bursting at the seams if a secretary of state controls all schools with a simplistic national system that treats all pupils as having the same needs.

Councillor Graham Lane is chair of the Local Government Association Education and Lifelong Learning Executive