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How crisis caught ministers on hop

Charles Clarke will be desperately hoping that this week's announcement will finally lay the funding crisis to rest.

The Education Secretary's officials have done their best to make the fiendishly complicated system - with its multiple funding streams and central and local government formulae - more predictable for schools.

But the fact remains that however much money the Department for Education and Skills pours in at the top it can never be completely sure how it will affect individual schools until they receive next year's budgets from local authorities.

It was this unpredictability that caught the DfES out last year. Ministers spent the latter half of 2002 believing that the Chancellor's "biggest sustained rise in education spending in a generation" would make 200203 a comfortable year for schools.

But a combination of rising staff costs, a new funding formula and the incorporation of previously ringfenced standards fund money into the general pot conspired to deliver unanticipated problems.

When the difficulties first surfaced in early March this year, Mr Clarke appeared to be in denial. He told a meeting of chief education officers that he did not listen to requests for more money because they were usually excuses for people not doing what they should have done.

By May the DfES had been forced to admit that there was a problem but it was doing its best to pin the blame on local government, accusing councils of sitting on unspent millions.

It was not until the summer that a real strategy on how to avoid a repeat of the crisis began to emerge. Mr Clarke announced his plans for a multi-year teachers' pay deal, the re-introduction of pound;400 million of standards fund grants, and a minimum per-pupil funding increase for schools.

This week's announcement follows a protracted battle between headteachers and local government over how funding should be distributed. But schools still have very little room for manoeuvre and keeping costs down in the forthcoming teachers' pay deal will be crucial if Mr Clarke is to avoid another funding disaster.

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