Next year could be the most important year for education since Labour came to power. Certainly, with a general election likely within two years, the Government can afford few of the mistakes which have disfigured the past 18 months.

The National Union of Teachers’ failure to secure a ballot result giving it the go-ahead for a national tests boycott may have made a welcome Christmas present for the Government.

But there are plenty of other problems on the horizon in 2004. The tuition fees wrangle will dominate, as will the Government’s need to persuade a doubting electorate that Labour’s increased spending on public services is reaping rewards.

Politically, the overriding question in schools will be whether the Department for Education and Skills can avoid a repeat of this year’s school budget crisis.

Charles Clarke will be pinning his hopes on a package of measures announced in October, which centred around a 4 per cent per pupil guaranteed funding increase for schools.

But some councils have already warned that they are facing pressure from the Government not to raise council taxes, and that they will struggle to pass on all of the money which ministers are expecting them to hand to schools.

Some heads are also muttering that the DfES has once again underestimated rising staff costs. The true situation will not become clear until schools receive their budgets from local authorities in the spring.

Mr Clarke perhaps anticipated problems during his October announcement when he placed the onus of balancing budgets in schools on heads and local authorities. These budget problems, lest we forget, have come about following Gordon Brown’s announcement of “record” funding increases for education in the summer of 2002.

Quite what will happen, then, after the Chancellor announces what seems certain to be a tighter settlement this year is anyone’s guess. His next three-year spending outline, covering 2005-8, is due in the summer.

There seems little doubt that Mr Brown will find it hard to offer much extra cash for education, given the current increase in government borrowing and the political wish to avoid more tax rises before the election.

This obviously has repercussions for teachers’ pay. Ministers, who will point to big increases in classroom salaries over Labour’s first six years, have now announced a pay freeze until 2006. They also want to reduce the numbers progressing to the top of the salary scale under performance-related pay, and have even floated the idea of introducing PRP on to the main scale.

The School Teachers’ Review Body is due to produce reports on these two issues this month. The funding question may cause problems for one of the Government’s successes of 2003, namely to ensure that the workload deal works.

The National Association of Head Teachers may yet carry through with its oft-repeated threats to withdraw co-operation on workload reduction over lack of funding.

The taskforce led by Mike Tomlinson, the former chief inspector, is due to produce recommendations to ministers for a new diploma qualification, to replace A-levels and GCSEs, by the autumn.

The plans, though unlikely to result in the long-discussed baccalaureate system, are highly ambitious but have yet to be costed, while much of the technical detail is still being worked out.

Changes in the way national curriculum tests for seven-year-olds will operate for some schools next year could be seen as a slight move away from a centralising agenda by ministers. Schools in 38 local authorities are to be given more flexibility over the administration of key stage 1 tests.

The NUT has said that despite the ballot result, it will continue to campaign for reform of the tests. The union is due to elect a new general secretary in June, with two centrist candidates, deputy general secretary Steve Sinnott and John Bangs, the head of education, poised to face two challengers from the left: Alex Kenny and Ian Murch.

Elsewhere on the horizon, the specialist schools movement will continue to gather pace, with 90 per cent of secondaries expected to gain the status by 2006. The General Teaching Council for England, which holds four-year elections this year, could embark on a long-term drive to take over recruitment responsibilities from the Teacher Training Agency.

Recruitment has been one of the Government’s success stories in recent years, and insiders reckon TTA chief executive Ralph Tabberer could be looking for a move after four years in the job.

Technological changes in the exams system will accelerate dramatically as, for the first time this summer, a big proportion of students’ GCSE and A-level papers are marked on-screen by examiners. In Parliament, the Children’s Bill, which unions fear could also place extra child protection responsibilities on teachers and confuse local authorities, is due for debate.

All of this could be thrown in the air, though, if things really go against Number 10 this month.

If the Government loses the vote on tuition fees, and the Hutton report on the death of David Kelly comes out against Number 10, will we have a new Prime Minister within weeks? It seems unlikely that the intricacies of education policy could bring down a Prime Minister, but Mr Blair has chosen to make the higher education issue a test of his party’s willingness to back public-sector reform.

That drive is what will dominate the political agenda in schools this year, even in the seemingly unlikely event of Mr Brown taking over.

Happy New Year!