For secondary schools lucky enough to get it, the leadership incentive grant should have been the icing on the cake. The extra cash was supposed to encourage collaboration between schools and strengthen all levels of leadership.

But headteachers’ leaders say that in the current funding crisis many schools are using the grant to help pay the wage bill and buy basic supplies. “I certainly know of a number of schools around the country who would be in deep trouble if it were not for the leadership incentive grant.

It’s only the existence of the grant that has prevented further redundancies and job losses,” said David Hart, general secretary of the National Association of Head Teachers.

Anne Welsh, president of the Secondary Heads Association and head of George Stephenson high, Newcastle upon Tyne, said that in her school “every penny” of the grant has gone to bolstering the budget after rising costs and the loss of standards fund money left her with a potential deficit of pound;160,000.

“I think that’s a picture that is fairly common across the country,” she said. Her school already works with two of its neighbours in North Tyneside on post-16 education. But plans to use the grant money to extend this collaboration to pre-16 courses have been put on the back-burner.

Most of the 1,400 schools eligible for this money have now received it, though a few education authorities are still working with groups of schools on how they plan to collaborate. Schemes have to be approved by the Department for Education and Skills which has asked for progress reports at the end of the first year of grant money.

Guidance on the grant issued last year warned that funding would be withdrawn if groups of schools failed to put their plans into action. But it does not look as if the DfES is going to penalise those that have not managed to do everything they said they would. “It is for heads and governors, as informed professionals, to decide how best to use the grant to raise standards and strengthen leadership,” said a spokeswoman for the department.

Whitehall has not always sounded quite so ready to trust the professionals.

Last spring Education Secretary Charles Clarke caused uproar when he talked of “taking out” weak heads and other school managers. If Mr Clarke is still hoping that this will happen on any large scale, he is in for a disappointment. Even in schools that are not using the incentive money to plug holes in their finances, governing bodies are showing few signs of wanting to act like hitmen.

“If we have a headteacher who isn’t performing, then we have a duty to retrain that person and support them before we go to the lengths of using the LIG money to get shot,” said Neil Davies, chairman of the National Governors Council.

“The main argument against (the grant) is the steep cliff edge between the schools that get pound;125,000 extra and those that get none. That is a completely unacceptable way of funding schools,” said John Dunford, general secretary of the Secondary Heads Association.

In some local authorities, however, schools that have missed out on the extra money will still be able to share some of the outcomes of LIG-funded work. In Herefordshire, for example, the three schools that have received the grant are using at least two-thirds of it to fund joint activities, including work on a new model of school self-evaluation that could eventually be used throughout the county.

“Bearing in mind that all schools are finding things difficult in terms of funding at the moment, we are very keen that the benefits of any additional funding that schools receive are shared more widely,” said Ted St George, the LEA’s head of school improvement services.

While criticism of the grant has focused mainly on the “cliff edge” it has created between secondary schools, there is also concern that primary schools have been left out altogether.

Mel Ainscow, professor of education and co-director of the leadership development unit at Manchester university, believes that the strengthening of partnerships between secondaries could create barriers between them and primaries.

“LIG is tending to encourage separate school improvement initiatives in the secondary and primary sectors. This is worrying because we know that students become vulnerable on school transfer. We have never been good at transfer,” he said One authority that seems to be handling the transfer issue better than most is Knowsley on Merseyside, an Excellence in Cities area, where all 11 secondary schools have received LIG funding and agreed to put pound;20,000 a year each into a central pot. Some of this money is now funding joint curriculum work with primary schools.

The willingness of many schools to pool resources - when they can afford to - suggests that despite years of competition, the idea of collaboration has struck a chord with heads and governors. As Sylvia McNamara, acting head of Birmingham’s advisory support service, put it: “The will is there. They want to work together and they are now tackling the barriers that are inevitably there because of a history of schools being in competition with one another.”

But, she added, a possible new barrier to collaboration was emerging in the form of a recent government proposal to stagger school opening times. While this could cut traffic congestion in Birmingham and other cities, it would go against efforts to help schools align their timetables so that they can, for example, share specialist staff.

As well as promoting closer links among its own schools, Birmingham LEA, along with the private-sector education consultancy Mouchel, is working with Nottingham city council on a project that aims to raise standards through school collaboration. Just over a year ago, before LIG was introduced, Nottingham’s 20 secondary schools were put into four groups. or “quadrants”.

When the grant money became available earlier this year, the schools agreed to put up to 40 per cent of it into collaborative activities, including co-ordinated training and joint appointments of specialist teachers. The quadrants are now exploring the possibility of improving retention by giving new teachers the chance to work in several secondaries. They are also thinking of bringing school governors together to share good practice.

The city’s headteachers have already discovered that working together on areas of common interest is better than reinventing the wheel in isolation. “We have been sharing good practice for a long time, but we didn’t have the forum in which to do it. Going down this route has created that forum,” said Pat Dubas, head of Hadden Park high, a “fresh start” school where the proportion of pupils with five good GCSEs rose from 16 per cent in 2002 to 26 per cent this year.

Across the city GCSE results have shot up by more than 5 per cent, which makes Nottingham one of the fastest improving authorities in the country.

It’s more than was achieved in the previous five or six years put together,” said Andy Mortimer, Mouchel’s project manager. “We can’t prove it’s the result of collaboration, but there’s got to be a connection.”

Where the grant goes

Worth pound;125,000 a year over three years, the leadership incentive grant goes to secondary schools where more than 35 per cent of pupils are eligible for free school meals or where fewer than 30 per cent earned five top-grade GCSEs in 2002 or 2001. Any Excellence in Cities, education action zone or excellence cluster secondary also qualifies, so even the highest performers in these areas are entitled to the grant.