The document was immediately dismissed by Chancellor Kenneth Clarke as “cranky” and “a leak from some kids in the office, some juniors who were asked to go out and produce this as part of a management review”, adding that it was “quite entertaining. . . it doesn’t represent anything to do with Government policy”.

However, Strategic Considerations For The Treasury 2000 -2005 resembles ideas being floated by the American Republican party.

Some senior backbenchers believe the Government has got cold feet on a long-overdue debate, while Labour claims one suggestion - vouchers for post-16 education - was what Clarke wanted in the current Education White Paper.

Suspicions remain that this was a kite-flying leak in the best political traditions - the purpose being to float extreme ideas, gauge reaction, and produce softer versions, possibly for the next Conservative party manifesto.

The document gives serious airings to policies already favoured by right-wingers, including privatising the welfare state and slashing the education budget. Suggestions that central government could deliver primary and secondary education, perhaps through compulsory opting out, the abolition of local education authorities and a central agency to administer student grants, would halve local government.

The document adds: “Consideration is currently being given to reducing state support for post-16 education on the grounds that rising demand is unaffordable and private returns to individuals and their employers exceed social returns.

“To change the balance of funding between the taxpayer and other beneficiaries and to inject more market mechanisms into the delivery of training and education, funding institutions (sixth forms, further education colleges and universities) could be replaced by financing individuals with vouchers, grants, loans and employer contributions.

“The failure of attempts to persuade the banks that they should finance individuals indicates the extreme difficulty of progressing this agenda significantly within the time horizon (2000-2005) we are considering.”

Compulsory opting-out of schools is felt to be difficult to sell by Conservatives on both wings of the party.

Former leadership contender and right-winger John Redwood says it is an idea which would have to be approved by the electorate through a manifesto.

He believes that in any case most of the benefits of grant-maintained status are being provided by increased budgetary delegation to schools.

Demitri Coryton, chairman of the Conservative Education Association, says it would be difficult to order schools to opt out after 18 years of promoting parental choice.

The ending of the principle of free further and higher education is also contentious. Few details were given about how this might be done, and what entitlement vouchers would provide.

Although universities have already experienced the thin end of this particular wedge, with “top-up” fees likely to be charged by some institutions, it is somewhat curious that the document appears to be pre-empting the current Dearing inquiry into all aspects of HE funding. Part of the reason this was commissioned was to get both major parties out of an embarrassing political hole in the run-up to the next election.