Andy Kerr, Finance Minister, has given a clear hint that education is to be among the main beneficiaries of the spending review for 2005-08, the results of which are due to be unveiled in September.

Meanwhile, local authorities say schools in particular should have a major claim on new resources, and have put in a bid for extra spending amounting to pound;62 million in 2005-06, rising to pound;178 million in 2007-08.

In his financial statement to the Scottish Parliament last week, Mr Kerr outlined a two-pronged initiative which involves a drive “to attack waste, bureaucracy and duplication” in the public sector - saving an estimated pound;1 billion by 2010 - while allocating pound;403 million in additional spending from “end-year flexibility” released by underspending - an irony not lost on opposition critics.

Mr Kerr made it clear that investment in skills and education was essential to achieve the Scottish Executive’s top priority of economic growth, adding: “I will say more about that in the spending review.”

He announced, however, that the year’s end underspending has allowed new spending of pound;20 million in this financial year for capital investment on colleges and universities, thought to be split equally between further and higher education. This would enable an earlier start “to modernise the teaching infrastructure and promote collaboration”.

Mr Kerr promised to “set out further investment proposals for further and higher education in the spending review”.

The Finance Minister also signalled a priority for online learning in schools where, he said, Scotland “aims to lead the world”. As a result pound;10 million would be brought forward to upgrade technology to allow schools “better access to the latest online learning material, including the digital curriculum that is being developed by the BBC”.

Mr Kerr stressed that his announcements related to spending on decisions “that would have had to be paid for in due course. By bringing them forward, we both bring forward the delivery of our programme and free up resources for the future.”

Within days of Mr Kerr’s statement, the Convention of Scottish Local Authorities set out spending claims which it describes as “probably the most important document produced by Cosla on behalf of our members”.

After talks among themselves and, significantly, with the Scottish Executive, the authorities say they need an extra pound;421 million in the coming financial year for a range of services, increasing to pound;680 million in four years.

Pat Watters, Cosla’s president, made clear the cash was to cover extra commitments, new policies and areas of significant underfunding from the previous spending review - not for increases in the general grant paid to local government by the Executive.

Education’s share of pound;62 million for 2005-06 is largely fuelled by ministers’ commitment to have an extra 3,000 teachers by 2007, which the authorities estimate will cost pound;19 million next year, increasing more than sixfold to pound;126 million within four years.

This programme includes expansion of the chartered teacher programme and recruiting teachers to shortage subjects.

According to Cosla’s submission to the spending review, councils will also have to be funded properly on a range of other educational fronts. These are (for 2005-06):

* Renewing ICT in schools so that all can have broadband access (pound;13 million).

* Personal learning plans for every child, to cover ICT support and teacher training (pound;10 million).

* Independent residential special school fees for pupils councils cannot support (pound;9 million).

* Home to school transport for youngsters with special needs (pound;8 million).

* The winding down scheme allowing teachers gradually to head for retirement (pound;3 million).

The convention says that, without additional resources, local authorities will be unable to meet their share of the costs of ministers’ policy commitments.