The Government has scrapped the common funding formula and cut special grants to GM schools in the final year before they are brought back into the local authority fold to become foundation or voluntary schools.

Although Labour ministers have said they wanted to see all schools raised to the funding levels of GM schools, the change will mean standstill budgets for many opted-out schools.

Some 560 GM schools - around half the total - are under the common funding formula, introduced in 199495 for all authorities where opted-out schools take more than 30 per cent of pupils. It applies in 31 local education authorities.

Each authority’s budget is top-sliced for central services and divided up according to a formula set by the Department for Education and Employment to get the funding for each GM school in its area.

But this year schools will be brought back under each LEA’s own local management formula - with the protection that funding per pupil will not fall. In authorities where the common funding formula gave big rises to GM schools, this means they face a standstill budget - a cut in real terms.

Until local authorities set their budgets, it is impossible to say how many GM schools are in that position, but the Funding Agency for Schools believes it could be between 60 and 120.

With a major review of school funding under way, the Government is saying nothing about protection for GM or foundation schools in future years. But heads fear they face major cuts as they are brought back into line with their local authority colleagues.

Wandsworth in south London is one authority where GM schools may suffer. Brigid Beattie, principal of Burntwood Girls’ School, said cuts this year looked manageable but if protections were removed in 1999, she could lose pound;200,000 and half a dozen teachers.