Schools in deprived areas could lose money in a radical reform of funding to be announced next month.

Current direct grants will be replaced by a single school improvement grant in a new system intended to give heads more freedom over how money is spent.

Excellence in Cities, the Government’s flagship scheme to raise achievement in deprived areas, is among the grants to be axed - a move unions and council leaders fear could hurt poorer pupils.

Other funding streams expected to be rationalised include grants for 14 to 19 vocational training and the leadership incentive grant, which can be used to pay off underperforming heads.

Ministers plan to introduce the changes in 2006.

John Bangs, National Union of Teachers’ head of education, said: “This could leave the most deprived schools high and dry.”

Graham Lane, Local Government Association chair of education, said:

“Ministers need to be careful that they do not end up with schools in the greatest need losing out.”

The new system will have as few as four separate funding streams. It is designed to make school funding more transparent and avoid a repeat of last year’s cash crisis.

Ministers are expected to reject calls for a national funding formula set by Whitehall in favour of a system that leaves local authorities some discretion over school budgets.

A Department for Education and Skills spokeswoman said that no decision had yet been made on the future of EiC. She said: “We are looking at rationalising grants to make things simpler but that does not mean schools will lose money.”

Simplification of the funding system was welcomed by heads. John Dunford, Secondary Heads Association general secretary, said: “It is sensible to bring together many of the 67 different funding streams for secondary schools.” But he said ministers must ensure there is no repeat of last year’s mistakes, when changes to standards fund grants created winners and losers and exacerbated problems as some schools faced rising costs.

The fund pays for many resources including school travel advisers, interactive whiteboards and the behaviour improvement programme. A further 71 grants have been axed, merged or transferred to another agency since the fund’s inception in 19989.

By 20056 central government funding of schools will have increased ten-fold since Labour came to power. This year Department for Education and Skills spending on schools will be almost pound;10 billion compared to pound;26bn spent by councils.

Excellence in Cities, launched in 1999, covers secondary schools in 58 authorities and primaries in some areas. Annual funding last year was more than pound;350 million.

The Office for Standards in Education has praised EiC for “making an important difference to schools in disadvantaged areas” and GCSE results in EiC areas have risen faster than the national average. However, researchers suggest its impact has been modest (see below).

Pat McDermott, Leadership 34

47 WAYS TO IMPROVE YOUR BUDGET

Excellence in Cities has been one of the more popular of 118 grants since the standards fund was created in 1998. Many have been scrapped, transferred to other agencies or merged. The 47 surviving direct grants are listed below.

INTRODUCED 19989

1. Specialist schools

2. National literacy and numeracy strategies primary strategy

3. Key stage 3 strategy

4. Playing for success

5. Health education partnerships

6. Beacon schools

7. National Grid for LearningICT in schools

19992000

8. Excellence in Cities

9. City Learning Centres

10. Small education action zones

11. Music services

12. Ethnic minority achievement

20001

13. Summer schools for gifted and talented

14. Excellence challenge Aim higher

15. Teacher incentives golden hellos

16. Training schools

17. Fresh Start

18. Devolved formula capital for school

19. Seed capital challenge

20012

20. National Grid for Learning: regional broadband consortia

21. School improvement targeted improvement

22. Diversity pathfinders

23. Child protectionco-ordinators

24. Condition funding

25. Targeted capital projects

26. Interactive whiteboards

20023

27. Behaviour improvement

28. Fast track payments

29. Extended schools

30. e-Learning credits

31. ICT pilot projects

20034

32. Leadership incentive

33. Targeted improvement

34. Study support: quality development

35. Primary behaviour pilot

36. LEA support for workforce remodelling

37. Federations

38. Leading edge schools

39. Raising achievement of African-Caribbean pupils

40. National primary strategy EAL pilot

41. Vulnerable children

42. Enterprise learning pathfinders

43. Key stage language pathfinders: recurrent? 44. 14-19 pathfinders

45. London challenge projects

46. School development grant

47. School travel advisers

Source: Hansard