“How on earth can anybody take Rutland seriously as a unitary authority?” is Local Government Association education chairman Graham Lane’s verdict on the smallest mainland local authority in Britain.

But despite the county’s struggling finances, it believes it made the right decision to go it alone - and even argues it is in the vanguard in delivering the new Labour agenda.

Primary school targets? Done that. While other authorities embark on laborious negotiations, Keith Bartlett and his team of four whizzed round Rutland’s schools in five days. Of course, it helps when there are few enough to count on your fingers and toes.

While some expected the authority to have to buy everything in, it provides most services itself, from payroll to school meals - and, it claims, does it cheaper than Leicestershire did.

Rutland is talking to its four grant-maintained secondaries in a way it believes all LEAs will have to in future. It probably has the closest relationship of any authority with its schools. It has even set up its own music service using local professional musicians.

But the cash question is all-pervasive, because the figures do not look good. While most English schools are boasting increases, Rutland’s primaries face a 2.6 per cent cut. Staff are being laid off. Class sizes and the number of mixed-age classes will increase.

Worryingly, Rutland has been unable to bid for any grants that require matching funds.

“We’ve cobbled together a reduced bid for the National Literacy Strategy,” says Mr Bartlett, “but there’s no money for the National Grid for Learning, early- years training and development, or training schools in the use of national curriculum data.”

Schools have mounted a vigorous campaign, and questions have been asked in the House. So far they have elicited education minister Stephen Byers’s sympathy but no cash.

Rutland is vulnerable to forces other authorities would swallow up. Changes in pupil numbers have a disproportionate effect in a county prey to the whims of the armed forces. A change in squadrons at two RAF bases means school roles are about to plummet only to shoot up again next year.

Mr Bartlett is optimistic that inequities in the funding formula which penalise England’s most sparsely-populated county will be put right in the forthcoming review of local government finance.

“I believe even more strongly in light of the Bill that size isn’t an issue for local education authorities - provided there is equitable funding,” he says. “In an increasingly delegated framework where responsibility sits very strongly with the schools, size is irrelevant.”