Two-thirds of the money spent on the education service is allocated by local authorities and Chancellor Kenneth Clarke in his Budget this week allowed them a 2.2 per cent increase on the Government’s estimate of their spending requirements.

However, the local authority associations point out that once account is taken of the extra costs created by councils’ new responsiblities for community care and expenditure on reorganisation, the settlement represents an increase of 0.8 per cent.

Local authorities are spending about Pounds 45bn this year, almost Pounds 1.5bn more than the new total standard spending assessment of Pounds 43. 5bn. The figures mean school budgets, which account for around 40 per cent of council spending, will come under further pressure. Demographic changes mean an extra 110,000 pupils are expected to be in schools this year. Increases in teachers’ salaries may have to be paid for by job losses and larger class sizes.

Local authorities were yesterday due to be given the Government’s assessment of the distribution of grant between services.The associations predicted the shortfall would have to be met by rises in council tax and cuts in services.

Missing from the Budget statement is any provision for the promised expansion of services for children under five.

According to the Department for Education plans are not far enough ahead for an estimate to be agreed with the Treasury. While it is unlikely to happen, the DFE says it would be possible for extra money to be allocated within this financial year. Cash for specialist sports schools was also missing.

Central government spending - mainly on training grants; special grants to opted-out schools and funding for further and higher education - will rise in real terms by 1 per cent. The increase is mainly to fund the Government’s commitment to expand further education and represents a scaling down by about Pounds 110 million on the original spending plans for 199596.

The extent of the failure of the Government’s ambitions for the growth of the grant-maintained sector is reflected in the fact that planned revenue spending has been more than halved from Pounds 193 million to Pounds 83 million. No figures have been provided for future years. The DFE says only that funding will increase in line with the number of GM schools. The figure for capital funding has not been announced.

Spending on the Office for Standards in Education has also been revised to take account of problems the organisation is having in meeting its original targets for the inspection of primary schools. Expenditure on OFSTED in 1995-96 has been revised down by Pounds 13 million to Pounds 98 million. Plans for the following year show spending at Pounds 116m - a reduction of Pounds 5m on the original spending plan.

Overall, central government spending on education in 19956 will be Pounds 10,958m, Pounds 427m higher than the previous year. The figure given in last year’s estimates for 19956 was Pounds 11,059m.

Gillian Shephard, the Education Secretary, also announced an increase of Pounds 60m over three years on previous plans for capital expenditure on schools.

The Budget was attacked by David Blunkett, leader of Labour’s education team, who accused the Government of cutting planned spending on education and of failing to fulfil its promises on nursery education.

Mr Blunkett is urging Mrs Shephard to deal fairly with schools on spending for repairs and maintenance. Figures produced by Mr Blunkett show that average spending on capital on GM schoools in 19945 was Pounds 182.50 per pupill, compared with just Pounds 60.90 per head in local authority schools.