For the first time in many years no end-of-year underspent cash was made available for new equipment or research projects, such as the recent Portables for Teachers initiative. And to add to the gloom came the resignation of the boss of the organisation responsible for carrying out most of the Government's initiatives on IT in education.
Margaret Bell, chief executive of the National Council for Educational Technology (NCET), resigned last Thursday at the show. It was a surprise decision as her contract would have run out in July (she leaves at the end of January), and follows pressure from the Department for Education and Employment which is known to have resented her insistence on independence.
Ms Bell said: "I am proud of the progress the NCET has made over the past few years. I am particularly proud of the expertise, commitment and enthusiasm of the staff. They form a firm foundation on which to build future strategies.
"There is still a great deal to do, " she warned. "There are far too few learners experiencing the benefits of technology. In order to make real progress in this, it is necessary to challenge current systems and structures; this can cause obvious tensions when this is initiated by an organisation which is government funded.
"The NCET has a new chair with new ideas. No doubt this opportunity will be used to change its focus and direction. I wish the organisation every success."
Ms Bell's departure comes after a year of wrangling between the DFEE and the NCET, ostensibly an independent quango with charitable status but receiving #163;5 million annual government funding. The first obvious signs of discord came at BETT 96 when the NCET released its report on integrated learning systems, computerised systems that measure children's performances, automatically tailor tasks to their individual strengths and can generate detailed analyses for teachers.
It emerged that civil servants from the DFEE's IT unit, headed by Robin Ritzema, attempted to prevent publication of the report because they did not agree with the findings - only one ILS (SuccessMaker, a US system marketed in the UK by Research Machines) showed significant learning gains during the trials. The NCET stood firm, the report was published and the civil servants were furious.
The situation changed as Ms Bell's power base at the NCET was eroded. Heather Du Quesnay, formerly acting chair of its governing council, became permanent in March. Hers had been an unusual appointment for a caretaker role because Ms Du Quesnay is known for changing organisations rather that caretaking them - in her current role as executive director of education at Lambeth she is "restructuring" the London borough's education department. (NCET council appointments are made by the DFEE.)
In autumn last year, the NCET council had to decide whether to renew Ms Bell's five-year contract. After a bruising meeting that went on until the early hours of the morning, a resolution was passed urging Ms Bell to re-apply for her job, which would be advertised.
It is understood that some council members voted in the belief that if her contract was renewed, then the DFEE would withhold funding.
In a statement issued at BETT 97, Ms Du Quesnay paid tribute to Ms Bell: "The NCET and the education service owe a great deal to Margaret Bell. She has made a major contribution to establishing the UK as one of the leading nations in the use of information technology in schools and colleges. We shall miss her energy and commitment but we hope she will continue to give us her support and to work with us from time to time."
Now the NCET has to find a chief executive for the next five years, one who meets the civil servants' and the council's approval, and the post is likely to be advertised shortly. Mike Littlewood, NCET admin director, will fill the post temporarily.
The civil servants will be looking for someone more malleable than Ms Bell, who was respected for her independent stance, but educationists will be looking for a leader who can maintain the NCET's independence so schools get the informed, confident leadership they need as they move into the brave new world of Internet, video conferencing and the information superhighway. The danger is that suitable candidates will be put off by working on such a short leash held by civil servants.
So what is the NCET's new direction? Ms Du Quesnay said this week that the NCET was "entering a new phase in its development". It was not just one person but "a great many talented people", and she was looking forward to "a productive relationship with the department".
"Strategic partnerships" would be built with outfits like the Teacher Training Agency and the Office for Standards in Education. But she ruled out a merger. "I personally think we would lose something important if we merged the NCET with one of these bodies."