Local authorities' attempts to put more money into primary education could be scuppered by new funding rules for grant-maintained schools.
Changes to the Common Funding Formula this April will see national figures used for the first time to calculate the primarysecondary split in spending.
Local authorities and grant-maintained schools have been told that for every Pounds 1,000 spent on primaries, Pounds 1,350 must go on secondary education.
Surrey, one of the 24 local authorities that have to use the CFF system because of the number of GM schools in their area, estimates that the decision will cost its primary schools around Pounds 4 million, with the cash going into GM secondaries. The county council has been attempting to redress the disparity in funding between its primary and secondary schools in line with the advice issued by the all-party House of Commons Select Committee on education. It has for many years funded primary schools above the national average. For every Pounds 1,000 it spends on the sector, Pounds 1,250 is allocated to secondaries.
Money for the CFF is taken out of local authorities' education budgets and Surrey estimates that the new formula proposed by ministers will increase the county's Pounds 113.8m secondary school budget by Pounds 6.5m.
Paul Gray, director of education services, said the council would have to find the extra cash by cutting other education budgets or services and has told headteachers that the primary budget could be reduced by 8 per cent.
"This could not affect class organisation until September," he said in a letter to them. "The effect on staffing would be almost 15 per cent. Class organisation could be changed radically."
In theory, the CFF applies only to the grant-maintained sector. However, in practice local authorities do not fund their own schools at a lower level. If they did, heads might be tempted to opt-out. And if LEAs fund their schools at a higher level, protection for GM schools enables them to be lifted to it.
In April, the CFF will be extended to 31 councils - seven of them new unitary authorities - as well as primaries in Essex, Gloucestershire and the London borough of Hillingdon.
Up to now the CFF has been based on the standard spending assessment for schools in each local authority, minus a sum to cover services still provided by the council, the so-called "top slice". These services include special needs and home-to-school transport.
Across the country the changes to the way it is calculated using national figures for the primary and secondary split will have a neutral effect. But there will be wide variations. While Surrey estimates that it will lose Pounds 4m, Kent stands to gain Pounds 5.3m because it had a higher than national average differential between primary and secondary spending.
Roger Crouch, head of education policy, said: "We are gaining from something we have always argued against - the standardisation of the formula and the application of national funding patterns to local authorities." He said the saving was welcome, but pointed out that the authority as a whole was facing cuts of almost Pounds 79m and service cuts of more than 10 per cent.
Alongside the change in the way the primarysecondary split is calculated, ministers have also decided to alter the rules covering the top slice and use national figures for special needs.
Stewart West, a finance officer at Calderdale, said that compared to the current year the change in 22 local authorities would be around 1 per cent or Pounds 6m less for special needs.
Many councils believe the changes are the first step to a national funding formula, something ministers have previously shied away from because it would produce winners and losers.