Latest skirmish in spending power battle
The battle for control of council spending - of which education makes up the lion's share - is a perennial one between the Treasury and local authorities.
The poll tax was the last, and most disastrous, attempt at a permanent solution. Former Chancellor Nigel Lawson decided as long ago as 1981 that the Treasury should either take complete control of local authority expenditure or require councils to fund all of their services from local taxation.
He wanted the Government to take over responsibility for education entirely- an idea which initially appealed to Margaret Thatcher. But, said Mr Lawson in his autobiography A View From Number 11: "On reflection she decided that it was too radical and that she was not prepared to take on the local authorities, who would greatly resent the loss of their responsibility for schools."
In the end Mrs Thatcher set up a Cabinet sub-committee from which the Education Reform Bill emerged and the compromise principle of allowing schools to opt out of their local authority.
John Major's desire for all schools to become grant-maintained may now have put the matter back on the agenda, particularly given the ending of council control over polytechnics and colleges.
Such a step would overshadow all previous changes to local government since 1979 and would raise serious concerns about the future of other council services and the immense difficulty of introducing a national funding formula.
It would also create a new tier of bureaucracy, answerable at arm's length to the Secretary of State, with the prospect of disagreements over accountability when things go wrong.
The recent dispute over who is accountable for mistakes made within the prison service, in which Home Secretary Michael Howard argued that he was not responsible for operational decisions, is a mark of politicians' reluctance to accept blame.
Doug McAvoy, general secretary of the National Union of Teachers, told a meeting at the House of Commons last week: "If the Government had set up an education services agency, the director would have been sacked either because too many children are playing truant or are in danger of accident due to the condition of our schools, or because classes are oversized and parents are complaining.
"The Secretary of State would have said that these were operational issues that don't stem from policy yet every one of these problems is a policy matter."