So what happens to LEAs once schools control virtually all their budgets? Labour's consultation paper pinpointed two examples where town halls are providing good services. Mark Whitehead reports.
The headteacher's office at Selly Park Technology College in Birmingham is wallpapered with certificates, awards and computer print-outs showing pupils' exam results. The school is at the fore of the battle to improve education in the city.
A year ago the jury was still out on whether the city, led by Tim Brighouse, its high-profile director of education, had turned around an ailing system. But earlier this year the verdict was given in a good report from the Office for Standards in Education. And in May the authority's inspection and advisory service was selected as a model for other authorities in the Government's consultation paper on school funding.
Mel Tennant, deputy head at Selly Park, points to a pretty lacquered plate given to the school by Singapore's education minister on a recent visit. "We're into a culture of continual improvement," he says. "We're on an upward graph."
The school, which gained technology college status two years ago, suffered a drop in its GCSE results last year which put it below the national average. But staff put that down to a blip because of a poor year's intake. The long-term trend, they say, is up. Mr Tennant believes most schools would support continued central funding for the advisory and inspection service. "In some areas of the country you get the feeling that each school is an individual institution in competition with all the others," he says. "But we're interested in sharing ideas, and a lot of that comes from the LEA. It looks attractive (to schools) to get the extra money, but if the service is broken up there would be no guarantee they would still have the experienced and qualified people to advise the schools."
David Woods, lured away by the Department for Education and Employment to carry out work on education development plans earlier this year, was at the centre of many of the changes in Birmingham's schools as head of the city's advisory service for five years. He oversaw a change in the culture of the authority, and the advisory service, from one of "command and control" to one of "leadership through partnership".
"The schools weren't positively involved in the management of the education authority," he says of the time before the Wragg report.
Several initiatives ushered in under the Brighouse regime have been adopted as Government policy. They included schools setting targets for improving examination results, comparing performance of schools through benchmarking, "guarantees" of what schools would deliver. The city also specialised in concentrating on specific subjects for years at a time; years of information technology and numeracy have been followed this year by the Year of the Arts.
Mr Woods sees a change in the authority's approach, and crucially in its advisory and inspection service, as central to the transformation of the city's schools.
It is not all good news for Birmingham. Exam results have improved but not dramatically, and there are still underperforming schools. Boys, in particular African-Caribbeans, need more attention paid to raising their achievement. Many secondary schools are grant-maintained and there may be problems in drawing them back under the local authority as is planned.
But the prospects appear good. Sue Mulvany saw a city in the middle of a renaissance when she arrived in Birmingham as senior adviser for primary and early years education six months ago. From the impressive newly rebuilt squares to the state-of-the-art concert hall, she believes the city is undergoing a cultural revolution, transforming itself from a dull, shapeless city with a reputation for appalling modern architecture, to a bright forward-looking place at the centre of new Britain. And the schools are playing an essential role in the renaissance.
The advisory and inspection service, she says, now carries out the role of the "critical friend", supporting schools but maintaining rigorous standards. "It's very seductive when you see praise for the LEA in an OFSTED report," she says. "But the drive for improvement is so embedded within the schools they will resist the temptation to be complacent."