Right-wing policy-makers this week urged ministers to "think the unthinkable" - to abolish local education authorities and make all schools self-governing.
The Institute of Economic Affairs called on the Government to continue the radical restructuring of education started by the Conservatives a decade ago, claiming such a move could release an extra Pounds 2 billion into schools.
"It must go forward, improve upon and complete the task already under way," said the IEA in a paper published this week.
"Just because it was the Conservative governments of the last decade which recognised that standards were too low, bit the bullet and began to reorganise the way education was delivered is no reason for Labour to go back to the way things were when it was last in power in the 1970s."
Written by Dick Atkinson, who founded a Birmingham school for "at risk" pupils excluded from mainstream education, the paper said Labour had to look beyond the divisions created by grant-maintained and locally-managed schools.
It acknowledged that attempts by the Conservative government to alter the education culture through opting out had been flawed, divisive and surrounded by confusion.
But it said that schools of all kinds should be made self-governing (a term first used by former education secretary John Patten), arguing that it was no longer relevant for them to be managed or funded by bureaucrats.
Schools had developed an unproductive dependency on local authorities, lost motivation and lowered their sights as a result of staying within the local authority fold. "The way education has been managed by LEAs has hindered the now agreed quest for schools to raise standards," it said.
But simply putting more money into education was not necessarily the answer to raise standards, argued Dr Atkinson. He claimed the cash was unlikely to reach the classroom without radical change.
"Schools do not so much need new money as to access that which is already in the system."
He pointed to research which suggested that local authorities retained, on average, 30 per cent of funds potentially available to schools and that the total sum withheld nationally could be as much as Pounds 2 billion.
Dr Atkinson suggested all schools should be made self-governing and equally funded on a per capita age and disadvantage-weighted national formula.
"All that is required to resource schools well is. . . to use existing funds differently, to redirect them from the bureaucracy of the LEA to schools which can then target them to their own distinctive needs."
Self-governing schools could be encouraged to link together in clusters, providing for needs which could not be met individually, he argued.
Towards Self-Governing Schools by Dick Atkinson is available from The Institute of Economic Affairs, 2 Lord North Street, London. Price Pounds 11 (including pp).