SCHOOLS still reeling from this year's budget crisis face a real cut in funding next year, according to MPs.
The Commons education select committee made the claim as it grilled senior civil servants from the Department for Education and Skills over the crisis.
Its warning came as council leaders prepare to lobby for an extra pound;1 billion for education next year to avoid a repeat of the crisis which has threatened hundreds of jobs.
Speaking after this week's select committee hearing, David Normington, the DfES's permanent secretary, insisted: "We are not planning on a real terms decrease."
But the MPs fear an expected 1.4 per cent real increase in 20045 - compared to 2.7 per cent in the current financial year - will prove inadequate.
Paul Holmes, Liberal Democrat MP for Chesterfield, said: "If this year's increase in funding did not meet the additional costs of pay, pensions and national insurance and next year's is smaller, it's hard to see how (schools) are not going to have the same problems."
Committee chairman Barry Sheerman criticised the DfES's handling of three crises - the collapse of individual learning accounts, higher education funding, and school funding.
And he told Mr Normington: "If you were a private-sector company, your chief executive might be saying you might want to consider your position.
"There are quite serious allegations that ministers were not given the full information they could have had (about changes to school funding this year)."
Mr Normington accepted the department's reputation had been damaged, but said its advice to ministers had been "good work".
In a House of Commons debate, Prime Minister Tony Blair said that only a very small number of teachers faced the sack because of funding.
He said: "In actual fact, however, every year there are certain numbers of teachers made redundant. Overall, we have a massive increase in the number of teachers over the past six years and the funding per pupil in our schools has risen significantly."
Both government and council leaders are pressing for an extended pay deal which they say would allow heads and local government to plan for the future. Councils also want pay awards moved to September.
After the hearing, David Hart, general secretary of the National Association of Head Teachers, said: "A real-terms increase of 1.4 per cent will be inadequate to repair the ravages of this year and provide money for workload reduction. A real-terms decrease would be catastrophic."