With the Government expected to issue a Green Paper on fundamental reform of local government and education funding soon, the National Association of Head Teachers and the Secondary Heads Association have set out their own vision for the way forward.

The two unions have long campaigned against huge variation in budgets between schools in different local authorities. Schools in similar circumstances can lose hundreds of pounds per pupil in what is seen as a geographical lottery.

The NAHT and SHA are demanding a “national funding entitlement” for all schools, a basic minimum figure per pupil, to be set by the Government.

Schools would then receive extra allowances to reflect need, such as pupil poverty, special needs or London weighting. But the system would be kept simple and transparent. Heads say any funding for deprivation should be lined to concrete measures of poverty - not “proxy” data such as free school meals.

Education authorities would be funded separately to meet the cost of their own duties - such as organising school places and providing school transport.

Currently, all funding goes through the LEA which keeps some and passes the rest on to schools, according to its own formula.

Councils would be free to raise extra cash through the council tax if they wanted to give schools more money.

Heads say a national formula would enable schools to plan better for the future and should give better value for money.

SHA general secretary John Dunford said: “This is what we will be looking for in the Green Paper.

“We are clear that an increasingly national system of education requires a national funding entitlement - the NAHT and SHA have developed a practical way of putting that into action.”

Unions said the growth in education spending, pledged by the Chancellor, Gordon Brown, would ease the transition.