Spending variations of up to pound;1,000 per pupil between different Welsh local authorities are “not unreasonable”.

That is the conclusion of the Wales Audit Office, which was commissioned by the Assembly government to discover the reasons behind the disparities.

Its findings drew flak from teaching unions and prompted Plaid Cymru’s shadow education spokeswoman, Janet Ryder, to call for a wholesale revision of the funding system.

But the report was welcomed for highlighting the way budgets are often based on historical spending rather than actual need, and for questioning whether free school meal eligibility is a useful indicator of deprivation.

In 2005-6, the individual school budget (ISB) - the average amount delegated to schools by councils - varied by pound;918 per pupil between primaries and pound;824 per pupil between secondaries.

The Audit Office concluded that large regional variations in pupil spending resulted from how the Assembly government calculates the education part of each council’s revenue support grant, and differences in how councils set their own education budgets.

Factors such as pupil numbers and deprivation, used by the Assembly to arrive at “indicator based assessments” (IBAs) of how much each council should spend on education, are “mostly sensible”, according to the auditors.

But because each year’s IBA is largely based on how much LEAs actually spent on education the previous year, future allocations are largely shaped by historical spending - which can leave them out of line with schools’

actual spending needs.

Ms Ryder said the system needed overhauling to prevent schools being trapped by historical trends.

“This has proved that the funding in no way reflects the cost of providing education in the classroom,” she said.

Brian Rowlands, secretary of the Association of School and College Lecturers Cymru, said: “It is astonishing that a variation of up to pound;1,000 per pupil in spending can be described as ‘not unreasonable’ in the context of national pay and conditions and a national curriculum which applies to every school in Wales.

“The report does, however, demonstrate that school funding is largely based on historical patterns as opposed to an evidence-based assessment of need.”

Geraint Davies, secretary of teachers’ union the NASUWT Cymru, said: “Not unreasonable? I think it’s totally unreasonable. I accept that the highest-paying authorities are mainly in rural areas, but there’s a strong link between the spend in these areas and exam results.”

The report also highlights the fact that funding disparities are often greater between schools within the same authority than between different LEAs.

Differences arise in LEAs with very small primaries - but these may not be a significant drain on resources overall, according to the Audit Office.

While 9 per cent of Welsh pupils are in small schools, they account for only 11.5 per cent of total ISB - a subsidy of around pound;20 million.

The auditors also questioned the level of understanding that school budget forums have of the funding procedure. And they called for a review on whether free-school-meal eligibility is the best indicator of poverty.

At last week’s meeting of the education and lifelong learning committee, Jane Davidson, education, lifelong learning and skills minister, said she would accept the report’s recommendations in full, subject to consultations.