The assembly government’s education spending review will fail to make a real difference unless it deals with the inefficiencies of Wales’s 22 local authorities, teaching unions have warned.

The seven-week pound;180,000 exercise by independent auditor PricewaterhouseCoopers revealed that almost one-third of the pound;4.5 billion annual education budget fails to reach the front line.

In fact, only 44 per cent - pound;1.8 billion - goes directly to schools to spend on teaching and learning.

Although the report was widely welcomed by the sector last week, many have now said they are frustrated it did not deal sufficiently with the “elephant in the room” - Wales’s 22 local authorities.

More than pound;560 million of education funding was retained centrally by local authorities last year, according to the report.

But while it acknowledged that there was a “persistent concern” that the number of local authorities was “inappropriate” for Wales - which has 480,000 learners in 1,800 schools - it shied away from advocating wholesale reform.

Instead, it suggested a number of measures to free up more cash to the front line, including setting up regional consortia to run schools and merging education administration systems geographically.

Rex Phillips, Wales organiser of the NASUWT teaching union, said: “We have repeatedly questioned the economies of scale provided through 22 local authorities. For schools and local authorities, the issue is not one of tinkering with the support services; it is about addressing the pound;527 per- pupil funding gap while maintaining the support and services that schools rely on in order to function effectively.”

Gareth Jones, secretary of the Association of School and College Leaders Cymru, said: “It really is the elephant in the room - 22 local authorities are too many for a population the size of Wales. However, reorganisation on that scale is going to cost a lot of money and there is no appetite for it politically.”

Even Leighton Andrews, the education minister, has acknowledged that the situation is not ideal.

Speaking after the launch of the report, he said: “I would not myself have invented 22 local education authorities, but there’s the danger we get into a distraction of radical reform. Questions about the future of local government are something to consider. There’s variability and different practices between local authorities. We need to look at what is the best practice and what maximises the money going to learners.”

Mr Andrews said he wanted the publication of the report to be the start of a process of “dialogue, discussion and debate” with everyone in the education sector.

But while most within education are keen to take part in that debate, they want it backed up with action.

The NASUWT labelled the report a statement of the “blindingly obvious”, and said it doubted there would be scope to make any significant savings.

Philip Dixon, of ATL Cymru, warned: “Those on the ground will only trust the government when they see more money coming into their schools. You can have all the rhetoric in the world, but if there’s no money, there’s no trust.”

Funding gap fought

The education spending review was prompted by the growing per-pupil funding gap between Wales and England, which has reached a record high of pound;527.

During his leadership campaign, Carwyn Jones, the new First Minister, pledged to increase education spending by 1 per cent above the block grant from Westminster from 2011.

In January, education minister Leighton Andrews announced a major review of the cost of administering education in Wales.