In a keynote speech on Tuesday, Mr Hague said that the move would save pound;4 billion - equivalent to an extra pound;540 per pupil - which would be given to headteachers to spend as they wish. He also said that the Department for Education and Employment should scrap its "gimmicky grant schemes" and pass more of its budget to schools.
"LEAs as we know them would cease to exist," Mr Hague said. "All the money will go direct to schools."
Education Secretary David Blunkett attacked the Tories for not telling the truth about their plans. "Mr Hague cannot do more than we are doing without scrapping rural school bus services, ending statements for special needs pupils, abolishing education welfare services and removing any help for failing schools," he said. He warned that Mr Hague would end the national literacy and numeracy hours and stop grants for cutting class sizes.
The Liberal Democrats said that Mr Hague's ideas did "not stand up to the real world".
Advance publicity about the speech had centred on school uniforms with Mr Hague saying he would give headteachers the power to exclude pupils who break schools' dress code.
However, if schools receive such a big cash boost they might prefer to be more creative. Gwen Randall, headteacher of pound;11,373-a-year Framlington College, Suffolk, has come up with a novel solution to uniform difficulties. After being unimpressed by her pupils' attire she ordered a new set of uniforms for all of them at a cost of pound;30,000. Mrs Randall said te school had paid for the clothes through "careful housekeeping".
Unfortunately not all private schools have been so prudent. A report by consultants, PriceWaterhouseCoopers, warns that one in seven independent schools is running at a loss with dozens facing closure. According to the report, many are surviving only by borrowing heavily and have no obvious means of paying back their debt.
Many universities are also struggling to make ends meet. Confidential government surveys are reported to show that almost half of British universities are in the red with debts totalling pound;200 million.
However, education action zones - a scheme which channels extra funding to support schools in deprived areas - appear to be in better health. The Government this week extended the life of 20 of the first 25 zones, saying standards had improved significantly.
Schools minister Estelle Morris said that 11-year-olds' numeracy tests scores in zones were four points better than the national average, while the number of pupils getting five A*-C GCSEs was increasing at double the rate of the rest of the country. Attendance has also improved in some areas.
The 20 zones will continue for an extra two years, while the remaining five have until the end of the year to show similar improvements.
Meanwhile, ministers continued to receive a rough ride on grammar schools. This week they came under fire from both sides of the debate. William Hague called for schools to be given freedom over their admissions policies - including selecting by ability, while 20 of Mr Blunkett's own backbenchers called for the abolition of grammars to be made easier.