ALMOST daily, new stories emerge about the state of the schools and the effects of government spending cuts. A school in Gloucestershire may have to close because its governors have resigned in protest at the prospect of over-sized classes; a school in Oxfordshire says that it is so strapped for cash that it may have to levy a "voluntary" income tax from its parents; other schools talk of putting their children on part-time education. "From Shropshire to Lancashire, from Sheffield to Somerset and from Cornwall to Oxfordshire," said David Blunkett, the Opposition education spokesman, in a debate in the Commons, "people are struggling to defend their services."

But are schools really so badly off? In the same debate, held last month, Gillian Shephard, the Secretary of State for Education, was on her feet, putting the government line. And, as yet another Labour member rose to ask why schools in his constituency were so badly funded, she made a statement that is likely to astonish every teacher, school governor and parent in the country. "The following facts cannot be ignored," she said. "Since 1979, real spending per pupil has gone up by 50 per cent. Spending on equipment and books has gone up by 55 per cent, on repairs and maintenance by 15 per cent and on support staff by 135 per cent."

How is it possible for there to be such a difference between what a minister says is happening and the daily reality that teachers and parents alike observe in the schools? How can education spending have been rising steadily since 1979 while, over the same period, the chorus of complaint about shortages of textbooks, over-sized classes and crumbling buildings has grown ever more insistent?

One possible explanation - and it is certainly part of the truth - is that expectations have also risen. The world has changed dramatically since 1979; nobody expects their homes or businesses to be as they were then. People drive better cars and live in more comfortably-furnished homes. They naturally want more for their children. Parents who live in houses equipped with videos, personal computers and microwaves are not likely to remain silent when they deliver their children each day to schools with holes in their roofs.

It is also true that educational expectations have risen: many more children stay at school or college beyond 16 and the proportion who go on to university has more than doubled to 30 per cent. For this, the Conservatives must take some of the credit.

But there is another reason for the chasm between Mrs Shephard's rose- tinted picture of our schools and the much grimmer reality which teachers and pupils now experience in the classroom. Her figures may be accurate but they do not tell the truth. If ever there were an illustration of Disraeli's much-quoted dictum about lies, damned lies and statistics, this is it.

ALL attempts to quantify how spending has changed over 16 years are bedevilled by inflation. When the Tories came to power, the average spending for each school pupil was £510 a year. By 1992-3, this sum had risen to £1,855 - a rise of 264 per cent. But not even Mrs Shephard would try to pretend that schools could buy 264 per cent more.

The figures she gave to the House of Commons were adjusted for inflation. This was how she concluded that schools were more than 50 per cent better off than they were in 1979. (See first graph above.) But her adjustment was based on what economists call "the GDP deflator" - a measure of how prices have risen in the economy generally. To give a true picture - the one that teachers and parents would recognise - her adjustment should have been based on how education costs have risen. By far the largest element in the school budget is teachers' pay. And, since 1979, teachers' pay, against the retail price index, has risen by 38 per cent. At first sight, this seems surprising. Aren't we always hearing complaints about how badly teachers have done under the Tories? The answer is that they have done badly compared to other people. Almost every white-collar worker is dramatically better-off than in 1979; teachers, while keeping ahead of inflation, have slipped down the pay league. (See graphs below.)

The important point, however, is that higher teachers' salaries reduce sharply the amount of money that can be spent on books, equipment, examination entry fees, repairs, and all the other things that directly affect children. They also reduce what can be spent on hiring extrateachers; indeed, schools may even find that they have to make do with fewer teachers and, therefore, larger classes.

This is precisely what the present crisis in funding is all about. The Government has given local authorities more money for schools compared with last year; but that is not enough to cover an increase in teachers' salaries, just awarded by an independent review body. The result is that heads and school governors face an uncomfortable choice: sack teachers to reduce the salary bill (and so increase class sizes) or reduce spending on, say, books and equipment.

Michael Duffy, head of King Edward VI School in Morpeth, Northumberland since 1980, is in no doubt that things have got worse. He has roughly the same number of pupils as in 1980, but 10 per cent fewer teachers. So classes are bigger and his staff have fewer "free" periods outside the classroom for the preparation of lessons.

"I am ashamed," Mr Duffy said, "when I think back to the complaints I used to make. There is no doubt I could turn up long and impassioned letters to the authority from 1980 saying we didn't have enough X, Y or Z. Now, quite simply, we can't order anything unless we are satisfied that it is within our budget. You have to do some very hard thinking about priorities." Pat Partington, head of Bramcote Hills primary school in Nottingham, tells a similar story. This year, the school needed its drive resurfaced at a cost of £3,000. But there was also a clear need for additional reading books, a new television and video and sufficient supply teachers to allow the staff time to work on a new curriculum to comply with government orders.

The school had to do without all these things. "It was curriculum versus repairs," said Mrs Partington, "but the drive was in such a state that it came into the area of health and safety and it had to be done."

WHAT, then, has really happened to spending on schools since 1979? The first answer comes from the Chartered Institute of Public Finance and Accountancy (Cipfa) which produces a measure of inflation that includes such items as books and building maintenance as well as teachers' pay. When this index is used the real rise in spending per pupil since 1979 is not 50 per cent, as Mrs Shephard claimed, but 21 per cent.

That still sounds generous - and it still gives a false picture, according to Don Foster, the Liberal Democrat education spokesman. He points out that, since 1979, pupil numbers have dropped by 13 per cent. Because every school has fixed overheads, such as buildings, spending per pupil can, in theory, rise automatically without children getting a penny extra.

Mr Foster asked the Commons library to re-calculate the spending figures taking these points into account. The results were startling. Overall, spending per pupil had risen by only 4 per cent since 1979; and, though primary school children had a 15 per cent rise, those in secondary schools had had a 5 per cent drop. (See second graph above.)

That is a long way from the picture that Mrs Shephard presented to MPs. Mr Foster argues that the Government has attempted to massage the figures and has been caught out. "What they are effectively doing," he says, "is saving up money to offer tax bribes at the next election, and they are doing that at the cost of the current generation of pupils and students."

But many teachers and governors would argue that the picture is even worse. Mr Foster's figures take no account of the increased demands made on schools. For example, more children enter exams, so increasing the bill for entry fees. More schools, in response to government demands, are offering vocational courses, which are more expensive than A-levels. Above all, the computer revolution has created an entirely new item of spending in school budgets. In the mid-1980s, only £2-£3 per pupil was spent on computers; now, the figure is around £30.

An audit of the nation's schools under the Tories would therefore go something like this:

l Class sizes: These have been rising steadily since the late 1980s and are now larger than they were when the Conservatives came to power. (See third graph above.) As class sizes grew, the Government's rhetoric on the subject changed noticeably. The party manifestos of 1983 and 1987 proudly stated that there were more teachers to pupils than there had ever been. In the 1992 election, however, there was no mention of the subject and in the same year Kenneth Clarke, then the Secretary of State for Education, described class size as "a relatively minor issue". Two years later, Eric Forth, another education minister who has now moved on, denied that there was "any proven connection between class size and quality of education".

The experience of a school like Bramcote Hills mirrors the national figures. In 1978, Pat Partington recalls, some classes had as many as 52 children as families flooded into a new estate that had been built near the school. By 1987, Mrs Partington also recalls, only one of the school's 11 classes had more than 30 pupils. Now, all but two have reached that level again and there will be classes of 34 this year.

l Repairs and maintenance: Here, spending is hardly changed: using the Cipfa method of discounting inflation, instead of Mrs Shephard's, it was £84 per pupil in 1979, £83 in 1992-3. In primary schools, spending has dropped since the mid-1980s. This revelation will come as no surprise to staff in the hundreds, possibly thousands, of schools which still have leaks in their 1960s-built flat roofs.

Among them is Bramcote Hills, where increases in pupil numbers have belatedly led to the building of two extensions after years of classes being taught in the entrance hall and in the library. Much-needed repairs were also carried out three years ago and Mrs Partington is proud of her school buildings now. Yet on rainy days the staff still have to put out buckets to catch the drips in the hall and in the resources room.

l Capital spending: According to an Oxford University study using the Cipfa index, the amount spent on school building projects is down since the Conservatives came to power - £933.9m in 1992-3 against £967m in 1980- 1.

l Books and equipment: Here, there is undeniably a rise in spending, but it is less than half what Mrs Shephard said it was. Using the Cipfa index, it has risen by 25 per cent since 1979, not the 55 per cent claimed by the minister. And in this item of spending schools have faced particularly high demands: new textbooks for the national curriculum, as well as computers.

ALL the figures on which this article is based were given to the Department of Education on Friday. None was disputed.

A spokesman conceded that the Cipfa index was a better measure of the "volume" of spending - what schools actually received from the taxpayer. But, he insisted, Mrs Shephard's figures were the best indicator of changes in the cost of education to the British economy as a whole. "The Government does not believe that looking at the prices in the education sector alone gives a true picture of the resources it has devoted to education," the spokesman said.

All the head teachers are concerned about is that they will continue to struggle. Some take it more cheerfully than others. "We cope," Mrs Partington said. "That's the problem with schools. Throw a problem at them, and somehow it becomes a challenge, so they cope." In Northumberland, Michael Duffy, who is due to retire this year, is more gloomy. The introduction of the national curriculum, the assessment of it and the transfer of budgetary responsibility to schools had all increased the demands on teachers.

"We are asking a lot more. We are asking teachers to do it with much larger classes and we are asking them to do it for more of the time," Mr Duffy said. "The worry is that the pressure starts to build up. I have told my governors that the cracks are beginning to show." The cracks are now clearly showing at Westminster, too. Last year, Mrs Shephard wrote privately to her Cabinet colleagues warning them of the consequences of cuts, and demanding more money to fund the teachers' pay award.

She lost the battle and was left to try to convince MPs that schools had done well out of 16 years of Conservative rule. Almost nobody believed her; unless she can get a windfall for the schools next year, the fear is that what are now cracks in the system will become chasms.