The Conservatives and headteachers accused the Government yesterday of making up for its own funding mistakes by allowing schools to raid their building repair budgets to save teachers' jobs.
Damian Green, the shadow Education Secretary, told a House of Commons opposition debate on the school funding crisis that Charles Clarke, the Secretary of State for Education, was using new budget flexibilities as a "fig leaf" to cover up his "spectacular cock-up" on funding.
Teaching unions added their criticism of the proposals, saying the Government should provide fresh funding to improve school finances.
Mr Clarke has announced that schools facing deficits will be allowed to use more than £500m set aside nationally for building repairs to save teachers' jobs. Schools were told they could set deficit budgets with the local authority as long as they could repay the debt over the next few years.
Wealthy state schools will also be encouraged to bail out their struggling neighbours by lending their reserves. Mr Clarke insisted that no extra funds would be allocated to schools.
Mr Green said: "What we have seen today is a panicky, short-term response, which takes money out of one pocket in a school's budget and inserts it into another."
Mr Clarke has stepped up his war on local education authorities by signalling a move towards direct funding of schools. He admitted that this year's funding problems were owing to a combination of decisions by central and local government but he criticised local authorities for increasing their central education budgets at the expense of school funding and for passing on very different increases to individual schools.
Mr Clarke's political opponents condemned his attempt to blame local authorities, saying it was a smoke screen for government underfunding of schools. Phil Willis, Liberal Democrat spokesman on education, told the House of Commons that local authorities were not to blame and accused Mr Clarke of making "crude threats" against them. "Rather than attacking local authorities, you should congratulate them for carrying out the Government's wishes ... and trying to assist schools to deal with this particular crisis," he said.
Although education funding rose by £2.7bn this year, schools faced a £2.45bn rise in costs. This national rise of £250m was too small an increase to ensure that no school would have to make staff redundant, headteachers argued.
Nick Christou, headteacher of East Barnet School in north London, said that even spending his entire £90,000 school repairs budget on staff would not balance his budget deficit of £300,000. "I am faced with losing ten staff," he said. "We have an appallingly leaky roof and water pours in whenever it rains. I was going to spend the £90,000 fixing it but obviously I'd rather have a leaky roof than lose my staff. But even then I'll have a deficit of £210,000. This Government should be ashamed of itself."
The unions said headteachers should not have to choose between making repairs to buildings and paying salaries.
David Hart, general secretary the National Association of Head Teachers, described Mr Clarke's refusal to allocate extra money as "a bad error of judgement. We doubt very much whether the prospects of job losses ... can be staved off."
Doug McAvoy, general secretary of the National Union of Teachers, said: "This year's quick fix is next year's major problem. [Mr Clarke's] funding announcement represents no solution, just a refusal to acknowledge the obvious. The Government has got its sums wrong and schools are suffering as a result."
Gerald Imison, joint acting general secretary of the Association of Teachers and Lecturers, described Mr Clarke's solution as a stop-gap. "The immediate cost is that teachers will continue to work in crumbling schools," he said.
Chris Waterman, general secretary of Confed, which represents chief education officers, said: "We do not accept that local education authorities were the cause of these problems."