Clarke assumes command of school budgets after blunder

Stricter Government controls are to be imposed on school funding to try to avoid a repeat of the education budget fiasco this summer that has led to hundreds of teachers and support staff being made redundant.

Ministers admit that they may have blundered in scrapping more than £1bn of centrally controlled grants to schools to improve standards this year - giving the money instead to local education authorities to distribute.

Schools that had received the grants, often cash awards for excellent performance, had their budgets slashed. Redundancies became inevitable at these schools as local authorities spread the money around all their schools.

Today Charles Clarke, the Secretary of State for Education, is to make a statement on school funding. He will seek to take more central control over the distribution of next year's school budgets.

One of his aims is to ensure that all schools get a cash increase per pupil, to protect against cuts in 2004-05. He will also call a halt to further reductions of Whitehall grants to improve school standards.

Mr Clarke has been making clear that he does not envisage any extra cash for education above the £1.4bnin the spend-ing review of Gordon Brown, the Chancellor.

Local authority leaders say further cuts can only be avoided next year if there is a "quantum leap" in funding. They say the £1.4bn will be swallowed up by increased costs. "While much of that 'leap' is yet to be costed, for example teachers' pay increases, we estimate it could take several hundred million pounds in further funding to avert further difficulties next year," Sir Jeremy Beecham, chairman of the Local Government Association, said.

Privately, though, some local authority leaders are happy that the Government did not bow to pressure to increase the budget immediately. "It would have been harsh on schools that had already made harsh decisions if others were bailed out," one said.

A survey by The Independent this week showed that one in five heads had bled dry the school reserves to avoid cuts this year - and believed they would be forced to declare redundancies next year unless there was a substantial increase in funding.