Education secretary Charles Clarke and school standards minister David Miliband will be among those summoned to explain their role in the crisis. Findings from the investigation will be geared to ensuring there can be no repeat of this year's situation, which is likely to leave hundreds of teachers redundant. The commission inquiry will examine the flow of money and decisions from Whitehall down to local authority staff.
Ministers are smarting over a chain of events that has raised questions over their commitment to education despite increasing school funding by £2.7bn. However, new calculations by the Local Government Association claim the funding increase in reality actually amounts to just over £250m - the equivalent of £10,000 a school.
Local authorities have already accused the Department for Education and Skills of blunders in handling this year's budget. In turn, Whitehall has laid the blame at the door of the local education authorities, claiming they have failed to pass on the money to schools. Officials have even threatended to take responsibility for education funding away from councils altogether.
LGA chairman Jeremy Beecham warned of the potential for a repeat of the funding shortfall next year. Unless radical changes are made made to the system a repeat of the chaos would almost certainly happen again.
He said: 'The education service needs to be tailored to local needs and run by local people accountable to local people and supported by the government. That is the only way to get flexibility and money where it is needed.
In a warning aimed at the education secre tary, who will be speaking at the conference, Sir Jeremy said that direct funding would rupture relationships to the point of 'real violence' across the entire structure of local government. 'It will sour the relationship and make it much more difficult to build relationships between schools and other services,' he said.
Instead, he would prefer a local funding formula that could quickly respond to the specific needs of individual schools alongside a scheme to minimise the amount a school's funding can fall.