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Education secretary Charles Clarke is drawing up 'radical' plans to prevent a crisis in school funding by proposing three-year finance deals paid directly to headteachers, according to The Independent on Sunday (p4).

The plans to bypass the local education authorities come after a long-running row over school funding. The Department for Education and Skills confirmed at the weekend that talks were talking place, prompted by Mr Clarke and backed by Tony Blair, to avert further problems. The proposals to fund schools will provoke those who oppose similar policies for the health service. The fear is that without the filter of local authorities some schools will prosper at the expense of others.


Local authorities are planning a legal challenge to the government in an attempt to claw back millions of pounds for schools 'as the feud over the cash crisis in education grew increasingly ugly' at the weekend, reported The Observer (p13).

London boroughs are preparing to take ministers to court over decisions by the Department for Education and Skills and the ODPM which have left some schools in the capital with a £450,000 funding shortfall. The move is being planned by a group of London authorities which believe changes in funding will have a devastating effect on their schools. The action will be watched closely by councils across the country considering their own legal challenge.

Meanwhile, councils themselves are preparing for dozens of court challenges from parents affected by the staff cuts and lost school time caused by the cash crisis.

The boroughs of Newham, Merton, Haringey, Ealing, Barking and Brent all pay inner-London salaries to teachers, but are classified by central government as being outer London so do not receive extra cash to fund their higher salaries. It is estimated that the six boroughs lose around £20m in this way each year.

Local Government Associat ion education chairman Graham Lane added to calls from the National Union of Teachers for an immediate injection of cash. 'If this £20m was in London budgets, we would be a long way to solving our problems,' he said.

Shadow education secretary Damian Green said: 'When you have Labour local authorities threatening legal action against a Labour government, you know that the breakdown of trust between local and central government is complete.

'This crisis has been handled by [education secretary] Charles Clarke with a mixture of aggression and complacency and leaves thousands of children affected. Every day that passes, the two sides get further apart. If redundancy notices are going out at the end of next week, then this is not the time to play pass the buck.'

A government spokesman warned that taking legal action would 'benefit no one' and added that Brent, Newham and Ealing all received funding well above the minimum level this year.

The newspaper said that over the past month the NUT had written to Mr Clarke on three occasions seeking an 11th-hour cash injection into schools budgets to stave off redundancies. However, he has refused even to acknowledge its demands, let alone provide much-needed funding, which has infuriated senior union figures.

Unrest will mount this week as hundreds of redundancy notices are issued to staff at schools which have to cut posts in time for the start of term in September respond to Friday's deadline to begin making the necessary reductions. An NUT survey revealed that as many as 900 teachers are to be laid off around the country. Desperate headteachers are said to be turning to increasingly desperate measures to balance their books.

Last week deputy prime minister John Prescott set up a task force of ministers and local authority officers to investigate this year's funding crisis and avoid a repeat next year. In a move seen as a split between Mr Prescott and his cabinet colleague, Mr Clarke is planning to move towards more direct funding of schools from cent ral government, with a national funding agency set up to sidestep local authorities.

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