Some schools' budgets were well short of costs

Tony Blair's advisers want to remove "the middle man", in an effort to avoid a repeat of this year's funding crisis, according to The Independent.

This would allow a reduction in council tax charges, it added.

But the Chancellor, Gordon Brown, and Deputy Prime Minister John Prescott are believed to oppose the plan.

Whose fault?

The complicated relationship between central and local government has dominated the row over school budget shortfalls of up to �500,000, which have cost hundreds of jobs.

Education Secretary Charles Clarke blamed LEAs for failing to "passport" more than �590m to head teachers.

The benefits of a �2.7bn increase in education funding were being undermined, he added.

LEAs, meanwhile, blamed the cumulative effect of increased teachers' wages, the Workload Agreement - which took some administrative tasks out of teachers' hands - and larger pension costs.

Changes in funding formulas also came in for criticism.

Opponents of greater centralisation of funding say it would further alienate head teachers and reduce local accountability.

But The Independent quotes one government aide as saying: "We already get the blame for the funding problems in schools.

"We might as well enjoy power, as well as responsibility."

Head teachers have been promised a minimum cash increase of 4% for the next financial year. This assumes their costs will rise by 3.4%.

The government has also announced an extra �120m to help balance budgets.

However, the Commons education select committee recently raised several "grounds for concern".

These included a rise in inflation and a predicted increase in schools' fixed costs over the next year.

A Department for Education and Skills spokesman said: "Funding schools is a shared partnership between local and central government.