School budgets are highly complex

Every state school in England will be put on three-year budgets from April 2006 and will be guaranteed an annual minimum rise in income.

The Schools Minister, Stephen Twigg, said this would mean more "freedom" and "streamlined" finances.

But the shadow education secretary, Tim Collins, said funding had become more complex since Labour came to power.

'Clear and simple'

Under proposed budget arrangements, first announced last year, ministers will provide a "ring-fenced" grant of central government cash which councils must pass on to schools.

The arrangements, which also include making the school year and financial year the same, form part of a "five-year plan" for education.

Mr Twigg said the strategy "set out a vision of greater freedom and independence for schools to run their own affairs, with clear and simple lines of accountability".

He added: "The new school funding arrangements will realise this vision, providing streamlined, secure and predictable funding arrangements to allow schools to focus on raising standards and improved outcomes for every single pupil.

"They will also enable schools to plan ahead to make the most effective use of their resources to secure better value for money."

Councils will lose some say over distributing funding, which currently comes from a mixture of council tax and central government grants.

They will not be able to use the new "ring-fenced" grant for anything other than school funding.

However, they will still be able to give the money "according to local needs and priorities", the government said.

David Hart, general secretary of the National Association of Head Teachers, said: "Three-year budgets for schools will bring much-needed stability into the budget setting process and will enable heads to plan for the future of their schools with more certainty."