The Chancellor’s promise of extra cash for schools rings hollow in Manchester, a city that has been told by central Government that it can manage on a lower education budget than last year.

Finance officers are still producing options for rises in council tax coupled with reductions in all services, but it is unlikely that schools could even get standstill budgets.

The Department of Environment’s estimate of what Manchester needs to spend on education is down Pounds 700,000 on last year, which means cuts to keep pace with inflation and teachers’ salaries.

The city’s problems are compounded by the fact that central Government has produced an estimate for standard spending across its services that is 1.7 per cent below last year’s figures. The final turn of the screw is the Government’s decision to reduce the council’s grant by Pounds 10 million - a 2.5 per cent cut. The treasurer’s department was unprepared for a financial settlement that leaves the city almost Pounds 14m adrift in terms of balancing spending. The size of gap suggests that Manchester’s schools may be the worst hit in the country.

According to Mark Hackett, the chair of education, effort will be directed at protecting school budgets, but the service is facing the prospect of serious cuts.

The dramatic shift in the city’s fortunes appears to stem from a revision of calculations on which Standard Spending Assessments are made. This year, the Department of Health has counted all recipients of income support, previously it had based its figures on a 5 per cent sample. In Manchester’s case, this has resulted in a fall from 59,000 to 52,000 in the number of children in households receiving income support.

The impact on schools in a city where spending on schools has historically not been generous is serious. Whether the city is actually spending at the level set by the SSA is a matter of dispute. The DoE says the city spends below, but officials maintain that the department fails to take account of spending on children’s services that should be counted against education.

However, within the education service, there is recognition among officials of the need to tackle surplus places and reorganise schools in line with shifts in population in the inner city. There may be schools with reserves, but there are others in areas where pupil numbers have fallen which are running deficit budgets.

Exam results across the city are improving, but performance as judged by the league tables shows an LEA in the bottom 15, one of the worst of the large authorities.

Officials are searching for options that will mitigate the effect of budget cuts on schools. However, schools will be lucky if the value of their budgets is maintained.

Phil Taylor, convenor of the Secondary Heads Association in Manchester, said: “It’s hard to see how job losses could be avoided if we have to put through more cuts.”