Australian parents spend hundreds of pounds a year on textbooks, exercise books and stationery for their children to take to school.

In this country, although parental contributions to state education are increasing, most people take it for granted that these things are provided by the taxpayer.

But for how much longer? The word in Whitehall is that, despite its oft-stated commitment to education, the Government is admitting defeat in its efforts to provide, free of charge, all the things we expect of schools.

Despite almost seven years in power, Blairites continue to be haunted by their friends’ (and in some cases their own) decisions to send their children to private schools in search of a better quality education.

They fear that growing numbers of people will opt to use private rather than public services. They worry that after record rises in spending, voters are yet to recognise real improvements in schools, hospitals and transport.

And they fear that the healthy and the childless will not vote for higher taxes to improve the services their neighbours use.

All this adds up to a growing consensus among Tony Blair’s coterie of advisers that tax levels are about as high as the British public will tolerate. If they get their way, last month’s budget will mark the last hurrah of this Government’s public spending splurge. But that leaves ministers with a problem. If the New Labour project is to be judged a success it must improve public services - and that means money. So where will it come from?

One option is to persuade business to cough up some cash. Academies, specialist status and education action zones have all been used to entice more companies to invest in state schools.

But none has been successful enough to provide the amount of money needed to fund significant and sustained improvements.

Other public services have, if anything, attracted even less private sector cash. So increasingly, the Blairites’ answer is to turn to the users of services themselves. If patients, commuters and parents want a better service, the argument goes, let them pay for it.

“Co-payment”, as the idea has been labelled, is the latest buzz-word on the lips of Downing Street policy wonks and political commentators alike. In plain English it means charging for things provided by the state.

Not surprisingly, the idea has provoked a sharp reaction from unions, consumer groups and supporters of public service - not to mention backbench Labour MPs.

The strength of feeling within his own party brought Tony Blair to the brink of defeat on the most high-profile example yet of co-payment - university tuition fees.

John Bangs, the National Union of Teachers’ head of education, said: “The idea of a free education is being whittled away.

“Tony Blair is undermining his own commitment to education by his failure to make the case for higher public spending.”

Critics would have you believe that this is a new idea. In reality, it as old as public services themselves. Train travellers, for instance, would be surprised not to be asked to pay for journeys.

Patients already contribute towards the cost of dental treatment and prescription drugs, two good reasons why the NHS rather than schools is likely to be a test-bed for the Government’s ideas.

Even in education, co-payment is well established. Think school trips, meals or transport.

But a major extension of the principle could have a huge impact on the way schools and other public services operate.

Dr Anthony Seldon, the Prime Minister’s biographer and head of the independent Brighton college, has called for schools to be jointly financed by parents and the state. Fees would be charged according to parents’

willingness to pay.

Bruised by the tuition fees revolt, Mr Blair and his advisers are keen to play down such talk. Radical ideas such as Dr Seldon’s are strictly off limits, at least for the moment.

Downing Street insiders stress that co-payment will be introduced only for extras, and point to adult education, childcare and the expansion of nursery education as areas in which it can be made to work.

A draft Bill to enable the cost of expanded school transport to be shared between taxpayers and parents was published last month.

But schools themselves are also a target. Education Secretary Charles Clarke and David Miliband, his deputy, have been noticeably impatient with headteachers’ complaints about funding. This is, perhaps, not surprising when spending per pupil has risen by almost a third to more than pound;3,600 since Labour came to power.

Instead of killjoys who moan about “cuts”, they want entrepreneurial heads who will find ways to raise the extra money their schools need.

Statistics show heads are increasingly taking the hint. As The TES revealed in January, parents now contribute more than pound;200 million a year to state schools - pound;60m through fundraising and the rest in donations.

Cash contributions for stationery and salaries are increasingly common and more schools are asking parents to covenant a small sum each term.

This comes on top of the pound;50,000 raised from private sponsors by each of the 1,686 schools which have won specialist status.

If it becomes a reality, co-payment will accelerate this trend. Schools will be encouraged to charge for services or facilities that they do not currently provide but that parents might want.

Charges for musical instrument tuition could be extended to cover football practice, chess clubs or school plays, especially in schools which do not currently offer them.

In effect, parents will be offered some of the frills of a private education within the state sector for a fraction of the cost.

As Phil Collins, director of the Social Market Foundation think-tank, says:

“Initially co-payment will have to apply only to activities which can be broken off from the rest of the school day.

“It is difficult for schools to keep within budget and provide these things.”

While they expect them to complain, the Blairites believe many parents will be willing to pay. After all, they say, the average household spends just pound;5.20 of its weekly pound;406 budget on education.

But that immediately raises the question of what happens to those who cannot afford the extras. Fears of a two-tier system may be at least partly assuaged if supporters of Gordon Brown win a Whitehall battle with the Blairites.

They want charges to be means-tested with the better-off subsidising those who cannot afford to pay. This may go some way to mollifying those who worry that disadvantaged children will lose out. But opponents also worry about where all this will end.

Once charging for after-school clubs becomes the norm, will cash-hungry schools really stop there? Or will we, in a few years, see parents in the UK forced to buy their children’s school books, just like those down under?