Ministers have proposed a “ local pupil premium” in an attempt to narrow the gap in achievement between rich and poor children, rivalling one of the cornerstones of the Conservatives’ education platform.

Under the proposals, announced in documents released on Monday, each local authority would have to channel the money received from Whitehall for deprived children directly to the school where the child was taught. This would end the system whereby councils often spread the money across schools or keep it for the local authority’s own budget.

Labour’s proposals tally with Conservative plans for education funding for poor pupils to follow the child, rather than being spent elsewhere, to narrow the attainment gap.

Vernon Coaker, schools minister, said the premium, which would start in April 2011, would “ensure that the very significant resources in the system for deprivation” that already existed would “reach the pupils who need them”.

The money would be termed a local pupil premium – rather than a national pupil premium, as planned by the Tories – because each council would be free to decide which children counted as deprived. For example, one council might choose pupils on free school meals as its yardstick, whereas another might choose families on out-of-work tax credits.

The Tory plan would assign the money according to criteria set by Whitehall, although the Tories have not said what these would be.

The Labour and Conservative proposals are also philosophically different, guidance from the Department for Children, Schools and Families officials made clear on Monday. The Conservatives hope the extra money for poor children will encourage schools to bid for them, because the pupils would bring extra money. However, Labour would leave the existing admissions process, which prevents schools from bidding for pupils, unchanged.

The Institute for Fiscal Studies recently calculated an “implicit pupil premium” – the average amount each school actually receives for each child on free school meals after the money has passed through local authority hands – at £3,370 for secondary school pupils. The government proposals could increase this by ensuring money followed pupils.

The DCSF also announced an increase in cash funding per pupil of 2.1 per cent each year in 2011-12 and 2012-13 – a freeze in real terms.

In the same documents, Ed Balls, schools secretary, said quango budgets and national programmes would be cut in a bid to find the £500m of saving in 2011-13 he had promised the Treasury. The biggest cuts have been identified at the Training and Development Agency for Schools, which is in charge of boosting teacher recruitment, and Becta, which promotes the use of information and communications technology.

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