A COMMITTEE led by Huddersfield MP Barry Sheerman today launched a savage attack on the way the Government is spending schools cash.
The report by the Commons Education Select Committee came as Ruth Kelly took up her new job as Education Secretary.
Mr Sheerman's committee said ministers could not prove their claims that more investment under Labour had resulted in better exam results for pupils.
And the MPs said there was no proper evidence of the need for the Government's radical changes to school funding, accusing ministers of being "incredibly short-sighted".
The reforms, which followed problems with school funding in 2003, give headteachers their own three-year budgets and dramatically cut the powers of councils.
The MPs said this would inevitably lead to more Government involvement in the day-to-day running of schools.
The scathing verdict from the Labour-dominated committee will come as a blow to Ms Kelly and Prime Minister Tony Blair.
Mr Blair has made education and childcare key issues.
Mr Sheerman said ministers could not prove their claims that greater investment in schools had improved GCSE results.
He added: "Our report shows it is not possible to demonstrate a straightforward link between expenditure and outcome."
The report said: "The Chancellor's budget book for 2004 claimed a direct relationship between the increased investment in education since 1997 and improvement in GCSE results, in particular.
"Our evidence showed that with lower levels of investment GCSE results had improved to at least the same extent in earlier periods in the 1990s.
"The Government needs to take great care in making claims about the effectiveness of increased investment in education in increasing levels of achievement which the evidence cannot be proved to support."
The MPs also questioned the wisdom of the Department for Education and Skills' decision to cut 31% of its staff as part of a Whitehall-wide efficiency drive.
Ministers should make their reasoning behind the move public, they said.