A radical proposal to overhaul Scotland's education system and give disadvantaged youngsters priority access to top independent schools was unveiled yesterday.

Reform Scotland, an independent think tank that believes parents should have more choice in their children's school, claims Scottish government statistics show almost half of second year pupils are not able to read and write to the expected standard. It wants to stimulate more competition between schools to improve standards.

It is proposing an “entitlement” scheme whereby parents would be given a credit equivalent to the cost of educating their child in their local authority area. They could use this at any school where a place was available. If a private school charged more than the entitlement, parents could not “top up” the difference. However, children who receive free school meals - a key indicator of disadvantage - would be given a supplement from central government, on top of their entitlement.

This would give children in some local authority areas, such as Shetland, an entitlement to an education of at least £10,000.

Geoff Mawdsley, director of Reform Scotland and one of the authors of the Parent Power report, said the scheme should not necessitate any additional cost for mainstream pupils. However, he admitted that the think tank had not assessed how much extra cash would be needed from Holyrood to provide for the deprived children.

He said the new system would “extend opportunity and promote social mobility” and warned that, without it, “countless numbers of children ... will be failed by an education system that does not meet their needs.”

The group wants to pilot its scheme with deprived youngsters and then extend it further. This willwould mean that, initially, the disadvantaged pupils willwould be given priority over mainstream pupils.

According to the Paris-based Organisation for Economic Co-operation and Development (OECD), such children have lower exam results and are more likely to drop out or truant. Reform Scotland claims that, despite the cash invested in state schools, they are “failing those who need them most.” The OECD, in its 2007 Programme for International Student Assessment, found that countries where schools compete for pupils have better results.

The report drew criticism from teachers' leaders who accused the group of failing to understand the education system. Jim Docherty, acting general secretary of the Secondary School Teachers Association, said the plans were “drivel from beginning to end. This idea has been floating around for years”, he said. “It betrays a total, utter, complete lack of understanding of how the public education system operates. It is nothing more than the Thatcherite ‘parents should have the right to choose' writ large."

He said the vast majority of schools were at capacity so the proposals would not work - and the idea that some schools were better than others was "completely erroneous" anyway.

Ken Cunningham, general secretary of the School Leaders Scotland union said an entitlement scheme was "hugely complex" and would be very difficult to implement. He also said that there were numerous underlying issues which determined whether children succeeded or not, rather than simply the school they attended.

However, Liz Smith, Scottish Conservative schools spokeswoman and former private school teacher, said the proposals were "giving families much more freedom of choice on which school to send their children to".

"They are talking about a radically different approach from what exists just now," she said. "It praises some of the aspects of the state sector but to get rid of the monolithic state they are trying to build in much more flexibility."

The report also suggests that local authorities could relinquish the power to run some schools, making them independent. And it wants to give local authorities complete control over pay and conditions for teachers, effectively ending plea-bargaining. Mr Docherty said such a scheme would result in 32 disputes every year, as opposed to one. Mr Cunningham also dismissed the idea, warning: "Anyone who tries to muck around with the pay and conditions within that frame in Scotland does not understand workforce planning."

A Scottish Government spokesman said the administration agreed with Reform Scotland that recent steady progress had to be accelerated, which was why it was working on the Curriculum for Excellence.

He added: "While we remain unconvinced regarding some of the more radical elements of their proposals, Reform Scotland's report is thought-provoking and we welcome all contributions that promote real debate on the best way to ensure every school becomes a good school."

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