A FLAGSHIP £2m school which was yesterday awarded a glowing Ofsted report is looking at axing staff to plug a huge financial shortfall.

Firthmoor Primary School in Darlington, which only opened in January, has confirmed it faces a budget deficit of more than £200,000.

The school said a key reason behind the shortfall was a fall in pupil numbers, which accounts for about 85 per cent of a school's budget.

Staff and governors said the regeneration of the estate, which has involved demolishing half of the houses, has led to the decline in numbers.

Headteacher Andrena Cabourn said it was too early to say how many teachers or support staff would have to go.

"Staff, governors and parents should be celebrating our success," she said.

"We are now worried that the shortfall in funding will have a detrimental effect on the education of the children."

Ironically, the very factors which are highly praised in the school's new Ofsted report, such as the excellent work with special needs pupils, more able pupils and children's behaviour, are now under threat by the dire financial straits. Governors are meeting early next month for urgent talks.

"We're not saying job losses will happen, but if current trends continue in falling rolls it is a likelihood," said Ms Cabourn.

* Education Secretary Charles Clarke yesterday gave the go-ahead for schools to raid their maintenance and repairs budgets to prevent teacher redundancies. But he insisted that a £2.45bn increase in central spending was more than enough to cover the pressures and urged local councils not to hold any of it back for other services.