There has been a call for sweeping changes to the Northern Ireland education system.
Peter Hain announced a review of public spending
Northern Ireland Secretary Peter Hain said he wanted a "re-orientation" around what he called the critical age of 14.
Mr Hain announced an independent review of education spending in the province.
He confirmed "a year zero" review of funding for all government departments and said no existing expenditure should be assumed to continue.
This would enable funds to be redirected to health and education and other front line services, Mr Hain said.
"We will continue to increase spending on public services in Northern Ireland each and every year, but we must be prepared to abandon established and entrenched spending programmes whose value has diminished with the passage of time.
"I want to see public expenditure targeted on those areas that will enable Northern Ireland to take its place as a highly competitive region with a growing and vibrant economy where public services are delivered in the most cost effective way to meet the needs of the community," he said.
The measures have been described as a "root and branch review of government spending for the financial years 2007 to 2009".
The NI secretary announced he was setting up an independent review of education spending, as well as the planning of the whole school estate and the effect of falling school rolls.
He said he is to give the new single education authority a strategic role across the provision of education for 14 to 19-year-olds.
According to government sources, there are currently about 50,000 empty school desks in the province. That number is expected to rise to 80,000 by 2015.
Mr Hain said the "segregation of schools into the numerous sectors in Northern Ireland comes at a high price".
"We need to see whether a new model of schooling, sharing across sectors, could help us achieve higher standards, better facilities and a better use of resources," said Mr Hain.
He said the state and maintained education sectors would remain for as long as churches, parents and children wanted them.
However, he said they should be prepared to cooperate with each other and share some facilities where that was practical.
DUP MP Sammy Wilson said he was glad "that the government are now adopting some of the measures which were in our party manifesto".
"Unfortunately, it was this government who encouraged a plethora of education providers and the growth of new sectors of education through the failed Belfast Agreement."
Sinn Fein education spokesman Michael Ferguson said: "Falling rolls offer the Department of Education great opportunities to improve the school provision that we offer.
"But instead the British government have used it to erode the educational entitlement of our children and young people and redirect investment to schools in England and Wales."
UTU general secretary, Avril Hall-Callaghan, said there were a variety of ways "that this money could be utilised to assist schools that need additional help".
"While some money has been put into schools to fund resources and materials, the loss of specialised teachers who were based at the education and library boards must be re-examined."