The Department for Education has lost £350m to local authorities because of complications in its funding system for academy schools, according to the National Audit Office.
A report from the public spending watchdog said the DfE had overspent on its academies programme by £1bn between April 2010 and March 2012. Of this, it said, £350m “remained in the local authority system”.
It described the £350m as “money the department was not able to recover from local authorities to offset against academy funding, and which therefore remained in the local authority system”.
Part of this was the £58m that the department agreed to refund after some authorities launched a legal challenge over its funding transfers to academies.
A further £105m came from the DfE’s failure to recoup from local authorities all of the £253m it transferred to academies in 2011-12. Of this, the report said, the department recouped £148m, leaving a £105m shortfall.
It said another £107m was not recovered because there was no academy funding transfer in 2010-11. The remaining £80m came from other complications in the funding system, such as differences in pupil data, it said.
However, senior local government figures have been keen to stress that they believe the academies funding system has left councils out of pocket.
The report also accused the DfE of failing to anticipate the high number of schools that would become academies, leading to a £1bn overspend that had to be made up by cutting other services – including a £95m cut to school improvement.
The DfE said in a statement: “We make no apology for the fact that more schools than even we imagined have opted to convert, and no apology for spending money on a programme that is proven to drive up standards and make long-term school improvements”.