Millions wasted by inefficient school money management

The report, Valuable Lessons, criticises schools for failing to use value for money services.

It found £80m could be saved if schools switched to cheaper cleaning and catering providers. Using different administrative suppliers could save £65m, on items like stationary and paper.

Schools are also accused of hoarding huge sums of cash unnecessarily.Money that could be spent on pupils is being held back in cash reserves worth almost £2bn.

While schools are allowed to save some cash from their annual budgets, two out of five schools are holding on to more than the recommended amount, which equates to around £500m.

Schools must now evaluate the effectiveness of their workforce, the report said.

Numbers of teachers, teaching assistants and support staff have increased whilst pupil numbers have fallen, but it is not yet clear whether these extra staff are providing value for money.

Michael O'Higgins, chairman of the Audit Commission, said schools could make savings without adversely affecting pupils or their education.

He said: "Accountability for spending in schools has been weak possibly because, in the last 10 years, the focus has been on results. Ofsted is planning to give a higher priority to value for money and we will be pleased to work with them."

Malcolm Trobe, policy director for the Association of School and College Leaders, said: "It is a sensible recommendation for schools to benchmark their expenditure against other schools but ultimately schools must be allowed to have their own priorities and to decide where funds are best spend."