£2.8m left in schools' reserves

They show more than 100 schools had "excessive balances" – holding back more money than is allowed.

But Shropshire county education bosses have warned that they will be reviewing balances at the end of next month and will take back any money that schools can't justify keeping.

The Government defines as excessive a surplus of more than five per cent of a secondary school's budget or more than eight per cent for a primary or special school.

Data from the Department for Children, Schools and Families for 2007/08 shows schools in Telford & Wrekin had an excessive balance of £694,000, while schools in the rest of the county underspent by a £2.1 million.

Ministers said the level of surplus cash held by schools was too high and that local authorities should "claw back" excess.

Shropshire County Council spokesman Simon Alton said: "We monitor surplus balances on an annual basis and they will be reviewed at the end of March.

"We will claw back a surplus that schools are unable to justify.

"Any balances we claw back will go straight back into schools' funding."

Nationally, some 92 per cent of schools held a surplus balance with an average underspend of £9,685 – totalling almost £2 billion.

Excessive surpluses totalled £592m with more than 8,500 schools – more than a third of all schools in total – averaging an underspend of more than £69,000.

A spokeswoman for Telford & Wrekin Council said: "Telford & Wrekin Council welcomes the sensible financial management practices in the borough's schools and believes that this reflects the high quality of financial support provided to schools by the local authority.

"There is always a reason for balances to be underspent but these will obviously vary from school to school.

"Sometimes it can be in preparation for an anticipated drop in school admissions, but other circumstances can apply such as a school saving for a major capital projects or replacement of IT equipment.

"Telford & Wrekin has a lower than average number of schools with surplus balances and our schools also have the lowest level of revenue balances in the West Midlands region.

"Additionally, the proportion of schools in deficit in the authority is currently the lowest for ten years.

"Telford & Wrekin Council works with schools in deficit to ensure that realistic recovery plans are in place to ensure that the deficit is repaid within a reasonable period of time.

"The effectiveness of this is demonstrated by the gradual reduction in the numbers of schools with deficits in the authority in recent years."