Education bosses threatened to claw back the money to invest in other schools when it was revealed in October last year that primary, middle and secondary schools in the county were sitting on the multi-million pound nest egg.

Councillor Robert Simpson, cabinet member for children and lifelong learning, issued an ultimatum to schools, some of whom were sitting on reserves of more than eight per cent of their budget, telling them to ‘use it or lose it’ – claiming the cash was preventing Staffordshire from getting extra funding for education from central government.

Now, a year on it was revealed that schools across the area – including those in Stafford, Cannock and Lichfield – have actually increased the cash in reserves by £1.2m.

After letters were circulated telling schools that excess cash would be clawed back in January this year, all but two schools said they had the cash set aside for specific projects and despite the further increase Councillor Simpson said he is confident that work is now being done.

He said: “Yes, the overall balances have gone up by about £1m, but £20m has been allocated to projects to benefit youngsters in the county in the forseeable future.

“This leaves us with around £4-£5m, and officers are keeping a close eye on this, to ensure it is being used for the benefit of youngsters, that schools are not just sitting on it for a rainy day.

Councillor Simpson had claimed said that the size of school balances has hampered efforts by the county’s F40 Fairer Funding Campaign to encourage more investment into the county’s schools, to bring them in line with other shire counties.

He said he is now convinced that the change in circumstance will give the county more power when arguing for extra cash.

He said: “It was the fact that the cash had not been allocated that caused the problems for the F40 campaign, but I think that we are in a much stronger position now and I will argue this with ministers.

“I would like to reassure anyone with concerns that there are mechanisms in place to make sure this money is being spent in these schools as we have been told.

“The district education officer knows what these plans are and will make sure they are developed.”

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