Schools in a Black Country borough are saving almost £22 million for a “rainy day” while exam results in the borough still fall below the national average.

Despite vows earlier this year that Sandwell Council needed to make sure schools were using their balances wisely, the authority has so far not reclaimed any cash. The total amount of money held by schools in Sandwell in 2006/07 was £21.9 million and back in July the council took legal advice to see what it could do to to tackle the issue.

In other areas of the Midlands councils have taken a hard line on schools building up savings and are introducing a “use it or lose it” approach.

But Councillor Ian Jones, cabinet member for children and young people, said: “We are taking a cautious approach, bearing in mind possible liability the local authority and schools may pick up under equal pay and single status.

“It’s important to look at the specific circumstances of each school. For example, Summerhill Primary School had a relatively high balance this summer but it has been deliberately setting this aside to contribute to the construction of the brand-new school. That’s good planning.

“We are working closely with our schools to improve our joint monitoring and understanding of balances.

“If we find a school is building up big balances without any clear plan behind this, that’s when we need to consider taking action such as clawing back some of the balance and recycling the money to all schools.”

Authorities were granted new powers in April to intervene if money was not properly assigned and was hoarded by schools.