A decision not to reinstate a multi-million pound project to rebuild crumbling schools in Sandwell has been described as a “bitter blow”.

Nine Building Schools for the Future schemes worth £138 million were scrapped by Education Secretary Michael Gove last July.

It was hoped the venture would be reinstated after Sandwell Council won a High Court battle challenging the termination of the scheme.

But Mr Gove said he would not be reversing his decision – and that he was only prepared to meet the council’s costs of terminating the contracts with private firms already brought in to carry out the failed revamp, which amounts to around £1.7m.

He said he appreciated the local authority would be “disappointed”, but he wanted to ensure “absolute fairness” across the country when handing out funding for school buildings.

He said the council could still apply for cash from a new programme.

The minister announced his decision yesterday when unveiling plans for a £2bn privately financed school building scheme, and an extra £500m to create more school places in areas that need them the most.

Sandwell Council leader Darren Cooper said he was “absolutely devastated” by the decision and described it as a “bitter blow”. He said: “The decision is a disgrace and shows just how much this government cares for ordinary hard-working families and their children.

“This programme was not a luxury. It was vital for the future of our schools.

“This must be a bitter blow to pupils, parents, teachers and governors.”

But he said it was not the end of the matter and accused ministers of burying bad news by announcing the move on a dramatic day at Westminster when the focus was on the phone hacking scandal.

MP Tom Watson, who was grilling Rupert Murdoch when Mr Gove broke the news to the Commons, condemned it as “a cruel decision by a pathetic minister who still hasn’t the courage to honour his pledge to come and explain himself to families in Sandwell”.

Mr Gordon Phillips, headteacher at The Meadows Sports College, a special school in Dudley Road East Oldbury, said: “It is unbelieveable. I really wasn’t expecting that because Sandwell had such a strong case.”

He said the school had planned to use the money to revamp the infrastructure for ICT and install a bespoke programme for students, who although are aged up to 19, have the mental age of five.

He added: “It is really sad that we cannot do this.  I think Michael Gove has made a very serious mistake.”