More than £380 million of a £500 million pot for building capacity in the academies system has been taken back by the treasury at a time when head teachers are protesting about a cash crisis.

In May last year, the government said it had set aside more than £500m to fund a plan to require all schools to become academies. Shortly afterwards, however, Downing Street confirmed it had abandoned the scheme after a rebellion from Conservative MPs.

The money was part of a £500 million allocation pledged to the Department for Education (DfE) as part of the 2015 spending review and 2016 budget.

The Department for Education has revealed that when the compulsory academy plan was ditched, the Treasury took back most of this extra funding.

Heads claim that this is "outrageous" when schools cannot "make ends meet".

Despite this, The Department for Education said the return of funds was appropriate if a project did not go ahead.

Education Secretary Justine Greening has faced increasing pressure over gaps in school funding, with many schools’ struggling to balance to books.

Now Grammar school leaders have said that they might have to ask for extra payments from parents to plug funding gaps and to maintain the best standards of teaching.

According to the BBC, the government has claimed that schools are receiving “record levels of funding” and that the proposed new funding formula “will distribute this more fairly”.