Education authorities are losing hundreds of thousands of pounds needed to educate difficult children because academies are not releasing the cash that comes with pupils they permanently exclude.

Other state schools are forced to return funding for pupils to their local authorities following permanent exclusions.

But academies, the controversial privately-sponsored, state-funded, semi-independent secondaries, are prevented from doing so by their centralised funding arrangements devised by the Department for Education and Skills.

Assuming an average funding of pound;4,000 per pupil, councils lost Pounds 328,000 in 200304 when 82 children were excluded by 12 academies.

The loophole has led to one authority with two academies losing nearly a fifth of its budget for excluded secondary pupils. Senior staff from two academies have said that they want the rule changed.

As the TES revealed in July, the King’s academy, Middlesbrough, permanently excluded 28 pupils in 200304, more than 10 times the English secondary average. The town’s other academy, Unity City academy, expelled 14 pupils, above average but down from the 18 it expelled in 200203.

Paul Thompson, Middlesbrough council’s executive member for education, said the level of exclusions was “morally wrong”. Middlesbrough’s five local authority secondaries expelled 10 pupils between them in 200304.

The council spends around pound;900,000 a year educating excluded secondary pupils. Mr Thompson estimated it had lost around pound;160,000 in 200304 because of the academies. “As a small authority, this is very damaging,” he said.

Nigel McQuoid, principal of King’s, sponsored by the Christian fundamentalist Vardy Foundation, said that his school had also put around 50 pupils on final warnings in 200304 and that between five and 10 pupils had been withdrawn by parents after it was explained they would face exclusion if their behaviour did not improve. He said the council knew there were likely to be a high number of exclusions in his school’s first year and should have put aside contingency money. “You can’t penalise a school for the misbehaviour of children that is beyond its control,” he said.

Eddie Brady, Unity City academy principal, said: “This will even itself out because there are some aspects of local authority funding that are better than academy funding.” But Ray Priest, principal of the City academy, Bristol, said the DfES should consider changing the funding rules, because academies are supposed to be in partnership with local authorities.

A DfES spokeswoman said that it had yet to see “significant evidence” that high permanent exclusions from academies were a “long-term concern”. “We are unconvinced that we need to introduce a complicated funding system to facilitate the transfer of funds back and forth between academies and authorities to follow excluded pupils,” she said.

SHOWN THE DOOR BY ACADEMIES

Permanent exclusions 200304

Business academy, Bexley 5

Greig City academy 1

UCA, Middlesbrough 14

Capital City, Brent 4

City academy, Bristol 6

West London, Ealing 8

Manchester academy 4

King’s, Middlesbrough 28

Djanogly City academy, Nottingham 6

City of London academy 0

The Academy at Peckham 5

Walsall City academy 1