Plans to boost the numbers of minority faith schools have been thrown into chaos after it emerged that the Government has cut off crucial funding to private schools hoping to switch to the state sector.

The targeted capital fund, supposed to distribute pound;327 million to improve school buildings and facilities between 2008 and 2011, has been closed early, having distributed just pound;157 million, less than half of its original sum.

The remaining pound;170 million has been redirected to other national school building projects as part of the Government’s fiscal stimulus to help boost the economy.

The move means that projects for private faith schools to join the state sector have had to be shelved. The schools need the money either to upgrade existing buildings or construct new ones.

Dr Mohamed Mukadam, chair of the Association of Muslim Schools and headteacher of Madani High School, Leicester, said the Government’s decision was “hugely disappointing”.

Dr Mukadam said he had been involved in negotiations for two years to buy land next to Madani High, the country’s first purpose-built Muslim state school, in order to open a new primary school.

The plan, which was put on hold this week after Dr Mukadam learnt the capital fund was not accepting new applicants, was to move a private Muslim primary school for 460 pupils into new facilities.

“This is a huge disappointment for us,” said Dr Mukadam. “We had gone through a local consultation process and had won the backing of the community and local authority, which said it was a wonderful idea.”

Dr Mukadam said there are at least three other private Muslim schools, including an all-girls’ school in West Yorkshire, caught in similar positions.

The targeted capital fund was also supposed to pay for the expansion of popular maintained schools, better working relationships in federations and improved facilities in state boarding schools.

Just pound;1.5 million of the original money went to support new state schools, which includes private schools wanting to join the state sector and the creation of new trust and voluntary-aided schools.

Ed Balls, the Schools Secretary, was confronted about the decision to close the fund at a recent conference in London for faith-school providers.

Mr Balls said the downturn meant spending had been brought forward and that the Government remained committed to improving school buildings in both primaries and secondaries.

The conference was to mark two years since the launch of Faith in the System, a Government document that pledged to remove “unnecessary” barriers to private religious schools joining the state sector.

It said it recognised that there were “relatively few” faith school places for Muslim, Sikh and Hindu children and vowed to provide funding if schools could not remain in their existing buildings and local authorities did not have sufficient funding.

Ministers have been keen advocates of expanding boarding provision for children at risk of going into care.

But Hilary Moriarty, national director of the Boarding Schools’ Association, said some schools would not be able to expand boarding places for vulnerable children.

Roy Page, head of the Royal Grammar School High Wycombe, which offers state boarding, criticised the Government for failing to make it clear that the fund had been closed.

`Inflammatory’ few

Most independent faith schools teach other religions impartially but some use biased, “inflammatory”, and inaccurate material, an Ofsted study has found.

Inspectors visited 51 independent Christian, Jewish, Muslim, Buddhist and Hindu schools, and reported that all taught their pupils to respect people of different faiths. But displays in eight schools had a bias in favour of one group.

“Wording used to describe the situation in Palestine, seen in a Muslim school, used inflammatory language,” the report says. “In a Jewish school, pupils’ writing used strong language in describing situations in that part of the world.

“Some of the published teaching materials seen contained biased or incorrect information about the beliefs of other religions.”

In most of the schools, staff taught topics such as Palestine well, using impartial material. Some schools felt rules on developing pupils’ spiritual, moral, social and cultural understanding were unclear.

Ofsted found provision was “at least good”, with pupils gaining “a strong sense of identity and of belonging to their faith, their school and to Britain”. Most schools taught a general understanding of other faiths, particularly to older pupils.

But 12 schools were reluctant to teach about other religions in detail. Leaders were concerned it would be inappropriate for young pupils. WS.