New analysis casts doubt over Ofsted’s ability to judge schools’ financial performance after finding that inspectors pay scant regard to the funding struggles facing headteachers.

The “disappointing” findings come amid plans for Ofsted to rate schools’ financial management and, separately, research schools’ financial decision making.

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The research examined the Ofsted reports of all 18 schools that ended 2018-19 with deficits of more than £2 million. In every case, the school had posted a “significant deficit” in the March before the inspection date.

Eleven were judged as “good”, four as “requires improvement” and three as “inadequate”.

However, only one report contained a “reasonably substantial comment on the deficit situation”, according to Julie Cordiner, who published the findings on her website School Financial Success.

Five reports contained no mention of finance at all, while eight ignored the deficit and referred only to pupil premium, Year 7 catch-up funding or the sports premium.

Referring to these eight reports, Ms Cordiner, who has previously advised the Department for Education on school funding, said: “It’s strange that the inspection system should focus on relatively small elements of funding when there’s a massive deficit in the main budget.”

Ms Cordiner carried out the analysis to provide a “baseline” for Ofsted’s interest in school finance issues.

There are plans for the inspectorate to publish ratings for schools’ financial management and oversight -  a move announced by the DfE and branded “hugely misguided” by headteachers.

Ofsted is also researching how approaches to looking at schools’ financial management could be used in future school inspections, for a trial due to be completed by autumn this year.

Ms Cordiner said: “I’d hoped that these reports would provide some reassurance that Ofsted has an awareness of the importance of financial performance, but I’m very disappointed by these results.”

“It all suggests there’s a massive leap to be made to train up inspectors to improve their awareness of finance in time for the pilot.

If inspectors are more aware of finance, it will help to “expose the true scale of the difficulties schools are experiencing up and down the country”, she wrote.

This “could generate more evidence about how difficult it is for schools to achieve a sustainable budget with inadequate funding, especially where they are serving a lot of children with additional and/or special needs”, she added.

All but one of the eighteen schools with a deficit above £2m had been in the red continuously since March 2016. Total deficits for this group have risen by 252 per cent over three years, from £19.6m in 2015-16 to £49.5m in 2018-19. Meanwhile, the average deficit per school has also more than doubled.

Ofsted’s chief inspector Amanda Spielman has previously fallen foul of headteacher unions for disputing that falling budgets are affecting educational standards.

However, Ms Cordiner said her findings were important because substantial, long-term deficits affect the ability of schools  to act on inspectors’ findings.

She said: “If the judgement is ‘requires improvement’ or ‘inadequate’, some external input or investment in different approaches may be needed. How will the school be able to afford that, if its budget is spiralling out of control?

“The other side of the coin is that if a school has been judged as good or outstanding while spending far in excess of their funding allocations, they must have achieved it with an unaffordable staffing structure and an unrealistic spending plan.

“The judgement is likely to be unsustainable as they implement a recovery plan for the deficit, which they surely will have to do. The situation also seems unfair to schools that have taken difficult decisions to stay within budget.”

Ofsted has been contacted for comment.