Schools are using inflated pupil-number projections to make their budgets for future years balance, a Department for Education minister has claimed.

Lord Agnew told the national conference of the Institute of School Business Leadership that this was a problem he saw “week in, week out”.

Speaking today, the minister, who oversees the academy system, said that school business managers were “really absolutely vital to the system, perhaps never more than now because of the funding pressures”.

Lord Agnew said that budget forecasting was “absolutely vital” for schools, and business managers can “make some sensible assumptions and plan for those”.

He told them: “One of the most important things that you can plan on is your pupil numbers, and I see this problem week in, week out, where to get a budget to balance, they just punch up the projection on the number of pupils, because that’s wonderful, isn’t it?

“You say ‘well, we’ll have another 50 kids in September’ and therefore all the problems will be solved.

“The reality, of course, is that is not what happens, and so you need to be part of that planning process, that forecasting process.

“You probably need to be the voice of moderation when they say ‘oh yes, there’s a new housing estate being built today, and of course, by September, that’s another 50 kids’. I hear this every week.”

Lord Agnew said that he had been “caught out” himself when the Inspiration Trust, which he founded, set up the Trafalgar College free school in Great Yarmouth.

“We went to the local authority for pupil-number projections,” he said. “They gave us the numbers, we opened the school and the kids didn’t turn up, and we went back to the local authority and said ‘where are all these children’?

“They said ‘oh yes, sorry, we made a mistake, we relied on doctor surgeries [to] estimate how many kids there are, but we didn’t realise that actually a lot of people in Yarmouth register with three surgeries’, so there were three times as many kids in their minds as actually turned up in the schools.”

The free school has since merged with Great Yarmouth Charter Academy, another school sponsored by the Inspiration Trust.

He told the conference that he was “not pretending there is a simple solution”, but described forecasting on pupil numbers as “really fundamental”.

He added: “On the more difficult issues there are variables, but you are running businesses, and in business that is what happens, so your voice must be heard.”