Labour 'has failed state pupils' despite investing billions of pounds in schools

Billions of pounds spent on state schools has failed to give parents greater choice over their children's education, a report claimed today.

Instead of funding new school places, ministers have spent the money propping up under-performing primaries and secondaries.

Despite Labour promises to harness 'parent power' to drive up standards, places at good schools are decided by rigid catchment areas and admissions lotteries, according to the Institute for Fiscal Studies.

Many pupils are forced to accept the schools they are given because the Government allows councils to maintain only tiny numbers of spare places. And this lack of competition for places has allowed poorer schools to survive.

The damning verdict emerged as ministers prepare to unveil a blueprint to force the country's 638 lowest-performing schools to shape up or face closure. Some schools face immediate intervention amid concerns they have been allowed to fail for too long. The IFS researchers found the schools budget exceeded £40billion in 2006-07 - up from less than £30billion in 1998-99.

But billions have been channelled into keeping open poorly performing schools, while a  £9billion school refurbishment fund will be concentrated on existing schools rather than giving new providers a foothold in the education system.

Meanwhile only half the extra money intended to help disadvantaged pupils is actually spent on them - £3,670 at primary level against £5,950 allocated. The rest is wasted on bureaucracy or given to schools that are already well-funded.

The report, funded by independent education provider the CfBT Education Trust, says ministers must be prepared to allow surplus places to give parents and pupils a real choice.

'The Government's wish to encourage a diversity of school providers is undermined by a funding regime which, with a view to controlling costs, aims to avoid creating surplus places,' said Neil McIntosh, CfBT chief executive, in a foreword to the report.

The report claims that Tony Blair's vision for increased parental is far from being realised.

'The current system does not live up to the 'school choice' programme enthusiastically described in the 2005 White Paper, in which successful schools expand, new entrants compete with existing providers, and weaker schools either improve their performance or else contract and close,' it says.

The report also found that the worst-performing primary schools were still 93 per cent full and the worst secondaries 89 per cent full.

'Schools that are all-but-guaranteed to fill their capacity, facing little or no threat of entry from new providers even if their performance is below the national average, do not face sharp incentives to improve their performance,' it said.

A spokesman for the Department for Children, Schools and Families said: 'We have made it easier for anyone, including parents, to set up new schools and by law, local authorities have a duty to encourage new providers to come into the system.