Education's top civil servant has been taken to task by the Treasury over his department's persistent failure to spend billions of pounds allocated for universities and schools each year.
David Normington, permanent secretary of the Department for Education and Skills, admitted to MPs on Wednesday that the Treasury had "cottoned on" to the fact his department failed to spend £1.6 billion of its budget last year - and the sum is likely to be closely matched this year.
He told the House of Commons select committee on education that he had been involved in "serious discussions" with the Treasury over future allocations for the department.
Ahead of next month's comprehensive spending review, the Treasury has made clear that persistent underspends such as the DFES's could lead to a clawback of cash, which would deprive schools and universities of potential millions.
Mr Normington accepted that the DFES had "got to do better" to spend the money it is allocated. "I want to make [the underspend] smaller," he said.
DFES finance director Ruth Thompson admitted that part of the reason for the underspend was a lack of financial expertise in the department.
MP Mark Simmonds (Tory Boston and Skegness) said that the DFES had had the largest underspend of any government department in 2000-01, at £1.6 billion. Figures for 2001-02, not yet published, suggest a similarly large underspend.
Mr Normington said that there were a number of reasons for the problem. He said that some money was ringfenced for specific initiatives such as the Sure Start scheme but had not all been spent as it had been slow to "get off the ground locally". "It does not mean it will not be spent later," he said.
Money for building projects had not been brought to account in the financial year, and the expenditure would be carried over to the next year.
Dr Thompson said that there were also problems in instances when large sums of DFES money were spent through intermediary bodies. The Learning and Skills Council spent a third of the department's entire budget, but had been running for only a year and had suffered from "turbulence".
But she said: "There are areas of direct spending when my colleagues and I have to work hard to improve the expertise we have."