Schools need to spend pupil premium money on their poor students and not on recruiting more teaching assistants, Ofsted's chief has warned.
Sir Michael Wilshaw has chastised schools receiving money from the government's £1.25bn flagship "pupil premium" policy for not channelling the funds to those who need them most. The education watchdog's chief inspector has said schools must be able to demonstrate how the funds are making a difference to the achievement of children from poor backgrounds.
Wilshaw added it is not "rocket science" and Ofsted had been surprised to find that half of schools in a survey had said it was making little or no difference to the way they were being managed and operated.
Only 10% said it was having a "significant" effect, all of which were in the most deprived areas.
"The big issue is that this money is for our poorest children to ensure that they achieve as well as others who come from more privileged backgrounds, it is simply not good enough for heads of schools to say that it is not changing policy," he said.
"If this money is going to the main school budget and children from poor backgrounds are doing well, we do not have an issue with that and I'm sure that government won't, that is not a problem as long as they can demonstrate that is happening.
"It will be an issue if it just falls into the main school budget and a school can't show that it is improving the outcomes for poor children.
"We will be very critical of those schools that are not thinking long and hard about the use of the pupil premium."
He added: "Most schools are subsuming it within their main budget, they are actually not ring fencing it (the premium). That is fine, as long as the school can demonstrate that they are using that money and any other money they identify to support children, poor children, to achieve outcomes that will close the gap.
"If they are not doing that, then we will be critical of it.
"This is not rocket science stuff.
"There is a wealth of good practice out there in terms of how you raise achievement and how you raise achievement particularly of youngsters from poor backgrounds."
He said the money should be used to fund teachers who are effective at teaching children from poor backgrounds to do better and other initiatives such as enrichment programmes, extension classes and to pay staff overtime to come in to school at weekends.
Wilshaw added that there were "some concerns" about a finding in the survey that heads were using a "significant amount" of the money to pay for additional teaching assistants.
This was in spite of evidence that teaching assistants did not have the same impact as good teachers, he said.
Wilshaw was speaking as Ofsted launched a report based on a survey of the views of 262 school leaders on how the pupil premium is spent, with the information gathered through inspections and telephone interviews conducted by Ofsted inspectors.
The pupil premium was introduced in April last year.
This academic year, schools were allocated £1.25 billion for children from low income families who were eligible for free school meals, looked after children and those from families with parents in the Armed Forces.
A Department for Education spokesman said: "It's unacceptable that children from disadvantaged backgrounds are less likely to do well in school than their peers. The coalition Government has introduced the pupil premium to tackle this problem.
"We have given schools the freedom to use the additional funding in innovative ways. However, it is vital they use it to boost results for the most disadvantaged pupils, drawing on the large amount of evidence on how to make the biggest difference.
"The pupil premium has only been in place for one year, but we welcome this early report by Ofsted and their recommendation that schools need to use the premium properly.
"We believe that Ofsted's focus on the pupil premium will cause schools to dramatically improve the ways they use this very large amount of money.
"By protecting schools' budgets we have made sure that the pupil premium - which will be worth £2.5 billion by 2014-15 - is additional money for schools."
Chris Keates, general secretary of teaching union the NASUWT, said: "This Ofsted report on the impact of the pupil premium says nothing that the NASUWT did not predict at the time the pupil premium was introduced.
"The pupil premium was never, despite claims to the contrary by ministers, 'new' money for schools.
"The fact that it was introduced at a time of savage cuts to the education budget and it was left to the discretion of schools on how to spend it has resulted in the premium being simply swallowed up in schools' budgets.
"As the cuts are set to continue, any benefit there might have been as a result of the introduction of the pupil premium will be eroded away.
"If the pupil premium is to have any widespread positive impact on the children and young people for which it was introduced, it will need to be additional to school budgets and ring-fenced, with close scrutiny of how it is spent."
Sir Peter Lampl, chairman of the Sutton Trust and of the Education Endowment Foundation said Ofsted was right to highlight the issue.
"It is vital that the money intended to boost standards for the poorest pupils is used effectively to narrow those gaps.
"Through the Education Endowment Foundation, we are working with schools to trial cost-effective ways of improving the attainment of children on free school meals."
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