City of York Council’s hopes of avoiding a £325,000 shortfall in its schools’ budget have been boosted after the Government agreed to review cuts.

York joined 23 other local education authorities last month in taking Local Government Secretary Eric Pickles to the High Court for a judicial review over £148 million of Government cuts in order to fund its flagship academy schools programme.

The Government had planned to take the £148 million out of the 2011/12 budget and a further £265 million in 2012/13 in order to help fund academy schools, free from local authority control.

Education chiefs in York said the cut equated to a loss of funding for the city of £411,000 in 2011/12, rising to £736,000 in the following year.

The council said that, even after it made savings of £86,000 from two York schools, Manor CE and Archbishop Holgate’s, becoming academies, it would still be left with a shortfall of about £325,000, which would lead to cuts in other services. The councils took legal action, claiming the method used to calculate the cuts was unfair.

Education Secretary Michael Gove has confirmed the reductions were now being reviewed because the number of academies was growing so quickly. He said the Government had to assure value for money and make sure that the taxpayer was not paying twice for the same services.

York council leader James Alexander described the move as “positive”. He said: “The Conservative-led Government’s approach to funding academies would mean York having to cut a further £325,000 of services and jobs after budget-setting with the Government was already agreed. “This was unacceptable and therefore City of York Council took legal action. Although we wait the final detail of the judicial review, the details emerging seem positive.”

He claimed the decision was the third U-turn Mr Gove had had to make in a year.

“All of this could have been avoided if the Conservative-led Government were not railroading through policies without proper consultation, without listening to parents, to teachers or local councillors” said Coun Alexander.

“As much as I would like to paint this as a strong victory for City of York Council over the Government, the real winners in this battle have been the lawyers.”