The chancellor's plan to transform every school into an academy faces a £560m funding shortage, according to a new analysis.

In his Budget speech on Wednesday, George Osborne declared his intention to convert every primary and secondary school in the country into an academy by 2020.

An analysis of his plan by Labour showed the schools system was facing a black hole of £560m.

There are 15,632 schools in England that are not yet academies and the average cost of conversion is £44,837, meaning academisation would cost £700m.

The Budget allocates £640m over four years to be split between meeting the cost of full academisation and the funding of a new formula to end uneven levels of funding for schools in England.

But Labour highlighted another section of the same document which earmarks £500m for the new national funding formula, leaving just £140m for academisation.

‘This £500m black hole in the education budget means that schools will be further out of pocket as a result.

‘The chancellor needs to come clean about where this money is going to come from,' she added.

Council leaders have also issued warnings about the plans, saying the move ‘defied reason'.

The Conservatives called Labour's calculations 'shoddy'.