A HEADteacher accused of enjoying a lavish lifestyle using thousands of pounds of her school’s money has been reinstated.

Jo Shuter will return to her post in charge of Quintin Kynaston Academy with a final written warning after overseeing the spending of thousands of pounds of public money on luxury hotels, restaurants and £7,000 on her 50th birthday party.

Governors at the St John’s Wood school came under fire from London Assembly member and former pupil Murad Quereshi, who questioned their decision to reinstate Ms Shuter.

Over the weekend the Department for Education released the findings of its internal audit investigation team, who concluded: "Funding provided to benefit the needs of the academy pupils has, in fact, been diverted for inappropriate purposes."

At the time of her suspension in September last year, Ms Shuter urged people to await the findings of the investigation and said the allegations were ‘malicious and vindictive’.

But Mr Qureshi said: "Jo Shuter being reinstated has turned Quintin Kynaston Academy into the Jo Shuter show instead of it being about the school and its pupils. As well as a headteacher Jo is the chief financial accounting officer for the school. In this post how could she have possibly got her personal accounting mixed up with the school’s?

"The reputation of this school is important to old boys like me and for any child that comes through those doors this has a knock-on effect."

The investigation revealed how senior staff members held off-site meetings at exclusive hotels, including at the Grove Hotel in Hertfordshire, and at the Landmark Hotel, costing £8,269 and £4,410 respectively.

Almost £7,000 was spent on Ms Shuter’s 50th birthday party, held at the academy, and was not repaid for more than a year.

But Karen Buck, MP for Westminster North, defended Ms Shuter, saying: "Jo Shuter has been a dynamic and inspirational headteacher, who has helped Quintin Kynaston become the successful school it is today.

“This is despite its intake being drawn from some of the most deprived neighbourhoods in London. The inquiry has clearly raised a number of issues of concern around financial management. However, I hope lessons will be learned from this and more effective controls will be in place in future.”

Ms Shuter was named National Headteacher of the Year in 2007, and when she was suspended supporters mounted a Facebook campaign calling for her return.

A Department for Education spokesman said: "The misuse of public money meant for schools is completely unacceptable.  The Education Funding Agency has issued a financial notice to improve to Quintin Kynaston. We will not lift that notice until the school has made sufficient progress to address the identified weaknesses. We are monitoring the situation closely and will take any further action necessary.”

Quintin Kynaston Academy and its board of governors declined to comment.