Milly: "if we already have oversubscribed LA run schools wouldn't it be more cost effective to extend these?"
Of course, provided there's space. In my area they've all been expanded to the max, and the demand is still increasing, so new schools are now needed.
"If there was a way to force free schools to ONLY open where school places are needed (e.g. to refuse applicatiions where projections show enough school places ) then I would have much less of an issue with them."
There is, but it needs to be a decision of the DfE as only they have the power to approve free schools.
I strongly suspect any free schools approved from now on will meet that criteria for exactly the reasons people have raised.
Reading between the lines of various announcements and press releases, the approvals policy has evolved quite distinctly since the start of the free school programme, partly in line with public opinion. At first it was all about promoting distinctive models and allowing private schools to convert. When that received a lot of criticism the focus seemed to shift to opening schools where existing standards were low and making sure there was a free school in every Local Authority. However when the criticisms about surplus places started growing to a crescendo, the focus shifted again to more of a "needs based" approach. As money has run out the focus has shifted even further from a broad definition of "need" which included a strong demand element, to more of a "basic need" approach.