Since in Muslim schools, you report, "music, dancing and creative art would be banned", the conclusion is that the public purse should fund a latter-day puritanical philistinism. It is not the duty of the state to promote that.

If a premise leads to a humanly unacceptable conclusion then the premise must itself be humanly unacceptable. So, all religion-based schools should be financed by the relevant Believers without state help. I resent paying taxes so that people can draw on public funds in order to get at the children and grind their private ideological axes at the expence of me and my kind. If religionists want to avail themselves of state education they can have the whole year, less about two hundred working days, to inculcate their children with their beliefs. If that is not enough then those beliefs must be unconvincing indeed. State funded education should be for the teaching of facts and principles we all need and promoting values we necessarily must all share, living as we all must in a plural society.