Ministers ‘misused money’ at school hit by scandal

Public Accounts Committee chairman Margaret Hodge questioned why Department for Education (DfE) bosses agreed the deal for the Kings Science Academy with Alan Lewis’s company at a time when they had believed he was the school’s chairman of governors.

The move follows controversy at the Bradford school which was found to have fabricated invoices following a Government investigation last year. At yesterday’s Public Accounts Committee hearing , MPs questioned two top civil servants about the DfE’s failure to ensure police investigated the case for six months and also over the separate issue of the land deal.

Mrs Hodge said she had received a local valuation suggesting the DfE had agreed a deal three times the market rate. She has been told the rent for the site should have been under £100,000 a year when the agreed deal was around £295,000. Mrs Hodge also asked if officials had considered if any conflict of interest existed.

Mr Lewis is the school’s executive patron but the DfE has said that for 12 months between October 2011 and October 2012 it had wrongly believed him to be the chairman of governors after being told this by the school. It later discovered this was not the case.

A spokesman for Mr Lewis’s company, the Hartley Group, has previously said Mr Lewis had never been chairman or had responsibility for financial management or governance at the free school.

Commenting on the land deal, Mrs Hodge said: “How on earth did that ever happen? So there is £300,0000 a year, a 20-year deal, so £6m to a person who was chair – even if he now says he wasn’t chair – he calls himself executive patron, which I don’t quite understand as a term, which according to local valuation should have been under £100,000 per annum it’s actually almost £300,000. How can you explain this? That is a complete, it seems to me, misuse of public resources.”

The DfE’s permanent secretary Chris Wormald questioned the reliability of the valuation that Mrs Hodge had received. Peter Lauener, the chief executive of the Education Funding Agency, said the site was chosen after an assessment of nine suitable locations.

He said officials had been aware that the land deal had involved a potential conflict of interest so took “extra steps in the process”.

He said independent property consultants had confirmed that the value of the deal was in line with market rents.

Mrs Hodge also criticised the DfE over its handling of the alleged fraud at the academy, questioning why the department did not provide the invoices officials had concerns over, either when the matter was first reported to Action Fraud – a national reporting centre – or later when the department was told the matter was not being pursued by police.

The Yorkshire Post has revealed that in September last year the DfE was told by Action Fraud the matter was being dealt with only as an information report and that more information was needed for police to be able to investigate.

The school’s principal, Sajid Raza, was arrested and bailed last week by police investigating alleged fraud. The school has said he will not return until the police investigation has finished.

PAC committee member Austin Mitchell the Labour MP for Great Grimsby suggested the events at the school proved that the DfE’s initial checks when approving the Kings Science Academy had not been adequate.

Mr Wormald told the committee no system had been created which could prevent fraud being carried out.

He also highlighted an Audit Commission report which found there had been 191 cases of fraud in maintained schools in 2012/13

He said it was not the case that issues like this did not arise in local authority run schools.