Exclusive: Governors 'failed to control Leeds Met spending'

Leeds Metropolitan University's controversial decision to pay governors up to 15,000 a year is also called into question, and the report additionally reveals strong dissent among some governors over a tuition fees policy which charged the lowest rates in the country.

The review of the governing board's effectiveness said it did not apply a sufficiently robust and systematic challenge to the "potentially high risk" strategies adopted by Simon Lee, who resigned as vice chancellor 18 months ago.

Mr Lee is not mentioned by name anywhere in the 31-page report, but the way the board approved a deal to acquire Leeds's professional rugby union club – a move engineered by the then vice chancellor and which ended up costing 10m – is highlighted as a particular concern.

The Yorkshire Post has previously revealed how Mr Lee encouraged the outgoing chairman of governors, Ninian Watt, to withhold details from the 20-strong governing body because they "might think that one of my chess moves is silly without having the slightest idea of the end game..."

After taking control of the Leeds Carnegie club in 2007, Leeds Met ended up agreeing to pay 1m a year up to 2017 as the price for extricating itself from the deal two years later when it realised it could not afford to subsidise the wages of elite professional rugby players. By then, Leeds Met had already handed over 2m as part of the deal, one of a number of controversial sponsorship agreements with professional sports clubs which cost at least 22m.

The governance review said: "The board seems not to have played much of a role in this other than to approve it when it was essentially a done deal. It would have been reasonable to expect the board to analyse and assess for itself very carefully on the basis of the professional advice obtained the financial and reputational risks associated with such a venture prior to giving Board approval."

Referring to the wider strategy, it also said that "it is clear from the documentation review and interviews that in some instances the board might not have been as robust as it could have been in offering effective and sufficient challenge around a number of strategies which could have been viewed as potentially high risk for the institution".

It adds: "These included a financial strategy based on planned deficits funded from reserves and property sales to fund estate development, a low tuition fees policy out of line with the rest of the sector, an ambitious estate strategy and various partnerships."

Tuition fees at Leeds Met were capped at 2,000 a year, the lowest rate in the country, until the board decided to increase them in line with national guidelines when Mr Lee left.

The report said: "On tuition fees, there appeared to be a strong concern among some members that fee levels should have been raised earlier because of the effect on the University's financial strength. Each year there were robust debates and it has to be recognised that opinion on this issue was divided in the board. On this issue, there was clearly a lack of unanimity in the board albeit recorded decisions were unanimous.

"While the board supported a strategy to transform the university, this could have been at the expense of asserting its authority. Some members were conscious of this at the time but chose not to assert the board's authority sufficiently in order as they saw it not to damage relationships and in turn the University."

The review, which was conducted by higher education consultant David Fletcher, also recommended that Leeds Met reconsiders its controversial policy of paying governors – a policy understood to be unique among UK universities.

Last year, the Yorkshire Post revealed that Sir Iqbal Sacranie had been paid 3,000 for being a governor but only attended one out of 10 meetings in the academic year.

Under the policy, the chairman can claim payment of up to 15,000 a year, chairmen of committees up to 7,500 for and remaining lay members up to 3,000. Student and staff governors are unpaid.

The review acknowledged: "There were very strongly differing views around this issue within and outside the board. Although great care was taken over a considerable period of time around the manner in which it was introduced, it would be desirable for a further discussion to take place...around the principles of remuneration."

A Leeds Met spokeswoman said: "The board has fully accepted the recommendations of the independent external review of the effectiveness of the governing body and an action plan has been agreed to implement these independent recommendations.

"The review demonstrated that our governance processes and procedures are fundamentally sound and recognised there have been some positive developments that have raised the university's profile across the last five years."

Ninian Watt formally stands down as governors' chairman today after announcing his plan to leave in January.

Key points

Governing board failed to sufficiently question spending spree

Controversial acquisition of Leeds Carnegie Rugby Union club presented as "done deal" to governors

Governors recognise they could have been "more challenging and questioning on key policy issues"

Board was split on controversial low tuition fees policy

Governors should review their controversial policy of paying themselves up to 15,000 a year.