The free school spending free-for-all: MPs savage lack of proper oversight of how £1.1bn of public money has been spent

Education Editor

A scathing attack on the financial oversight of Education Secretary Michael Gove’s free schools programme is delivered by a public spending watchdog today.

Opening the new schools “at such speed” has led to risks, including a failure “to ensure public money is used properly”, even though £1.1bn has already been spent on them, say MPs on the cross-party Commons Public Accounts Committee.

“Standards of financial management and governance in some free schools are clearly not up to scratch,” they say.

As a result, the Government has to rely on whistleblowers to expose financial mismanagement rather than its own checks on spending.

In addition, the committee reveals that only half the free schools filed their accounts to the Education Funding Agency on time.

The report comes at a time of growing concern over school finances, with controversy over a £230,000 salary being awarded to the head of a primary school academy, Sir Greg Martin, and The Independent’s revelation that the Government is spending £45m on setting up a new selective free school for sixth-formers in Westminster.

Margaret Hodge, who chairs the Public Accounts Committee, said both the Department for Education and its funding agency “must improve their arrangements for the auditing and accountability of free schools so that we can follow the taxpayers’ pound and satisfy ourselves that public money is being spent wisely”.

She added that “financial management and governance in some free schools are clearly not up to scratch”.

The report cites the cases of Al Madinah free school in Derby and the King’s Science Academy in Bradford where concerns over standards and financial mismanagement were raised by whistleblowers, rather than government agencies.

“Whistleblowers played a leading role in uncovering recent scandals when problems should have been identified through the [Education Funding] Agency’s processes,” says the report.

It goes on to warn that many of the free school places are being provided in areas where the need for extra provision is not at its greatest.

Ms Hodge said: “The Department has received no applications to open primary free school places from half of districts with high or severe forecast need for primary school places.”

Eighty-seven per cent of primary free school places have been in areas of greatest need, and 19 per cent of secondary school places.

So far 174 free schools have been opened, with a further 116 in the pipeline. The report says a quarter of free schools opened by September 2012 had 20 per cent fewer pupils than planned. Of those opened afterwards, 38 per cent had fewer than planned.

An earlier report from the National Audit Office said the free schools had attracted three-quarters of their planned numbers.

Ministers have earmarked £1.5bn for the free schools project by March 2015 – and £1.1bn has been spent. The report warns that rising capital costs – as a result of schools being opened in more expensive regions such as London, the South-east and South-west – means there is a risk of the programme overshooting its budget.

It acknowledges that the DfE implemented its free schools programme quickly but, as a result, has opened itself up to risks.

The shadow Education Secretary, Tristram Hunt, said the report showed the project was “damaging school standards”.

“The complete absence of local oversight of these schools, their disproportionately high cost and the failure of many to deliver the quality education we should expect is having a detrimental impact on our children’s schooling,” he added.

He pledged Labour would appoint a director of school standards to oversee schools in every region.

Mary Bousted, general secretary of the Association of Teachers and Lecturers, said it was “deeply worrying” that less than half the free schools in the first tranche submitted financial returns on time.

Mr Gove delivered a robust defence of the project when he addressed an education conference at Brighton College yesterday afternoon.

He said: “There has yet to be sufficient focus on what has gone right with the programme. There are lots of successes and I think we are learning from those successes about making sure that intervention works.”

He added that Ofsted was halfway through its inspection programme for free schools and “there are one or two of them that have done poorly by that judgement”. However, he added, the proportion of free schools rated as “outstanding” was twice as high as other schools.

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