Head teacher's waste criticised

But while the "super-head" was in charge of Whalley Range High School in Manchester, she made illegal payments and wasted taxpayers' money, according to an Audit Commission report.

While head teacher of the school - motto: "Not for oneself but for all" - her pay rose from £76,193 to more than £141,000.

Dame Jean paid a personal friend £13,200 for unauthorised "consultancy'" work, while her twin sister, Maureen Rochford, was appointed as clerical assistant at the school despite a "clear conflict of interest", the report says. Ms Rochford rose to become assistant head of the school on a salary of £60,722.

Dame Jean was honoured for services to education in 2001 when Estelle Morris was Education Secretary. She then spent £3,300 of school funds on two celebration parties.

But in October 2002 a complaint was made, alleging nepotism, and the Audit Commission began a two-year investigation. Dame Jean was suspended on full pay from her post last November, along with her sister and a third member of staff.

The "public interest" report, published today, concludes: "The headteacher has made serious errors of judgment ... particularly in relation to the role and remuneration of her sister." It says, however, that she should not face legal action.

Dame Jean is still suspended, but rejected many of the report's criticisms. "I also certainly do not accept that the employment of my sister over a 10-year period and her remuneration was wrong," she said. "The considerable success of the school, which had previously underperformed significantly, was due to our policy of employing the best people in each post, whoever they happened to be."