Michael Gove accused of free school ‘fraud’ cover up

More than £80,000 was misused at a free school previously lauded by David Cameron, with false invoices submitted to Whitehall and taxpayers' money used to hold parties, buy furniture for staff and pay for first-class rail travel, according to a Department for Education report.

The catalogue of financial irregularities occurred as the Kings Science Academy was set up in Bradford two years ago and represents a fresh blow for the Government's key schools policy. The Education Secretary Michael Gove is accused of suppressing for five months the damning findings of the internal investigation into the school that was eventually published today.

The report alleged that invoices were fabricated and that £86,000 of government funding had not been used for its intended purpose. It also disclosed that investigators were so concerned at what they uncovered that they called in police to assess whether a crime had been committed. The Department for Education said auditors had informed police in April 2013 but that no further action was taken.

West Yorkshire Police referred the case to Action Fraud, but it concluded it did not meet the criteria for further action, a Department for Education (DfE) spokesman said.

The report claims that almost £60,000 of the school's £182,000 lead-in grant, which is intended to pay for setting-up costs, was spent without supporting documentation, while “fabricated invoices” for rent were said to account for a further £10,800.

Payments also allegedly went to cover the cost of teachers' furniture, with more than £600 spent on parties or meals and £169 given to a staff member to buy clothes. The former vice-chairman of governors was also said to have been allowed to buy first-class rail tickets.

The report queried the school's recruitment policies, pointing out that a senior member of staff appointed his brother to the board of governors and employed his sister as a senior teacher, while his wife also worked at the school and his father drove the bus. The episode is a fresh blow to the credibility of the free school programme, coming a week after the al-Madinah school in Derby was condemned as inadequate by Ofsted inspectors.

Christine Blower, the general secretary of the National Union of Teachers (NUT), said: “It is now apparent the DfE has been sitting on the report detailing financial irregularities at the Kings Science Academy since May and only released it today once it became clear the NUT had released to the press its own document outlining alleged financial irregularities at the school.

”The catalogue of irregularities in the management of the school's finances acknowledged in the DfE's investigation report is a disgrace. This makes it very clear that the DfE lacks the proper procedures to manage and oversee its free schools programme.

“Michael Gove is himself personally responsible for this position. The public can no longer have confidence in him or his education policies.”

After being contacted by a whistle-blower, the DfE ordered an inquiry into the handling of cash at the 160-pupil school. It found that not all of a lead-in grant could be accounted for, with £86,000 used for different purposes. The internal review, which was published today, five months after completion, highlighted “serious concerns in relation to internal control, financial accounting systems and payment processes in operation in the academy until November 2012”.

It said it had identified a “number of payments where we could not find invoices/documentation to support the payments”. The department said it had issued a warning notice to the school in May, instructing it to “address failings in their financial management”. A spokesman for the DfE said that it was “nonsense” to suggest there was a cover up and that “we always intended to publish the report when the school finished its investigation”.

He added that it is a requirement within the Academies Financial Handbook that the Education Funding Agency will publish reports on all its investigations.

The school has taken action to pay the money it owes, recruit new governors, appoint an experienced finance director and overhaul its financial-management systems. Earlier this year Ofsted inspectors criticised the leadership, teaching and pupil performance at Kings Academy. They concluded that the school “requires improvements” - the third-lowest of the four possible grades that Ofsted can give.

Last year the school was visited by the Prime Minister, who described it as innovative and inspiring and later praised it in a letter to its principal.

A spokesperson for the school said: “We acknowledge there were poor governance issues during the start-up due to the pace of setting up the new school in two to three months. These have since been addressed. All payments received from DfE have been fully accounted for and any sums incorrectly claimed have been repaid.”

Tristram Hunt, the shadow Education Secretary, said, “This case represents another deeply concerning episode in a string of failings of David Cameron's free school programme. Labour has long warned of the dangers that a lack of financial oversight would cause. The case of Kings Science Academy proves yet again that it is not possible for thousands of schools to be run directly from Whitehall.”