The investigation by Parliament’s Committee of Public Accounts (CPA) concluded that standards of financial management in some free schools are “clearly not up to scratch”. Its 64-page report also slams the Department for Education (DfE) and Education Funding Agency (EFA) for a lack of effective oversight.
The MPs are concerned that recent scandals came to light not via the EFA’s monitoring processes, but because of whistleblowers. They are also worried that in 2011/12 fewer than half of free schools submitted their required financial returns to the EFA on time.
There are currently 174 free schools open with a further 116 set to follow this September. However, there have been a number of high-profile failures, including the recent “serious failings” in financial management found at the Kings Science Academy in Bradford.
Committee chairwoman Margaret Hodge said the DfE and EFA must improve their audit and accountability procedures.
She added: “High-profile failures demonstrate that the DfE and the EFA’s oversight arrangements for free schools are not yet working effectively to ensure that public money is used properly.
“(They) have set up an approach to oversight which emphasises schools’ autonomy, but standards of financial management and governance in some free schools are clearly not up to scratch.”
The report adds that “poor levels of compliance by free schools with governance and financial reporting requirements” must be addressed.
The report, which is based on evidence sessions held with Peter Lauener, CEO of the EFA, and Chris Wormald, the DfE permanent secretary, also raises concerns that the DfE and EFA have let the capital costs of setting up free schools spiral out of control.
The budget for the programme up until 2015 is £1.5 billion, of which £1.1 billion has been spent to date. However, £740 million of this has gone on capital costs.
The report states that if recent trends continue for more expensive free schools, such as secondaries, special and alternative provision, located in more expensive areas, such as London and the South East and South West, then it could result in costs exceeding available funds.
It adds: “The Department’s cost estimates when approving individual schools have so far proved to be inaccurate. The Department acknowledged that publicity surrounding free school applications can inflate the market value of the proposed site, particularly in London. It also faces the risks of additional costs arising from the use of temporary accommodation on the initial opening of some free schools, from the need to provide off-site facilities such as playing fields, and from securing planning permission for permanent accommodation.”
At the same time, the report raises concerns at the number of free schools that have been approved in areas which do not need additional school places. It finds that while 87 per cent of projected free school primary places are in districts that expect a “high or severe need for extra places”, only 19 per cent of free school secondary places were in such areas. Ms Hodge added: “The Department has received no applications to open primary free schools from half of districts with a high or severe forecast need for extra school places. We are calling on the Department to set out how, and by when, it will encourage applications from areas with a high or severe forecast need for extra schools places, working with local authorities where appropriate.”
The MPs also said that the DfE must be more “open” about the reasons behind its decisions to refuse or approve applications. Ms Hodge continued: “(The DfE) was unable to give us a consistent explanation of how its decision-making process leads to certain applications’ approval and others’ rejection, and how this represents value for money.”
Christine Blower, general secretary of the National Union of Teachers, said: “It is extraordinary that, as the report makes clear, the Department has set no limit on how much it is willing to spend on free school premises. It would appear that there is no sum too large to lavish on free schools, a fact that most headteachers in schools desperate for repairs and renovation will greet with incredulity.
“All in all this is a damning indictment of the free school programme and of its handling by the secretary of state, Michael Gove, who in light of this report should really consider his position.”
A DfE spokesperson said: “Many of the committee’s concerns are misplaced. Free schools are subject to greater scrutiny than council-run schools, they are overwhelmingly located in areas with a shortage of places, and construction costs are 45 per cent lower than the previous school building programmes.
“Those areas with a shortage of places but with no free schools receive extra basic need funding to make up for it.
“The vast majority are performing well – of the most recent schools to be inspected three have been rated ‘outstanding’ and 10 have been rated ‘good’.”