A teaching union is calling for further investigations into two collapsed free schools, and says robust mechanisms are needed where schools operate outside of local authority oversight and accountability.

The DfE’s own investigation failed to identify how more than half a million pounds of public money was spent in related-party transactions at both the Collective Spirit Free School, in Oldham, and Manchester Creative Studio School, which closed in 2017 and 2018 respectively. 

The NEU teaching union has now written a letter to the Serious Fraud Office asking it to open an investigation.

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Kevin Courtney, NEU joint general secretary, said: “The government has established almost 10,000 state-funded academies, free schools, studio schools and university technical colleges that operate outside of local authority oversight and accountability.

“It is important that there are robust mechanisms in place to ensure that children and young people in these schools are receiving a high-quality education and that governance and financial arrangements are robust.

“It is clear that there were failings on a grand scale at these schools yet the DfE’s own agency has been unable to uncover the full extent of these failings. It’s now time for a full and independent investigation.”

The DfE investigation report highlighted a series of financial failings  at both free schools. However, the Education and Skills Funding Agency (ESFA) said that a lack of evidence meant it could not reach a conclusion over allegations that the related-party transactions had not been delivered at cost, as required by DfE rules, or whether the deals had been “inappropriately inflated” or whether invoices were submitted for services that were then not delivered.

The report also said the schools’ former chair of directors Alun Morgan had breached the Companies Act: “In particular the requirement: to exercise independent judgment, to exercise reasonable care, skill and diligence, to avoid conflict of interest and to declare interest in a proposed transaction or arrangement.”

NEU joint general secretary Mary Bousted said: “These were publicly-funded schools and the public has a right to know the full extent of what occurred and who was responsible.”

The DfE said the ESFA the investigation into the schools had now been completed, the report published and the schools closed.