Council calls in the fraud squad

Head raises alarm over missing cash after being told pupils not even enrolled had received support

Scotland Yard's fraud squad is investigating the alleged disappearance of public money that was intended to help vulnerable London school pupils.

EduAction, a private company that ran education services for the north-east London borough of Waltham Forest, received Pounds 1.1 million of Youth at Risk grants.

All of that money was spent without formal authorisation and Pounds 240,000 is unaccounted for, according to a draft report by the council's anti-fraud team.

Helen Jeffery, head of George Mitchell Secondary School, was one of the first to raise concerns.

She was told that four of her pupils had received additional behavioural assistance, but some were not even enrolled at the time and one was still at primary school. She said nine pupils should have received more than Pounds 20,000 in support, but none had received any.

Mrs Jeffery was told this year that George Mitchell was one of School Secretary Ed Balls's 638 National Challenge schools. "If that support had come into my school, it might not have made much difference to the attainment of those nine children, but it would sure as hell have taken some pressure off my staff," she said.

EduAction's five year contract in Waltham Forest ended earlier this year, and VT Education has now taken over its work in the borough.

EduAction is owned by two bigger private education providers, Nord Anglia and Amey.

Nord Anglia has faced criticism about its provision of education services elsewhere: in 2003, the Adult Learning Inspectorate branded its Hackney education services "inadequate".

Next week, educational psychologists and other members of the Trades Union Congress will condemn reliance on private firms for the provision of children's services.

The National Union of Teachers said the problems in Waltham Forest and Hackney backed up its view that private companies should not do the job of local authorities.

"Only with local authorities do you guarantee democratic participation and transparency," said Christine Blower, acting general secretary.

Waltham Forest's fraud team report into EduAction was passed to the Metropolitan Police last month. A Scotland Yard spokeswoman confirmed that its economic and specialist crime department was now conducting a full review.

The Pounds 240,000 was meant to provide additional behavioural assistance to 100 pupils in some of the borough's most deprived schools, but a whistleblower told the council's fraud team that no more than nine had actually received help.

According to the fraud team's report, one council officer said contract documents had been filled in retrospectively: "It was a bit of a dirty process," the officer said. "There was a lot of back-filling."

The Youth at Risk money was provided from the Neighbourhood Renewal Fund, which is run by the Department of Communities and Local Government.

A Waltham Forest spokeswoman said there was no evidence of council fraud in the management of the project: "We fully accept that this project was badly managed and monitored by the council, and that this severely hindered the council's ability to evaluate the project.

"We apologise unreservedly for this, but believe the measures we are putting in place will ensure that failures of this nature cannot happen again."

Following TES inquiries, EduAction said that, while it refuted the accusations, it was prepared to collaborate with any investigation.

"EduAction has not been contacted by the Metropolitan Police with regard to any enquiry regarding this matter," the company said in a statement.

"With regards to the allegations made by the internal London Borough of Waltham Forest investigation, EduAction commissioned independent third-party investigations and is confident that there is no substance to these claims.

"If required to do so, EduAction will co-operate fully with any ongoing investigation. The EduAction contract operates independently to the operations of its shareholders."

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