The Department for Education was yesterday accused of “colluding” with the suspended head of one its flagship free schools and a Conservative Party vice-chair, who owns the land on which the school was built.

David Ward, Liberal Democrat MP for Bradford East, called for a full investigation into the government’s role in the scandal surrounding the King Science Academy in Bradford, which is at the centre of a police fraud investigation.

Speaking in a Westminster debate on Tuesday, Mr Ward suggested that ministers within the Department for Education (DfE) had worked together with Sajid Raza, the principal of the free school, who was arrested earlier this month as part of the investigation, and Tory vice-chair Alan Lewis, who leases the land to the school at a cost of £300,000 a year.

“I am interested in what seems to be the collusion between the so-called benefactor, Alan Lewis, the currently suspended principal, and the Department for Education,” Mr Ward said.

“I am interested in the DfE’s role in allowing a rich Tory vice-chair to become even richer to the tune of millions of pounds of public money, and how it allowed an inexperienced young man to become principal of the school and to remain in control long after the DfE knew he had admitted that fraud had occurred in his school. How could that be?”

The Lib Dem MP then demanded ministers “prove him wrong” over his suspicions that Mr Lewis received “preferential, favourable treatment” when it came to securing the tenancy of the free school on his land.

Mr Lewis’ company, Hartley Investment Trust Ltd, stands to gain nearly £6m over 20 years after it agreed a deal with the DfE to build the free school on its land.

“I also want to see the evidence that the near £300,000 per year rent is not far in excess of what Mr Lewis could reasonably have expected to get from the partially tenanted and largely derelict site,” Mr Ward added.

Earlier this month, education secretary Michael Gove told the Commons main chamber that Mr Lewis was “receiving for the property an appropriately guaranteed market rent - less than he was receiving for it beforehand”.

But Labour’s shadow schools minister Kevin Brennan said in Tuesday’s debate that one of the architects involved in preparing the free-school bid said he found that statement “very difficult to believe”.

Concerns were also raised around how Mr Lewis was mistakenly believed by the DfE to be the free school’s chair of governors for a year, when in fact the school’s governing body did not have a chair.

And the Lib Dem backbencher demanded more transparency into the DfE’s handling of the fraud when irregularities were first raised following an internal audit carried out by the Education Funding Agency.

Mr Ward said: “We need clear evidence, because we are now receiving at best evasive responses to the questions that many of us have been asking. At worst, hiding behind the ongoing police inquiry, we have received no response whatsoever. To be honest, the evasiveness of some of the responses has been disrespectful to members of this House. We need answers - all the speculation can then disappear.”

Speaking on behalf of the government, schools minister David Laws said that the mishandling of the fraud was down to an administrative error on behalf of the national fraud centre Action Fraud, which incorrectly categorised the department’s evidence in April.

The lease between Mr Lewis’ company and the school had been approved by the Treasury, Mr Laws added.

“The site was secured for Kings Science Academy at £295,960 per annum, after an independent valuation. Due to the related party involvement, Treasury approval was sought and provided before final decisions were taken. If any members have any points to make about the police investigation, they should make them as soon as possible to the police,” Mr Laws said.

A DfE spokesperson said: “We always seek to secure sites at no or minimal cost. We are paying rent on the Kings Science Academy site because that was the best site available in terms of its cost, suitability, size and location.

“Independent commercial advice was obtained on the cost of the lease for the Kings Science Academy site. This confirmed the cost was in line with the market value. It was also a lower rate of rent than for previous tenants. Treasury approval was also sought and obtained on the proposed site.”