William Stewart reports

Police have questioned two Department for Education and Skills officials as part of the peerages for loans inquiry, The TES has learned.

David Bell, the department’s permanent secretary, said: “The police have taken documents from the department and two members of our staff have been discussing the contents of the documents in relation to our work.”

The documents were ”... all related to the processes and procedures of the department when it comes to nominating people for honours”, he said.

Two of the four millionaires who backed Labour with unpublicised loans and prompted the inquiry when their peerages were blocked, are also academy sponsors. But Mr Bell denied suggestions that other potential sponsors had been put off. He was speaking as a Cabinet Office “capability review”

delivered a mixed verdict on his department.

A controversial education Bill, the media furore over checks on school staff, not to mention yet another ministerial reshuffle, has meant a busy first seven months for Mr Bell as the top education civil servant.

The report says he has come through with flying colours and is seen as “visible, decisive, engaging and inspiring”.

There were no “serious concerns” about his department’s ability to deliver in the future, but there were some “significant weaknesses” in several key areas, such as staff morale and the DfES’s relationship with bodies such as the Learning and Skills Council and the Qualifications and Curriculum Authority.

Mr Bell admitted: “We must raise our game.”

He conceded there was poor morale, citing the 1,460 job cuts the DfES must make by 2008, as the main reason.

A copy of a book on Summerhill presented to him by a pupil from the famous school, which allows its pupils maximum freedom, when he was chief inspector, sits in his office as a reminder of his many former roles in education.

When asked how he draws on his experiences from his former lives, Mr Bell replies: “I am careful not to say ‘When I was a teacher’ or ‘When I was a head’ because people just say ‘yeah, yeah’,” he said. “But I do think it brings a kind of reality check to what we do here.”

He admitted there was a “strategy clutter” at the department. Ministers needed to make hard-nosed decisions about which priorities to focus on if the department was to deliver the “clear overarching strategy” called for by the review.

It also found that senior DfES leadership had to work together more effectively and that the department’s board, made up of the heads of its directorates, had a “lack of corporate drive”.

A new annual survey of learners, parents and employers is being planned to help the DfES focus more on the needs of its “customers”.

A departmental group will promote closer relationships with arm’s-length bodies such as the QCA.

The report found there was confusion and overlapping of their responsibilities, a perception of “man to man marking” of the other agencies by the department and “a lack of confidence on both sides about the other’s ability to deliver in key areas”.

But DfES staff were praised for a commitment and passion for their work compared to other departments.

And the report said the department “acts swiftly and decisively at times of crisis and in taking legislation through Parliament”.