Kings Science Academy (Bradford)

Kevin Brennan Excerpts

Tuesday 28th January 2014 Westminster Hall

[Mr David Ward (Bradford East) (LD)]

It is good to be here before you, Dr McCrea, and the Minister. I initiated this debate and I was lucky to secure it, so it is only fair that I should be able to say what its focus is. It is important to say that because it is not about free schools and academies in general. We have had such debates, so it is not for or against such schools, but about one particular school: Kings science academy. I am not interested in what has been done in the last year or so to improve things at the school or the achievement of pupils, the quality of teaching, the behaviour of pupils, or the leadership and management. I am passionately interested in all those things because I care about Bradford, but that is not what this debate is about.

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. 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?

I would like the Minister to prove me wrong in what I believe has occurred and the preferential, favourable treatment received by Mr Lewis by ending the speculation and making public the options, analysis and appraisals of nine alternative sites. If they were available, we could see whether there was a rigorous process in place.

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—I have given the Minister three photographs from before it was developed, and I can give more. What evidence is there that Mr Lewis has not made excessive profits from the school that now stands on that site? The Minister has the pictures before him. I believe that the school was only ever going to be built on that particular site—neither the principal nor, certainly, Alan Lewis would have been interested had it been anywhere else. Prove me wrong, please, but the DFE failed in its duty to ensure that a fair and robust options appraisal took place, and I have evidence to suggest that it did not take place.

As for the personal involvement of Mr Lewis in the running of the school, there is this big debate about “was he or wasn’t he” chair of the governors. How on earth can the DFE have mistakenly believed that a vice-chair of the Conservative party was chairman of governors at a free school for 12 months? How can the Department have been confused about that? I had a letter from Mr Lewis as recently as December 2013, signed by himself, in which he states:

“I was never chair of the governing body of the academy.”

Yet I have a copy of an e-mail to the Department, which has been amended by Mr Lewis to show him as chair of the governing body and not simply as someone involved in some way in the school.

I also have evidence that Mr Lewis was involved in the financial management of the school. In the same letter from him, however, he states that

“at no time have I ever had responsibility for the financial management of the academy.”

Yet I have a letter from the DFE in which the financial arrangements of the school have Mr Lewis not only as one of many involved, but as the person who should receive financial reports. He was the key individual who was receiving the reports, even though, to repeat his own words:

“at no time have I ever had responsibility for the financial management of the academy.”

The e-mail clearly shows, set out as an action point, that the monthly financial reports were to be given directly to him.

The truth is that Mr Lewis was personally and heavily involved in the school, right from the very beginning, but he now wants to distance himself from any involvement during a period in which he knows that fraud took place. Moreover, at the same time, negotiations were taking place about the rent for the property that he owned.

A second point, on the principal, involves the internal audit investigation team report endorsing the findings of the earlier Education Funding Agency report and of the report by the accountants, Crowe Clark Whitehill, in August 2012. Will the Minister please tell me whether the CCW report was seen by the DFE? I have to tell him that I think it was, but I want some evidence that it was and for when it was seen. The IAIT report states that the principal admitted that fabrication of invoices had taken place, so even if the DFE did not see the CCW report in August of 2012, at the very least it must have known about it from the audit team at the beginning of 2013. The DFE knew about the fraud, which had been admitted by the principal, but it took no action whatever to remove him from the school.

[Kevin Brennan (Cardiff West) (Lab)]

The Secretary of State said to me during a recent exchange in the main Chamber that

“Mr Lewis is receiving for the property an appropriately guaranteed market rent—less than he was receiving for it beforehand.”—[Official Report, 6 January 2014; Vol. 573, c. 16.]

One of the architects involved in preparing the free school bid has said to me that he finds that statement is a

“very difficult to believe” Statement.

Does the hon. Gentleman agree?

[Mr Ward]

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 whatever. 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.

We know how serious things were in the school, and that the audit reports identify not only the fraud, but all the nepotism and other financial irregularities that were taking place. I repeat that all of that was known by the DFE, but no action was taken at all. We are not talking about a young and inexperienced man, but about a dishonest and disreputable character, and yet, with all that information, the DFE was content to let the principal remain in place.

I hope that the Minister can prove me wrong, because I have a number of serious allegations about the DFE itself. If I am right, the independence of the civil service must be in doubt. Will the Minister please put to bed some of the suspicion about the DFE by helping us? The Department has failed in its public duty to expose what it knew to be malpractice and criminal activity—it held information back and covered up the situation. We cannot have the freedom extended to free schools including freedom from public accountability.

On the reporting of an admitted crime to the police, I am still not satisfied. We have asked oodles of questions, but I am still not satisfied that the DFE acted as it should have. There will always be suspicion of a cover-up until the Minister carries out a full investigation into what happened.

The first phase of the launch of the Kings school was praised by the Prime Minister and described in the press as closest to David Cameron’s vision of what a free school should be. We know the background, but when the whole scandal broke, the DFE said that it was for the school itself to decide whether the issue was a disciplinary one. How on earth can an organisation highlighted in an audit report as responsible be the organisation responsible for looking at itself and dealing with its own disciplinary issues? It beggars belief. A Government audit uncovers misconduct so serious that it needs to be passed to the police for criminal investigation, and yet the DFE feels that it is for the school itself to decide whether the issue is a disciplinary one.

When at last the Department decided that matters could not be contained within the school, it finally referred it to Action Fraud. We are asked to believe that Action Fraud botched up the recording of the fraud on 25 April. Even if we believed that to be true, we know that the DFE then did nothing about ensuring that a crime was investigated until 5 September, when it sent an exploratory e-mail to ask what was going on.

On 5 September, the DFE knew that its April report had been erroneously recorded as an information report. It was told by Action Fraud:

“If more information related to your report becomes available your report will be re-assessed to determine its viability for investigation.”

The Department knew that on 5 September, but did nothing. Why was the audit report not sent directly to the police at that time?

--- Later in debate ---

[Mr Laws]

I will come directly to that point in a moment. The EFA’s financial management and governance report and the Secretary of State’s warning notice have also now been published. We insisted that Kings science academy address identified failings urgently. While its internal evidence gathering continued, we confirmed the repayment sum at £76,933. We also sought confirmation that the disciplinary process was being taken forward. It is right that the relevant funding is being recovered from the academy in full, as it always will be if an academy or free school is unable to demonstrate that funding has been used for its intended purpose.

We believe that the Kings science academy, under the leadership of Mr Bowers, is making steady progress to address the weaknesses found in financial management and governance. That increased confidence is not just a result of the monitoring visits carried out by the EFA. We have evidence from KSA’s externally audited accounts for 2012-13, which were received on time, unqualified, and report the auditor’s comments on improvements in financial control and governance.

Let me turn now to the reporting of evidence to the police. The administrative error made by Action Fraud, which wrongly categorised the Department’s evidence in April as an information report rather than a crime, is deeply regrettable, as my hon. Friend made clear. Significantly, Action Fraud has apologised for the error. We do not believe that there is any fault with the way in which the report was made by the Department.

[Kevin Brennan]

Will the Minister briefly give way on that point?

[Mr Laws]

I will not give way, because I have so much to cover. I hope the hon. Gentleman will excuse me.

Before April 2013, any evidence of fraud found by the Department would have been reported to the relevant police authority. Action Fraud was established from April 2013 and since then has been the correct organisation with which to engage. The KSA situation was the first occasion on which the Department had needed to contact Action Fraud, so it made a further check with West Yorkshire police on the same day—25 April—to confirm that the report had been made in the right way. I put it to my hon. Friend the Member for Bradford East that if there had been an attempt at a cover-up, it is unlikely that that check would have taken place.

In September, we made a further check with Action Fraud, which told us that the National Fraud Intelligence Bureau had assessed the case and decided not to take it forward. At the time, it seemed clear to us that the information regarding an alleged fraud had been correctly provided; it had been assessed and the case was not going to be progressed further. We know now that the case should have been passed by Action Fraud to West Yorkshire police for investigation, but the decision to investigate lies with the police, not the Department for Education.

I am sure my hon. Friend shares my wish to ensure that such a problem does not happen again. The Department’s internal audit and investigation team has now met Action Fraud and the National Fraud Intelligence Bureau to review and refine the processes for reporting fraud in future. We have tightened the procedures through which any future reports will be made. We will use Action Fraud’s online system. We will retain our own copy of the report we make and follow up within five working days if we have had no response from Action Fraud or contact the police.

As my hon. Friend knows, the police made an arrest in connection with the case on 9 January this year. Kings science academy wrote to parents on 10 January to confirm that the arrested man was Mr Raza, the principal, and that he would not be returning to the school, at least until the investigation was completed and finalised. Beyond that, it is not appropriate to comment. The parameters of the investigation are, quite rightly, for West Yorkshire police to determine. Until such time as the investigations are concluded and a determination regarding the case is reached, it would not be appropriate to release further information on that matter.

I shall now turn to the matter of Alan Lewis’s role at Kings science academy. On 27 September 2011, the academy told the Department that Mr Lewis would be chair of governors from 1 October 2011. The Department was informed on 24 October 2012 that Mr Lewis was not the chair and that Dr Asim Suleman would be chair of governors from 25 October 2012. We learned in December 2012 that there had been no chair of governors in place between October 2011 and October 2012. That was clearly a completely unsatisfactory position and totally unacceptable. Not to have a properly constituted governing body is a demonstrable failure to comply with the funding agreement. It is one of the issues identified in the EFA’s review, and one that the academy quickly addressed.

Alan Lewis’s other connection is that his company, Hartley Investment Trust Ltd, leases the site to the school, as my hon. Friend indicated. 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 hon. Members have any points to make about the police investigation, they should make them as soon as possible to the police.