Auditor warns over flagship boarding school scheme

The upper school is to be built on the site of a former boarding school in Midhurst

Ministers agreed £17m for England's first free state boarding school, for inner-city children, without looking at its long-term viability, auditors say.

The National Audit Office says the Department for Education approved funds for the Durand Education Trust plans in Sussex without fully analysing risks.

The DfE said funds would only be handed over when a business case was produced.

But the NAO said it had already granted £330,000 in revenue funds, plus nearly £20,000 a month going forward from May.

Concerns about the government's backing for the innovative but controversial scheme emerged in a letter from the comptroller and auditor general, Amyas Morse, to the DfE's most senior civil servant, Chris Wormald, seen by the Independent newspaper.

The project aims to create a boarding school for children aged 13 and above linked to the successful Durand Primary Academy and new Durand Academy Middle School in Lambeth, south London.

Under the plan, the teenagers would be bussed from the Lambeth school, to board for four nights a week at the new school to be built on the site of a former public school in West Sussex. Unlike other state boarding schools, where a boarders' fee is charged, parents will not have to pay a penny.

'Lacks robust estimates'

The scheme has much high-level backing and cross-party support, and the head teacher who devised it, Sir Greg Martin, was knighted in the most recent Queen's Birthday Honours.

But concerns have been raised about the financial viability of the scheme, by villagers living near the proposed site in Midhurst who fear the waste of public funds leading to a "white elephant" in the countryside.

The majority of the £22m building costs for the scheme is to come from the DfE, with the Durand Education Trust providing a further £5m itself.

In the letter to the permanent secretary, Mr Morse said: "I recognise that supporting innovative approaches to raising educational outcomes may require a higher than standard level of risk.

"Strong management practice - including appropriate planning and risk management - is also essential to ensure effective delivery of innovative projects and to safeguard value for money.

"In my view, the department currently lacks sufficiently robust estimates of the financial risk of this project. In part this is because full analysis of future operating costs and revenues has not been carried out."

Decision point

He added that although he felt the procurement process overseen by the department's funding arm, the Education Funding Agency, was "robust", it was limited to cover "the design and build of the facility".

Mr Morse acknowledged that the DfE would not release the full £17m it pledged in April 2011 for the scheme before planning permission was granted and "a full business case assessment". But, he said, "some financial exposure already exists ahead of the main capital investment".

"It is important to identify clearly the level of risk at the point of decision for a project, and for value for money to be thoroughly explored proper to the commitment of funds," he added.

At the point when the multi-million package was agreed by the DfE for the project, he said, it had lacked a "sufficient appreciation of the scale of financial and operating risk" associated with it.

However, discussions between the NAO and the DfE have led to an expansion of what the full business case will cover.

In a letter on the issue to the local parish council, Public Accounts Committee chairwoman Margaret Hodge said: "It is clear to me that either the department has not kept sufficient records of the work it has undertaken on this project, or that it did not undertake sufficient work to have the full understanding of the project risks at the point it initially decided to award funding."

'Cost plan viable'

The DfE said in a statement: "Durand is an innovative and inspirational project which has enormous potential. The National Audit Office is clear that it is satisfied that the procurement process for this project is robust.

"We will of course produce a full business case once planning issues have been resolved and the full scale of investment is clear. Only then will the money be committed."

Durand Academy executive head Sir Greg Martin said his school had a track record in successful delivery of innovative education projects that raised standards and delivered lasting results.

"Innovation in education is never easy. But if no-one pushes forward, if no-one pushes the boundaries, we all end up standing still.

"This is a new model, but revenue forecasts, capital costs and savings plans for the boarding school have been examined in depth and approved by the school's financial advisers.

"The Department for Education has also concluded that Durand's innovative cost plan is viable - as reflected in the school's funding agreement with the secretary of state."

The NAO intends to carry out a full review once the business case is complete.