Free schools budget trebled to £1.5bn, report shows

The government's flagship free school programme will cost at least three times the sum originally allocated, the public spending watchdog has found.

The National Audit Office said the scheme allowing groups to set up state-funded schools would cost £1.5bn - the original Treasury grant was £450m.

The NAO said the programme prioritised speed over cost and schools were not always where places were most needed.

The government insisted its free schools offered value for money.

The NAO report says that the free school programme had seen "much lower average construction costs than in previous programmes" - on average 45% lower - by using "existing properties, reduced building specifications and smaller space standards".

This argument was echoed by the New Schools Network, which supports the opening of free schools, saying that they had provided more places at a lower cost.

But the ASCL head teachers' union warned against "diverting" funds to open free schools in places where extra places were not needed.

The report shows that in half of all districts with high or severe need for new places the Department for Education received no applications to open primary free schools.

If local councils want to set up new schools they have to invite free school or academy providers to bid.

The NAO's report, Establishing Free Schools, analyses Education Secretary Michael Gove's free school programme which has seen 174 schools open in England between September 2011 and 2013.

While it praises the speed with which the Department for Education has opened schools - with a future capacity of 82,000 places - the auditors call for a tighter watch on rising costs, and says the government underestimated the funds it needed.

Its original Treasury grant of £450m had to be topped up to £1.5bn with extra Treasury funds and money from other DfE building projects.

And it points out the average cost per school at £6.6m is twice the DfE's assumption.

'Safeguard investment'

The report says: "To date, the primary factor in decision-making has been opening schools at pace, rather than maximising value for money. The Department will need to exert more control over a rising cost trend."

"Many schools have been established quickly and at relatively low cost," it says, but warns that "to safeguard its £1.5bn planned investment" the DfE needs to "systematically respond to emerging risks".

And it suggests a review of the oversight of the programme may be needed in the light of the early problems that have emerged.

These include financial mismanagement claims at three open free schools, two of which have been judged to be providing an inadequate standard of education.

The report also has examples of lost funds and double payments associated with the scheme.

Some £27m was spent on opening schools in temporary premises and £80m was handed to local authorities for pupils who later moved into free schools - it was not recovered.

The report says that 87% of free school primary places opened in 2013 were in districts where the need for school places is "high or severe".

But there are also free schools opened in parts of the country with no pressure on places.

More than a quarter of all spending on school buildings - £241m out of £950m - has been on free schools in areas with no need for extra places forecast, the report says.

'No apologies'

Head of the NAO Amyas Morse said: "The programme's success and value for money ultimately depend on how free schools perform but lessons must be learned systematically from the problems that have arisen in a few of the early wave schools, especially where these have revealed failures in governance and control."

A DfE spokesman said it made "no apologies" for implementing its reforms as quickly as possible and claimed free schools offered good value for money.

"As the NAO states, 'Many new schools have been established quickly and at relatively low cost.' We are opening free schools at a fraction of £25m it cost to build a new school under the Building Schools for the Future programme.

"We have also cut the cost of building a new school by around 45% compared to previous school building programmes."

Shadow education secretary Tristram Hunt said providing enough good school places was a basic responsibility for any government - something he said this government was failing to deliver.

'Progress'

He said the programme was operating with "a complete lack of financial transparency and local accountability" and "has allowed unqualified teachers into our schools".

Natalie Evans, director of New Schools Network, said the report showed just how much progress had been made in a short period.

"Overall the NAO acknowledges that free schools are providing good value for money, creating new school places at a significantly lower cost per place than under previous programmes."

But Public Accounts Committee chairwoman Margaret Hodge said: "350,000 extra school places are needed by September 2015. At a time when money is tight, it is essential that resources are directed at areas of greatest need for places.

"Over £1bn will have been spent on the free schools programme by March 2014, yet on opening, one in four desks at free schools were empty."

The Association of School and College Leaders warned that when schools were making difficult financial decisions "it is unacceptable that the free school budget is not being managed properly".

"We are not against free schools as long as they are in areas where there is a need for more school places and they represent value for money. Diverting funds to unnecessary new schools is a waste of taxpayers' money and harms the quality of education for children in other nearby schools. Children are not guinea pigs in some educational lab," said Malcolm Trobe, the union's deputy general secretary.