A state school in south London lauded by politicians is likely to be stripped of its management after refusing to repay £2m in government funds and charging pupils to use its own swimming pool through a tangled network of payments and companies.
The Department for Education said that the Durand Academy Trust, which runs the school in Lambeth, has been told its funding would be ended after “repeated and significant breaches” of its agreement, and the school’s inability to cut ties with Sir Greg Martin, its former head teacher.
The episode ends a long-running saga involving Martin – who was knighted for services to education in 2013 – and the school’s byzantine commercial structure. At one point Martin was paid £160,000 a year as director of a leisure centre that rents property from the school, on top of receiving his £230,000 annual salary as head.
John Nash, the academies minister, said that “serious concerns about financial management and governance” had led to the notice being issued.
“This is not a decision we have taken lightly but it has been done to safeguard the future education of Durand’s pupils and to ensure public money and public assets intended for the education of children are managed effectively,” Nash said.
Durand Academy’s management did not respond to requests for comment.
Martin was previously praised by the former education secretary Michael Gove, Liberal Democrat David Laws and other politicians for his work in turning around the struggling inner city primary school and expanding it into an all-through school of more than 1,000 pupils, including a controversial boarding school in Sussex which the DfE was prepared to fund.
As education secretary, Gove appeared at Durand in 2011 to deliver a high-profile speech, and described Durand as “an already outstanding school doing a wonderful job for children in one of London’s most challenging neighbourhoods”.
“What has been achieved here is inspiring,” Gove remarked, and later that year described Martin as one of his “heroes” as part of a select group of “great headteachers”.
But the school’s overlapping web of payments between different trusts and companies revolving around Martin brought it to the attention of regulators, including the Education Funding Agency (EFA) and charity commissioners.
Durand and Martin also came under the spotlight of the National Audit Office, which saw Martin scrutinised over his additional £160,000 in fees as the owner of a separate company running rental accommodation and a fitness centre from the school’s property. The NAO cited “a large number of conflicts of interest” in the way the academy was run.
Martin was also grilled in 2015 by parliament’s public accounts committee, and suffered further embarrassment over his scheme to start a dating website using the school as a contact address.
By the middle of this year, the DfE and Durand were engaged in legal battles, with the DfE issuing a provisional notice to terminate its funding unless the school’s management met its demands. They included the return of nearly £2m in funding that had been transferred from the Durand Academy Trust that runs the school to the Durand Educational Trust, a separate charitable arm.
After stepping down as head teacher last year, Martin stayed on as a governor of the school despite the DfE’s demands. He remains unrepentant, and four months ago gave an interview saying “for the the greater good of the education system we need more people like me”.
The DfE’s patience was exhausted by the legal manoeuvers, and led to a blunt letter from the EFA’s chief executive, Peter Lauener, to begin the formal process to replace Durand Academy Trust in running the school.
The letter from Lauener says that the trust has “failed or refused to comply fully with six of the eight requirements” in its earlier notice, and that the DfE has been requesting the full repayment of the £2m since February 2015. Lauener notes that he has “no confidence” the trust’s managers will repay the money.
The termination notice details how the leisure centre’s operating company charged the school £158,000 in 2014 for using its own property – including the school swimming pool by pupils during school hours – at market rates rather than at cost.
The Durand case closely resembles another school lauded by Gove. An EFA report into the Perry Beeches academy trust in Birmingham uncovered complex accounting and additional payments to the executive head teacher, Liam Nolan, leading to the trust’s management being deposed.
Mike Kane, Labour’s shadow schools minister, said: “This is an extremely concerning case which further exposes the Tories’ failure to properly oversee academy schools and make sure taxpayers’ money is being spent where it should be.
“The Conservatives need to get a grip of the academy system as it stands, rather than make the problem any bigger by adding more schools and academy trusts.
“It’s clear what we need: good teachers in good schools, but every day that goes by shows the Tories can’t deliver the change we need.”
The academy trust can appeal against the DfE termination, which comes into effect in a year’s time.