Richard Wilson's blog

Mystery surrounds a multi-million pound government grant to the charity behind one of Michael Gove’s flagship Academy schools.

Last year, the Durand Education Trust was awarded £17.3 million to build what the Telegraph heralded as the “first fully free state-run boarding school” .

Durand Primary School in Stockwell, South London, had earlier, said the Daily Mail, “used proceeds from a leisure and student accommodation business it runs” to buy St Cuthman’s, the site of a former special needs centre in Midhurst, West Sussex.

The school’s plan was to  give its pupils an alternative to poorly-performing local secondary schools when they completed their time at Durand. The new secondary school would be based in the countryside to keep the children far away from “stabbings and the constant threat of trouble”.

“Teenagers will be transported from London on Monday mornings to spend five days and four nights in the country, returning on Friday evenings, all free of charge”, reported the Mail .

To those tempted to ask whether public money would be better spent improving the local secondary schools rather than building an entirely new one, 50 miles away, and then shipping hundreds of children there and back every week, the school had a good answer:

“It wouldn’t cost [the government] a penny”, Durand’s Executive Head told the Spectator. While the secondary school’s core expenditure would be funded by the state in the normal way, “we’d cover the costs of boarding from the profits of our health club”.

According to the Economist, “Nothing quite like it has been tried before”.

According to the Daily Express, “Parents… are delighted their youngsters will get the chance to enjoy a Harry Potter-style education away from the area’s notorious gang culture.”

“Unlike other state boarding schools, it will not charge for accommodation”, explained the Guardian. “Instead, its running costs will come out of private income the school generates from a swimming pool, gym and block of flats.”

Media coverage has been so positive, in fact, that the PR and lobbying company employed by Durand to promote the St Cuthman’s project, secure government funding, and “make Durand Academy synonymous with educational excellence” last year won an advertising industry award for the £200,000 campaign.

It may also have helped that the school has repeatedly deployed libel lawyers Carter Ruck against critics of the school’s management, and is currently suing Lambeth Council over three emails in which its chief auditor raised concerns about its financial affairs.

Yet amid all the glowing news reports, two big problems seem to have been overlooked.

1. Notwithstanding claims that Durand purchased the St Cuthman’s site “using its own funds”, and  “using income from a gym and flats on its London site”, Companies House records  appear to show that the Durand Education Trust actually took on a debt of £1.9 million to buy the property – over half of its reported £3.4 million sale price:

2. The reported profits from Durand’s business activities cover only a fraction of the school’s boarding costs. It appears that the project will therefore need millions of pounds in additional funding in order to become financially viable – at a time when other schools are having to cut back.

State boarding school lodging costs reportedly range from £7,500 to £12,000 per year for each child. Even at the lower end of that scale, Durand would need more than £4.3 million per year to board the 625 secondary pupils it hopes to take in. In the last three years, the school’s business arm, London Horizons, has generated £304,964 (2009), £255,157 (2010) and £350,120 (2011) for Durand Primary School and the Durand Education Trust – an average of just over £300,000 – less than 10% of the money the school looks to require.

According to “Spears Wealth Management Survey”, Durand has recently launched a public fundraising campaign urging wealthy individuals to sponsor children at the new school, costing this at £3,800 per child, per year. But even at that level, this would still require around £2,375,000 per year for 625 children. This is a sum that many long-standing charities would struggle to raise in a good year, let alone a start-up fundraising programme focussing on a single state school in the midst of a global recession.

When I asked for a copy of the budget and costings for the boarding school project, the Department for Education refused to reveal it, claiming that “Disclosure of certain information would be likely to prejudice the commercial interests of the Department, the proposers or both by adversely affecting bargaining positions and resulting in less effective use of public money”.

So I made a Freedom of Information request to Durand Academy asking for:

“Details of how much Durand paid for the purchase of the St Cuthman’s site”, “The amount of any funds borrowed by Durand to finance the purchase” and “The terms of any such loan, and details of how any such loan is
to be repaid”.

I got the following reply:

1.    Details of how much Durand paid for the purchase of the St Cuthman’s site in Sussex.

ZERO (DAT did not purchase the site)

2.    Details of how Durand financed the above purchase.

NOT HELD.  See above

3.    The amount of any funds borrowed by Durand to finance the purchase.

ZERO

4.    The terms of any such loan, and details of how any such loan is to be repaid.

See above

When I queried this, pointing out that a video on Durand Academy’s own website states that “Durand used its savings to purchase a site in the countryside”, I got no response.

But the school appears to be working on the basis – at least when it comes to Freedom of Information – that the Durand Education Trust is legally a separate entity from Durand Academy, and that FOI requests to the latter do not cover the former.

I subsequently told Durand that I’d seen information suggesting they were in debt, and that this seemed to raise questions about the viability of the St Cuthman’s project and the government’s decision to award it so much money at a time of “extreme national austerity”.

They issued a strong denial, stating that:

“Your assertions and source are factually incorrect on this matter. Durand Academy is not in debt, nor has liability for the land purchase and it would be wrong to suggest either.

“On the issue of value for money, we must object. More than any other school we are aware of, Durand has worked tirelessly and independently over the last twenty years to add significant value and opportunities for local tax payers, without impacting the public purse. Without additional central government support Durand has: improved the condition and value of the school estate substantially; absorbed a run-down failing primary school; completely refurbished that school to a high specification as a specialist early years site; expanded the number of places available to the local community; built state-of the art leisure facilities that children enjoy free use of and the wider community benefit from; reduced class sizes; subsidised healthy meals and; invested in a secondary school project that will provide choice and opportunity for local parents.

“We appreciate very much the ‘extreme national austerity’ that you refer, and that is why we believe that the Government has chosen to support a project and a project team that has never asked for hand-outs and are self-sufficient, has always made maximum efficient use of resources and have a strong record of delivery, not only in education, but in delivering projects on time and to budget.

“The £17.34 million pledged by the Government is some £8m to £15m less than has typically been spent on establishing a new secondary school to serve inner London in recent years. This money will help to deliver a secondary state boarding school from scratch, providing life changing opportunities for thousands of children. This project is innovative and ambitious, but we can assure you it is viable and we are committed to its delivery.”

Confused, I asked whether this applied to Durand as a whole – ie. not just Durand Academy but also the Durand Education Trust (for whom my usual correspondent at the school is listed as the main contact).

I was told: “As stated below this is from Durand Academy. Durand Education Trust is a separate entity. I am an administrator at Durand Academy and field correspondence for Durand Education Trust.”

So I asked my correspondent to refer my previous query about the financial situation to the Durand Education Trust. At the time of publication, a follow-up request for clarification had been acknowledged, but not replied to.

Given that the Durand Education Trust is legally constituted as an “independent charitable trust”, rather than a government body, it is not clear whether the Freedom of Information Act can be applied to it.

It may be that I’ve missed something obvious here (in which case, please do email me or leave a comment below). Or it may be that Durand has a substantial, and previously-undisclosed, source of additional income that can plug the financial gap.

But at the moment it is difficult to see how the Department for Education will be able to avoid committing many more millions each year to this experimental project – leaving millions less available for other, less favoured schools within the education system.

Update: I have now had some comments from the Durand Education Trust. Here’s what they say:

“1. Some of your estimates are so over the top as to be risible. For instance, though there will be costs associated with providing boarding (principally the extra costs associated with keeping duty staff on site overnight for safeguarding) the idea that these would amount to almost £30,000 per night, which is what is consistent with the lower figure in the range you cite, is frankly absurd.

2. DET did not take out a bank or building society loan to fund the purchase of the site. Any information you have to the contrary is false.

3. The figures you quote for London Horizons revenues were figures supplied to you in respect of sums historically paid over to Durand Primary School and Durand Academy. They do not reflect the level of income accruing to DET now or in the future.”

The Durand Education Trust also complain that “Whilst we are prepared to be as transparent as commercial sensitivities allow, we note that almost everything you have written about Durand in the past… has been unfair or inaccurate, and sometimes both. It is hard to resist the conclusion that your reporting is actuated by malice and/or a political agenda…”

So it looks like the mystery will continue for a while yet. I’d welcome any comments from readers that could help to clear things up.

On the financial question, the figure of £7,500 to £12,000 per year per child for state school boarding costs comes from a broadly positive Telegraph article, in which Durand got a prominent mention (“More cash needed for state boarding schools, warns head“, November 28th 2011). Over a 39-week school year where 625 children were boarded for 4 nights per week, the lower end of this scale would indeed amount to approximately £30,000 per day, which certainly is a lot of money.

It’s worth noting, however, that the cost-per-child cited by Durand in their new fundraising campaign – £3,800, would, under the same analysis, equate to around £15,000 per day for 625 children – or £24 per child. While this is significantly less, it is still a substantial sum, and with a total yearly cost (£2,375,000) that would still be much higher than the reported annual income generated, to date, by London Horizons (£350,120 in 2011).

It is not yet clear how the costs of transporting 625 children on the 50 mile trip to and from West Sussex each week would fit into the above analysis, or where the money for this would come from.

I have asked the Durand Education Trust for more details of the things I’ve written that they feel have been unfair or inaccurate, and invited them to produce a “right to reply” piece for publication on this blog, putting their side of the story. I will update this post if and when I receive a reply.

In literal terms, The Durand Education Trust appear to be correct in stating that “DET did not take out a bank or building society loan to fund the purchase of the site”. Records from Companies House show that the company which lent them £1.9 million was not a bank or a building society, but a firm called Alderley Land. More on that in due course…