The Department for Education is facing questions about why it failed to secure a police investigation into a £150,000 fraud at a flagship free school after being told the case was not being looked at.

Tes can reveal today that the department did nothing after being told that allegations of crime at the Kings Science Academy, in Bradford, were not being investigated by the police. 

A response to a freedom of information request shows that the DfE did not go back to the Home Office body Action Fraud after it told the department there was no criminal investigation due to take place and that more information was needed.

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The DfE’s inaction is now being questioned by the chair of the Commons Public Accounts Committee, Meg Hillier.

“The department should have ensured that this was properly investigated,” the Labour MP said. “It raises questions about the checks that were in place over how public money was spent in the early days of the free school programme.”

The news represents an important new development in a case of major fraud at a free school - personally endorsed by the then prime minister David Cameron - that was only made public by the DfE when a leaked document forced its hand.

The Kings Science Academy case eventually became a high profile national scandal resulting in criminal convictions and prison sentences for three people including the school’s founder and principal Sajid Hussain Raza.

But the police investigation only took place after publicity surrounding the leaked document led to questions being asked.

The new evidence obtained by Tes reveals that although the DfE had been told that no criminal investigation into the fraud was taking place, it did nothing to correct the matter or provide the necessary extra information.   

National Education Union joint general secretary, Mary Bousted, said it showed the DfE had taken “a cavalier attitude” to the misuse of taxpayers’ money

It took the leaking of an internal DfE investigation report into the public domain on 25 October 2013 to finally trigger the launch of a criminal investigation more than a year after concerns were first raised.

That day saw the department publish a heavily redacted version of its report hours before a BBC Newsnight programme about the school was due to go on air.

At the time the DfE said it had informed the police, who had decided no further action was necessary.

But once the matter was in the public domain Action Fraud passed the case to the police for criminal investigation and convictions followed.

Since then outstanding questions facing the DfE over how it took more than six months to secure a police investigation have not been answered.

The allegations of fraud came from an internal investigation carried out by the DfE’s Education Funding Agency. Its report in 2013 found that invoices for public money had been fabricated and recommended that the matter should be reported to the police.

The department did this with a phone call to Action Fraud in April 2013. A mistake by Action Fraud has been blamed for the case being wrongly logged as an information report and not as a report of a crime. This meant it was not passed to the police for criminal investigation when it was reported.

This mistake was admitted in November 2013 after the allegations became public.

However a freedom of information request revealed that Action Fraud had already told the DfE - months earlier on 5 September - that the matter had been reported as an information report and would need to be reported again as a crime in order for a criminal investigation to take place.

But Tes has now established that the DfE did not correct Action Fraud or report the case as a crime over the next two months, and then the case became public.

Ms Hillier said: “With allegations of fabricated invoices involving taxpayers’ money this should have been reported robustly. It should have been escalated by the department. To just report it with a phone call to Action Fraud and check on it with an email is not appropriate.”

Dr Bousted said: “The fact that the DfE failed to follow up on the inexplicable decision by Action Fraud not to investigate the fraud at Kings Science Academy remains a mystery.

“It shows a cavalier attitude on the part of the department to the misuse of taxpayers’ money. Responsible governance starts at the top, it is little wonder that some proprietors felt they could play fast and loose with taxpayers’ money when the DfE was failing to monitor how funds were being spent at new schools opened under the government’s flagship free school programme and step in when there was clear evidence of impropriety.”

A Department for Education spokesperson said: “We acted as soon as we received allegations of wrongdoing at Kings Science Academy. We formally investigated and referred the case to Action Fraud, which resulted in a police investigation and subsequent convictions for those involved.”