DfE didn’t look into failed UTC’s finances

The government chose not to investigate when auditors were unable to properly scrutinise the finances of a failed university technical college.

Accounts for the Greater Manchester UTC for 2016-17, published last month after missing the deadline by more than a year, reveal auditors gave a rare “disclaimer of opinion” on the state of the UTC’s finances because important data was missing.

It beggars belief that the DfE has failed to undertake an investigation into this situation

They could not find out income and expenditure or see the school’s balance sheet or a statement of cash flow.

The UTC, set up by Michael Dwan, the venture capitalist and Bright Tribe founder, closed in September 2017 after failing to attract enough pupils to be financially sustainable.

In the accounts, the auditors said they were “unable to obtain all of the information and explanations requested” following the departure of trustees and leaders during 2016-17.

The documents also show the UTC closed after three years with a £526,000 deficit, which the government paid off.

A disclaimer of opinion is one of four types of report issued by external auditors when looking at company accounts and means that a company’s financial status cannot be determined. Such reports are rare in the academies sector; just three were issued in 2015-16 and 2016-17.

However, despite the rarity and the Education and Skills Funding Agency (ESFA) previously investigating trusts and schools on the basis of internal financial information or concerns about financial irregularities, the Department for Education told Schools Week no investigation was carried out in this case.

Lucy Powell, the MP for Greater Manchester and a member of the parliamentary education committee, told Schools Week: “The failure to supply adequate accounting information to the auditors is really concerning, and is a further indictment on the management and oversight of this school.

“It beggars belief that the DfE has failed to undertake an investigation into this situation. Large sums of public money were at stake and the DfE and EFSA need much better systems to account for its expenditure.”

She added that a “catalogue of errors from the DfE, the ESFA and the school leadership” had contributed to the UTC’s downfall.

Schools Week understands the ESFA must consider the cost of any investigation and might have chosen not to do in this case because the UTC was due to close.

Greater Manchester UTC opened in September 2014, but was struggling less than two years later.

A flurry of directors resigned in 2016. Michael Dwan and his brother Andrew left in November, but North Consulting Limited, a company owned by Michael Dwan, remained as the UTC’s company secretary until January 20, 2017.

Michael Dwan also remained as a controlling member of the trust until that date, with the Bright Tribe Trust and University of Bolton.

A spokesperson for Dwan said he had resigned in July 2016, but continued to offer “some support to facilitate the transition”, which was given “at the request of the Department for Education”.

“He did not at any stage have any day-to-day operational responsibilities and was never made aware of any issues with the accounts or a lack of information.

“He was never approached asking for any documentation.”

A DfE spokesperson insisted the accounts “were signed off by the trust and the auditors”, but acknowledged the disclaimer of opinion.

“New trustees were appointed in February 2017 to oversee the closure of Greater Manchester Sustainable Engineering UTC. The parent trust is still in place, pending all actions being completed.”