The government gave more than £250,000 to a doomed free school to help it close down, new documents reveal.

The annual accounts of the Collective Spirit Free School in Oldham, Greater Manchester, show the Education and Skills Funding Agency paid £254,819 “to assist in the close-down of the academy” in 2016-17. The funding meant that the academy shut last year with a £192,710 budget surplus.

According to the documents, the government also handed more than £150,000 to the school to pay another academy for support. School funding bosses also wrote off debts of at least £300,000 in the school’s final year.

The school, opened by charity boss Raja Miah in 2013, was placed in special measures in 2016 following a damning ‘inadequate’ Ofsted report. Its leaders announced last June that it would close, and its doors shut for the final time in September.

The school’s 2016-17 accounts show that general debts of £51,105 owed back to the public purse were written off by the ESFA as “donations”.  This is on top of almost £250,000 written off as a result of the school having overestimated its pupil numbers.

Free schools are funded based on their predictions of pupil numbers. Those which receive more than they needed because they overestimated their roll are supposed to pay the extra money back.

But data obtained under the Freedom of Information act earlier this year shows that debts of £248,660.66 accumulated by Collective Spirit as a result of this “pupil number adjustment” were written off by the ESFA in 2016-17.

Free school spent £339k with linked company

The Collective Spirit Free School paid out £339,261 in related party transactions to Collective Spirit Community Trust Limited, a company part-owned by one of its trustees, in 2016-17.

Payments included £120,000 for “extended curriculum” services, £57,760 for catering supplies, £39,134 for transport, £28,167 for educational consultancy and £20,266 for “educational boosters”. The school even spent £16,666 on “marketing” in its final year of operation.

This is on top of £419,028 paid by the school to the Collective Spirit Community Trust in 2015-16, of which only £139,676 was declared at the time. Alun Morgan, a former director at the school, owns a 50-per-cent share of the Collective Spirit Community Trust.

Auditors were also unable to conclude that the disclosure of related-party transactions was “fairly stated” because they were unable to get hold of all invoices issued to the school by the trust.

The school also paid Consilium Academies Trust, an organisation run by its chair Martin Shevill, £4,000 for work on HR support and safeguarding in 2016-17.

The Department for Education also gave Collective Spirit an additional £154,500 to pay a neighbouring academy, Oasis Academy Oldham, to support Collective Spirit Free School in its final year.

Auditors for the school also reported that they were unable to access statements for two of its three bank accounts, which contained £1,006 and £217 respectively when the school closed. As a result, they were unable to confirm if any adjustments to the bank balances were necessary. They were also unable to account for £33,512 in donations given to the school through its ParentPay online system because they could not gain access to it.