MPs want free schools to be monitored more closely and they call for a greater openness about how free school approvals are carried out.

The Public Administration Committee believes that the Department for Education and the Education Funding Agency’s oversight arrangements for free schools are not yet working effectively and consequently there is an urgent need to ensure that public money is used properly. The Committee’s view has been influenced by recent high-profile failures at Al-Madinah School, Discovery New School and Kings Science Academy.

Free schools are all-ability state-funded schools set up in response to what people say they want and need in their community to improve education for local children. They operate independently of local authorities and have freedoms over their curriculum, school day and term time, staffing, and budgets.

The Department and Agency have set up an approach to oversight which emphasises schools’ autonomy, but standards of financial management and governance in some free schools are clearly not up to scratch.

The Agency relies on high levels of compliance by schools, yet fewer than half of free schools submitted their required financial returns for 2011-12 to the Agency on time.

Whistleblowers played a major role in uncovering recent scandals when problems should have been identified through the Agency’s monitoring processes.

The Department and the Agency must improve their arrangements for audit and accountability of free schools so that the taxpayer’s pound can be followed and the Committee can be satisfied that public money is being used appropriately.

The Committee is also concerned that applications for new free schools are not emerging from areas of greatest forecast need for more and better school places. Around 87% of projected primary places in the free schools opened so far were in districts that had forecast a high or severe need for extra places, but only 19% of secondary places in the free schools opened so far were in such areas.

The Committee also gave a warning about standards of governance in some free schools. Recent cases of poor financial management and governance in a small number of free schools highlight the need for improvements to the Department’s and the Education Funding Agency’s monitoring arrangements.