The Birmingham Labour Party has been criticised in a damning report for accepting donations from the troubled Perry Beeches Academy chain of schools.

An Education Funding Agency (EFA) report into the financial mismanagement at the Birmingham academy found it had made a £5,000 sponsorship donation to the Labour Finance and Industry Group in January 2014 - something academies are not allowed to do by law.

The money was later refunded.

It is the latest troubling link between the school and the party after it emerged three city MPs also received donations from Perry Beeches, via Nexus Schools Ltd.

This private company was also used by the academy to pay its former head teacher and chief executive Liam Nolan a second salary of £160,000 on top of his basic £120,000pa.

Mr Nolan resigned in the light of the inquiry, while the Labour MPs Jack Dromey (Erdington), Gisela Stuart (Edgbaston) and Shabana Mahmood (Ladywood) paid back a total of £15,000 to Nexus Schools Ltd.

Last month Perry Beeches’ Academy, the chain's first school in Beeches Road, Great Barr, saw its Ofsted dropped from Outstanding to Inadequate in the wake of the scandal. It is now under new management.

Birmingham Conservative education spokesman Matt Bennett said: “The Education Funding Agency’s report, published today, confirms what was blindingly obvious to most of us some time ago - that it was not only immoral but also illegal for Perry Beeches Trust to make political donations to the Labour Party.

Matt Bennett
Matt Bennett

“The Labour Party may have eventually returned the money but they should never have accepted it in the first place.

“Where on Earth did they think the money was coming from if not from the school’s budget?

“MPs like Jack Dromey rage against academies but apparently took this money without turning seeing any ethical problem.

“Either Labour was going to tremendous lengths to demonstrate flaws in academies’ accountability, or their principles disappear at the first sight of cold hard cash.

“An explanation and apology is required from the MPs whose campaigns benefited from these illegal donations.”

But the Labour Party strongly rejected any allegation of wrongdoing.

A spokesman said: “Neither the Labour Party nor any of its MPs have ever accepted donations from Perry Beeches Academy.

“One MP and two Constituency Labour Parties received permissible donations from a private company, Nexus Schools Ltd, which were registered and recorded through the Members’ Register of Interests and the Electoral Commission in the correct way.

“It is wrong to allege that these donations were in any way illegal. However these donations were voluntarily returned in full to Nexus Schools Ltd to avoid any perception of wrongdoing.

“Perry Beeches Academy did sponsor a West Midlands Labour Finance and Industry Group education dinner. West Midlands LFIG is an independent organisation and is separate from the Labour Party. We have been informed by West Midlands LFIG that they returned the sponsorship money in full some time ago.”

Then Prime Minister David Cameron and then Education Secretary Michael Gove attended the opening of Perry Beeches III free school in 2013.
Then Prime Minister David Cameron and then Education Secretary Michael Gove attended the opening of Perry Beeches III free school in 2013.

The EFA was called into the school following a whistleblower’s complaint and its first report in March raised questions about the school’s links with Nexus and Mr Nolan. Further issues came to light and these are covered in the new report.

It found that the school spent £2,227 on meal expenses or dinners at political events, including £205 at a brasserie following a visit to Downing Street.

It also highlights a conflict of interest in Mr Nolan setting the salary of his nephew, who was employed at the school in March 2014.

His niece had also been promoted six times since being taken on in 2009.

The EFA report is inconclusive on this, but states: “Employee records were insufficient to evidence fully that directors were not involved in the recruitment of family members.”

The EFA also found that a PR firm was hired at a cost of £450 a day during the spring to deal with the fall out from the scandal, without going through a proper procurement process.

The trust was going to pay £5,000 in sponsorship for a political fundraiser in January 2015, however, this was not actually paid

The report also said the Trust’s audit committee paid £5,000 to a firm owned by a wife of a committee member to carry out a health and safety audit.