AN educational trust responsible for Burnley’s new free school has been told it must overhaul its financial affairs after making a second request for urgent funding in six months.

Education Funding Agency (EFA) officials say that they have “significant concerns” about the cash flow of Chapel Street Community Trust, which is behind the new under-construction Burnley High School building, and issued it with a “notice to improve”.

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The government watchdog has described how the Surrey-based trust had made one previous request for financial assistance and become involved in a number of unapproved loan arrangements.

Under the EFA move, Chapel Street was required to produce a financial recovery plan, in order to secure a balanced budget, and must run any major spending proposals past the agency’s inspectors.

Just last month the town’s university technical college, at Victoria Mill, which had laboured under the same financial restrictions, announced it would be closing its doors.

In a letter to Chapel Street chief executive Russell Rook, the agency’s Sue Baldwin, director of the academies and maintained schools group, said that “the lack of advance warning of this impending cash-flow deficit indicates that the trust does not have full knowledge and control of its academies’ financial positions”.

And later she outlined that if Chapel Street failed to meet its financial obligations, it may be found to be in breach of its funding agreement and have its future support terminated.

Cllr Marcus Johnstone, who represents Padiham and Burnley West on Lancashire County Council, where the high school is based, said: “This is living proof that these trusts are not the silver bullet that the Tories think they are.

“Education is being out-sourced to these trusts that are very secretive and we don’t know too much about them.

“Now at least we know that they are not all as good as they say they are.”

The new Burnley high School building will include a sixth form and room for up to 650 pupils.

The new school, which is due to open at Easter next year, is being built on the site of the now-demolished Habergham High School by Eric Wright Construction.

The Chapel Street Community Trust was unavailable for comment.