Education chiefs were branded “stupid” last night in their handling of the Kings Science Academy scandal, at an inquiry by MPs.

Margaret Hodge, of the powerful Public Accounts Committee (PAC), tore into the “shocking” lack of oversight of the Bradford free school by the Education Funding Agency (EFA).

At a stormy evidence session, the chairman demanded to know why: l The scandal was only revealed when a whistleblower went to BBC’s Newsnight programme.

l The EFA did not send its full audit report – listing “20 fraudulent invoices” – to Action Fraud investigators.

l The head of the EFA did not pursue Action Fraud when its inquiry ran into the sand.

l A firm run by Alan Lewis, the school’s patron, is receiving £300,000 a year for lease of its land in Lidget Green – when local evidence suggested the market rent is only £100,000.

l The school’s principal, Sajid Hussain Raza, was left in place until his arrest last week on fraud allegations.

Miss Hodge, a Labour MP, said: “This is stupid. We should not have had to wait for public disclosure for everybody to act.”

On the payments to Hartley Property Trust, run by Mr Lewis – a vice-chairman of the Conservative Party – she added: “How on earth did that ever happen? That’s £300,000 per year for a 20-year deal. That’s about £6m. It seems to me to be a complete mis-use of public resources.”

Questions were also raised about the £10m academy building, which is apparently owned by Hartley Property Trust.

In the firing line were Chris Wormald, permanent secretary at the Department for Education (DfE) and Peter Lauener, the EFA’s chief executive.

Mr Lauener promised to write to the PAC, to clear up what would happen to the building if the academy failed. He issued a strong defence of the EFA’s actions, denying the scandal would have been kept secret without the whistleblower.

On Mr Lewis, he agreed there was “a clear conflict of interest”, which was why the EFA had obtained an independent valuation that market rent was being paid.

On Action Fraud, the MPs were told: “I think we gave them plenty of evidence. This was the system we were asked to follow. You are right that the outcome was not wholly satisfactory, but we did everything we were asked to do and Action Fraud apologised to us.”

Kings Science Academy must repay about £77,000 after “fabricated invoices” for rent were submitted to the DfE – something only revealed when a secret report was leaked.