PARKFIELD School will have to pay back almost £772,000 in grant money – and its future could be in doubt if it cannot negotiate more time to pay.

Meanwhile, the taxpayer will pick up the tab for “onerous” lease payments on a previous site that cannot be cancelled.

The first free school in the Bournemouth area has reported a net deficit of £278,966 for the year ended August 2017 and expects another shortfall this year.

It will have to repay £771,880 to the Education and Skills Funding Agency (ESFA) after receiving grant for more pupils than it enrolled.

The school says delays in moving to its permanent site at Bournemouth Airport, which it finally occupied last term, were a “significant contributory factor” in the failure to attract more students.

But governors are “confident” that pupil numbers will rise now it has a permanent site – and that it will reach an agreement with the ESFA that will secure the school’s future.

The school, for 4-16 year-olds, has twice been rated by Ofsted as requiring improvement.

Recording the £278,966 deficit, a report by Andrew Clark of independent auditor Carter & Coley says: “A further deficit is expected to arise in 2017/18 and there are no reserves carried forward to cover the resultant cash shortfall.”

The school has asked ESFA for a payment plan to help with cash flow until it can repay the grant based on pupil numbers. “However, no assurance has been received, although we anticipate that it will be forthcoming,” Mr Clark writes.

“Should this additional support not be forthcoming there is significant doubt regarding the charitable company’s ability to continue as a going concern.”

Parkfield had 432 students as of the 2017 summer term, but hopes to reach 672 after adding a sixth form.

The accounts show lease payments of £532,384 are due in the next five years, with £272,184 due within a year.

“Included in the above, the trust has obligations under an onerous lease in respect of premises no longer occupied by the trust,” they say.

But ESFA is “obliged to fully reimburse” these payments through grants.

The accounts say the academy’s trust has made “significant budget cuts” while “seeking to minimise the impact on the quality of the education”.

The school adds that “after making appropriate enquiries, the trustees have a reasonable expectation that the trust will have adequate resources to continue in operational existence for the oncoming year”.

Parkfield opened in September 2013, a year later than planned. It was the first local “free school”, independent of council control, as championed by then-education secretary Michael Gove.

The first lessons took place at Butchers Coppice Scout Camp, because the Bournemouth office block Dorset House was not ready in time.

Plans for a purpose-built base in central Bournemouth came to nothing and the school relocated to a former air traffic control centre at Hurn after a lengthy delay. Proposals for a sixth form were shelved.

An interim academy board was appointed after the resignation of several governors in close succession, disappointing Key Stage Two results and the absence of principal Terry Conaghan on long-term sick leave. Department for Education officials attend the interim board meetings.

The trustees say a comprehensive action plan is in place to address the concerns highlighted by Ofsted in its report last year.

“The governors are certain that the stability of a permanent site will be the necessary platform the school requires to transition to an outstanding school,” they add.

The school adds that “after making appropriate enquiries, the trustees have a reasonable expectation that the trust will have adequate resources to continue in operational existence for the oncoming year”.

A DfE spokesperson said: “We expect academy trusts to manage their finances appropriately and in accordance with their funding agreement and the Academies Financial Handbook.

“We are currently exploring sponsor options for Parkfield School, with our main priority being to minimise the disruption to pupils’ education.”

The department says a “robust and credible recovery plan” would be agreed for repaying its grant money.