DURHAM Free School, a 90-pupil secondary school with a Christian foundation, is to close at Easter, after learning that its government funding is to be withdrawn.

The move followed a snap OSTED inspection of four maintained Christian schools in the north-east, in which Durham Free School, and Grindon Hall Free School, Sunderland, formerly a fee-paying independent, were placed in special measures.

Two of the four schools, however, retained their previous ratings. Emmanuel College, Gateshead, kept its outstanding status, and the inspection confirmed Blyth Academy as good.

The four schools are loosely connected because John Burn, a retired head teacher and educational adviser to the Emmanuel College Foundation, backed by businessman Peter Vardy, was chairman of governors at Grindon Hall, and on the governing body of Durham Free School. Mr Burn also chairs the Newcastle-based conservative Evangelical Christian Institute.

The snap inspections were allegedly sparked by complaints made to OFSTED by Peter Cantley, Durham Free School's first head teacher, who was dismissed last autumn.

OFSTED's criticisms of Grindon Hall and Durham Free school included weak leadership, and failures in teaching the subject British Values, made compulsory last year after the Trojan-horse inquiries. The values focus on social and religious tolerance.

Inspectors said that pupils did not adequately understand or respect religions and lifestyles other than their own.

The head teacher of Grindon Hall, Chris Gray, who objects to the findings, has lodged an official complaint with OFSTED about the attitude of the inspectors. He acted, his letter to the Chief Inspector says, after parents complained that their children had been subjected to "intrusive and deeply personal questioning . . . in group sessions". One parent said that her pre-teen daughter had been asked what she understood about lesbianism.

The Christian Institute was considering taking legal action over the way in which OFSTED inspectors are interpreting the British Values agenda, the director, Colin Hart, said this week. "We are waiting for the outcome of Grindon Hall's complaint before making a decision," he said. The Association of Orthodox Jewish Schools had made a similar objection, he said.

Concern that inspectors may be looking for contraventions of a liberal social agenda, implied by the British Values proposals, is mounting beyond the Christian Institute's conservative Evangelical constituency.

Last autumn, inspectors initially placed a Roman Catholic voluntary aided school, St Benedict's, in Bury St Edmunds, Suffolk, in special measures for failing adequately to educate pupils about the dangers of extremism. The report was withdrawn within days after a "quality assurance" check by senior OFSTED officials.

Critics suggest that faith schools are being targeted to avoid complaints by Muslims that their schools, at least two of which have been closed down, are being unfairly treated.

The Church of England's chief education officer, the Revd Nigel Genders, has criticised the Government's current approach to the British Values agenda. In a blog posted this week, he wrote: "The experience of recent inspections suggests that OFSTED is increasingly being required to make nuanced judgements about aspects of school life where there are few, if any, guidelines.

"This is an unreasonable expectation to place on the inspectors and is ultimately unfair on the schools and their pupils if we haven't beforehand made clear what they are looking for. Without a major rethink, the credibility of OFSTED's judgements will be quickly undermined and we will lose a valuable asset for the sector. . .

"Whilst OFSTED works out how it measures 'British Values', and schools wonder how they might be downgraded for failing to promote them, asking OFSTED to become the schoolroom security service is a step too far."

A statement on the OFSTED website said that allegations against inspectors who visited Grindon Hall were the subject of a formal complaints procedure, and were being investigated. "To date we have found no evidence that inspectors failed to act with care and sensitivity, and to ask age-appropriate questions as they have been trained to do."

Inspectors who visited Durham Free School, the statement added, found that a culture had been allowed to develop where it was acceptable for racist, sexually derogative and homophobic language to be used without adequate challenge from leaders.

School closure questioned. During an adjournment debate on Durham Free School on Tuesday, MPs from the north-east called for full public disclosure of the reasons to close the school. The Schools Minister, Nick Gibb, said that, as well as the OFSTED report, serious concerns had been detailed by the Education Funding Agency.

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