The entire governing body of a comprehensive school was sacked yesterday by Children's Secretary Ed Balls following a row over bonus payments to its head and senior staff.

An interim board will now be set up to run Copland Community School in Brent, north-west London, after it emerged that its head, Sir Alan Davies, was paid a bonus on top of his salary of £80,00 last year and £50,000 two years ago.

Mr Balls said he was "very concerned" about allegations of serious financial mismanagement at the school. These are now being investigated by the National Audit Office while Sir Alan and the school's bursar have been suspended.

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In all, it has been alleged that bonus payments worth £1.6m have been paid to senior staff at the school over a number of years.

The payments came to light when a teacher at the school, Hank Roberts, highlighted them at the Association of Teachers and Lecturers conference at Easter and claimed it was bringing the world of banking bonuses into education. He was subsequently suspended over another matter, but later reinstated.

They were defended by Dr IP Patel, chairman of the school's governing body, who said Sir Alan – one of the first "superheads" to be knighted under the Blair government – was "worth every penny".

The interim board to run the school will be appointed by Brent Council.

Mr Balls said: "Robust governance and management must be established as soon as possible at Copland." He said there was "no alternative in putting Copland back on track" to replacing the governing body.