Ministers splurged £46m on Kids Co after six warnings in 13 years
MINISTERS handed £46million of public money to Kids Company in spite of at least six warnings about the dire state of its finances, a damning report has found
Five government departments doled out millions in grants to keep the now- defunct charity afloat over a period of 13 years, the National Audit Office said.
Officials first raised concerns about its management in 2002, saying other charities offered ‘better value for money’.
And they ‘repeatedly’ warned ministers in the years that followed that the charity was being kept alive by government cash alone.
Yet ministers continued to dispense grants, even overruling a senior Cabinet Office civil servant and handing over another £3million just before Kids Company finally collapsed in August.
The money was paid on July 30, the same day officials learned that the Metropolitan Police was investigating the charity over allegations of physical and sexual abuse.
Meg Hillier, a Labour MP and chairman of the Public Accounts Committee, said it was ‘unbelievable’ that such sums had been handed over to the charity ‘with little focus on what it was actually achieving’.
The report is a damning indictment of the Government’s handling of Kids Company, which was run by founder Camila Batmanghelidjh and chairman Alan Yentob, the BBC’s £330,000-a-year creative director.
David Cameron has been accused of allowing himself to be ‘mesmerised’ by Miss Batmanghelidjh because he felt she embodied his Big Society agenda.
Senior government officials will now be hauled in front of the PAC to face questions over the scandal.
Richard Heaton, former permanent secretary of the Cabinet Office and Chris Wormald, permanent secretary of the Department for Education – which gave Kids Company more money than any other department – will be grilled by MPs on Monday.
Meanwhile the Public Administration and Constitutional Affairs Committee, which has already questioned Mr Yentob and Miss Batmanghelidjh, will summon Cabinet Office chief Oliver Letwin.
They are likely to face questions about who gave the orders to override advice from officials and issue Kids Company with more money despite its apparent precariousness. In particular, they will be asked which minister ordered the final £3million of funds to be released this summer. The 40-page NAO report found that officials warned 13 years ago that Kids Company’s cash flow was poor and that public money would go further with other charities.
Department for Education officials also said that government funds would be at risk if the charity failed, as it was close to doing, and that the charity ‘ was not well regarded at a local level’.
The NAO disclosed that Kids Company used the same recipe to request money from the Government on six occasions since 2002 – and that ministers gave in every time.
Firstly Kids Company would lobby government and air concerns to the press; ministers would then ask officials to review funding options; and finally officials would then award grants.
In 2013, the Department for Education refused Kids Company funding but was requested by the Government’s accounting officer to prepare a ‘public interest case’ to keep funding in place, ‘despite its failure to win grants through the competitive process’.
Among the reasons given, the department argued that it was necessary to keep on funding Kids Company ‘on the basis of the reputational damage to the Government’s wider agenda (which would have an impact on delivery) if it withdrew funding’. According to the NAO report, Kids Company was also treated as a special case. Most charities have to compete for government funding but, astonishingly, officials often asked Kids Company to produce their own ‘self-assessment’ reports to see if the money was being spent wisely.
Since Kids Company’s collapse, there have been a string of damning allegations painting a picture of financial chaos at the charity.
Earlier this month, Miss Batmanghelidjh was lambasted for dishing out more than £70,000 to a single individual.
The NAO report did not examine how Kids Company handled its money. Miss Batmanghelidjh has repeatedly denied any wrongdoing or financial mismanagement.