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Kids Company £3m grant a 'punt'

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3rd Nov 2015
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This week brought more revelations about the government’s involvement with failed children’s charity Kids Company, with a senior civil servant telling MPs on the Public Accounts Committee that ministers gave a £3m grant to the charity just days before its collapse because they thought it was worth taking “a punt” on its future.

Former Cabinet Office permanent secretary Richard Heaton yesterday told MPs that he had advised ministers not to provide further funds to the charity after it requested emergency assistance in June, just six weeks after receiving a £4.3m grant. But according to Heaton ministers decided to keep funding Kids Company because of the “narrow prospect” that it could get itself back on a solid footing.

The charity, which provided support for vulnerable children and young people in London, Liverpool and Bristol, closed its doors in August after a dispute about funding and concerns over how its finances were run.

Committee chair and Labour MP Meg Hillier started yesterday’s Public Accounts Committee session by quoting broadcaster Janet Street-Porter, who claimed the recent National Audit Office (NAO) report into the government’s funding of Kids Company said “more about the failings of Whitehall” than any wrongdoing on the part of the charity’s founder, Camila Batmanghelidjh. Hillier went on to comment that the flaws in Whitehall’s handling of Kids Company were “staggering”.

However, Heaton and DfE permanent secretary Chris Wormald denied assertions that the collapsed charity was given “special treatment” following repeated claims of financial mismanagement. Although both Whitehall officials admitted that they were aware that the charity was favoured by David Cameron and ministers across government, they both denied their handling of the troubled charity had been influenced by political pressure.

Last week the NAO published its finding into government’s backing of the charity. The NAO found that Kids Company had received public funding worth at least £42m across 15 years. The funding comprised government grants, including £28m from the DfE and its precursors, around £2m from councils and £2m from the National Lottery.

The report also stated that both Labour and Conservative ministers ignored civil servants’ warnings about Kids Co’s finances on six separate occasions to push through grants to the charity. It went on to indicate that David Cameron, Michael Gove, Ed Balls and David Blunkett had all personally intervened to support Kids Co, in some cases to prevent it from becoming insolvent.

The NAO reported that civil servants had repeatedly warned ministers that providing financial support to Kids Company carried risks because of the charity’s fragile finances, but were overruled. However, the report stated that there was no evidence ministers acted inappropriately or beyond their powers.

Responding to the NAO’s report Joe Bates, managing partner and third sector specialist at accountancy firm Clement Keys, said: “Unfortunately this is another high-profile example of a charity failing to achieve its real objectives. This shows the detrimental effect it can have when an organisation’s priority is on raising funds at the expense of delivering on its social impact goals. On this occasion, Kids Company has paid the ultimate price for its lack of focus. 

“The new charities SORP requirements, which charities are adopting as part of their transition to the full FRS 102 standard will increase the degree of transparency and financial scrutiny expected of charities. This will allow trustees and funders to spot potential warning signs much earlier. For example, under the new reporting system, charities are required to provide donors and other funders with an outline of the principle risks and uncertainties facing the organisation as well as a summary for managing those risks.”

Looking at the NAO report more closely, Bates commented: “It’s astonishing that the government not only allowed Kids Company to continue getting away with failing to deliver measurable outcomes, but persisted with pumping taxpayers’ money into the organisation despite warnings. The government and other key private funders should make it their business to scrutinise charities and their objectives closely.”

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By abaco
04th Nov 2015 12:16

Kidscompany

Did Alan Yentob realise the consequences of "joint and several responsibility" when he agreed to chair Kidscompany consequently signing the accounts year on year? He could be about to learn a very expensive lesson.

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