Kids Company collapse: former Cabinet Office perm sec Richard Heaton to appear before MPs next week

Official who raised value for money concerns over further funding for the charity to face questions from the Public Accounts Committee

By matt.foster

26 Oct 2015

MPs are to question Richard Heaton about the collapse of the Kids Company charity, after the former Cabinet Office permanent secretary raised concern with ministers about fresh government support for the organisation.

The charity folded in August soon after receiving £3m from the Cabinet Office, the latest in a long line of public grants to the organisation.

Correspondence published on GOV.UK shows that Heaton – then Cabinet Office perm sec and now the most senior official at the Ministry of Justice – advised against the granting of more public money to Kids Company, citing "limited confidence" in the charity's "management and capacity".

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The Public Accounts Committee announced on Monday that it would question Heaton alongside the Department for Education's permanent secretary Chris Wormald.

The session – set to take place on November 2 – follows the publication of an exchange of letters between Heaton and Cabinet Office ministers Matt Hancock and Oliver Letwin over the continued funding of the charity.

Citing worries over value for money, Heaton sought a ministerial direction over the grant, using the formal mechanism by which a perm sec, as accounting officer for their department, may note their concerns and seek permission to continue regardless. That exchange of letters is then forwarded on to both PAC and the NAO.

Heaton wrote at the time: "The government has a long history of making grants to Kids Company, and I recognise the good work that the charity does with vulnerable young people.

"But the fact remains that, to date, they have not met the conditions that they agreed to in April. More generally, the experience that this department [the Cabinet Office] has of the charity's management and capacity gives me limited confidence that Kids Company will successfully implement the changes they describe in their new restructuring plans while meeting the stringent conditions set out in the proposed new grant."

He added: "It is therefore my judgement that the proposed additional £3m grant does not represent value for money, in terms of delivering the outcomes for which the department is funded by parliament."

Responding to Heaton, Cabinet Office ministers Matt Hancock and Oliver Letwin said while they "noted" the perm sec's concerns, they were "mindful of the inspirational work that Kids Company does" and believed the department could "take confidence from the changes that Kids Company has undertaken to make in terms of its leadership, management and governance".

"We have therefore decided that the department should proceed with providing additional funding of £3m to the Kids Company, and direct you to proceed accordingly," the ministers wrote.

The Public Accounts Committee has said its session with Heaton and Wormald will draw on an ongoing inquiry by the NAO, which is currently pencilled in for an autumn 2015 release.

Earlier this month, Kids Company founder Camila Batmanghelidjh accused some officials of having acted in a "malicious" way following the charity's collapse.

In a separate inquiry conducted by the Public Administration and Constitutional Affairs Committee, Batmanghelidjh claimed that there had been "enormous amount of leaking from government offices into the media" concerning the charity's finances, arguing that some civil servants had been "absolutely malicious and unprofessional" in their dealings with the organisation.

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