Kids Company: senior civil servants should have pushed back against ministers, say MPs

Stinging report by the Public Accounts Committee says government funding to the collapsed charity was “never seriously questioned, let alone stopped”

By matt.foster

13 Nov 2015

Responsibility for scrutinising the now-defunct Kids Company charity was "passed between departments like a hot potato", MPs have said, in a report that accuses senior officials of having failed to do enough to challenge ministers.

The charity, which worked with disadvantaged young people, closed in August soon after receiving £3m in emergency funding from the Cabinet Office, the latest instalment in the more than £40m of central government grants the organisation received since 1996.

A report by the Public Accounts Committee, published on Friday, accuses the government of having failed to properly track the impact of the charity's work, and says funding to the organisation was "never seriously questioned, let alone stopped".

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"We support government funding of innovative and new practices to help vulnerable young people," the MPs say. "However, Kids Company was a 13 year experiment which cost the government £42m and we saw no evidence that children outside London and, at the end, Bristol had benefited from the government's investment.”

The final £3m grant to the charity – which followed an earlier 2015 round of funding of £4.3m – was the subject of a rare ministerial direction from the then-Cabinet Office permanent secretary Richard Heaton.

In spite of Heaton's decision to formally raise his concerns over the value for money of the £3m grant, the committee says that there was "insufficient" scrutiny of Kids Company's performance – and accuses successive permanent secretaries of having "failed to stand up to ministers".

"Although in some circumstances ministers can decide which charities they wish to support and how to fund them, it is always the job of accounting officers to determine whether the support provided represents value for money for the taxpayer," the report says.

"Yet for many years accounting officers did not challenge whether decisions to fund Kids Company represented good value for money, and therefore did not seek a direction from ministers.”

"Too little, too late"

Responsibility for funding Kids Company was transferred from the Department for Education (DfE) to the Cabinet Office in 2013.

Chris Wormald, the DfE's permanent secretary, told the committee during its inquiry that warnings over the charity's financial position had been "one piece of the evidence on the table”.

He said: "I'm not going to say that every single one of those warnings was dealt with as well as it could have been [ ...] but – and I've discussed this with both of my two predecessors as accounting officer over that period – when you look at the weight of evidence that there was about Kids Company acting successfully which you set against some of the warnings that were made, I do think the decisions that were made across that period were reasonable in their own right".

Meanwhile, Heaton – who is now perm sec at the Ministry of Justice – told MPs that he had ordered an external firm, Methods Consulting, to review the organisation before telling the charity its funding would be tied to an outcomes model.

The committee says while the Cabinet Office adopted "a more systematic approach to overseeing the charity", the concerns raised by Heaton were "not new" and were "too little, too late".

"For the Cabinet Office a lesson learned was that the government would not fund a charity like Kids Company now unless it was solvent, at arm's length from government, and sustainable without hand-to-mouth government funding," the report adds.

The committee calls on the government to carry out a "fundamental review" of the way it makes grants to the voluntary sector, including a look at the way it judges the geographical reach of a charity as well as its financial health.

The MPs also recommend a register of grants to charities is set up so that government can "easily identify charities receiving large amounts of government funding from single and multiple sources" and share information on a charity's past performance.

A spokesperson for the Cabinet Office said the government would consider the committee’s findings.

“The welfare of the young people continues to be our primary concern and we are now working closely with local authorities to make sure they have access to the services they require,” the spokesperson added.


Karl Wilding of the National Council for Voluntary Organisations – an umbrella group representing charities – meanwhile said the report would make for “extremely frustrating reading” for charities who had submitted “highly detailed” plans and not received the same treatment as Kids Company.

"Successive governments threw money at Kids Company at the same time as they were making life harder for other charities,” he said. "Local and national government have been imposing complex contracts on many of the charities they contract with in the name of efficiency, but these are often so unwieldy that they create more problems than they solve."

Cabinet Office ministers Matt Hancock and Oliver Letwin – who told Heaton to proceed with the final grant to Kids Company – are expected to be questioned by the separate Public Administration and Constitutional Affairs Committee in the coming weeks.

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