'Concerns were raised' over funding handed to Kids Company


At least £46 million of public money was handed to Kids Company despite repeated concerns being raised by officials about the way the now collapsed charity was being run.

The charity, which was led by its high-profile founder Camila Batmanghelidjh, relied on taxpayer funding for its cash flow and would issue public warnings about its future whenever there were concerns about the continued supply of government money, spending watchdog the National Audit Office (NAO) found.

It was "unbelievable" that the money was handed over to Kids Company with "little focus on what it was actually achieving", Public Accounts Committee chairwoman Meg Hillier said.

The NAO's report found that Kids Company had received public funding for at least 15 years, with at least £42 million in central government grants - including £28 million from the Department for Education (DfE) and its predecessors - around £2 million from councils and £2 million of lottery money.

The first Whitehall department to provide money was the Home Office in 2002, although most of the grant money was awarded by central government between 2005 and 2015.

The report found that despite the huge sums of public money being handed to the charity, until 2013 the government relied heavily on Kid's Company's self-assessments to monitor its performance.

"The DfE oversaw the grant funding of Kids Company until summer 2013 but has limited records of monitoring activities before 2011," the report said.

In 2008 and 2011, Kids Company received larger grants than any other charity from DfE grant programmes, the report found.

The 2008 award saw Kids Company receive 20% of available grant programme funding, the remainder was shared between 42 other charities. In 2011 it received more than twice the amount given to any other recipient.

The NAO's investigation followed the award of £3 million to the charity in June 2015 after ministers overruled official warnings from the senior Cabinet Office civil servant that it would not represent value for money.

The money was paid on July 30, but the same day officials learned that the Metropolitan Police was investigating the charity over allegations of physical and sexual abuse.

Following the announcement of the police investigation, the trustees decided to close Kids Company in August 2015 as they were no longer confident they could secure future income. On August 3, the Cabinet Office terminated the grant agreement and requested repayment of £2.1 million.

The NAO report said: "The concerns raised by the Cabinet Office in 2015 were not new. Officials repeatedly expressed concerns about Kids Company, but the government continued to respond to the charity's requests for funding.

"As far back as 2002, government records show officials were concerned about the charity's cash flow and financial sustainability. Officials also noted at that time that other organisations appeared to offer better value for money. Briefings to ministers in 2002, 2005, 2007, 2010, 2012 and 2015 show that officials accepted Kids Company's assertions that it would become insolvent without government grant funding."

Whitehall continued funding Kids Company so that it could deliver services to vulnerable young people.

Despite the charity's claims that it worked with up to 36,000 youngsters and their family members, when it closed the details of only around 1,900 cases were passed to local authorities in London and Bristol.

Ms Batmanghelidjh's colourful public profile made her a figurehead for successive governments' work with charities and the report noted how Kids Company was able to lobby for extra funding whenever it appeared the supply of taxpayers' money may be cut off.

The NAO "observed a consistent pattern of behaviour each time Kids Company approached the end of a grant term".

Although the spending watchdog was "not able to comment on causality" it noted that in 2002, 2005, 2007, 2010, 2012 and 2014 Kids Company lobbied the government for a new funding commitment and "if officials resisted, the charity would write to ministers expressing fears of redundancies and the impact of service closures" while expressing the same concerns in the media.

This led ministers to ask officials to review options for funding Kids Company and then grants would be awarded either through wider programmes or, from 2013-14 onward - as a direct grant award.

This arrangement meant Kids Company has not had to compete for its annual grant since 2013. After it failed to win grants through the competitive process the DfE made a "public interest case" for continuing to fund Kids Company outside of the competitive process.

This was in part due to the precedent of having funded its since 2005, the "quality of the work Kids Company did" and the risk of "reputational damage" to the government's wider agenda if it withdrew funding.

Mandarins responsible for some of the funding decisions will be called before the powerful Commons Public Accounts Committee on Monday.

The committee's chairwoman Ms Hillier said: "It is unbelievable that over 13 years, taxpayers' money has been given to Kids Company with little focus on what it was actually achieving for the children it was supporting.

"Government repeatedly raised concerns about Kids Company's finances but little action was taken. Despite this, government gave it further grants - funded by the taxpayer.

"Government departments have questions to answer about how they held the charity to account for spending taxpayers' hard earned money. We will be quizzing key Government officials on Monday about their approach."