Kids Company cash row: Mandarins deny charity had 'special treatment'

Whitehall mandarins have denied giving collapsed charity Kids Company "special treatment" amid criticism over millions of pounds in taxpayer grants.

Appearing before the Commons Public Accounts Committee, former Cabinet Office permanent secretary Richard Heaton and Department for Education permanent secretary Chris Wormald admitted there were lessons to be learned from the way the situation was handled.

But they dismissed the idea that civil servants allowed the charity more leeway than other organisations.

Asked if the body had received "special treatment" despite allegations of financial mismanagement, Mr Wormald replied: "No I don't think that it did.

"I do think that there are some big learning points for my department and for the Government as a whole to come out of this story."

Cabinet Office officials raised concerns that a further £3 million government grant to Kids Company would not "represent value for money" in June this year.

They took the relatively rare step of requesting a "letter of direction" from ministers.

However, the funds were paid after ministerial direction was obtained.

Mr Wormald said he "did not see" a point earlier in the process when civil servants should have asked for such a formal instruction from politicians.

Mr Heaton said ministers had "broad" powers under the law to allocate grants to charities.

"It is entirely proper for ministers to decide which charities in which sector they wish to support," he said.

Mr Heaton argued that the job of officials was to ensure that financial support authorised by ministers was "properly implemented in a way that delivered value for the taxpayer".

In that respect Kids Company had received "no special treatment at all", he said.

Pressed on whether civil servants had acted early enough to protect public money, Mr Heaton said: "We were very concerned and we were taking action. The first action was not the direction letter."