NAO to investigate Whitehall relationship with defunct Kids Company

The National Audit Office has launched an investigation into Kids Company to inspect the grounds on which Whitehall provided cash to the now-defunct charity.

It will look into the funding it received from the government and how these grants were monitored, with a findings report expected in the autumn.

The charity, which supported severely abused and traumatised children, received grants from the Cabinet Office and the Department for Education for at least 10 years, including a £4m grant for 2015-16.

In June, permanent secretary Richard Heaton received a ministerial direction to pass on another £3m as an “emergency loan” to the charity, despite his advice that the cash would not be “value for money”.

The Cabinet Office grant was made on the condition that Camila Batmanghelidjh, the charity’s founder, agreed to step down as part of a reorganisation. Reports suggested that the charity has to fold after donors withdrew funding when it emerged that it was facing a police investigation over child protection issues.

On 5 August, Kids Company was closed and was subsequently wound up as it was insolvent.

Kids Company is already the subject of a statutory investigation by the Charity Commission. On 9 July, the independent regulator met with the charity’s trustees regarding public concerns over the body’s funding, financial stability and proposed government changes.

On 21 July, in a different meeting, the regulator insisted that a number of steps be taken, including an immediate independent examination into allegations being made over inappropriate spending and financial control breaches. This work was ongoing when the charity closed, but the regulatory engagement continued.

The charity’s financial management and leadership will also be covered in an inquiry by the House of Commons Public Administration and Constitutional Affairs Committee. The committee will take oral evidence in October, scoping the extent of the government’s relationship with Kids Company, advice given to ministers to continued financial grants and the oversight role of the Charity Commission.

In a statement released on the day of its closure, Batmanghelidjh said the charity had been forced to close with “profound sadness”.

She said: “Our children, staff and volunteers supported by trustees and extraordinarily generous donors, have over the last 19 years helped create an inspirational community committed to recovery and love. The catastrophic abandonment of children who are suffering is a testimony to our collective moral failing.”

At the time, LGA warned that councils were being left to “pick up the pieces” after the charity’s closure, with Cllr David Simmonds warning authorities would have to take up abandoned services formerly commissioned by a council.


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