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Government to review charity grant process after ‘failures’ at Kids Company

While the repercussions of the collapse of major charity Kids Company are “far from played out”, one of them must be a radical change in Whitehall’s approach to charity regulation at every level, MPs have concluded.

The defunct charity shut its doors in August last year after an “extraordinary catalogue of failures of governance and control at every level”, including its trustee auditors, inspectors, regulators and the government.

In its scathing report published today, the Public Administration and Constitutional Affairs Committee (PACAC) argued that when a large amount of public money is involved, Whitehall must have proper mechanisms in place to ensure it can make “dispassionate, transparent and accountable” decisions about funding and regulation.

Along with the government’s lack of skills and expertise to assess and hold funding recipients to account, MPs argued a “catastrophic confluence of factors” ended up conspiring to allow Kids Company to operate for as long as it did.

Bernard Jenkin MP, chair of the Committee, said: “Despite lacking robust evidence about the quality of the charity's outcomes, value for money or governance, Kids Company attracted high-profile support from senior ministers throughout successive governments, and tens of millions of pounds of public money have been handed to the charity over the course of its existence. 

“Government and regulators must learn from this. Proper mechanisms must be put in place to allow dispassionate, transparent, accountable decisions to be made about charity funding and regulation in the future.”

In its own look into the charity’s collapse, the Public Accounts Committee had already claimed that Whitehall must undertake a fundamental review of how it makes grants to the voluntary sector by seeking advice from councils working in affected areas.

Today’s PACAC report strengthened these claims by concluding that Cabinet Office minister Oliver Letwin should not have over-ruled advice from the Civil Service, including the then-Cabinet Office permanent secretary, warning against handing the charity another £3m government grant. Senior officials argued that Letwin’s plans to restructure the charity would not succeed and would therefore not justify fresh pay-outs of public money.

Part of the reason behind Letwin’s decision to ignore official advice could be tied to Number 10’s longstanding relationship with the charity, PACAC found, with the prime minister expressing personal support towards its work.

Letwin had already said that he was “well aware, as the whole world is” of this support, but maintained that the £3m funding he authorised was his responsibility exclusively.

Speaking after today’s report was issued, Letwin said: “As I said to the Committee [in November] I believed it was the right thing to do to give this charity one last chance to restructure.

“We will of course pay careful attention to this report and in light of what we now know about Kids Company we will be reviewing our grant-giving process.

“By updating the process by which grants are awarded we will make sure the most stable, most effective charities receive taxpayer funds.”

(Top image c. Claire Hayhurst, PA Wire)


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