PAC slams “failed and expensive” funding of Kids Company

13 Nov 15

The Public Accounts Committee has concluded that government funding of the closed charity Kids Company was a “failed and expensive experiment” that must never be repeated.

In a strongly worded report, MPs said it was “staggering” the charity had received at least £46m since 1996 despite government having “no idea what it was getting for taxpayers’ money”.

The committee found there had been warnings about Kids Company performance but insufficient Whitehall scrutiny of what the charity was delivering had not served taxpayers or children across the country well. Ministers treated the charity as a special case, leading to missed opportunities to help children by funding other charities.

The Department for Education oversaw grant funding for Kids Company until 2013 when the Cabinet Office took on the responsibility.

Since March 2013, funding awards were made through non-competitive, direct grants as Kids Company no longer met the criteria and quality standards for competitive funding schemes. The final £3m award to the charity in June was made despite Cabinet Office advice this would not represent value for money.

PAC chair Meg Hillier said the Kids Company case would anger many people. “The charity was passed around Whitehall like a hot potato, with no one willing to call time on spending millions of tax pounds for uncertain outcomes,” she stated.

“The lack of scrutiny over its funding was staggering. Fairness and value for money – fundamental values when considering public spending – appear to have been forgotten in repeated and ultimately doomed attempts to keep Kids Company afloat.”

Kids Company has so far passed 1,900 case files to local authorities and the Cabinet Office has given £200,000 to the authorities to support the transition of young people to other services.

Although MPs said the remit of the inquiry was not to assess the outcomes of Kids Company’s work, they were “very sceptical on the charity’s inflated claims about what it achieved”.

The PAC objected to the “obvious unfairness” of central government directly funding a charity which operated in only two London boroughs for most of its existence at the expense of other charities.

It recommended a fundamental Whitehall review of how government makes, monitors and evaluates grants to the voluntary sector to ensure these mistakes are not repeated. This should include a register of such grants.

In addition, where a national charity is providing services with predominantly local characteristics, government should seek advice from local bodies working in that area to help validate value for money.

If ministers decide to use special powers to grant funding, this should be done transparently with regular reports on the use of these powers, the PAC said.

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