'Naive' government support for Kids Company meant other children missed out, MPs find

The public accounts select committee said it was "staggering" that government gave Kids Company more than £40m over 13 years with "no idea" what it was getting for that.

The group of MPs concluded that by treating Kids Company as a "special case" the government missed opportunities to help other children.

Kids Company, which was set up in 1996 to enhance the emotional health of young people through counselling, support and art therapy; and to help schools, and other educational institutions address the emotional needs of young people, closed in August this year amid claims of financial mismanagement.

A report published by the public accounts select committee today states that Kids Company regularly received significant sums of money from central government, far in excess of grants paid to other charities. But despite this there was "insufficient scrutiny" of what it did.

It said that government ignored Kids Company’s serious cashflow problems and failure to make itself financially sustainable and continued to fund the charity to keep it afloat. It added that funding decisions were not based on evidence and did not follow due process.

"It is particularly alarming that the Department for Education carried on handing over money for years despite there never being a model that could be replicated across the country," the report states.

The group of MPs have called for government to undertake a fundamental review of how it makes direct and non-competitive grants to the voluntary sector.

Meg Hillier MP, chair of the public accounts committee, said the case of Kids Company will 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 said.

"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.

"Even after civil servants finally refused to agree additional funding, ministers ‘took a punt’. The final £3m of public money was handed over just a week before Kids Company closed. Payments during the charity’s final months alone totalled more than £7m.

"The faith that things would improve when they didn’t was naïve. So many other charities did not get the same support and it is clear that Kids Company received special treatment – to the detriment of other deserving charities around the country."