Kids Company: Report into charity's collapse fails to scrutinise David Cameron's role in fiasco, MP claims

A report into the controversial collapse of the Kids Company charity fails to put Prime Minister David Cameron’s personal role in the fiasco under the microscope, a leading MP has claimed.

Mr Cameron’s adoption of Camila Batmanghelidjh, founder of the charity, as the “poster girl” of his much derided Big Society scheme, was the reason the charity secured more than £43m in government funding despite serious misgivings among senior officials about the charity’s effectiveness, according to Labour MP Paul Flynn.

The report, out on 1 February, by the influential parliamentary Public Administration Select Committee, is expected to be highly critical of the way Ms Batmanghelidjh led the charity. It is also thought to be damning of the charity’s trustees – led by BBC executive Alan Yentob – and their failure to supervise its operation.

The MPs’ inquiry was launched after the charity collapsed last August amid claims of financial mismanagement.

In a rare step, Mr Flynn, a key member of the committee, criticised the report ahead of publication accusing fellow MPs of “political timidity” for failing to ask Mr Cameron to give evidence. Mr Flynn said the Prime Minister or his representatives should have been asked to defend how his Big Society idea resulted in official concerns about the charity being ignored, and millions of pounds of grants being approved.

“It was quite clear from the evidence that the support of the Prime Minister meant that despite misgivings from officials and other ministers, Ms Batmanghelidjh could not be refused,” he said.

He said evidence to the committee revealed that if ministers appeared reluctant to approve grants to the charity then “Dear Dave” letters would be written by Ms Batmanghelidjh directly to the Prime Minister or his advisers and money would be paid regardless.

MPs heard that for a three-year period at the start of the coalition government, Kids Company received disproportionate amounts of government funding at the expense of other charities which could demonstrate far superior results.

In evidence to them, the former children’s minister Tim Loughton blamed Downing Street for overruling officials in 2012, after the Prime Minister received a letter from Ms Batmanghelidjh.

“When you as a minister see Camila Batmanghelidjh around the Cabinet table at No 10 as part of the Big Society summit, when you have a reception as was held in 2011 for Kids Company at No 10, and when policy advisers or people from the No 10 Policy Unit are apparently having contacts with Kids Company of which you are not aware, clearly the pressure is on that this is a charity that needs to be looked at a bit more favourably,” he said in evidence.

Mr Flynn said the Prime Minister needed to defend the special treatment and privileged access the charity was given.

Mr Loughton, children’s minister from 2010 to 2012, said one refused grant application “went over our head” at the Department for Education when Ms Batmanghelidjh wrote the “Dear David” letter to Cameron and went straight to No 10.

“You have to ask No 10 as to why final approval went through, and it has been in the hands of the Cabinet Office after my time at the Department for Education,” he said. There was always a subplot of: “There is going to be terrible publicity on this … it’s not going to reflect well on the government and all these kids.” Kids Company would “mesmerise” people in positions of power to “pay up or else”, he added.

Downing Street said afterwards it did not recognise his characterisation of events, and said ministers in successive governments approved financing based on the evidence in front of them that the charity was helping vulnerable children.

The Prime Minister later defended his role saying: “I always judged it was worth giving it one more go to try to get it to be financially viable,” he said.

A National Audit Office investigation found that Mr Cameron, Justice Secretary Michael Gove, Labour’s former home secretary David Blunkett, and former education secretary Ed Balls, all intervened to support the charity between 2002 and 2015, in some cases to prevent it from becoming insolvent.

Ms Batmanghelidjh, who has seen a copy of the report, accused the MPs of unfairly making unsubstantiated allegations. “It’s not based on evidence, they don’t have access to our databases ... people feel free to just throw allegations around as if they are fact. The gist of it is they repeat allegations, they put the blame on the trustees, but I think that’s unfair,” she told The Independent on Sunday.

She insisted the charity was run properly, and questioned why, despite official misgivings, nobody raised the issue with Kids Company. “The actual running was fine; we just didn’t have enough money. I want to throw a challenge out to the civil servants – where is the letter, in all these years, that should have arrived on our desk that said we were not producing results, or we were financially mismanaged, where is this communication? We didn’t get one because that was never what they said,” she insisted.

At all times her decisions were “informed by trying to do the best for the kids,” she said.

She admitted that on reflection there were things she would do differently. “One is I think I trusted the politicians too much; I really think I made a mistake there. And I waited too long, so I went from one promise to another each year that a solution would be found, and in some ways I didn’t pay attention to the fickleness and the temporariness of their decisions, so I think there was a mistake there,” she said.

In a BBC1 documentary to be shown at 9pm on 3 January she describes officials and ministers as “bastards” and “psychopaths”. Of funding wrangles with the Cabinet, she says: “I’m playing chess with psychopaths.”

“I never break the law, I just stretch it a bit,” she insists.

“Because if you’re asking me, the correct law is to take care of these children properly. So I want to follow the correct law and if the law of the land is not correct then we have to slightly break it.” Her colourful appearance counts against her, she claims: “Everyone thinks that just because I wear funny clothes and have a Miss Piggy bag that I must be unable to run a business.”