Cameron Criticized Over Love-In With Collapsed Kids Charity Bailouts

The Kids Company charity was set up in 1996 by Camila Batmanghelidjh, the Iranian-born author, to provide support to deprived inner city children, beginning in London and spreading to other UK cities, including Bristol. Batmanghelidjh — who claims to have been practising psychology for 20 years, yet has no formal qualifications — made much of her flamboyant dressing and was very media savvy, giving her access to high-profile people, including Cameron and the Prince of Wales.

For many years, Cameron made his support for the collapsed charity clear, writing on one occasion to the House of Commons public administration and constitutional affairs select committee:

"I have always admired the work of Kids Company and the two reports you sent to me reinforce my belief in the importance of supporting the most vulnerable children and young people in our country."

However, a National Audit Office report published Thursday has found there were serious suspicions about the charity's finances, which had resulted in a total of US$70 million being paid to bail it out, despite there being no feedback on whether the money was achieving the outcomes the charity was claiming.

Kids Company received larger grants than any other charity from the education department's grant programs. Over several years, "officials repeatedly expressed concerns about Kids Company, but government continued to respond to the charity's requests for funding," the report said.

'Dear David' Letters

Tim Loughton, Conservative MP for East Worthing & Shoreham, and former Parliamentary Under-Secretary of State for Children and Families from 2010-2012 was responsible for one of the grants being made, but said he had advised against it.

"We had this very sizeable emergency application for funding from Kids Company warning that they would be going bust unless we came up with a very large quantity of money," he told the BBC Today program.

"I was very skeptical at the time and was against giving them such a large amount of money."

Despite his skepticizm — and the advice of his civil servants — the money was paid to the charity.

"Basically, it went over our head in the Department for Education, and — as was characteristic of Camila Batmanghelidjha — she wrote a 'Dear David' letter and went straight to Number 10 [Downing Street] and there is always this sub-plot that 'there is going to be terrible publicity unless you stump up the money and it's not going to reflect on the government and all these kids are going to be roaming the streets'," he said.

"It was a unique charity and Camila Batmanghelidjha assured us it was doing a fantastic job, but we never saw the proof. When you are handling such large quantities of public money, you really do need to show it's effective, value for money and it's sustainable… and it wasn't. That's why I cautioned against giving further funds, but was over-ruled." 

The report said the UK Cabinet Office paid US$4.6 million (£3 million) to Kids Company on 30 July 2015, under the terms of the ministerial direction.

On the same day, the Metropolitan Police announced that they were investigating allegations of physical and sexual abuse involving a children's charity. The Cabinet Office wrote to the charity on 3 August terminating its grant agreement and requesting repayment of US$3.2 million (£2.1 million). Kids Company filed for insolvency on 12 August 2015.

It was only on closure that another disputed claim was brought to light. Despite Kids Company reporting that it worked with up to 36,000 children — a figure disputed but never actually proved — the details of only around 1,900 cases were passed to local authorities in London and Bristol for case-handovers, suggesting the charity had inflated its operational influence.