David Cameron has been forced to defend his decision to back funding for Kids Company, on a day that one of the MPs conducting an inquiry into the failed charity called for the Prime Minister to give evidence.

Cameron's comments follow criticism that the failed charity received £46m from multiple government departments over 13 years, despite serious concerns by civil servants.

He has faced criticism from Tim Loughton, a former children's minister, for overruling concerns to ensure funding after receiving a personal letter from Camila Batmanghelidjh, the former chief executive of Kids Company.

The Prime Minister told a summit in Reykjavik yesterday that his role was “always” to keep the charity going “because it was doing very good and important work”.

The government was faced with a “difficult situation”, Cameron said.

“My role in this has always been to try to help keep that organisation going because it was doing very good and important work," he said.

“In the end, sadly, that wasn’t possible so it has come to an end,” he said. “I certainly think it was right to give Kids Company every chance of a sustainable, viable future. That’s why it had access to public money.”

Cameron’s comments come in the wake of a damning report by the National Audit Office yesterday, that revealed ministers ignored numerous concerns raised on six different occasions by civil servants in three different departments between 2002 and 2015.

The report said the charity repeatedly failed to achieve sustainable funding sources, despite it being a key requirement of the grants. But it said the money continued to flow, partly because of “reputational risk to the government’s wider agenda” if it failed.

'Delusional fraudsters'

Labour MP Paul Flynn told the Commons yesterday that failings by three consecutive Prime Ministers had cost taxpayers millions, and said the convention that a serving Prime Minister should not answer committee questions should be debated. 

"There is compelling evidence now that three Prime Ministers were unwittingly but directly involved in an enterprise that cost the taxpayers many millions of pounds," he said.

“Is it not important, too, that we understand why three Prime Ministers were infatuated by the delusional fraudsters of Kids Company?”

'Over our heads'

Tim Loughton - Cameron’s former children’s minister from 2010 to 2012 - told BBC Radio 4's Today programme that people would “have to ask number 10” why warnings about Kids Company were ignored.

"Basically, it went over our head at the Department for Education. As was the characteristic of Camila Batmanghelidjh. She wrote the ‘Dear David’ letter and went straight to No 10,” he said.

“There’s always this 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’.”

“What particularly annoyed me when it was taken out of our hands and the money was paid over ... is there were many other youth charities doing some really important work who effectively were squeezed out because there wasn't enough money to go round.

“You have to ask Number 10 as to why final approval went through. I think it’s just unfortunate that the great work that Kids Company did was used to sort of mesmerise people in positions of power to pay up or else, and clearly the number of kids who were being helped by Kids Company was much lower than we were led to believe and it was just not sustainable,” he said.

Batmanghelidjh's ‘blackmail’ email

Batmanghelidjh was under further scrutiny yesterday after an email obtained by ITV News claimed the former CEO boasted of using “blackmail” and “military strategy” to win government grants.

In response to a government award in 2013, Batmanghelidjh emailed Kids Company staff saying: “Our 'military strategy' was instrumental in getting everyone to the table. I wish I could say that people were funding because they cared about the children very deeply, I'm afraid we have got a long way to go before that happens.

“There was definitely loving blackmail, arm-twisting and all manner of ghetto-strategies before we got to this point. But you know that we love politicians, we have compassion for them and we are always willing to rehabilitate them. Read between the lines!”

Batmanghelidjh said the grant was “excellent news in the context of the cuts and the number of agencies that have had to close”.