I was right to give Kids Company £3m grant days before collapse, says Cabinet Office minister

20 Nov 2015 News

The cabinet minister who personally overruled civil servants to award the last £3m grant to Kids Company days before it collapsed has denied that he was “emotionally blackmailed” by the organisation’s founder Camila Batmanghelijdh.

The cabinet minister who personally overruled civil servants to award the last £3m grant to Kids Company days before it collapsed has denied that he was “emotionally blackmailed” by the organisation’s founder Camila Batmanghelijdh.

Oliver Letwin (pictured), Chancellor of the Duchy of Lancaster, was giving evidence before the Public Administration and Constitutional Affairs Select Committee in London yesterday.

He said he had been right to award the charity £3m of public money, even though it collapsed days later.

He said he had agreed to the funding only because the money would be match-funded by private backers. The match-funding was never provided but Letwin said he had been right to pay out anyway.

He said he took the view that the charity might have flourished if match-funding had been provided, and told the committee that the Big Society "continues to flourish".

At the end of Letwin’s evidence, Bernard Jenkin, chair of the committee, said that Letwin’s evidence had been “a masterclass in making black seem white and white seem black”.

'I was confident'

Letwin said that he believed the charity could have functioned effectively.

“There was going to be a new chief executive, a new financial director and I was confident that the people who were putting £3m of their own money in would be good,” he said.

He denied a claim from Paul Flynn, Labour MP for Newport West, that he had been "emotionally blackmailed" by Batmanghelidjh and former chair Alan Yentob into personally giving a £3m grant to Kids Company days before it closed.

When asked why the government’s grant had gone through before the private money which it was supposedly set to match, Letwin said that he was told that the money was needed as soon as possible, as Kids Company would have closed down without it. Letwin said that the private money was never donated due to “allegations”.

“The reason Kids Company went bust was because the donors fled after the allegations were made. If it had been allowed to restructure, history would only have told whether it would have survived and perhaps even flourished. I took the view that it was worth trying [to save].”

Earlier in his evidence, Letwin said that he had had a personal conversation with former Kids Company chair Alan Yentob, after he had signed off on a £4.25m “final” grant to Kids Company in April.

Letwin said that Yentob phoned him six weeks after the grant and said “'if you don’t give us some extra money now, we will go bust almost immediately'. I said, as I say, ‘so be it’. I didn’t find it hard to make that an objective assessment”.

But Letwin then admitted to personally overruling officials to make the second and ultimately final £3m grant a few weeks later. He said he signed off on the grant as "I had no basis for assuming that their financial governance was anything but reasonably OK". 

Letwin also admitted to being “incredulous” about the claims Kids Company were making about how many children actually used its services, but said he still believed that the charity did “good work” that he had seen “with his own eyes” in 2002.

When pressed by MP Paul Flynn as to whether he sought “penitence” for doing “something wrong by boosting this charity and making it more attractive to donors”, Letwin said that he did not.

Letwin also said that he was “hopeful” that the government could recover “the majority” of the final, £3m grant made to Kids Company as only a “small bit” of the grant was paid out.

“I hope we can recover the majority of that £3m as only a small bit has been paid out, a third on salaries and costs. We hope to be able to recover as much of the rest as we can.”

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