Kids Company founder Camila Batmanghelidjh has blamed “rumour-mongering civil servants, ill-spirited ministers and the media” for the demise of the charity.

Last night the charity’s trustees announced the closure of all the charity’s services, with the loss of nearly 500 jobs, with immediate effect as it was unable to secure enough funding to continue, despite recently being awarded a £3m restructuring grant from the Cabinet Office.

Batmanghelidjh has since spoken out on BBC Radio 4 Today’s programme and on the Victoria Derbyshire programme on BBC2 to deny claims of financial mismanagement and accuse the government of trying to suppress her for speaking out on child protection issues.

She accused some areas of government of mounting a “malicious discrediting campaign” against her, on BBC2.

“People inside government think I am a bit too outspoken,” she said. “Elements of government want to support us and other elements want us to disappear.”

She also said that she had faced “prejudice because I am female and I don’t wear a suit”.

Tim Loughton, a former children’s minister, yesterday said that he had raised “serious concerns” about a significant grant awarded by the Department for Education between 2010 and 2012.

Funding problems

According to Batmanghelidjh the closure of the charity was caused by philanthropists pulling a £3m grant, which had been intended as match funding for the £3m grant the charity received from the Cabinet Office, after it was revealed that police are investigating allegations of child abuse.

“The minute we got government funding the police called saying that there has been allegations of sex abuse,” she said on BBC2. This led to philanthropists withholding £3m because “they felt that they fundraise for us”.

According to the BBC, because the £3m from philanthropists did not materialise the charity used the some of its £3m restructuring grant from the government to pay its staff, which it was not supposed to do under the conditions attached to it. This prompted the government to recall its the grant and ultimately led to the closure of Kids Company yesterday.

Batmanghelidjh told Derbeyshire that: “People confuse our lack of money with financial mismanagement.” And insisted that the charity had become “completely overwhelmed by the numbers arriving at our door”.

She said that the charity had needed to hire psychiatrists and nurses to deal with the issues its clients had and that “local mental health provision should have done that”.

“I accept that I failed to raise enough money. I knew this year that it would be really difficult, that’s why I turned to government early in the summer,” she said. Batmanghelidjh claimed that Oliver Letwin, Chancellor for the Duchy of Lancaster, had promised “to find us substantial money”.

Letwin, a long-time supporter of the charity overruled the Cabinet Office’s lead civil servant, Richard Heaton, to provide the charity with the £3m restructuring grant.

Government and local authorities working with other charities

The Cabinet Office has issued a statement to say it is working to support young people affected by the closure.

A government spokeswoman said: "The government has supported Kids Company over the last seven years to help it deliver services for vulnerable young people and so we are disappointed it has been unable to move to a sustainable financial position.

"The welfare of these young people continues to be our primary concern and we are now working closely with local authorities to make sure they have access to the services they require."

A Lambeth Council spokesman said: “We are aware of the concerns over the future of Kids Company and its work in Lambeth, and our priority is looking after the children and young people who rely on its services.

“Kids Company is currently contracted by Lambeth council to run a One O’Clock Club and an adventure playground in the borough. The Council will re-open these services as soon as possible, so the children and parents who rely on them are not adversely affected. We are also letting children and parents know about the facilities and activities nearby that are open throughout the summer holidays.

“Kids Company also provides after-hours kids’ clubs to some of our schools. Those services are directly negotiated between the school and the charity. We have already written to schools and are helping to ensure that affected afterhours clubs will resume once the summer holidays are over, with a new provider if necessary.”

The council has given £193,000 to Kids Company over three years towards running a One O’Clock Club and an adventure playground in the borough.

Batmanghelidjh said that her aim had been to convince the government that it should be supporting those people coming to the charity through statutory mechanisms. And warned that the reason Kids Company had been supporting so many children was because it had the local authorities were “overstretched”.

“What are all these cases doing being at my door when they should be at their door,” she said on BBC2. In a clip from an interview she has done for BBC Radio 4’s The Report, due to be broadcast this evening, she calls for David Cameron to step in.

“I am still left with these kids and their unmet needs. It is devastating. Where is the Prime Minister of this country saying what is going to happen to these children,” she said.