The Prime Minister’s office told Nick Hurd to continue funding Big Society Network even though the then-minister for civil society had raised concerns about its poor performance and financial sustainability, the National Audit Office has found.

The revelation, contained in the NAO’s second report into the public funding of Big Society Network (BSN) and its parent charity Society Network Foundation (SNF), published today, is the first piece of solid evidence that the chain of command on the funding of the two organisations reached all the way to the top.

The report says that the Cabinet Office agreed in April last year to give SNF another £150,000 to continue running the Big Society Awards, on top of the £2.96m it had already received from various public bodies since it was set up with David Cameron’s backing in 2010.

The grant was agreed despite Nick Hurd having told No 10 that he was worried about the charity’s failure to deliver on a previous Cabinet Office-funded project and its general sustainability risk.

Public Accounts Committee chair Margaret Hodge said it was “alarming” that the Cabinet Office continued to fund SNF despite concerns over its poor performance and financial health.

She added: “It’s hard to believe that government’s decision to renew funding was in the best interests of the taxpayer.  Over a year later, the Society Network Foundation applied to be wound up and the Cabinet Office decided to take over the operation of its work.”

NAO findings

The NAO report said: “The Cabinet Office withdrew funding from the Big Society Network for the Get In programme in December 2012, due to poor performance.

“In February 2013 the minister for civil society judged the Big Society Network to have performed poorly in its work on supporting the government’s objectives for the Big Society, and in April 2013 officials provided him advice about its financial sustainability.

“Prior to awarding the Society Network Foundation a further grant, the minister also asked for advice from officials in the Prime Minister’s office, citing issues with the Society Network Foundation’s performance and financial sustainability.

“The head of campaigns and strategy in the Prime Minister’s office sought advice from the Policy Unit and met with Steve Moore and Martyn Rose, director and chair of the Society Network Foundation.

“Following this the Prime Minister’s office asked the Cabinet Office to continue with the new grant funding.  It also asked it to pay a bridging grant to cover the costs of the Big Society Awards while a memorandum of understanding was agreed for the grant.”

The Cabinet Office had also noted that SNF was overdue filing its 2012 accounts with Companies House and the Charity Commission.

A few days later, on 11 April 2013, the Cabinet Office agreed in principle to give SNF a further £150,000 and immediately handed over an advance of £12,500.

The final payment was made as planned in February this year, just as the Cabinet Office decided to take the running of the Big Society Awards back in-house.

Altogether BSN/SNF received £500,000 to run the Big Society Awards programme over two years – a large increase on the £10,000 that the Cabinet Office had managed to do it for in the previous two.

Public money totalled £3.1m

Civil Society News began investigating the flow of public money to the supposedly independent Big Society Network in May 2013. The NAO report confirms all the grants that we uncovered during our investigation, namely:

• £480,000 from Nesta to help BSN set itself up and run the Spring, Nexters, It’s Our Community and Your Local Budget programmes
• £830,000 from Big Lottery Fund to run Your Square Mile
• £350,000 and £150,000 from the Cabinet Office to run the Big Society Awards
• £299,800 from Cabinet Office to run Get In (which never launched)
• £997,960 from Big Lottery Fund to run Britain’s Personal Best

With regard to the first grant of £350,000 to “support the Big Society agenda and run the Big Society Awards”, the NAO said the grant’s objectives were “broad” and that the Cabinet Office did not require any detailed reporting against those objectives.

However, the NAO found no evidence of wider “systemic issues” with grant programmes administered by the Cabinet Office or Big Lottery Fund.

In response to the report, the PM’s office referred enquiries to the Cabinet Office.  A Cabinet Office statement said: “This government is committed to backing and providing funding for organisations which encourage people to volunteer and use their talents to help others. We welcome the NAO’s report today which finds no evidence of any systemic issues with our programmes.”

Response from Society Network Foundation

The trustees of the Society Network Foundation issued a statement saying they were pleased that the NAO has concluded its twin reviews and found no evidence of  systematic issues regarding the administration of grant awards by the Cabinet Office and the Big Lottery Fund.

They added: "This report, alongside that published by Nesta's chief executive Geoff Mulgan in October, provides an accurate account of the various deliberations that took place relating to each of the projects the charity and BSN developed. No evidence of any malpractice has emerged. We are satisfied that none ever occurred.

"Each report has provided honest accounts of how public bodies, our staff and trustees worked to nurture innovative ideas, legitimately submitted, all consistent with our charitable objects. We were a new charity operating in challenging times. The opprobrium the charity has attracted in the past two years was plainly politically motivated. It undoubtably made it difficult for us to operate effectively.

"We trust that this report will finally lay to rest the wholly unfounded and damaging accusations that have been made against the charity, its trustees and the people who worked with and on our behalf."

Labour's response

Lisa Nandy, Labour’s shadow minister for civil society, said:
“The Big Society has lost its last shred of credibility. The thousands of charities who have had their funding cut will be dismayed to read today’s report, and learn an organisation with strong ties to the Prime Minister was allowed to waste millions of pounds of public money on pet projects.

“The Conservative donors and supporters that ran the Big Society Network were hand in glove with ministers and advisers, who didn’t seem to care the organisation they were writing cheques to hadn’t even filed its accounts.

"Concerns were overruled by the Prime Minister’s office after a meeting with the Tory donor who was a trustee. Advisers were lobbying independent funders for projects that didn’t get off the ground. At a time when public funding is being slashed the behaviour is breathtaking."