David Davis writes for the Mail on Sunday about the collapse of Kids Company

As published in the Mail on Sunday:
Why I, as a Tory, despair at our bedazzled PM’s decision to give this woman a second chance: Kids Company has been a tragedy waiting to happen

The Kids Company charity has been a tragedy waiting to happen for years. Supported by Prime Ministers seemingly dazzled by the charm of its founder Camila Batmanghelidjh, encouraged by a neglectful Charity Commission, and egged on by the adulation of the recipients of their banknotes, its fate was almost preordained.

There is little doubt about Batmanghelidjh’s good intentions. That is part of her charm – that same charm that seduced David Cameron into providing enormous funds to her charity.

Over the past few weeks this newspaper has exposed serious shortcomings with this charity. But the catastrophic financial haemorrhage that eventually destroyed Kids Company highlighted not just a weakness in Batmanghelidjh’s management, but a fatal flaw at the heart of Cameron’s beloved Big Society project.

The original Big Society was the one that flourished under the Victorians when there was a burgeoning of self-help organisations spawned in the industrial heart of Britain – many of them the precursors of today’s charities.

But critically, all of these were close to the people they helped, and parsimonious with money.

Their support came from the people, not the Government.

They knew that every penny they spent had to be collected and that their (generally not very rich) donors wanted it to be spent wisely. Not for them the casual handing out of £10 notes to be spent on potentially anything from trainers to marijuana.

Cameron’s Big Society was originally a slogan in search of an idea. But it has evolved into a veritable State takeover of the charitable sector.

Since 2008, charities in Britain have depended on the State for more than half their money. To date, Kids Company has received over £30 million in state aid. Neither has this money been handed out against tightly drawn criteria to deliver challenging social aims. It is just the reverse.

When Tim Loughton, then a junior Education Minister, considered the bid from Kids Company for £4.3 million a year for three years, he rapidly concluded this was far too much taxpayers’ money for too little advantage for the youngsters concerned.

But he was instructed by Number 10 to give the charity the money it demanded. Cameron was, it is said, ‘mesmerised’ by the charismatic Batmanghelidjh.

This was not the first oddity in the financial arrangements between the Government and Kids Company. Astonishingly, in 2003, Revenue & Customs waived £589,000 of £689,000 unpaid National Insurance.

This was an early harbinger of the organisation’s carelessness with money – and it is hard to believe Ministers have not been aware. The charity’s latest published accounts, for 2013, showed £23 million of contributions, of which £15 million – two thirds –went on wages and salaries. But what did that staff salary bill deliver?

According to one ex-employee writing about the charity’s Urban Academy in London in 2008, it delivered the extraordinary practice of staff handing out packages of cash to young people.

Kids Company claims to have helped 36,000 youngsters in one year but can identify only 750 in its deal with the Government.

It also claims success rates of 80 to 100 per cent with the youngsters it helps. An average 90 per cent across 36,000 underprivileged youngsters would show up in everything from violent crime rates to hospital admissions in the areas where Kids Company has a centre. They do not.

You have to wonder what the measure of success is when one of your policies involves handing out cash to any youngster that turns up. So it is not hard to see why the Cabinet Office’s most senior civil servant was worried about handing the charity an extra £3 million of public money.

That is why he required Oliver Letwin and Matt Hancock, the two Ministers who overruled him, to write him a letter of direction – a rare move. In all my time either as a Minister or as chairman of the Public Accounts Committee, never have I seen such a letter come so spectacularly unstuck in less than six weeks.

But it is hard to avoid the conclusion that the hapless Ministers were simply doing Cameron’s bidding.

Speaking on Friday, the Prime Minister was still defending the grant, saying Kids Company had needed ‘one last chance’. A second chance? Another £3 million, when we do not know if the first £34 million did any good?

But these are symptoms of a more fundamental problem. Ever since the Blair Government it has become increasingly common to use charities and NGOs as an arm of government.

This has serious consequences. It undermines the independence of much of the charitable sector and it substitutes the charismatic appeal of a celebrity charity leader for any normal measure of public accountability.

But it also distracts us from realising what should constitute a genuine 21st Century Big Society and where it should spring from. We seem to have forgotten the virtues of self-help, of strong families, of children brought up in loving but disciplined surroundings and educated in fair but demanding schools.

When I grew up on a council estate in South London, the people who climbed their way out of poverty were those who were encouraged by their schools and other institutions to work and save and grow – not those whom the State lulled into a terrible dependency, despondency and despair with unconditional cash payments.

Governments always have trouble recognising their own mistakes, particularly when the Prime Minister is personally involved.

A charismatic leader of a popular charity apparently helping disadvantaged children, widespread celebrity endorsement, a rare example of the Big Society in action – it is hardly surprising that Cameron meddled in this.

But that does not make it right. Tempting as it is for Conservatives to take state functions away from inefficient government departments and give them to ‘third sector’ charities, it often does not work.

Worse, we do not even know that it is not working. We do not really know how the money is used or what we get for it. When the charity is as tapped in to the Establishment as this one is, we barely want to ask.

The Charity Commission does not help either.

Whether by inclination or statute, it has proved incapable of policing its sector.

It frankly does not know whether it is the midwife or the policeman for failing charities.

But if we must insist on using charities to deliver government policies, they must be subject to the same transparency requirements as any public project. They should publish not just their accounts, but agreed measures of their performance.
They should also be subject to Freedom of Information requests. And they should have to compete for the money on a level playing field.

Ministers should be forbidden from intervening on behalf of any individual charity, just as they would be banned from intervening on behalf of any company.

Any attempted ministerial intervention, including from Number 10, should be immediately published in full. And any charity that receives taxpayer funding should be forbidden from political campaigning.

Good intentions are all well and good. But by themselves, they are not enough.

When you are spending taxpayers’ money, you have to be accountable to the taxpayer, whoever you are.