Who is Kidding who?
The BBC reports today that Commons Public Administration and Constitutional Affairs Committee (PACAC) has today (six months on) criticised the charity’s trustees and the Charity Commission.
But how much is the actual business model – of using charities to deliver what would otherwise be government services – examined and criticised?
Camila Batmanghelidjh, who founded the charity in 1996, said the report “is a product of bias and rumour”. …
Conservative MP Bernard Jenkin, who chairs the committee, said its inquiry had heard “an extraordinary catalogue of failures of governance and control at every level – trustees, auditors, inspectors, regulators and government”.
He did say that the committee had heard positive accounts of valuable work by Kids Company, and of “inspired and motivated employees”, which made the trustee board’s failure to ensure the charity’s sustainability “all the more tragic”.
He added: “There has been a litany of allegations of inappropriate ‘therapies’, lavish spending and abuse of power within the organisation, and we hope that this episode highlights to all trustees that protecting the reputation of an organisation is a core element of good governance.”
BBC News Website, 1 February 2016 | Kids Company: MPs say ‘catalogue of failures’ led to collapse
Good headlines, putting the boot into individuals – particularly Batmanghelidjh and Yentob, but what examination of process has actually taken place? I was always taught that, in business, when “pointing the finger” target processes rather than people. We are a process driven society. In business the people who run processes are recruited, trained, promoted and supervised by processes. Supervisors and managers are expected to “work within process”. I imagine that in Government and the Charity Sector, the requirements for public accountability, means that there must be “process”. Or are such concerns overridden by the need for sound-bites and photo-opportunities? Has process been ignored?
The PACAC report criticises the government, saying it is unacceptable that successive ministers appear to have released funds to the charity “on the basis of little more than their relationship with a charismatic leader, small-scale studies and anecdotes, and no more than two visits made by [Oliver] Letwin more than 10 years previously”.
The committee says such an approach was an unjustifiable way to conduct government business and to handle public money.
Ms Batmanghelidjh and Kids Company “appeared to captivate some of the most senior political figures in the land, by the force of the chief executive’s personality as much as by the spin and profile she generated for the charity”, the report added.
The report itself, The collapse of Kids Company: lessons for charity Trustees, professional firms, the Charity Commission, and Whitehall, went a bit further but did not review the appropriateness of using third parties to deliver services such as those delivered by Kid’s Company.
It reports (amongst a large number of conclusions):
The Cabinet Office’s tender for the contract to review Kids Company required the successful bidder to provide the Government with assurances about the effectiveness of Kids Company’s governance. PKF Littlejohn now says that the original scope was narrowed, in agreement with Cabinet Office, to establishing whether the policies
and procedures in place were appropriate. PKF Littlejohn asserts that Ministers took assurances from the report that were outside the scope of the review. The Cabinet Office should have identified that the PKF Littlejohn remit had altered and communicated this message clearly to future users of the report. This would have minimised the weight Ministers placed upon the very limited assurances the report offered. [Conclusions, paragraph 23] …
.. it is not acceptable that a report commissioned to provide a professional assessment of a charity’s governance and controls looked only at systems and processes; as Mr Duke acknowledged, good controls can be overridden. [Conclusions, paragraph 24] …
Public Administration and Constitutional Affairs Committee , 1 February 2016 | HC433, The collapse of Kids Company: lessons for charity Trustees, professional firms, the Charity Commission, and Whitehall
It is critical of processes within Kid’s Company – and concerned that such processes were overridden. It is especially critical of the financial management of the charity and of the level of financial oversight provided by the Charities Commission (as if looking at published financial numbers would give you a complete picture).
It is critical of the over-sight processes that should have noticed that processes were either being or capable and likely to be being overridden. It also appears to me to be remarkably critical of Number 10 (under a number of administrations) seeming to over-ride process. I find these conclusion particularly remarkable:
Ms Batmanghelidjh and Kids Company appeared to captivate some of the most senior political figures in the land, by the force of the Chief Executive’s personality as much as by the spin and profile she generated for the charity. As a consequence, objective judgements about Kids Company were set aside. The Government’s relationship with Kids Company was forged outside the usual decision-making processes of Whitehall departments and there is little doubt that the high profile support of successive Prime Ministers for Kids Company had an impact upon decision-making across Whitehall. This included the authorisation of multiple grants outside of the normal competitive process. We also question whether it was wise to move youth funding from the Department for Education into the Cabinet Office. Had that not occurred, it is possible that less money would have gone to Kids Company and more to other, perhaps better run, youth charities. Other charities have said that they are angry and cynical about how one or two charities gain unfair advantage, and that the approach of successive Governments towards Kids Company has damaged their confidence in Government. [Conclusions, paragraph 42] …
… As the Cabinet Office is the department most closely under the Prime Minister’s control, the existing structure leaves the Prime Minister exposed to the kind of pressures which Kids Company thought it could exert. [Conclusions, paragraph 46]
… Releasing Kids Company from the usual competitive grant processes to which other charities are subject, despite a lack of evidence about the efficacy of its model or any evaluation of outcomes, has been proved to be an unjustifiable way to conduct Government business and to handle public money. This approach is condemned by the fact of Kids Company’s failure and is therefore unjustifiable in the future. [Conclusions, paragraph 51]
Government doubted that the information that Kids Company was circulating regarding its client number was true, but did nothing to correct the record. Instead, it continued to grant funding despite that knowledge. [Conclusions, paragraph 52]
PACAC | HC433, ibid
Let’s look at just a few sentences from the above.
- … Kids Company appeared to captivate some of the most senior political figures in the land, by the force of the Chief Executive’s personality as much as by the spin and profile she generated for the charity.
- As a consequence, objective judgements about Kids Company were set aside.
- The Government’s relationship with Kids Company was forged outside the usual decision-making processes of Whitehall departments
- … little doubt that the high profile support of successive Prime Ministers for Kids Company had an impact upon decision-making across Whitehall.
- the authorisation of multiple grants outside of the normal competitive process.
- leaves the Prime Minister exposed to the kind of pressures which Kids Company thought it could exert
- has been proved to be an unjustifiable way to conduct Government business and to handle public money.
- doubted that the information that Kids Company was circulating regarding its client number was true, but did nothing to correct the record. Instead, it continued to grant funding despite that knowledge.
And yet when this was reported on the Today programme (BBC Radio 4, 1 February 2016) or in the (at least initial) report on the web, I did not get the impression that anyone was staggered, astonished, horrified or dumbfounded, by such findings.
But does the report examine the appropriateness of using Charities to provide such services to vulnerable citizens? It is critical of outsourcing reviews of such charities:
Government was right to attempt to assess the governance of a charity before awarding funds. However, rather than commissioning a review of a charity’s policies and processes from one of the usual outside firms, the Government should develop its own Civil Service capability in order to exercise its own judgement about whether a charity’s governance, quality of decision-making, objective setting and culture are effective, and if its internal controls are sufficient. There should be particular caution towards Boards in which Trustees have held their position for more than two terms, and towards Boards where no individuals have experience in the charity’s particular area of delivery. [Conclusions, paragraph 60]
PACAC | HC433, ibid
But nowhere does it question whether such services would be better delivered integrated into existing children’s services provided by local authorities. I am left wondering why?
- Government, and the PACAC, being mesmerised by a charity that had grown from being a small charity servicing those it felt were falling through the net to being part of the net itself?
- A blind acceptance that outside providers (whether private sector or third sector) are always better than government – part of this government’s mantra that smaller government is always better?
- A total loss of trust in the ability of all local authorities to provide children’s services – driven by a number of high-profile failures in a few local authorities?
Faced with the above conclusions, I want to know why. It’s not just poor governance, it’s not just misapplication of public money, it’s a failure of society to protect its most vulnerable members.