The Cabinet Office minister who overruled a civil servant’s recommendation not to release a £3m grant to Kids Company days before the charity’s collapse has denied being “blackmailed” into handing over cash.
Oliver Letwin said he did not regret handing over the money but has been told to expect to be criticised for his role in the debacle during a hearing of the public administration and constitutional affairs committee.
The committee heard claims that the charity’s founder, Camila Batmanghelidjh, would write to ministers warning that without more state cash the charity would fold, with a potentially harmful impact on the prime minister’s “big society” agenda.
Letwin, one of David Cameron’s closest advisers, admitted authorising two final grants of £4.265m and £3m to Kids Company this year.
It emerged during the hearing that Letwin had a close relationship with the charity to which he was supposed to be handing over funds. He had named Batmanghelidjh his “hero of the year” in 2002 and had accepted personal phone calls requesting more money from the charity’s chairman, Alan Yentob, as he travelled in his ministerial car.
The final £3m was the subject of a formal objection from Richard Heaton, then Cabinet Office permanent secretary, who sought a rare ministerial direction to put his concerns over the funding on the record.
A Labour MP, Paul Flynn, told Letwin that Batmanghelidjh appeared to be a “confidence trickster” who had blackmailed ministers into handing out more than £40m of public money over a number of years.
He asked the minister: “Aren’t you ashamed of yourself?” Letwin said he wasn’t.
Asked if he had done “something wrong by boosting this charity and making it more attractive to other donors”, Letwin said he had not. The minister said he had asked himself whether he should have stopped funding the charity after it failed to meet the conditions of the £4.3m grant it received in April and had concluded that the answer was no. “I had no basis for assuming that their financial governance was anything but reasonably OK,” he said.
Letwin said the charity could have carried on if it had been restructured after the removal of Batmanghelidjh as chief executive and could have carried on its work with children.
At one point, a third of the government’s entire budget for youth sector funding went to Kids Company, the committee was told.
Bernard Jenkin, the Conservative chair of the committee, told Letwin that he had given the charity money because he was “enamoured”.
Jenkin said: “This charity had unprecedented access [to senior politicians] and that’s why it got the money. You wouldn’t have been giving them money if you hadn’t been enamoured. How can we possibly trust you with an objective assessment of this situation?
“This is like a family looking after a profligate maiden aunt, however spendthrift... In this case, the aunt disappeared from the scene.”
Letwin told the committee that the charity collapsed because of a failure to raise private donations. He appeared to blame some of the donors who he said had “fled” following allegations of child abuse at the charity made in August.
Asked where the responsibility for the government’s failed relationship with the charity lay, Letwin referred to Tim Loughton, the former children and families minister, who also appeared before the committee. Letwin also said that Nick Hurd, the former minister for civil society, and Francis Maude, the former minister for the Cabinet Office, had also had responsibility for overseeing Kids Company decisions.
Letwin said he could not explain why responsibility for the charity had been moved from the department for education to the Cabinet Office in 2013.
Earlier, Loughton, a minister in the DfE from 2010 until 2012, told the committee that officials had repeatedly raised concerns about the charity’s management to him. “Looking back at some of the papers, I had a submission in July 2010 when they said that they desperately needed some more money and they were looking for a direct grant. So we took advice on this,” he said. “The advice from officials was very clearly that that would not be appropriate for a whole host of reasons.”
But money was handed over, Loughton said, because there was pressure on officials to approve funding because of Batmanghelidjh’s close links with senior figures in government and the media.
Kids Company went bankrupt in August 2015, following reports of a police investigation into allegations of abuse of children on its property. The charity had provided services for thousands of children with complex mental health issues who were involved in gang and gun crime or suffering from neglect or destitution in south London, Bristol and Liverpool.
Jenkin said that in light of the close relationship between leading members of the Conservative party and the charity’s founder, the award of money to her charity “smacks of political patronage”.
“At what point does this become a conflict of interest?” he said. Letwin replied that he had never felt “the slightest conflict of interest”.
