The Liberal Democrat peer Baroness Barker has called for an inquiry into the government’s funding of Kids Company and the Charity Commission’s "significant failure" to take action to prevent its closure.
Speaking in a debate in the House of Lords yesterday, Barker said that a "cursory examination" of Kids Company’s annual accounts showed that it repeatedly ignored warnings that failing to put money into its reserves was putting the charity at risk.
She asked Lord Bridges of Headley, parliamentary secretary in the Cabinet Office: "Does the minister agree that that is a significant failure on the part of the regulator, which had the information and did nothing, and that that should be the subject of a future inquiry, as should the government’s continued funding of an organisation that was clearly inadequately managed?"
Headley replied that it was down to a charity’s trustees to protect it and its assets.
"The Charity Commission has neither the legal authority nor the ability to assess the financial health of the more than 160,000 registered charities; that is the job of each charity’s trustees," he said.
But he said he recognised what she was saying and pointed out that the regulator was conducting a statutory inquiry into the charity.
"I am sure that it will wish to consider what lessons the sector as a whole and the commission itself might learn from this episode," he said.
The Labour peer Baroness Hayter of Kentish Town suggested that the National Audit Office should conduct a wider review into various areas, including the role of ministers in giving grants. Ministers in the Cabinet Office overruled the advice of civil servants in giving a final £3m grant to Kids Company.
Headley responded: "When a ministerial direction is given, it is automatically referred to the NAO, as a number of your lordships will know. It is then expected to be passed to the Public Accounts Committee, and it is up to the PAC to decide what it wishes to do."