The Cabinet Office is seeking to recover almost £34,000 of grant funds given to the Society Network Foundation, the charity that owns the Big Society Network.
During Cabinet Office questions in parliament yesterday, Brooks Newmark, the Minister for Civil Society, was pressed by Lisa Nandy, his Labour shadow, about funds given to the SNF and the BSN for projects that failed to get off the ground.
Nandy said that thanks to a report by the National Audit Office on funds given to the Big Society Network, which found that the Cabinet Office and the Big Lottery Fund had mismanaged grants totalling more than £2m to the BSN and the SNF, "we now know that the government’s big society lies in tatters".
She said: "We have since learned that the charity the Prime Minister personally launched at No. 10 Downing Street is not only under investigation by the Charity Commission, but is also under investigation for moving Cabinet Office funding to its parent company, which is chaired by a major Conservative Party donor who also earned hefty consultancy fees from it.
"Was the Cabinet Secretary aware that government funding was being transferred not to the thousands of legitimate charities in this country, but to the bank account of a Conservative Party donor?"
Newmark replied: "This allegation has been investigated by the grants manager and appropriate action to recover any funds not spent in line with the grant agreement is being taken."
He did not give any further details, but a Cabinet Office spokesman said today that the department was seeking to recover £33,994.
Pat Glass, the Labour MP for North West Durham, also asked Newmark in parliament yesterday whether it was true that the Big Society Network was being investigated by the Charity Commission in relation to allegations of misuse of government funding and inappropriate payments to directors, including a Tory donor.
"This has been investigated and no evidence of impropriety has been found," Newmark replied. Neither Nandy nor Glass named the donor to which they were referring.
The SNF was awarded a grant of about £300,000 in 2012/13 from the Office for Civil Society through the Social Investment Business from the government’s Social Action Fund for the now cancelled children’s fitness project Get In.
The SNF spent £134,466 of the £199,900 that it received and transferred the remainder, £65,434, to unrestricted funds.
The remaining £100,000 of the grant awarded was withdrawn by the Cabinet Office and not paid to the SNF because of poor performance.
The Charity Commission is still running an operational compliance case on the Society Network Foundation to investigate concerns including related-party transactions and accountancy issues.
A statement issued in August by the trustees of the SNF, which is in the process of winding up, said that Martyn Rose, chair of the charity, was paid £40,000 for the provision of contracted office services and consultancy support over the past four years, as agreed by trustees.
"Martyn Rose contributed £193,000 personally to the Society Network Foundation and its operating subsidiary Big Society Network, a not-for-profit organisation, meaning that overall he made a net contribution personally of £153,000 to these entities," the statement said.
"As a successful entrepreneur and investor in early-stage business, both private and social enterprises, Martyn Rose’s involvement in SNF was to give back to society and led him to devote a considerable amount of time to help further the organisation’s objectives.
"Payments were made to two directors who are part of BSN’s executive management team for their work on behalf of BSN and the various projects with which they were involved, as was both appropriate and as is standard practice in these circumstances."
Rose is listed on the website Searchthemoney.com as having made donations of services worth more than £54,000 to the Conservative Party in the months before and after the 2010 general election. The website says it draws its information from publicly available data published by parliament and the Electoral Commission.
Newmark was also asked in parliament yesterday by two MPs for the assessment he had made of the implications for his department’s policies from the NAO report into the funding arrangements for the Big Society Network.
He said: "I am satisfied that the issues raised concerned adherence to process and therefore do not feel that there are any implications for the policies of my department."
He said the Cabinet Office had "learned the lessons" from the experience.
"There are no conclusions that the Cabinet Office did anything untoward in this regard," he said. "All the report says is that we did not adhere to the guidance we issued for this particular programme on a couple of points."
Newmark has also responded to written parliamentary questions posed by Nandy about the awarding of grants to the SNF and the BSN.
He said that Nick Hurd, his predecessor as Minister for Civil Society, in conjunction with an advisory panel, had made the decision to refer back to the Social Investment Business its decision to reject an application for funding from the SNF for the Get In project.
"Decisions taken regarding the Cabinet Office’s Social Action Fund grant to Society Network Foundation, made through the Social Investment Business, were made via the designated decision-making mechanism for this programme – the Minister for Civil Society, supported by the programme’s advisory panel," wrote Newmark.
He said that no Cabinet Office officials were involved in the process to award funding to the SNF from the Big Lottery Fund, because it was independent of government.
Asked by Nandy whether his department would seek to recover grant funds spent on the Get In project, Newmark said the "Cabinet Office would not normally seek to recover funds spent in line with a grant agreement".