Kids Company was 'special case' to ministers, say MPs
Vulnerable children across the UK are likely to have lost out amid ministers' "special treatment" for failed London charity Kids Company, MPs have said.
The Public Accounts Committee said it was "staggering" government gave KidsCo more than £40m over 13 years with "no idea" what it was getting for that.
Kids Company collapsed in August amid claims of financial mismanagement - something its former bosses deny.
The government said it would consider the recommendations made by the PAC.
Kids Company said it was bemused and angered by the report as the committee had not taken evidence from the charity. The charity's founder and former chief executive Camila Batmanghelidjh has called for a further "independent" inquiry into its demise.
In a damning report published on Friday, the cross-party committee said money was ploughed into Kids Company to the detriment of "other, deserving" charities.
The charity, run by Ms Batmanghelidjh and BBC executive Alan Yentob, was given "at least £43m" from central government from 1996, and more than £4m from local authorities and lottery bodies, the PAC said.
This was "far in excess" of what other charities were given, even though Kids Company, which worked with vulnerable young people, operated "in only two London boroughs for most of its existence", said the MPs.
Analysis by Lucy Manning, BBC special correspondent
It is a frank report. MPs say it's "staggering" the government spent so much money on Kids Company and calls it "a failed and expensive experiment".
In fact the committee wasn't investigating Kids Company but the behaviour of senior civil servants. It didn't have much to say that was positive about them either.
It concluded civil servants knew the charity had friends at the top of government, so they gave it an easy ride and didn't raise concerns until it was too late.
This is the second committee of MPs investigating Kids Company. And more damning allegations about the charity's spending were made to the other one.
Kids Company collapsed days after receiving a £3m grant from the Cabinet Office and in the midst of a Scotland Yard investigation into allegations of historical sexual abuse.
The closure came after ministers said they wanted to recover the grant, with officials saying they believed conditions attached to the use of the money had not been met.
The PAC said decisions to fund Kids Company "were not based on evidence" and failed to follow due process.
And despite "all the warning signs" about the charity's financial situation and the impact of its work, funding "continued and was never seriously questioned, let alone stopped".
Ministers were criticised in the report for relying too "heavily" on the charity's own performance assessments.
And civil servants were accused of failing to stand up to successive ministers who, the MPs say, favoured the charity. They "have not served taxpayers or children across the country well", MPs said of the officials.
What was Kids Company?
- Founded in 1996 in south London by Camila Batmanghelidjh
- Relied on donations and government money and was backed by Prime Minister David Cameron
- Financial difficulties first reported to councils in June
- Ministers approved £3m grant on 26 June
- In July, police said specialist child abuse investigators were looking into the charity
- The Cabinet Office tried to reclaim the £3m and the charity confirmed it had closed on 5 August
In light of the case, the committee has called for a "fundamental review" of government grants to charities and a register of such payments to improve monitoring and evaluation of organisations in receipt of public money.
Meg Hillier, Labour chair of the committee, said: "So many other charities did not get the same support and it is clear that Kids Company received special treatment - to the detriment of other deserving charities around the country."
Commenting on the report, a government spokesman said it would "consider the recommendations" put forward by the committee.
"The welfare of the young people continues to be our primary concern and we are now working closely with local authorities to make sure they have access to the services they require."
Ms Batmanghelidjh and Mr Yentob have strongly denied accusations of financial mismanagement at the charity.
The National Audit Office is investigating grants given to Kids Company, and the charity is also the subject of a statutory investigation by the Charity Commission and an inquiry by the Constitutional Affairs Committee.
But Ms Batmanghelidjh said the current investigations were insufficient because they were not "independent of government structures" and a judge-led inquiry or Royal Commission might be necessary.