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Kids Company

Volume 764: debated on Tuesday 8 September 2015


Asked by

To ask Her Majesty’s Government what action they intend to take as a result of the closure of Kids Company.

My Lords, the welfare of the young people who used Kids Company services has always been and continues to be our top priority. We are working with local authorities, charities and youth clubs in Lambeth, Southwark, Camden and Bristol to support young people with the services they need. Meanwhile, investigations into Kids Company are being conducted first by the official receiver and then by the Charity Commission.

My Lords, I thank the Minister for his Answer. A cursory examination of the Kids Company annual reports, which are available on the Charity Commission website, shows that the organisation repeatedly ignored warnings that failure to put money into its reserves was putting the charity at risk. 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?

My Lords, I should like to say first that obviously the noble Baroness speaks with a great deal of experience of the sector, so I take great note of what she is saying. She needs no reminding, but I would like to stress that it is ultimately the legal responsibility of a charity’s trustees to protect the charity 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. However, I hear what the noble Baroness is saying. As I have mentioned, the Charity Commission will be conducting a statutory inquiry into Kids Company, and 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.

My Lords, I declare my interests as set out in the register, as I am involved with a number of charities. I hope the Minister recognises that the sector is highly regulated, and that it is largely well regulated. The vast majority of charities pay attention to good governance, make sure that they have reserves and fully accept that they are accountable to those who fund them. Will the Minister and the Government relook at what they can do to encourage the many rich people we have in this country to take up philanthropy? One of the possible consequences of the panic and concerns around Kids Company is that charities which are struggling will actually continue to lose money when really they need to be supported.

I entirely agree with the noble Baroness that the large majority of charities do a very good job and that we need to tread with extreme care and caution. I also entirely agree that charities need to be able to raise funds and donations in a way that is not overly burdensome when it comes to regulation. I am sure that my right honourable friend the Chancellor will heed what she has to say about encouraging giving. I would note only that there has been a considerable amount of public donations to a number of the causes that have asked for money, especially the Nepalese earthquake and, of course, the Syrian refugees in the last few months.

My Lords, does my noble friend feel that people who are asked to be trustees of charities are given enough information beforehand against which they can check whether they have any experience in those areas and are able to deal with things such as accounts? I know that friends of mine who are willing to work for charities do not really understand things such as balance sheets or income and expenditure—they do it because they have time and they want to help the charities. Something has got to be done about that.

My Lords, I should declare an interest as I am a trustee of a charity. I entirely agree that there are a number of responsibilities and obligations that every trustee needs to heed. As a number of your Lordships will know, the Charity Commission provides clear guidance on the role and responsibility of charity trustees; indeed, it has recently updated its guidance, The Essential Trustee, which is designed to be easy to use and to support trustees in complying with their duties. That said, as I mentioned at the start, I very much hope that the Charity Commission will use this as an opportunity to look at what lessons the commission itself may learn from this episode.

My Lords, I hope that the Government will also learn some lessons. The responsibility for the grants that the Government give is with the Government. We understand that the Ministers overruled the advice that they had from civil servants and continued to give grants. We suggest that the National Audit Office should do a wider review. We should look not just at the official receiver and the Charity Commission but at the role of government Ministers.

My Lords, I hear what the noble Baroness has to say. 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.

My Lords, it is the turn of the Conservative Benches, and I am sure the House wants to hear from my noble friend Lord Tugendhat. I think we should go then to the noble Lord, Lord Morris, who has been very patient.

My Lords, the Minister will be aware that in the corporate sector, rotation is the normal rule. It is very rare for non-executive directors to stay for more than three terms of three years. I read in the press that the chairman of the trustees of Kids Company has been in office for some 18 years. I do not know whether other trustees have been in office for an equally long time. Does the Minister agree that the lack of rotation is perhaps one of the causes of the difficulties that have occurred and that bringing new blood on to boards of directors or trustee boards is one safeguard against the sorts of problems that have arisen on this occasion?

I entirely agree. That is a very interesting point. Again, I point to the Charity Commission’s investigation into this. It will look at the role of trustees—not just in Kids Company but more broadly, I hope—and the lessons it can learn from that. I hasten to add that trustees obviously provide a considerable wealth of experience. One needs to get the balance right between rotation and retaining that experience on a board of trustees.

My Lords, the House will note the steps that the statutory authorities and others are taking—but in the mean time, can the Minister tell us what is being done to safeguard the immediate and short-term interest of the children concerned?

The noble Lord makes an extremely valid point. I entirely share his concern, which is and has been paramount since the closure of Kids Company. Government officials have been working closely with local authorities. I take this opportunity to thank the local authorities in Lambeth, Southwark, Bristol and Camden for all they have done. This work has encompassed not just the Cabinet Office but other departments in government. I also pay particular thanks to the dioceses of Southwark and Lambeth, which have offered to provide practical support to local authorities, including food.