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Kids Company collapse is another example of Whitehall's reliance on local authorities

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The collapse of Kids Company was a telling reminder of the difficulties facing central government in attempting to fund neighbourhood services from the heart of Whitehall.

The celebrity-driven charity, which began life in inner south London, had expanded to Bristol and Liverpool. Its open-door policy appears to have left it without the capability to plan and ration resources. As a result, it went bankrupt.

Bankruptcy came after ministers had overruled civil servants to give Kids Company a further £3m at the end of June. This grant was given despite Cabinet Office permanent secretary Richard Heaton warning against giving the grant.

Presumably, the National Audit Office will look as this spectacular misjudgement and report on the circumstances of the decision.

Imagine if a local authority had pushed through a huge grant to a charity which immediately went bust. Ministers would have lined up to criticise wasteful councillors and their over-paid officers. But, as with all debacles involving central government spending and procurement, it is a matter of ‘que sera sera’.

A government representative, quoted in the Daily Mail, said “The welfare of these 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”.

Put in a more direct way, councils can pick up the pieces.

These are the same councils whose funding has been cut by 25 to 30% in real terms since 2010.

Lambeth’s overall budget fell by 7% in cash (over £15m) in 2015-16 and Southwark’s by almost the same amount and percentage.

Each borough has had to cut social care spending by £15m to £20m in a year. Yet it is to these authorities the government turns when its favoured project fails.

When care home provider Southern Cross collapsed in 2011, it was local authorities which were in the front line to guarantee homes for residents. Transport for London picked up the pieces when Gordon Brown’s doomed London Underground public-private partnership imploded in 2007.

However much successive governments take powers and resources from councils, ministers still depend on them to mitigate Whitehall’s many failures. 

Tony Travers, director, Greater London Group, London School of Economics

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Readers' comments (1)

  • “The welfare of these young people continues to be our primary concern..." Very reminiscent of the "Your call is very important to us" style response. It was government action that forced the closure and it was government cuts that placed Kids Company in a terminal condition. Who knows what the consequences will be for the vulnerable young people who relied on KC but I am sure it wont trouble the Chancellor too much - they are only 'loser trash'!

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