Kids Company – a Contract Management Approach Might Have Helped

The trouble around the Kids Company charity might all have been avoided if the organisation had been treated a bit more like a conventional supplier. That is my theory anyway, and one I have held for many years, since I worked as a consultant to the public sector and saw various examples of “grants” that were frankly too often a waste of taxpayers’ money.

The first context in which I saw this was research grants to universities and similar institutions for leading-edge scientific research in a particular sector. Toooften, the money was given, nothing was heard back, and when the public body finally asked what the results were, they would just be told, “oh, the idea didn’t really work”!

Now that does happen in research at times, but we suggested then that the recipients of these grants should commit to at least aiming for some defined outputs; should explain clearly where the money was going to be used; should provide regular reports and updates on spend and progress; and should occasionally meet with or be checked out by the “buyer”. Generally, the recipient should be treated to the sort of contract management approach that would be used for a more conventional supplier of goods or services.

That applies as far as I can see to anyone who gets money from the state that is not a conventional purchase. So whether it is a research grant, a charitable donation, overseas aid (there’s another whole issue in itself), the same principles should apply. We might also consider what the competitive process should be prior to award of the grant, but let’s leave that for today.

So when it comes to the Kids Company, it appears that money has been given by government without much in the way of this contract management discipline. There are stories of money just handed out by the charity to kids and then being spent on drugs. These articles (here and here) suggested chaotic financial management, that the charity employs a lot of staff and that some of the money seemed to go more for their benefit than the kids they should be helping. From the excellent Times article by Camilla Long:

Looking around, I could see another: the staff. Vast numbers of twentysomethings swanned around, eating food from the children’s ­canteen and socialising.

“It’s not lavish down there,” said Harriet Harman, the acting Labour party leader and local MP, who came to the defence of Batmanghelidjh on Friday. “It’s not like spa ­treatments.”

I disagree. It is quite lavish — the staff quarters bristle with laptops and gadgets — and there are spa treatments, manicures, massages and facials. I saw a whole therapy wing packed with staff, but very few children were in evidence.

It got to the point where some politicians and civil servants wanted to cut off funding. We then had the extraordinary “letter of direction” from the Permanent Secretary of the Cabinet Office to the Minister. Such letters happen once in a blue moon – it is basically the Perm Sec saying “I really don’t think we should do this but if you tell me I must, Minister, then of course I will”. Very unusual, and well done Richard Heaton for having the guts to do that. The answer from Oliver Letwin and MatthewHancock was “yes, give ‘em the dosh”.

So Heaton was over-ruled, but the last tranche of money was supposed to be used for re-structuring. Instead, it seems to have been used for ongoing running costs, which is why there is talk now of the government wanting to recover that money, and the charity countering by saying it will close. It is all very messy and a great shame, but it might have been avoided if a more professional “contract management” approach had been taken from the beginning.


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  1. DrGordy:

    Thanks Peter, now may be a good time some sort of due diligence on grants across central government to establish who is managing the taxpayers interests and ensuring that deliverables match the expectations. I can’t see why recipients wouldn’t benefit from that reassurance too.

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