Why is Labour’s new leadership so squeamish about attacking the government over Kids Company?

Few members of the shadow cabinet were sitting at the real cabinet table when Labour was merrily funding Kids Company, so why the reticence?

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This week’s report into the collapse of Kids Company sprays blame in numerous directions. According to the Public Administration Select Committee, the charity’s trustees, led by Alan Yentob, were “negligent”, while the organisation’s media-friendly chief executive, Camila Batmanghelidjh, was “unaccountable and dominant”.

Those two have attracted the bulk of the headlines, hardly surprising given Batmanghelidjh’s high public profile and Yentob’s controversial status at the BBC before his departure in December. Many will also recall the pair’s bizarre joust with the select committee producing this report in October, when Yentob complained that an elderly woman had sent him “abusive limericks”, and Batmanghelidjh said that an unpaid tax bill had been “conceptualised”.

Yentob and Batmanghelidjh’s well-publicised failings should not obscure the huge government blunder also detailed in the report. In June, the Cabinet Office ministers Oliver Letwin and Matthew Hancock dispensed a £3m grant to Kids Company, even though their department’s most senior civil servant told them the grant would not represent value for money.

In fact, Richard Heaton, their permanent secretary, was so adamant that the grant should not be disbursed that he sought a ministerial direction – a kind of arcane Whitehall way of registering a formal objection. Heaton was right: Kids Company spent £800,000 on unpaid salaries – not allowed under the terms of the grant – and then closed its doors. The government is still trying to recover the money.

The report is damning about this sequence of events, saying that “in neither his letter of direction nor his oral evidence has Mr Letwin provided convincing justification for his and Mr Hancock’s decision to ignore the comprehensive advice of senior officials”.

For a government whose dominant narrative is financial prudence, this is embarrassing. Or it ought to be. But it’s rather difficult for the government to be embarrassed by the grant when the opposition is failing to talk about it. This should be easy fodder for a Labour party desperate to argue that the government is not as sound a steward of the public finances as it claims. Letwin’s shadow, Tom Watson, is hardly shy, but he and other senior frontbenchers have kept determinedly schtum.

It’s possible that Labour frontbenchers have calculated that the grant issue is a bit too complicated for the public to latch on to, or that they think £3m is too paltry a sum to make controversy out of. Even so, the report makes clear that Letwin releasing the funds was symptomatic of a lax approach to scrutinising the charity’s work that pervaded government.

Letwin, whose role coordinating policy puts him at the heart of the government, and Hancock, a former chief of staff to George Osborne, are hardly rogue ministers. The report is clear that they made their decision in a wider climate where Kids Company’s requests for funding were happily met, with little scrutiny of its work.

Perhaps Labour’s apparent reluctance to criticise the government’s actions over Kids Company stems from the fact that the current government is not alone in being criticised. The last Labour government funded Kids Company assiduously too, and when the charity started to unravel in July, the party’s acting leader Harriet Harman praised Batmanghelidjh as a “charismatic, inspirational leader”, and described the charity, which received over £46m of public money, as “a pretty hand-to-mouth organisation”.

But, as Labour likes to remind us, this is an era of new politics. Very few members of the shadow cabinet were sitting at the real cabinet table when Labour was merrily funding Kids Company, and Corbyn and McDonnell were still eccentric backbenchers back then.

In any case, the charge of hypocrisy is not insurmountable. Ed Miliband made hay attacking the government’s closeness to Rupert Murdoch, just a few years after the end of the Labour government Murdoch supported. And if Miliband were still leader, he would probably be calling for a judge-led inquiry into the government’s funding of Kids Company, if not Letwin’s resignation.

Neil Coyle, the Labour MP for Bermondsey and Old Southwark, which includes some areas that were served by Kids Company, tells me that Labour should not hold back from criticising the grant. He says:

“Today’s report again outlines personal failings by ministers directly. This led to millions of pounds of taxpayers’ money being squandered. Shockingly, no minister has yet resigned. Hancock and Letwin have a blatant disregard for public money and have not even had the decency to acknowledge their mistakes. Their personal errors arguably put children at greater risk in my constituency. Their overriding of officials’ views also wasted vital resources at a time they lectured the UK on austerity and the need to balance the books. Labour should be championing the third sector and condemning ministers’ mistakes in no uncertain terms.

Labour’s new leadership has no reason to be squeamish about attacking Letwin for funding Kids Company. Old politics or new, it’s the task of the opposition to hold the government to account for poor decisions. The decision to hand an unweaving charity a pot of government money was breathtakingly misjudged. Labour should say so. 

Henry Zeffman writes about politics and is the winner of the Anthony Howard Award 2015.