July 26 2014: David Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
David Cameron’s flagship Big Society Network is being investigated by the Charity Commission over allegations that it misused government funding and made inappropriate payments to its directors – including a Tory donor. The organization, which was launched by the Prime Minister in 2010, was given at least £2.5 million of National Lottery funding and public-sector grants despite having no record of charitable activity. The Independent has learnt that it has now been wound up, having used much of the money on projects that came nowhere near delivering on their promised objectives.
Two senior figures on government grant awarding bodies have also made allegations that they were pressured into handing over money to the Big Society Network despite severe reservations about the viability of the projects they were being asked to support. Liam Black, a former trustee of Nesta, which was then a public body sponsored by the Department for Business, said Nesta had been “forced” to give grants that totalled £480,000 to the Big Society Network in 2010 without a competitive pitch. He described it as a “scandalous waste of money”. Another senior figure involved in the decision to award £299,800 from the Cabinet Office to the organization said the funding request had initially been turned down. “When we did the analysis we turned them down because the bid did not stack up,” they said. “But we were told to go back and change the criteria to make it work.”
Tonight Labour said it was writing to the Cabinet Secretary, Sir Jeremy Heywood, asking him to investigate whether political pressure had been applied to give an organization with close ties to ministers, “special treatment”. The Independent understands that the Charity Commission is also looking into allegations that some of the “restricted funds” given by the Cabinet Office for a childhood obesity project were transferred to pay down the deficit of a linked company. It is also investigating payments made by the charity, “for consultancy services” to two directors of the charity and its chair, Martyn Rose. Mr Rose, who helped set up the Big Society Network, also contributed more than £54,000 to the 2010 Conservative election campaign.
Tonight he said he had no memory of the payment but added that it was possible “one of my companies did work on its behalf”. He said he had personally put £200,000 into the Big Society Network which he had not got back. “With hindsight, of course, if we had all known that the projects were not going to work we would have been idiots to do them,” he said. “[The truth] is that in the early stages of social investment some will work and some won’t.” Giles Gibbons, a trustee of the charity and a former business partner of Steve Hilton, David Cameron’s “blue skies thinker”, added that he did not believe any of the payments made by the charity had been in any way inappropriate.
An examination of the Big Society Network projects, funded by the Government and the lottery, reveal a marked discrepancy between what they claimed they would achieve and what they did. They included: A project called “Your Square Mile” whose purpose was to encourage and enable local people to improve their community. It was awarded £830,000 by the Big Lottery Fund – despite officials assessing the application as “weak” in three out of the six criteria. In February 2012 the project had attracted just 64 signed-up groups compared with the one million predicted in the funding application.
A project called Get In – to tackle childhood obesity through sport. In April 2012 it was awarded a grant of £299,800 from the Cabinet Office despite officials concluding it was unlikely to meet its stated objectives. They were told to change their selection criteria and approve the grant. The project was never even launched.
Britain’s Personal Best, which aimed to build on the Olympic Games by encouraging people to excel in athletic, educational or creative challenges. Given £997,960 in April 2013 by the Big Lottery Fund, it claimed it would sign up 120,000 people to take on challenges in their community – but was wound up within months after failing to meet all the milestones the Big Lottery Fund had set.
A long-running investigation by Civil Society News into Big Society Network funding has also discovered that the organization was given statutory grants totalling £480,000 in 2010 by Nesta – which was then an arms-length body of the Department of Business – without a competitive pitch being held. About £150,000 was to part-finance the core costs of running the organization in its early stages and £330,000 was to support four projects – called Nexters, Spring, Your Local Budget and It’s Our Community. Nesta is now an independent charity but said, “While the vast majority of Nesta’s grants are made following open calls for proposals, we do have the ability to provide grants to projects that fit with our vision and advance our objects outside of open calls for proposals. That is what happened with the grants to the Big Society Network.”
Labour is now demanding an inquiry into links between the Big Society Network and senior Conservatives. Several members of the network’s staff had worked with and for ministers including Michael Gove and Theresa May, and two had stood as Tory candidates. Giles Gibbons had been a partner in the same firm as Steve Hilton and co-wrote a book with him. He said tonight: “Am I disappointed that the network didn’t have a more positive impact? The answer is 100 per cent yes. Do I think we could have done more about that? Yes I think we could have. “There was powerful core at the heart of what we were trying to do but was our delivery was not good enough. Is there anything untoward in the way in which we have worked? I genuinely don’t think there is.” But Lisa Nandy, the shadow minister for civil society said: “It’s bad enough that millions of pounds of public money were squandered, but the connections between these organizations and the Conservative party are deeply concerning.”
A spokeswoman for the Charity Commission said: “Our case into the Society Network Foundation remains open and ongoing. We have received a response to questions we had relating to connected-party transactions and the use of a grant. “However this does not fully address our concerns and we are in the process of engaging further with the trustees. We are also awaiting copies of documents that explain the grounds on which a grant was given.”
Steve Hilton: A former advertising executive who became David Cameron’s, “blue skies thinker”. He championed the idea of the Big Society, and was instrumental in getting government backing for it when the Tories came to power.
Martyn Rose: A businessman who gave £60,000 to the Tories in the run-up to the last election and became chairman of the Big Society Network. Worked with both Theresa May and Michael Gove.
Giles Gibbons: Co-wrote a book with Steve Hilton called Good Business. He became a trustee of the Society Network Foundation – the charitable arm of the Big Society Network. It is now being investigated by the Charity Commission.
Steve Moore: Worked for the Tories in the late 1980s and became chief executive of the Big Society Network. Was ultimately responsible for delivering the projects that failed. Had close links with Mr Hilton and the Nick Hurd, the minister responsible for the Big Society.
August 20 2014: Since publication of the above, an application dated 7 August 2014 has been made by the Trustees to have the corporate entity Society Network Foundation Ltd struck off the Register of Companies. The controversial charity that received over £2.5m of lottery and government grants is to be wound up amid allegations that it misused funding and made inappropriate payments to its directors. The Society Foundation Network, which ran the Big Society Network, is being probed by the Charity Commission following several failed projects.
The Network was also investigated by the National Audit Office over allegations that Government money was incorrectly allocated. The charity denies all the allegations. Yesterday, “The Independent” revealed that one project run by the organization had made a series of claims for nearly £1m of lottery funding that are now being disputed by other charitable organizations it referred to. The Charity Commission said that the trustees of the organization had contacted it to tell them that they planned to voluntarily wind it down. It said its “operational compliance” case into the terms and conditions of a grant awarded to the charity and other accountancy issues were still on-going and the trustees were co-operating.