The National Citizen Service (NCS) has agreed to pay The Challenge Network £2.8m following a legal dispute between the two organisations.

The Challenge Network, a registered charity, went into administration last year, shortly after the NCS Trust dropped its contract with the charity to deliver the NCS youth social action programme.

The Trust dropped the contract after it said it failed to reach an agreement with The Challenge over the requirement to use a shared IT system and had concerns about the charity's delivery programme.

Shortly after, the charity went into administration and filed a High Court Claim against the NCS for £20m as a result of financial damages.

A statement from the NCS said the parties have now agreed 'mutually acceptable terms of settlement, which resolve all outstanding issues between them'.

"Without any admission of liability, NCS Trust has agreed to pay a sum of £2.8 million in respect of costs incurred by The Challenge for unfilled places during 2019 which can be claimed under the contract," the statement said.

"NCS Trust has accepted no liability in respect of the other two parts of the £26 million claim brought by The Challenge.

The payment was authorised by the department for Digital Culture Media and Sport (DCMS), which oversees charities, and HM Treasury.

Both parties have refused to make any further comment.

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