House of Commons Public Administration Select Committee
Work of the Charity Commission
Oral and written evidence
Tuesday 25 October 2011
Ordered by The House of Commons to be printed 25 October 2011
HC 1542-i Published on 2 April 2012 by authority of the House of Commons London: The Stationery Office Limited £7.00
The Public Administration Select Committee (PASC)
The Public Administration Select Committee is appointed by the House of Commons to examine the reports of the Parliamentary Commissioner for Administration and the Health Service Commissioner for England, which are laid before this House, and matters in connection therewith, and to consider matters relating to the quality and standards of administration provided by civil service departments, and other matters relating to the civil service.
Current membership Mr Bernard Jenkin MP (Conservative, Harwich and North Essex) (Chair) Alun Cairns MP (Conservative, Vale of Glamorgan) Michael Dugher MP (Labour, Barnsley East) Charlie Elphicke MP (Conservative, Dover) Paul Flynn MP (Labour, Newport West) Robert Halfon MP (Conservative, Harlow) David Heyes MP (Labour, Ashton under Lyne) Kelvin Hopkins MP (Labour, Luton North) Greg Mulholland MP (Liberal Democrat, Leeds North West) Priti Patel MP (Conservative, Witham) Lindsay Roy MP (Labour, Glenrothes)
Powers The powers of the Committee are set out in House of Commons Standing Orders, principally in SO No 146. These are available on the Internet via www.parliament.uk
Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at http://www.parliament.uk/pasc
Committee staff The current staff of the Committee are Steven Mark (Clerk), Charlotte Pochin (Second Clerk), Alexandra Meakin (Committee Specialist), Paul Simpkin (Senior Committee Assistant) and Su Panchanathan (Committee Assistant).
Contacts All correspondence should be addressed to the Clerk of the Public Administration Select Committee, Committee Office, First Floor, 7 Millbank, House of Commons, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5730; the Committee’s email address is [email protected].
List of witnesses
Tuesday 25 October 2011 Page
Dame Suzie Leather DBE, Chair, and Sam Younger, Chief Executive, Charity Commission Ev 1
List of written evidence
1 Charity Commission Ev 18 2 PCS Ev 21 3 Supplementary evidence by Charity Commission Ev 25
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Public Administration Committee: Evidence Ev 1
Oral evidence
Taken before the Public Administration Committee on Tuesday 25 October 2011
Members present Mr Bernard Jenkin (Chair)
Charlie Elphicke Kelvin Hopkins Paul Flynn Greg Mulholland Robert Halfon Lindsay Roy David Heyes ______
Examination of Witnesses
Witnesses: Dame Suzi Leather DBE, Chair, and Sam Younger CBE, Chief Executive, Charity Commission, gave evidence.
Q1 Chair: Welcome, both of you, to this session on funding? You have had a cut of £2.8 million on a the work of the Charity Commission. I wonder if you budget of about £30 million, and it will be cut by could each identify yourselves for the record. nearly a further £1 million by 2013Ð14. What Dame Suzi Leather: Thank you very much indeed. I activities have you actually ceased to undertake as a am Suzi Leather; I chair the Commission. result of that? Sam Younger: Sam Younger, Chief Executive of the Dame Suzi Leather: When we consulted with the Charity Commission. strategic review, it was very clear from responses that all the people we consulted felt that there was really Q2 Chair: Thank you for being with us today. The nothing very obvious that we could stop doing. That purpose of our session is to look at the work that the came to us from the charity sector, from umbrella Charity Commission does in the light of the bodies, and internally from our own staff. We have, of forthcoming review. Dame Suzi, I believe you would course, the same statutory objectives in the 2006 Act. like to make a brief opening statement. What that said to us was that we had to change Dame Suzi Leather: Only to thank you for this fundamentally how we did things, rather than what we opportunity to talk to you about our work. Since we did, but also really carry out the functions that only last appeared before you, quite a lot has happened; not least, like many other Government departments, we we as the regulator could do—in other words, stop have had a very significant funding reduction. That doing things that other organisations could do. has necessitated a root-and-branch strategic review. Clearly, you do not do that overnight, but we did We have now a new strategic policy going forward. identify that one-to-one advice and support was an We have very fundamentally restructured the area where we could do less and rely more on organisation, and it would be very helpful to talk to umbrella bodies to do that, supported, of course, by you about all those things. I would also like to record our own guidance. The guidance that we provide will my thanks to all our staff, because as you will see continue to be incredibly important, but what we are from our annual report, in terms of our performance, seeking to do is rather fewer of what I might term it has been a very good year; we have achieved a lot hand-holding responses. I think Sam will come in on against a very difficult background, so on behalf of the figures on this, but the traffic coming into the the board, I want to thank all my staff. Commission asking informal questions, whether by phone, letter or e-mail, is really quite considerable, Q3 Chair: May I place on record my thanks—I am and we wanted to stop doing that. sure that I speak on behalf of the Committee as a whole—for the work that the Commission has done Q5 Lindsay Roy: Good morning. How satisfied are in a very difficult period? Particularly, our thoughts you that the umbrella organisations can fulfil that are with your staff, who are suffering the effects of downsizing, and we realise that this is a very, very function—the one-to-one rapport? difficult time for the Commission, as it is for very Dame Suzi Leather: Mr Roy, you have put your finger many parts of the public sector. I hope that you will on a really important issue, and this is why I pass on our very best wishes to your staff. emphasise the importance of not stopping what we are Dame Suzi Leather: Thank you. That will be much doing overnight but moving gradually to asking the appreciated. umbrella organisations to do more. Certainly, many of them are facing the same funding problem that we are. Q4 Chair: We have quite a lot of housekeeping I think in the short term it is a difficulty, but our long- questions, but we think we may deal with some of term vision, as it were, is to build up the self-reliance those in writing rather than orally, because we have of the sector, to make those umbrella bodies stronger very many pressing issues that we want to press on and perhaps increase their membership, so they with. May I ask, to start with, about your resource become more resilient. cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 2 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Q6 Chair: What does that mean in practice? Q9 Chair: What effect on charities has the Somebody rings up and starts asking questions, and downsizing of your operation had? you say, “Look, you have to ring this person, and they Dame Suzi Leather: I think it probably has not had will deal with it”? How does it actually work? very much impact so far. However, I would say that Sam Younger: There are two forms in which we can we have noticed a reduction in the number of contacts do it. When people come to us, whether by telephone, from organisations. Having said that I do not think e-mail, via the web or whatever, we can have better that it has had a huge effect, I think the message is signposting to other sources of advice beyond what is beginning to get through that our communication with on our web that is not just straight back to us. That is the sector, or at least our regulatory touch, certainly one element. The other is working more positively to in an informal-advice-and-guidance sense, will move develop a strategic relationship with a number of up from contact one-to-one with individual umbrella bodies, so that they are in a better position organisations to the umbrella bodies. That may be to take this on and avoid things coming to us in the driving some of the decrease in contacts with us. first place. In answer to Mr Roy’s question, one thing that was Q10 Chair: In terms of your staff redundancy striking in the context of our strategic review programme, how have you ensured that you hang on consultations was that the umbrella bodies expressed to the people and the skills that you want, rather than quite a positive wish in principle to take on some of some of your best and brightest taking the opportunity these areas of contact with and advice to their to accept redundancy and move on to something else? members. I think it is also important to remember with Sam Younger: In the context of our strategic review, umbrella bodies that we are not just talking about half we have run two voluntary exit schemes so far. a dozen large national organisations; there are a lot of Obviously, voluntary exit schemes are not targeted in sub-sectoral umbrella bodies, such as the Almshouse Association or the National Confederation of Parent the sense that the management says, “These are the Teacher Associations, that we have been working with people we wish to go”; they are volunteers coming over some years to make sure they are in a position forward. There was a clear management decision early effectively to give advice that arguably is better suited on that said, “If we are going to lose as many as the to their members than the more generic advice that we 140 or so people we need to lose, we need to make could give. this as voluntary as we can, in terms of our ability to operate and manage the organisation, staff morale and Q7 Lindsay Roy: You are being asked to do more so on.” When those expressions of interest in with less. To what extent has professional training and voluntary exit come in, it has always been open, and development been incorporated within the plans of the in a number of cases the management have said, “No, umbrella organisations? we are not allowing this application to go forward”. Sam Younger: In terms of the umbrella organisations, Largely, that would have been a matter of wanting to we are still at quite an early stage of the discussions keep not just particular talents, but people in areas about how they might take on more, but as we develop where, if we had allowed somebody to go, we would those relationships with umbrella bodies, I think we simply have been paying public money for them to go will certainly want—it is not exactly training—to and then having to recruit externally because it was a make sure that we have a privileged relationship, or specialist skill, for example. they with us, in terms of understanding what the I think in a voluntary exit scheme—I think this is how requirements are. In a sense, if there is a very long- it is proved—because of its voluntary nature, you do term vision, it is that our engagement is with 150 not keep absolutely everybody you would like to keep. umbrella bodies right across the breadth of the sector, Among those who leave are some whom you would rather than with 180,000 individual charities, but it is prefer to keep, and some whom you are content then incumbent on us to make sure that they are very should leave. I think that is part of the equation when well up to date with what the legal requirements are you look at the case for going down the voluntary exit as we see them, and that they keep us up to date with route as opposed to a voluntary/compulsory the kinds of things that their members are asking redundancy route. I am satisfied in terms of the way them. it has gone so far. We are not absolutely at the end of the road yet. At the moment, we are probably about Q8 Lindsay Roy: Surely you need to be satisfied that 20 to 25 short of the numbers that we need to get to they can fulfil the function. by the beginning of 2013Ð14, but I think the balance Sam Younger: Yes, indeed. For that reason, we want that we have got has maintained a spread. to make sure that we have a relationship, as indeed on We do have an added complication, because we are a smaller scale we have developed relationships with spread over different sites. You have the geographical other sub-sectoral bodies where we are convinced that location of where people go, and we are working they are capable of providing good advice. That said, through that in those final stages now, to see whether we need to be careful not to compromise our certain roles can be transferred from one geographical regulatory independence by allowing them to be in the location to another. We do not want to be in the position that, as it were, those that follow their advice position of potentially making somebody redundant in can rely on that and avert the possibility of regulatory one location while we are having to recruit externally intervention from the Commission. So we need to somebody of broadly the same skills and experience keep a firewall to that degree. at another. cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 3
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Q11 Kelvin Hopkins: The Commission currently when I raised this at the Charity Finance Directors’ receives all its funding from money voted by Group—to about 300 of them—it was audible around Parliament. I preface this by saying that I am not the room that there was not a great degree of making a suggestion, but have you explored popularity for the notion of £5,000 or £6,000, alternative models of funding for the Commission’s particularly in the current economic circumstances. activities? Dame Suzi Leather: Over the years, we have thought Q13 Chair: Is the idea that charities with large about getting our money in a different way. We could trading accounts should contribute something? It is not move to, for instance, a levy on the sector without still taking money away from charities, instead of primary legislation; we are not enabled at the moment using taxpayers’ money. to do that. When we have looked at the different Dame Suzi Leather: I think there is quite a lot to be funding models, the most attractive one would be a said for it, but it does need to be properly debated. In unit cost on each individual charity, perhaps with a response to the strategic review, some charities did threshold below which you would not ask for money. ask why we were not doing it now as a way of solving At the moment, on the register, I think there are just our funding problem. Perhaps it is not generally over 100,000 charities with an annual income of less 1 understood that we would not be able to do that now. than £10,000 . You might, for instance, want to There are these problems of capture that Mr Hopkins exclude those. We are trying to encourage the has alluded to, but this would be an ideal thing to be development of small, community-based looked at by the review of the Act. organisations, which are after all an important part of Sam Younger: There is one other aspect of it. Even if the big society. It would mean that perhaps you could we were to move towards having some form of levy ask the larger charities to pay a certain amount every on the sector, I cannot conceive that it would be done year—a few thousand pounds—and go down from there. I think it would be very difficult to get our without any form of control on what those levels funding, for instance, through asking charities to pay would be. It is not as though that would in itself, from to register their annual accounts with us. I think that our point of view, solve the funding problem, because would give out one message: if you do not register there would still need to be controls on what those your annual accounts, you do not have to pay the charges were and how they would move in the future. money. That would not be very good for transparency. Chair: Can we move on to campaigning and political activity concerning charities? Mr Halfon. Q12 Kelvin Hopkins: Is there not a danger of conflict of interest when charities are paying you to Q14 Robert Halfon: Good morning. Obviously, regulate them? Atlantic Bridge has been in the news recently. I know Dame Suzi Leather: Absolutely. This is something my colleague, Mr Flynn, is going to ask you in more that perhaps the review of the Act could consider. I detail about that, but could I just understand from you do not think there are any easy solutions to this, nor how you decide what is and what is not a charity? would it necessarily be the case that if we moved to a What are your criteria? different funding base we would have larger or more Dame Suzi Leather: In law, a charity is an sustainable funds, but many regulators are funded by organisation that has charitable purposes and is for the sector that they regulate. public benefit, both in terms of its purposes and how Sam Younger: I think it is important to make a it behaves day to day. Parliament has laid down what distinction between something that is an automatic those charitable purposes are. levy on registered charities, and something that might be payment for services. I think if we went down the Q15 Robert Halfon: Can you explain what those payment for services route, we would be in danger of charitable purposes are? creating a customer-supplier relationship, rather than Dame Suzi Leather: Yes, there is a list that includes, a regulator-regulatee relationship, if I can use that for instance, advancing education, advancing religion, phrase. promoting animal welfare, protecting the As Suzi says, when we put in the case for funding for environment, arts and museums and so on. It is quite the last spending review, we outlined a possible model a long list, laid out in the 2006 Act. for a levy on the sector. Just for illustration, some of the figures that went in there were saying that, if we Q16 Robert Halfon: Can you explain why you were looking to raise broadly the amount of public decided that Atlantic Bridge should not be a charity? money we had at the time, which is higher than we Dame Suzi Leather: We conducted our investigation will have in the future—this was about £30 million of Atlantic Bridge in 2009 to 2010, and published our per annum—one of the models, just to give an idea of report on that in 2010. We were looking at whether it the order of magnitude, was to exempt charities with was an organisation that was capable of being a an income of under £250,000 from any payment. charity—whether it had been rightly registered—and, Above there, it would range from £300 for charities of between £250,000 and £500,000, up to £6,000 for in carrying out its activities, whether it behaved like a those of £5 million plus. I remember that last winter, charity. We concluded that it was capable of being a charity. It was set up as an education charity. For an 1 Note from witness: As at 30 September 2011, there were education charity, case law requires a certain amount 70,522 charities on the Register of Charities with an income of, for instance, balance, but case law also requires below £10,000 per annum. http://www.charity- commission.gov.uk/About_us/About_charities/ that charities remain insulated from party politics. factfigures.aspx They cannot support different political parties or align cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 4 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE themselves, or run the risk of being seen to align connected with the centre-right. Could you answer themselves, with political parties. that? Sam Younger: I do not see any evidence of that Q17 Robert Halfon: Could you then explain why myself. you allowed the IPPR to be a charity, for example, which is clearly an organisation on the left aligned Q21 Robert Halfon: My colleague has just given with many people in the Labour party? you one, with the IPPR and the Centre for Social Dame Suzi Leather: Most think-tanks, which I guess Justice. is what you are referring to, are education charities. Sam Younger: Obviously I cannot answer an There are some think-tanks that are not charities and individual case, but what I see is— do not wish to be, or wish to have to behave as charities. Where a think-tank is a charity, it has to Q22 Chair: The Smith Institute was a charity and maintain balance and a degree of neutrality. It cannot you withdrew charitable status from it. align itself with a political party. Sam Younger: Yes.
Q18 Robert Halfon: I accept what you say about the Q23 Chair: That is on the left. I think the problem rules and so on, but I cannot see any difference with we have here is that this is a very subjective process, the IPPR, because they have links with the Labour isn’t it? party and people who work for them are former Sam Younger: There is a judgment to be made. Labour party people. Why is that classed as a charity, when something like Atlantic Bridge and other Q24 Chair: Will you have suggestions for the organisations are not? legislation to make this less subjective? Sam Younger: I think I am right in saying that when Dame Suzi Leather: I think it is one of the areas that the investigation of Atlantic Bridge was done, part of is really difficult for the Commission, because what the reason it was determined that Atlantic Bridge was case law says is that charities cannot promote a not carrying out activities in line with its charitable particular view in an area that is not uncontroversial. I purposes was that there was no evidence of research think that is the actual wording; Mr Elphicke probably that was being published and widely disseminated. In knows it better than I do. I think that is a difficult area this case of an IPPR, it would not be quite like that. for the Commission. Over the years, we have had It has come up in a number of discussions we have quite tricky questions raised about particular think- had, and is still coming up, in terms of applications tanks, and they have not been completely on one side for registration over the last year, since I have been at all; it has been much more mixed than that. It is a there, one or two of which we have actually rejected, controversial area. I have suggested that we have a saying, “This is getting too close to being political.” look at think-tanks generically in the next year or so. It is fair to say that it is a very thin line, and it is one I think, in the context of requiring information from that I would say is worth discussing in the context of think-tanks, it might be worth considering a bit more the review of the Act, in terms of whether greater transparency about sources of funding, because when clarity could be brought to it. you are drawing these very difficult lines, where organisations are getting their funding from may help Q19 Charlie Elphicke: IPPR is a left-wing think- you make those difficult judgments. tank that is well known, but it does education. I acted as the advisor to the Centre for Social Justice as a Q25 Chair: The Tax Justice Network—I should lawyer with an understanding of charitable law, and declare an interest; I am on the Council of St Paul’s put the case for charity status for that. They said that Cathedral—are now arguing that St Paul’s Cathedral was political. My clear impression as a lawyer was is compromised because most of its donors are that there was a cause-related issue with that within connected with City institutions. It is very dangerous the Charity Commission. Can you explain why the to look at sources of funding as a determinant of the Centre for Social Justice did not get charitable status, independence of an institution. whereas IPPR, the Smith Institute and places like Dame Suzi Leather: It is not straightforward at all, that do? but I think it is worth considering. Sam Younger: I cannot speak for that individual case, because I do not know the detail of it. All I would say Q26 Robert Halfon: Moving away from think-tanks is that from my experience I see no evidence within and on to charities in general, you say that charities the Charity Commission of any partial view of this. are not allowed to have a political purpose. How easy You have got people genuinely struggling with what is it to make the distinction between an organisation is a difficult issue to determine about that line. that campaigns, or spends most or a substantial Normally, it is a line between what is education and portion of its money on campaigning, to change what slips into political activity, and I acknowledge legislation as part of its activities, or criticise or that that is a difficult and a thin line, and there are a support the Government or Opposition in one way or lot of discussions around it. another, and one for which this is a main activity? Dame Suzi Leather: Charities may campaign so long Q20 Robert Halfon: There is a view that you are as it is in keeping with their charitable purpose, and more lenient to so-called charities on the left, and so long as they do not give a general endorsement to much harsher with those that are regarded as a particular party. cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 5
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Q27 Chair: If an aid charity is campaigning against Q32 Robert Halfon: Would you not accept that your free trade, is that not political activity? Is that not decision on whether something is a charity or a straying into politics, and is that what people expect a pressure group is pretty subjective, and that there are charity to do? many people who could argue that many of the Sam Younger: The important distinction is that the organisations that you class as charities are in fact purposes must be exclusively charitable. Change in pressure groups? There is nothing wrong with having legislation is not a legitimate charitable purpose; that a pressure group—that is fine—but they get charitable is a political purpose, but in support of a charitable status for all the tax benefits, et cetera, that brings. purpose, both campaigning in general terms and what Sam Younger: Undoubtedly there is a judgment that is defined as political activity—looking for, for has to be made, and sometimes quite a fine judgment, example, changes in legislation—are legitimate in and to that extent it is subjective, but it is based on support of those purposes, so long as it is in support what the law says. The other difficulty—an important of those purposes. one to recognise—about the registration of charities is Just going back to the think-tanks, I was quite struck that you register charities on the basis of their by somebody making that distinction in a discussion charitable purposes at the time of registration and about charities not very long ago. Particularly with what they say about their activities. We are not a think-tanks again, there is a concern that it is much licensing operation that can then subsequently say, easier to identify the campaigning that is in support of “Well, actually, we do not like the way—” a charitable purpose when the charitable purpose is one of service delivery of one kind or another, where Q33 Chair: Except you want to look at their sources the campaigning is very much linked to it. It is less of funding. easy where you have got something that is intellectual Dame Suzi Leather: I want it to be considered in the property that you are developing, rather than services. case of think-tanks. Chair: Last question, very briefly. Q28 Robert Halfon: Many of the bigger Tesco-type charities, as I call them, spend most of their money Q34 Robert Halfon: Well, it is sort of one and a half, on political campaigning, Shelter being a classic Mr Chairman. Are you able to provide the Committee example. Why is that regarded as perfectly okay, but with a list of organisations to which you have refused a political think-tank possibly is not regarded as a charitable status, and give the reasons why? charity? What is the difference? If a so-called charity Dame Suzi Leather: Yes. is spending most of its time on campaigning rather Sam Younger: Yes, we certainly could. than providing charitable services, why is that Robert Halfon: My final question— regarded as a charity? Chair: I have given you long enough. Dame Suzi Leather: In the case of the think-tank, it has education purposes and must carry out those Q35 Robert Halfon: That was just to ask for purposes in a balanced way. In the case of Shelter, its information. I have one quick question. Do you agree beneficiaries are people who may be homeless, so it that an organisation that derives more than 10% of its income and more that £1 million from the is carrying out its campaigning in support of its Government, while also lobbying the Government, beneficiaries and in keeping with its charitable has questionable aims as a charity? It should not get purpose. money from the Government and then lobby Government; that is what I am saying. Q29 Chair: It is very easy for somebody to set up a Sam Younger: I do not see the connection between charity and use it as a cloak for political campaigning. the two. I am not accusing Shelter of that, but it would be quite Dame Suzi Leather: No. Can I just be quite clear on easy to do so, wouldn’t it? what we are being asked for? I do not think it was a Dame Suzi Leather: It is perfectly acceptable for list of all the charities we have turned down. charities to campaign in promotion of— Chair: We will write to you. I am going to short- circuit that. Q30 Chair: Do you ever pull up a charity, saying, “You are doing too much politics and not enough of Q36 Paul Flynn: Did the Commission investigate the your core purposes?” allegation that Atlantic Bridge was using taxpayers’ Sam Younger: It is fundamentally not for the money for a political purpose? Commission to tell trustees how they should run their Dame Suzi Leather: When we carried out our charities, so long as the political activity or the investigation, what we were looking at was whether campaigning is clearly in support of an exclusively Atlantic Bridge first of all was capable of being a charitable purpose. charity and had been properly registered, and secondly, whether its activities reflected its charitable Q31 Chair: This is a matter for legislation, isn’t it? status. Sam Younger: It is certainly a matter for review of Paul Flynn: So the answer is no. the legislation. Just going back to your earlier remark, Dame Suzi Leather: And we were absolutely clear I think there is a case for looking at different forms of in our— organisation that may deserve certain privileges but are in rather different categories. I think getting those Q37 Paul Flynn: You did not look at the allegation, categories right is important. made as long ago as 2009, that Atlantic Bridge was cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 6 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE using taxpayers’ money for a political purpose? You absolutely pulled up by the Charity Commission. It have been criticised by a past Chair of the was clear that they could not continue any longer. Commission for failing to carry out a full They had to cease all their activities, and they investigation into all aspects of the initial and other subsequently decided, as is their legal entitlement, to complaints. Is this fair criticism by Geraldine close the organisation. Peacock? Sam Younger: No, I do not think it is fair criticism. Q41 Paul Flynn: You directed them to have a look You ask whether we looked at them using taxpayers’ at their activities and to review the governance of the money; of course, it is not for us to look into the issue charity and report back to the Commission within two of tax. That is for HMRC. What we were looking at months. Have they reported back to you? was whether it was using the resources it had, Dame Suzi Leather: In the period that we gave them, wherever they came from, for charitable purposes. We they were carrying out, as I understand it, no activities did a thorough investigation of that and concluded whatsoever. They were looking at the requirements back in 2010 that the activities that they were and the recommendations we had made, and they then undertaking were not in line with their charitable decided to close the charity. They are legally entitled purposes. We came out and gave the trustees 12 to do that. months in which to sort themselves out, and they ultimately decided that they would deregister. Q42 Paul Flynn: And to get off scot-free, without any responsibility for breaching the rules that you Q38 Paul Flynn: Did it occur to you that a so-called have identified, and possibly breaching other rules? Is charity set up by Liam Fox and supported by William the fact you can close down a charity and then escape Hague, George Osborne and Michael Gove might without any responsibility a satisfactory situation? possibly have a political purpose? Sam Younger: There are two elements here. The Dame Suzi Leather: We have already discussed what winding up of the charity is one. There is a further difficult territory this is. It is also the case that think- possible area of investigation, which for us would be tanks can be bona fide education charities. The crucial dependent on the evidence, which is if you identify thing is whether their objects are right and whether what is effectively a fundamental dishonesty in the they are carrying out those objects in practice— running of a charity, and there seek restitution of whether their activities reflect their charitable objects. funding. It is a very high hurdle of proof, and it In the case of Atlantic Bridge, they absolutely did not. requires the Attorney General’s consent to pursue it. If we see significant evidence that that is the case, we Q39 Paul Flynn: Are you aware of what the Chief would look at it again. Executive of Atlantic Bridge in America said about the British Atlantic Bridge? She described it as a shell Q43 Paul Flynn: Have you not got the evidence game, which is a game of deception—a confidence already? Have you not been criticised for failing to trick in which a stone is put down, covered by shells, carry out your responsibilities and answering the full and people have to guess where the stone is. That complaint? One is tempted to ask: are these people seems to be a complete admission that Atlantic Bridge too big and too important to pursue? was being used for the purpose alleged in the Sam Younger: No, I do not think that is the case at complaints—to divert taxpayers’ money into political all. I would very much say that the action the ends. You had this from the highest authority you can Commission took was proportionate as a regulator, get it from—the Atlantic Bridge in America. and the right action to take with that organisation. It Dame Suzi Leather: Mr Flynn, I would encourage was to take them to task, given that complaints had you to look at the report that we published in 2010, been made, and to say that they had charitable because I think that very firmly criticised the charity, purposes capable of being carried out for public and very firmly said what they had to do, and in the benefit, and that they must put their house in order light of that they decided to cease all their activities and do that. They chose to stop being a charity. Unless and have since wrapped up. there is very compelling evidence of fundamental dishonesty, I think that is the proper role the regulator Q40 Paul Flynn: They fled the scene; they disbanded should provide. last month. Their excuse for whatever bad behaviour concerned was that they were ignorant of the rules. Is Q44 Paul Flynn: Isn’t the message you are sending that correct? They did not understand. I mean we are out to any charity—we know that many of them are not talking about a charity run in the village hall. involved with fraud and dishonesty—that what they These are the most powerful people in the land who should do is just close the charity down, go home, said that they were ignorant of what they were hide their heads under the pillow and soon it will be actually doing in running this front for the forgotten? Is that the message? This is the message Conservative party. Well, that is unfair—a front for you have given to Liam Fox, George Osborne and the right wing of the Conservative party. the rest. Dame Suzi Leather: That is what they claim, and to Sam Younger: I do not think it is the message we give be fair, this is— at all. We have plenty of investigations going on into Paul Flynn: Complete ignorance? areas of fraud. Of course, fraud itself is a criminal Chair: Let her answer, please, Mr Flynn. matter for the police rather than for us; what we are Dame Suzi Leather: It is a very complex area of supposed to look at, and need to look at, is whether a charity law, but I think it is also clear that they were charity is capable of being carried on in line with its cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 7
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE purposes for public benefit. That is what we did in Paul Flynn: It may well be, but we have to get to the this case. I do not think there is any such message. bottom of this. Chair: I agree with that. Q45 Paul Flynn: Are you not concerned by what the Chief Executive of the American branch says of it? Q49 Paul Flynn: It is the most prominent case of a She described the charity, Atlantic Bridge, as virtually charity winding up when they are under pressure from a confidence trick. Should that not be a matter that the Charity Commission. It sends out ripples that causes you some alarm? There seems to be no mean that smaller charities will see what has evidence that this was a charity in any way that most happened with Atlantic Bridge, and if Atlantic Bridge people would recognise. It was used as a front for can get away with bad behaviour, it means that using money under questionable headings. Sources are everyone else can. Have you seen Geraldine absolutely vital. People do not give money for causes Peacock’s complaint? How do you respond to it? She with which they disagree. I disagree with what the is saying, as somebody who did the job before, that Chairman said; of course the source of the money is your response in dealing with the complaint did not important, and the sources are pretty questionable in deal with important parts of it. this case. Is it not something you should look into Chair: Can you conclude your questioning, Mr when you have a prominent charity run by powerful Flynn? people who behave in this extraordinary way, running Paul Flynn: Okay. a non-charity? Dame Suzi Leather: She made all sorts of allegations. Dame Suzi Leather: I think the quote that you have Just before I took office, I made a point of going to given us does clearly reveal a cynical opportunism. see Geraldine to talk about the Commission and how The question for the Commission is whether the it carried out its work, and whether she had any organisation is set up to be a charity—whether it is concerns, general or particular, which I think is a capable of being a charity. Then there is the second sensible thing to do when you take office. She did not question about whether it is actually behaving as a give me any indication that she had the kinds of charity. We could not have been clearer that it was not general concerns that she has given in that interview. behaving as a charity. The upshot is that it is no longer I find it puzzling and confusing. It seems to me that a charity on the register. what Mr Flynn is raising is a point about the Commission’s powers, and that is perhaps for the review of the Act, rather than for us to comment on Q46 Paul Flynn: I am not sure I gave you the quote, now. but the quote from Amanda Bowman is: “When Paul Flynn: I am grateful to you. events occur in America, expenses are paid by the Atlantic Bridge Inc (US), run by Scott Syfert. If a Q50 Greg Mulholland: I think this will be helpful British citizen wishes to attend an event in the US, for us in working out if there is an issue with your and prefers to give a donation in GBP, the UK charity remit. One of the things that is very unsatisfactory in will accept the donations on behalf of Atlantic Bridge this case is that the destination of Atlantic Bridge Inc.” That sounds very much like a confidence trick— assets has not been disclosed. On the basis that they a way to disguise funding. That is why Amanda were charitable donations to a registered charity, and Bowman is saying this as the Chief Executive of therefore treated in a very specific way, are they not Atlantic Bridge, American end. obliged to do so? If not, is that a failure in the system? Dame Suzi Leather: I completely accept that Atlantic Dame Suzi Leather: We are in contact with the Bridge was not behaving as a charity. That is why we charity trustees about precisely this matter, and you took the action we did. I think it is a credit to the are absolutely correct. Our understanding at the regulation of charities here that it is no longer a moment is that when they have paid all their charity. The message that goes out to charities is, “You liabilities, tax and otherwise, they will be left with a are not going to get away with it; the Charity very small sum of money. The plans that they have to Commission will come down on you.” give that money to another charity with similar purposes is one that we will look at, and we should Q47 Paul Flynn: No, the message is exactly the be satisfied. opposite of that. It is: “You will get away with it.” They have got away with it by closing it down, by the Q51 Greg Mulholland: And all that will be fully sound of it. You are washing your hands of this. The made public? statement you made in answer to the complaint from Dame Suzi Leather: Yes, of course it will be. Geraldine Peacock was, I understand, that, “We Sam Younger: There is a distinction between what consider that in this case the nature of our happens to the assets on the charity winding up, and investigation was appropriate to the concerns about any question of restitution of previous donations to the the charity”, and that is the end of it. charity on the grounds of any fundamental dishonesty, which is that higher threshold I spoke about before. Q48 Chair: May I interject at this point? Is that not That is a separate process. a complaint from Mr Flynn about the nature of your role as prescribed by legislation, rather than a Q52 Chair: Can we move on now and look at the complaint about the conduct of the Charity Charity Tribunal decision on public benefit and the Commission? charitable status of independent schools? The 2009 Dame Suzi Leather: Correct. guidance was taken to judicial review, and it was cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 8 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE described by the judge as prescriptive and At the same time, in defending the Charity interventionist. This judgment was referred to the Commission’s guidance, which was heavily consulted Charity Tribunal, which ruled that the Commission’s on at the time, and had pretty widespread approval guidance on the adequacy of provision for the poor and endorsement at the time from those with whom was not clear, and that the number of bursaries and we consulted, when it is picked apart for clarity by a the level of bursaries available to pupils who could court, that is fine, but of course it was written to try not otherwise afford the fees should not be the only to be understandable to trustees, and not written as a test of whether an independent school was acting in legal document. the public benefit and therefore qualified for charitable status. This guidance was a big mistake, was it not? Q55 Chair: That was a mistake, wasn’t it? Dame Suzi Leather: First, the Tribunal says in its Sam Younger: We need to be careful when we try to judgment that it has every sympathy with the Charity provide clarity on the basis of the judgment that we Commission for having to provide guidance in this actually provide clarity. very difficult area of charity law. Q56 Chair: Why is it that the charity commission Q53 Chair: Yes, but it was the wrong guidance, in Scotland did not get into a similar dispute with wasn’t it? independent schools in Scotland? Dame Suzi Leather: I absolutely accept that there are Dame Suzi Leather: Because the law is different in parts of the guidance that we must amend in the light Scotland. of this judgment. The judgement, however, does uphold the Charity Commission in important legal Q57 Chair: So have we got something to learn from respects. First, it confirms unequivocally, and I think the law in Scotland to avoid this kind of dispute? for the first time, that charities must make some Dame Suzi Leather: I think when the 2006 Act is provision for the poor—for people who cannot afford reviewed, looking at what has been the impact of the the fees. That is significant and important. That level English and Welsh requirement and how it is different must be above what they call de minimis or tokenistic, in Scotland would be quite useful. There is a different and how charity trustees provide that is up to them. test—an activities test—in Scotland; it is a purposes We have always said that; we were absolutely clear in test here. our guidance. You do not have to provide bursaries; you do not have to support an academy; it is up to Q58 Chair: So would it be better if there was an you how you do it. These crucial legal aspects—that activities test applied, rather than a purposes test? you must provide provision for the poor both in your Dame Suzi Leather: That is not for us as the regulator purposes and in how you carry out those activities, in England and Wales to say. but that it is absolutely up to trustees how they do that—have been clarified, and I think that is helpful. Q59 Chair: There is an impression that the There is a great deal that, as a result of the judgment, legislation may have been framed in order to foment is not clear, and the judgment itself apologises for a dispute with the independent sector. being unable to bring greater clarity. There is no Sam Younger: Our view as the regulator would be the objective test, even for the de minimis or tokenistic more clarity we can get in law, the better. The element level that the judgment refers to. of the law clarification that we got out of this judgment that I think is very helpful says that, in order Q54 Chair: But speaking personally, you do to be a charity operating for public benefit, there must be—in the case of independent, fee-charging schools, recognise that independent schools are entitled to be because that is what the judgment is limited to—a charities? benefit beyond to those who can afford to pay the high Dame Suzi Leather: We have, of course, always fees, and that must be above a de minimis level and recognised that independent schools are very not tokenistic. That much is clear, but what is not clear important charities, but they have to behave as is what that public benefit needs to be. Were there to charities. With this judgment, we now have absolute be a possibility of that being clearer in a clarity about the need to provide for people who reconsideration of the law, that would obviously be cannot afford the fees but it is at a de minimis or just helpful to us as a regulator, because as it is, although above level. It is for the trustees to decide that. it is the case that this is very much up to the trustees, Sam Younger: I just wanted to add something. You I cannot see that in the future we are going to be referred to the Tribunal saying that there needed to be able to avoid being sucked in. If somebody makes a greater clarity. It is a difficult area to be clear in. One substantive complaint that a school is not operating of the things that I accept about our guidance is that for public benefit, it is something we will have to look we need to be clearer about the decisions being for at and make a judgment on. the trustees. It is quite interesting to note that it is there in the guidance; it says it is not a matter for the Q60 Chair: When you knew this was leading to a Commission to say whether you should do bursaries; legal dispute, you must have taken advice and been it is up to the trustees, and the bursaries are an told what the issues in doubt and in contention would example of how you could do it. Nevertheless, I be. Would that not have been a better time to withdraw accept that the way the guidance has been taken has your guidance or to declare that you would revise your been to focus very much on bursaries, and we need to guidance, rather than wasting time and money in the be clearer about saying, “This is a matter for trustees.” courts? cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 9
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Dame Suzi Leather: We have always been confident The judgment rather clearly says, in a sense, “This is that we have got the legal principles right. going to please no one on the political divide on this, and must eventually be answered by Parliament—not Q61 Chair: Well, you got them wrong. the courts and not the Charity Commission.” Dame Suzi Leather: No, we have not. The judgment has upheld them. That is why I am saying that it is so Q67 Chair: So the legislation is not clear enough. helpful that we now have the Tribunal in the judgment Dame Suzi Leather: I think we now know, as a result very clearly saying for the first time that charities must of this judgment, what the 2006 Act means. We have make provision for the poor. greater clarity about that. It is up to Parliament whether what it means is what Parliament wants. Q62 Chair: Yes, but that was clear from the legislation. It was the manner in which you were Q68 Paul Flynn: In a previous session of the prescribing schools to make provision for the poor Committee, the Chairman had to apologise. I think it that seemed to be the problem. is up to me to apologise, perhaps, for the Chairman Dame Suzi Leather: No, the difficulty we have imputing a motive to you, Dame Suzi, of which you always had in providing the guidance—we have to have been widely accused by the Daily Mail, entirely carry out that statutory responsibility—was that we unjustly. Do you think the savage cut to your were looking at case law since, I think, 1767, and department has any explanation other than political rather sparse case law, and trying to tease out of that malice? what are the general principles. Now we were Dame Suzi Leather: I do not think that we have, as a confident, because we had done this so carefully and Government department, been singled out for different consulted so widely, that we had got this right. We treatment. We are facing exactly the same stringent have been upheld in that. What the Tribunal does not budgetary constraint that other departments are. I do think is correct is that the wording of our guidance not think this is politically motivated; of course I do seems to imply that trustees have to provide a not. reasonable amount of benefit for people who cannot Sam Younger: The thing that I think disappointed me afford the fees. It is that implied reasonableness test— about the settlement, having just come in, was not so much that we were going to take a significant cut, Q63 Chair: Your guidance was much too because many other departments were doing that, but prescriptive. It was much too definitive. that absolutely everything the Charity Commission Dame Suzi Leather: If you say the requirement to be does was considered by Government as administrative reasonable is too prescriptive, then it is too expenditure. Even investigatory work was considered prescriptive, but I am not sure that most people would administrative, and I think that went across all think being reasonable meant that. regulators. That is the bit that we felt a little bit disappointed by, if anything. Q64 Chair: I think that was the point at issue. This Chair: It is a very disappointing time for the public dispute could have been avoided if you had been a sector generally. Let us go on to compliance little bit less prescriptive. investigations and enforcement. Dame Suzi Leather: We really have not been prescriptive about this, because we have never said Q69 Charlie Elphicke: Dame Suzi, a few moments that trustees have to provide bursaries or have to do ago, you spoke of the public benefit criteria in the partnership working with schools. Charities Act 2006, and you said that it was about poverty. Can you tell me how public benefit is defined Q65 Chair: Then why did the judge say that you precisely in the 2006 Act, and where the definition is? were prescriptive and interventionist? Dame Suzi Leather: Of poverty? Dame Suzi Leather: We have always said it is up to trustees. Please read the guidance. Q70 Charlie Elphicke: No, public benefit. A few moments ago, you said that we have to look at public Q66 Kelvin Hopkins: I take a different view, and the benefit; that it is in the 2006 Act; and that it is about Chairman will not be surprised by that, I am sure. I poverty. What is the definition of public benefit in raised this with you and Sam Younger’s predecessor that Act? in the previous Parliament. I cannot persuade myself Dame Suzi Leather: Sorry, you misunderstood me. I that public schools are charities, and the Government referred to the requirement in the Act that we provide clearly want to subsidise them by tax relief. You guidance on public benefit. cannot comment politically, I appreciate, but if the Government want to subsidise private education, they Q71 Charlie Elphicke: Where is the definition of should be upfront about it and say, “We are giving a public benefit in that Act? Is it defined? subsidy to private education,” and that would be a Dame Suzi Leather: No. As you know, Parliament much more honest way of doing it. declined to define public benefit. Chair: Isn’t that really your view, Dame Suzi, Chair: This is a feature of modern legislation, is it personally? not? Dame Suzi Leather: My view is that we should uphold the law. That is what we have tried to do all Q72 Charlie Elphicke: Okay, so you provided along: to provide guidance on what the law is, and guidance. In terms of the cases you took, or chose to then to uphold it. I go absolutely no further than that. take, you have discretion as the Charity Commission, cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 10 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE do you not? In terms of compliance and enforcement, would be on children’s ability to find loving homes. is it or is it not the case that the Charity Commission The answer was it would not make that difference. In has discretion as to which cases they take? fact, opening up to the widest possible list of potential Sam Younger: Yes, cases are taken up according to parents was regarded as in the child’s interest. I should our risk framework. also point out that, when the High Court in 2010 looked at the appeal to them, they actually said that Q73 Charlie Elphicke: So it was your decision to respect for religious views could not be a justification take the cases on the public schools, which we have for discriminating in the way that Catholic Care just dealt with. Was it also your decision exercising— wanted to, because of the public nature of adoption Dame Suzi Leather: Sorry, I think you have work. I think that is rather important—that it actually misunderstood. When we were providing the came from the High Court. guidance, we looked at all the case law. It is my understanding that we looked at all the case law. We Q78 Charlie Elphicke: Nevertheless, we also have did not selectively choose which cases to include, and to look at outcomes. You have discretion; we have to we provided a legal underpinning to the guidance that look at outcomes. The outcome is that adoptions have we published at the same time as publishing the halved in the last few years. Is that not a tragedy? guidance. Sam Younger: There are two things. First, again, this Sam Younger: I think there are two separate things. area is not one of discretion, because we are not When complaints come to our attention of one kind talking here about compliance cases and complaints or another, whether from another agency or a member coming to us. We are talking about an organisation of the public or whomever, it is within our discretion, requiring the Charity Commission’s permission to do according to our risk framework, to decide what something, so it is not optional for us to get involved action we take on that. There was a separate process in that and make a judgment on what the law requires. that was undertaken some time ago in relation to That was the judgment that was made, and that public benefit, looking at how a random sample of judgment has been upheld by the court. institutions across the board operated under public benefit. That was a different line. Q79 Lindsay Roy: Is it not the case that we need a major review in terms of engagement and Q74 Charlie Elphicke: I understand. The other intervention? We have this polarisation: on the one celebrated case in this area is that of the Catholic hand we are saying in relation to independent schools adoption agencies. Again, was it or was it not a matter that it is too prescriptive, and on the other hand we for the discretion of the Charity Commission as to are saying that evidence can be highly subjective. In whether to take action in that area? other words, there needs to be a matter of judgment, Dame Suzi Leather: No, because Catholic Care whereas in other cases it seems to be very crystal clear applied to us to change their objects, and therefore we and over-prescriptive. had to respond to that. Sam Younger: There will always be, it seems to me, matters of judgment, whether it is judgment about Q75 Charlie Elphicke: And was that under the registration or risk. Clearly, from our point of view, public benefit criteria? the greater the clarity there is in the law that we are Dame Suzi Leather: No. implementing, the better. Chair: There is a very clear message that is coming Q76 Charlie Elphicke: Or was that purely under the through from all these very contentious areas that you discrimination laws? are dealing with: very general legislation, relying on Dame Suzi Leather: No, it was nothing to do with— very detailed interpretation at the front end, is leading Sam Younger: The discrimination laws and the you into very contentious areas, and is leading people Human Rights Act would have been the areas in play to question the judgment of the Charity Commission in the case here, rather than public benefit. There is on all fronts. You are getting criticism from all sides this judgment; I know it is being appealed at the of the political spectrum on these areas. I think we moment. It is this question of a proportionate response will be very interested in perhaps a written assessment to a legitimate cause; that is what it turns on. from you about your risk-based approach, how you deal with complaints, and your view of how the Q77 Charlie Elphicke: Many people will say that legislation could be improved as we go through this where you are targeting your risk-based enforcement review, if you have a house view; if you do not have is not right. We now have a situation where there are a house view, perhaps you have individual views. only 60 adoptions in the country, and people point to the Charity Commission and say, “They have stuffed Q80 Lindsay Roy: Do the criteria need to be more a whole load of children into care who could have robust? been in a family who had a stable, good life. They are Sam Younger: You look at the cases that are coming going to have a rubbish life, and the Charity in, and I would say the Commission has been robust Commission is responsible for that.” What would you in its approach, but it needs to be proportionate both say in response to that concern that people put to me? in terms of the resources it puts in and the judgments Dame Suzi Leather: Absolutely the opposite is the it makes. Those judgments are always open to case. Indeed, when we looked at this the second time, challenge—that is the nature of the 2006 legislation one of the things we were careful to do was to ask putting in the Charity Tribunal—and that is how it local authorities what impact, in their view, there should be. One of the themes of our strategic review, cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 11
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE looking at how we adapt to having a smaller resource it is how you exercise your discretion that is really base, is to say that we need to be better at making key here. decisions in a lot of areas in a more timely way, and Sam Younger: As you have suggested, there are a have the right resources going into them, while couple of areas to be addressed in the review. One is recognising that that can be challenged. We are often about powers in relation to disqualification of trustees, talking about areas of judgment where one set of and the other is some of our powers of information people can take one view, and on the same evidence exchange with other agencies and powers to require another set of people can take a slightly different view. information, but not, I think, very major ones. I think In a sense, that is a nature of these difficult judgments; one of the things that it is always important for us to they are at the margin, and there is a case that can be remember as a regulator is that we are there to made on either side. It is the nature of it being regulate the governance of charities. We are not a difficult. prosecutor; we are a civil regulator, and issues of criminality, for example, are for other agencies, not Q81 Greg Mulholland: We are talking about the for us. review that is coming up. This is a very timely Dame Suzi Leather: There is one area—the regulation session, with the independent reviewer being of common investment funds—that falls to us at the appointed on 5 November. You have given us some moment, but that we think much more properly brief but helpful comments about what the belongs to the Financial Services Authority, so that is Commission sees as potential ways forward. We have an area where we want to have some of our clearly dealt with the issues, and you have very clearly responsibility taken away from us and put somewhere said that you want to review the definition of charity, more appropriate. charitable purposes and public benefit requirement. Very clearly, this session has shown that that is right. Q83 Charlie Elphicke: Let’s look at investigation In terms of the review, how could it change the scale and enforcement. I have read your Charities Back on and breadth of the Charity Commission’s statutory Track 2010–11, and you say that the scrutiny of the objectives, functions and duties? Are you feeling that accounts of charities that were targeted for compliance you have to make certain decisions on those duties included high administration, high support or because of the funding cuts that you face? administration costs, low expenditure on the charity’s Sam Younger: In terms of our funding cuts, the area purposes, and high staff costs. Can you tell me where that relates most to the review of the Act is the fine- the issue of how these issues are to be dealt with is to toothed comb we have taken through all these areas be found in your strategic plan? There are two points where the Commission has to give consents and of the section concerned. permissions. To reduce incoming demand to ensure Sam Younger: In our strategic review, we have looked that we have got resources there to do the at where we need to devote our resources. In the investigatory work—the key regulatory work we do— things that you have said there, we need to be careful we are looking at where the areas are where we could that we are not drawn into telling trustees how to run withdraw from having to give formal permissions. We their resources. We have a significant role, in terms of are reducing demand to some extent through the information required from charities in their annual technology and improving the process of that, but part return, for that to be transparent, but it is not up to us of our agenda for the review of the Act—the Office to tell a charity, “You should spend more on for Civil Society are well aware of this in advance of administration”, or “less on administration.” finalising the terms of reference and the reviewer—is that there are a number of areas, particularly in terms Q84 Charlie Elphicke: It is taxpayers’ money, of of the disposal and purchase of land by charities, course it is. It is absolutely a prime interest; it is where we think there is not sufficient added value in public money. the Commission’s involvement—that we could pull Sam Younger: That is not our role. back there. So that is where the two are probably Charlie Elphicke: It is abuse of public money that linked most closely. we are talking about. Sam Younger: But that is not the role of the Q82 Greg Mulholland: And where do you think you Commission as regulator. Look at the judgment, for need more powers? One of the things you mentioned example, on public benefit coming out. It is saying, was trustees’ disqualification, so that is one issue, but “These charities are for trustees to run.” One of the are there other areas where you feel that the things that we are pulling back from a little bit is Commission needs more powers in this review? talking about best practice. We are looking at whether Dame Suzi Leather: I do not think there are a lot of these organisations are run for charitable purposes and areas where we think we need more powers, but this whether the activities are in line with that. It is up to really goes to the heart of what kind of charity donors and supporters to judge, with what comes out regulator you want. We are the closest that you come from that, whether the charities are ones worth to regulating civil society, and it seems to me that supporting. you do not want an organisation with huge draconian powers. You need sufficient powers, but we have quite Q85 Charlie Elphicke: So you are saying that if they considerable powers, for instance, when we open a have massively high administrative costs, chief statutory inquiry—powers to freeze bank accounts, executives who pay themselves over £150,000 a year remove trustees, impose trustees and stop payments and massively high staff costs, there is absolutely being made. There is quite a lot that we can do, and nothing that you can or will do? cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 12 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Sam Younger: No, I am not saying that there is receive any benefit from their charity in return for any absolutely nothing we will do. That is a matter of service they provide to it or enter into any self-dealing making sure that we have the right powers to require transactions”. That is in your strategic plan. In information, and that that information is in the public developing the compliance and accountability of the domain. Beyond that, it is for the charity’s own sector, you say that you will take “timely and decisive supporters to decide whether they should support action” in cases of malpractice and misconduct, and that charity. ensure decisive interventions to give rise to public confidence. That is really important. Ensuring that Q86 Charlie Elphicke: So as long as you are there is complete openness of dealing and no self- transparent, then you can trough. Is that the message? dealing with trustees is right, because that would be a Dame Suzi Leather: If a charity was doing nothing breach of trust as a matter of law, would it not? and spending all its money on a very highly paid chief Sam Younger: Yes. executive, that would clearly not be acceptable and we would step in, but there is no routine requirement Q90 Charlie Elphicke: Let me give you an example. that charities should not pay a certain amount in Let us say that a trustee sells an asset or goods to a administrative costs, or pay their chief executive a charity of which they are trustee; would that certain amount. That is not a matter for the Charity potentially set off alarm bells, and would you say, Commission, but I think it is rightly something that “This may be a case we ought to take into assessment charities ought to be transparent about, because it is a and look at”? matter of public interest. Sam Younger: Yes, I think that is a fair statement.
Q87 Chair: As a supplementary to that, in the Q91 Charlie Elphicke: If an officer of a charity gave review, is that something that you think you should be a contract to their spouse for a large amount of money, interested in? Should the legislation reflect a would that also set off alarm bells: “There is regulatory role for the Charity Commission in that something a bit fishy about this and we should look respect? into that”? Dame Suzi Leather: In the amount of money that is Sam Younger: Yes. Can I make one rider? I think you paid in administrative cost? are right in both of those, but one thing I have to say Chair: It would be an extra task. is that, in looking at those things, we do always have Sam Younger: My feeling is we should be looking at to look at what resources we have able and how we the absolutely core regulatory functions, not being an best use them. With 180,000 charities, we can only organisation that forces charities to run themselves in ever significantly investigate a fraction of the any particular way; that really is for them. We are complaints that come in to us. talking about a very varied sector of 180,000 charities. The question that you raise about paying a huge Q92 Charlie Elphicke: Granted, so it would need to amount to a chief executive arises if the evidence is be a substantial charity—a substantial amount of there that the activities are not reflecting the charitable money involved. purpose—in other words, were it to be a vehicle only Sam Younger: That is one of the factors. It may be, for paying the chief executive, rather than for carrying even if the amount of money is small, that we would out that charitable activity. I think that is where our want to look at a particular charity—for example, if role stops, not in saying that there is a best-practice an executive was letting a contract to a spouse or percentage of income and resource that can and whatever, or a company with whom the spouse was should be spent on administration that we would associated—if there were other elements in that police. I do not think that is practicable, quite apart charity that we were also interested in. In our strategic from the fact that I personally think it is probably not review, one of the questions that we threw out at the desirable to get into that level of potential intervention time was, “Should there be a de minimis of charitable in the way charities run themselves. funds at risk before we actually get involved and intervene?”. The response that came back very clearly Q88 Charlie Elphicke: So just to be very, very clear was that it would be a mistake to set any threshold, in my own mind, when it comes to campaigning, because all you are doing is potentially driving people advertising, how much people are paid and just below that threshold. administrative costs, you do not see that as your remit? Q93 Charlie Elphicke: I take your point. A last Sam Younger: No, it is not in our remit. example: the charity gives a contract of services or something to a company that a trustee is a chairman Q89 Charlie Elphicke: Fine. As a matter of public and shareholder of. That would also presumably, in policy we may disagree, but I hear what you are the same vein, set off alarm bells. saying. Let us move to the matter of trustees having Sam Younger: Yes. conflicts of interest. Under ‘Issues for other charities’ in your Charities Back on Track, you say: “Charity Q94 Charlie Elphicke: In that case, would you be trustees must not put themselves in a position where willing to open an assessment case in relation to the their personal interests conflict or are likely to conflict National Trust, which falls foul of a lot of the things with their duty to act in the best interests of the put in the annual report? Is it not right that it is not charity”, and there is an onus on the trustees to prove just the actual wrongdoing but the appearance of that they have not. “The law states that trustees cannot conflict that needs to be dealt with, so that people can cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 13
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE be sure that there is openness, transparency and public Q98 Chair: But there is the invidious business of confidence in all charities, particularly large charities when an inquiry becomes a statutory inquiry, as like that? opposed to a preliminary excursion—what you would Sam Younger: I am not going to answer that on the refer to as regulatory compliance case procedure. How hoof, but if you put in a case to be made, that case is are you addressing this? Is it true that you are going considered, as we would any case that is made of to cease this procedure? malpractice. Dame Suzi Leather: I would not describe that compliance activity as a preliminary excursion. That Q95 Charlie Elphicke: Finally, do you provide is certainly not what it feels like to the trustees on guidance to trustees on how to handle complaints, and the end. is that an appropriate thing for a regulator to do? Dame Suzi Leather: We think it is a good idea for Q99 Chair: Well, it might feel like it to the trustees charities to have complaints procedures themselves, on the end; that is exactly the point. absolutely. Is it a requirement? No, it is not. Dame Suzi Leather: It does not. It feels a lot more Sam Younger: The issue you raise is something we rigorous than that, I can assure you. We generally struggle with and will continue to struggle with: what open a statutory inquiry if we think it is going to be is the line between what you tell trustees they must necessary or desirable to use the specific powers that think about and potentially do in order to stay within opening a statutory inquiry gives us, such as the the law, and moving into best practice? Certainly one ability to freeze bank accounts and so on. of the views coming back from a number of bodies in the course of our strategic review was that, in a resource-constrained world, the Charity Commission Q100 Chair: Obviously, it is very invidious for a should be doing what only it can do, which is charity to be under investigation when they do not compliance with the law, and not move too strongly know that they are being investigated formally. Is that into the areas of best practice. You cannot stay out not the concern that charities express? of them altogether, because proper use of charitable Sam Younger: The legislation gives us a wide resources remains a statutory objective, but it is an discretion in how we carry out our business. As Suzi area that others can make a contribution in, rather than says, the section 8 inquiries—the formal inquiries— the Commission only. That theme has been very are when we think we may need to use specific strong in our strategic review—that we need to focus powers. Indeed, in our restructuring, we are on those things that only we as the regulator can do. refocusing so that that really high-level investigatory activity is in one area, so that we can develop the Q96 Charlie Elphicke: I understand. Just for the focus and the specialism of it. Charities that are record, can I say that it is numbers 12, 17, 20 and 25 engaged with us when we have a matter of complaint of the related party transactions disclosed in the latest and are going to them are in no doubt that there is an National Trust Report that I am concerned about. I do investigation being undertaken; there is nothing think it is important as a matter of public confidence underneath the radar about it, as far as they are that we ensure that there is absolute clarity in concerned. upholding trust in trustees. Would you agree? Sam Younger: I absolutely agree that confidence in Q101 Chair: The reports that you are going to trustees is important. You will have seen from looking change your procedures on regulatory compliance are at how we would like to develop our own performance not true? indicators that we are looking to have only three at Sam Younger: No, it is not true. There has been the top level, one of which is public confidence. something that we have called regulatory compliance Clearly public confidence will be driven by a whole lot of other things as well as what the Charity cases, and the name may not stay the same, but the Commission does, but it nevertheless is absolutely principle will that says that we have a top level of critical. inquiry. That is when we deploy those section 8 powers, which are for the highest risk areas, where we Q97 Chair: Before we leave the area of inquiries, think we need to use those powers—whether to freeze do you believe that the 2006 Charities Act inquiries bank accounts or force changes in trustees, for procedure is operating satisfactorily? example. Sam Younger: I think so. The most difficult issue for With the others, I think we need to be quite flexible, us is the application of the risk framework with a huge and it goes back to this thing of how much resource amount of incoming complaint, but I think mostly the it is proportionate to devote to a particular area of powers are there to undertake inquiries. The trick for inquiry. I think we need to be better at putting the us is to get right the ones that we look at and spend appropriate level of resource and inquiry into resources on, and the ones we do not. That is individual areas to cope with what comes at us. In inherently difficult in an area where every complaint addition, one of the things that I have been struck by you get in, however small and local the charity, is in my year at the Commission is that the Commission a matter of great passion to the person making the has been inundated with incoming stuff to react to, complaint. That always creates difficulties and will and I think in our regulatory role we need to find the continue to do so, but I do not think it is the space to be able to look at category areas of activity investigatory powers as such that are, generally and anticipate areas of risk, as opposed to only speaking, the issue. responding to things that come at us. cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 14 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Q102 Chair: Dame Suzi, did you want to add Q105 Lindsay Roy: 66% confidence is not something? particularly high. Dame Suzi Leather: I think that when we next appear Sam Younger: It is higher than every group of people before you, it is likely that the number of complaints other than doctors and the police, I think. about us for not intervening will have gone up. My Chair: You are doing better than MPs. sense is that this will happen not just to the Charity Sam Younger: I think so. Commission but many different regulators, as they are Paul Flynn: I think everyone is doing better than faced with resource constraint and are having to be MPs, certainly. You have been in position for two much more rigorous about applying their resources to terms now, and looking back on them, we still have the high end. It does mean that there are going to be a situation— times when we cannot take up issues, and people may Chair: Can we come back to this at the end, Mr feel that we jolly well should, and many of them will Flynn? I am terribly sorry. Mr Heyes has been very write to their MPs, and then their MPs are going to patient. have a go at us as well. But we cannot do everything, Paul Flynn: I thought this was the end. and I hope that you will support us in sometimes saying no. Q106 David Heyes: I think we have a time constraint now, Chair, so I think there should probably be brief Q103 Lindsay Roy: In the introduction to your answers to the questions I want to ask. Despite the report, you indicate that you have met all your key impending review of the Act, you have had to do your performance indicators. Is that not gilding the lily a medium-term planning on the basis of the 2006 Act, bit? When you look at Key Performance Indicators 4, and that is in your draft strategic plan for the next there are three of the six that you have not met, and three years. I have just a couple of points on that. You they relate particularly to investigations being have touched on them already, so this is an completed within a period of time. Why were these opportunity to expand on them. You talk in there targets not met? about bringing in stronger, more robust action against Dame Suzi Leather: Because the indicators we have charities defaulting on their reporting requirements. In had have been, to some extent, composite indicators, what way more robust? and we have not been required—it has to be said, nor Sam Younger: Clearly, that is medium-term, and as has this Committee ever fed back to us, I believe—to you say, before the review of the Act, we are not tick absolutely every box to get the green light. going to be in a position where you could in theory This is an opportunity, perhaps, for hearing how we fine for late submission. The question is whether, in are going to treat our performance indicators going terms of the information about charities that is on our forward, because we are no longer required now to website, we can highlight better and more clearly for agree our key performance indicators with the users those areas where we think there has been non- Treasury. It is up to us what performance indicators compliance. It is looking at using the public we set, and as part of our Strategic Review we have information to make sure that people understand what given some thought to this. We want to simplify how the charity they are interested in is delivering, or not we measure our own performance, and what we have delivering. come up with is that we should look at our cost, we should look at the impact we have, and we should Q107 David Heyes: It is just a continuation of your look at public confidence in us. I think the impact we present practice of trying to embarrass charities into have must have a quality dimension: are we getting better reporting. our decisions right first time? Those seem to us to be Sam Younger: Yes, and chasing up charities to make quite sensible ways of measuring our own sure they do actually make those returns. We have performance, but if you have any words of wisdom now got those returns coming in for 99% of the on this, now is a really good time to tell us. income of the sector, but it is not 99% of the charities. We need to look at how we can try to improve that Q104 Lindsay Roy: You describe the indicators as last area. challenging. I look at the improvement over a six-year period in the critical area of trust, where you have Q108 David Heyes: Does that point to a need for moved from 63% to 66%. Would you not say that you greater powers in the review of the Act? have made modest improvements? Indeed, they were Dame Suzi Leather: I think 84% of charities file their not quantified so any improvement would have been accounts within the 10-month deadline. Our approach a plus factor. for the last few years has been twofold. One is Sam Younger: In what we are looking to have as our embarrassing them, as you have said, by putting a red key indicators going forward, public confidence is or green box on our website, and I think that has been one, but as I think I said in answer to an earlier effective. It is quite a good example of nudge and is question, one of the things about any kind of measure used, for instance, by foundation trusts who are giving of public confidence is that it will be driven by a lot out grants. Many of them have said to me, “We would else other than what the Charity Commission does. It not give a grant to an organisation that cannot be is something that we need to keep an eye on, because bothered to get its accounts to you on time.” So I think if anything significant happened to it in a negative that has been quite successful. direction we would need to look hard at ourselves and We also remind charities that they are about to come ask if there is something that we are not doing that up to the 10-month deadline. They get two reminders we need to. before the 10-month deadline, and at least two cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
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25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE afterwards, and that has managed to bring up the organisation that determines what we take on and percentage of charities filing on time. Even taking what we do not take on. At the moment, we are doing those steps has not worked completely—we have not the detailed operational application of that across got 100%; and some small charities write to me and different areas of function—registration and handling say, “For heaven’s sake, haven’t you got better things complaints, for example. A lot of it is about clarity, to do with your money than remind us that we haven’t and it goes back to the answer Suzi was giving the got our accounts in on time?” Getting the right Chair. We need to be very clear about using our balance in encouraging these mostly very small resources to the best possible effect, so there are going organisations to file on time—because we do think to be things where we are saying we are going to be that accountability and transparency are important— less involved than we might have been historically— is quite delicate. for example, in disputes within charities.
Q109 David Heyes: One of your aims is to be more Q113 David Heyes: So for “greater clarity”, read proactive and less reactive in ensuring compliance “we are going to do less”? That is really what that with legal obligations. Have you set yourselves any means, is it? targets for this? Dame Suzi Leather: Fewer of the less important Sam Younger: No, we are not at the stage of targets things. for that. Sam Younger: The other element of greater clarity, from our point of view, is that one thing we have been Q110 David Heyes: Will you be doing that? pulled up on by our independent complaints reviewer Sam Younger: Yes, I think we certainly could, over the years is not necessarily being as clear with probably starting with our business planning for 2012Ð13. There are a number of examples where I complainants early enough in the process about what think we would certainly have some targets. One is to they can and cannot expect of us. make sure we have a threshold of annual accounts that we scrutinise in a random way. It is not that we are Q114 David Heyes: Is this not going to add to that thinking we are going to pick up malpractice so much downward spiral that you referred to of increasing as having the sort of deterrent effect of it being clear complaints about your work? I will not make a that we are looking at those accounts and are able to complaint about the work of the Commission, but I pick up any trends. We also have a target in felt tempted to because of the tardy, unhelpful proactivity, and we need to be careful about the response that I have had when I have referred proactive area, because with a reduction in resources, concerns within my own constituency. I think perhaps we need to test whether we are able to cope with what many of us could say that. Are you not setting your is coming in at us. stall out for even more of that? Sam Younger: No. I think what we are setting our Q111 David Heyes: Without clear targets and under stall out for is to say that we need to be better about the tighter financial constraints that you have, it would being clear in our responses as to what we will and be quite easy for that to be lost and not given will not take on and why, which I think we have not sufficient priority. necessarily been as good at in the past as we could Sam Younger: Yes, it would, which is why I want to have been. That said, in any area of constrained make sure that we have got some deliverables in there, resources, we need to be very clear that we are using but we have to be realistic about it, given the our resources in the right way, and in that sense, there reduction in resources. I would want to set targets in will be some things that maybe we might have particular areas of proactive work. For example, one investigated before that we will not investigate now. that we have launched recently looks at charities’ That is not to say that we were necessarily right to readiness or ability to cope with fraud and financial investigate them before. I think we need to make sure controls. We have gone into a partnership—it is a that we are investigating the things that are really resource issue as much as anything else—with the important. Institute of Chartered Accountants in England and David Heyes: Okay, fine. Wales, who are providing, pro bono, 25 accountants Chair: There are one or two supplementary questions. to go into a sample of 25 charities to review their systems. They get free consultancy; we get a report telling us whether the guidance we have got is Q115 Robert Halfon: Going back to how you decide adequate and meets the need, and how we should do whether organisations have committed a breach in it. I would be looking to put in targets for developing terms of campaigning and charitable activities, can I those kinds of programmes, so that would be one just clarify with you how you actually make that example of an area of proactivity that I would want decision? Do you base it on parliamentary guidelines, to pursue. or is it your own guidelines, and then how do you make the decision within the organisation? Q112 David Heyes: You talk in your plan about Dame Suzi Leather: It is not fantastically difficult, greater clarity in setting the scope and boundaries of because mostly the breaches are absolutely obvious. the Commission’s role in compliance. Where do you It is charities giving money to a political party, for plan to set the boundary? instance. That is a no-brainer; you cannot do it. In Sam Younger: We currently have a top-level risk fact, there are very few complaints about this; I think framework, and it is a unified risk framework for the only 2% of our investigations were about that. cobber Pack: U PL: COE1 [E] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Ev 16 Public Administration Committee: Evidence
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Q116 Robert Halfon: But do you have internal you are accountable to Parliament through this guidelines? Committee. I think we would be interested in your Dame Suzi Leather: Oh, absolutely. views about how the legislation could be clarified to make your job less contentious. Q117 Robert Halfon: Are there parliamentary guidelines—a clear set of defined criteria set by Q123 Paul Flynn: I thank you for being here, and Parliament—or are they set by yourselves? Do you for what you have done, and echo what David has said have a committee that makes the decision? That is about the fine co-operation we have from the Charity what I am trying to tease out. Commission on constituency matters. I certainly very Sam Younger: There is nothing prescriptive in what much enjoyed the contact I have had with them. We has come through Parliament. What we have produced know about the bizarre cases of charities; I think there after plenty of consultation is guidance of various is one public school devoted to providing education kinds. There is strong campaigning and political for the orphans of soldiers who died at the Battle of activity guidance. We put out specific guidance, for Waterloo. We know of other bizarre ones. It does seem example, on referendums in the run up to the AV vote. extraordinary to me, as Mr Hopkins said, that it is regarded as a charity to provide a tax handout—an Q118 Robert Halfon: So you produce the guidance. advantage—to the sons of rich people, an advantage Sam Younger: Yes. denied to the sons and daughters of poor people. I think it is astonishing that someone has the bare-faced Q119 Robert Halfon: Who produces it? Is it a cheek to use charity money to launch a book in the committee or is it you two? United States, as one of our major politicians did. Sam Younger: No, it is not us two. When you look at the changes that have taken place Dame Suzi Leather: No. while you have been at the Charity Commission, what Sam Younger: We have a policy function that takes are the main disappointments and what have been the the lead, and it takes its advice from the operational main improvements? areas that are involved in compliance work and other Dame Suzi Leather: I think the 2006 Act has overall areas. Then, as with all guidance, there is significant been a very positive encouragement to trustees to external consultation. think consciously about the public benefit that they provide. I think the requirement for them to account Q120 Robert Halfon: So the guidelines are entirely for that in their trustees’ annual report has been a very subjective as to what your organisation thinks. significant move. It is not about the Charity Dame Suzi Leather: No, because we also look at what Commission requiring things; it is not about case law has decided. compliance. What I am talking about here is the self- conscious consideration of what impact a charity is Q121 Robert Halfon: But again, that is your having for its beneficiaries. I think that has been the interpretation of it. single most important achievement of the 2006 Act. Sam Younger: Yes, based on law and case law. The review will noodle down into all the nuts and Dame Suzi Leather: Yes, absolutely. bolts and will come out with a lot of things that have gone well and things that have gone less well, but for Q122 Robert Halfon: Do you not think it would be me that is the top line—the most important thing. better if Parliament set the guidelines for this, so that Many boards of trustees tell us that they find that everyone would see that it was fair, which they do not reporting of public benefit actually rather helpful. It see at the moment? At the moment, it seems to be takes them out of the day-to-day fire-fighting of rather—dare I say it—like choosing a Cardinal at the “What are we going to do with x amount of money?” Vatican: smoke-filled rooms and smoke coming out of and allows them to sit back and think, “Why are we the chimneys. No one really knows how you come to here? What is the impact we want to have? How can your decisions. we best achieve that?” It is actually what you Chair: It gives you a lot of responsibility, doesn’t it? yourselves drew attention to when you were talking Dame Suzi Leather: If Parliament wants to achieve about Government departments downsizing—that something different, then obviously it is for you to set the rules differently. We are accountable. It is not just they should go through precisely that thought process. the smoke coming out with no accountability. You had the good sense to introduce the Tribunal as part of the Q124 Charlie Elphicke: Just following up on Mr 2006 Act, and visibly it has done its job. Heyes’ point on MPs raising issues with you, Sam Younger: As a regulator, you prefer maximum previously I raised the issue with you of a charity in clarity from Parliament on what the law actually my own constituency, the Deal Maritime Museum, means and how to apply it. It is more difficult the and you were kind enough to correspond with me and greater margin there is; you have to produce guidance say it was outside your risk matrix. I will just let you when the law is not necessarily 100% clear—it is know the conclusion of that. There was a legal case, subjectively more difficult. I would not go along with which the charity took. It lost completely and lost the description of smoke-filled rooms and puffs of £60,000—most of the assets of the charity. I think it smoke, because we do extensive external consultation. was right for me to bring that to your attention, Chair: I am sorry to cut you off. I sense that a number because I wanted to safeguard the assets. I think it of the members of the Committee are feeling that shows an issue that those issues were not safeguarded, Parliament should be more prescriptive, but ultimately and I think that is a great pity. cobber Pack: U PL: COE1 [O] Processed: [09-02-2012 11:54] Job: 017018 Unit: PG01 Source: /MILES/PKU/INPUT/017018/017018_o001_michelle_PASC corrected transcript 25 Oct 11(HC 1542).xml
Public Administration Committee: Evidence Ev 17
25 October 2011 Dame Suzi Leather DBE and Sam Younger CBE
Chair: But you would regard that as a matter for the and you have put up with some rigorous trustees and not the Charity Commission? cross-examination. Dame Suzi, your present term of Dame Suzi Leather: Absolutely. office is due to end in August next year. I am not Chair: I think this is an interesting area. inviting you to comment on that at the moment; I just Charlie Elphicke: I would say it is supervisory, and want to say we are extremely grateful for your huge it is you guys who should do it. contribution over your period of office in what has Chair: We will be looking at all these matters as we been a very difficult and contentious period for the look at the new Bill that the Government say they are Charity Commission. We may see you again, but in going to bring forward, and we will be doing pre- case we do not, may I thank you on behalf of the legislative scrutiny on the draft Bill. We will look Committee for your service as Chairman of the forward to your views on that. But in the meantime, Charity Commission? may I thank you very much indeed? You have been Dame Suzi Leather: Thank you very much indeed. excellent witnesses; you have been very forthcoming cobber Pack: U PL: CWE1 [SE] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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Written evidence
Written evidence submitted by Charity Commission We are looking forward to appearing before the Committee on 25 October; as you know, we feel that Parliamentary scrutiny is of vital importance to us as an independent regulator. You will have received our annual report which was published in July. Another copy is enclosed with this submission for the Committee’s convenience. We are pleased to have met all our Key Performance Indicators and, despite the challenges, to have had a successful year. As you know, we are publicly funded by the Treasury and in the last spending review our budget was cut by 33% in real terms, following previous reductions of 5% year-on-year over the last three years (including inflation these amount to a reduction of around 20% in real terms). Our resource funding for the period 2010–11 to 2014–15 breaks down as follows: 2010–11: £29.3m 2011–12: £26.5m 2012–13: £25.7m 2013–14: £22.0m 2014–15: £21.3m Whilst we have made all possible efforts to reduce our core costs through efficiency savings, it is clear that, given the scale of the reduction, we need to reduce staffing levels across all four of our sites. In consultation with departmental trade unions, we plan to manage these reductions as shown in the tables overleaf. We are confident that the majority of departures can be made by voluntary means. The first phase of our voluntary exit scheme (launched in January 2011) has already enabled 54 full-time equivalent agreed departures and a second scheme, which has just concluded, will enable another 61 staff to be released. We will then need to achieve the remaining 10 FTE departures in 2012–13. Whilst we considered the option of being located on one, or maybe two, sites, the cost of paying break clauses meant that this would be uneconomic given our financial constraints. We also decided that this would create an excessive level of disruption at a time of profound organisational change. In the meantime, we will save £804,000 by subletting office space to other government departments. We will look to move to smaller, cheaper accommodation as our leases allow.
STARTING POINT AS AT 31 MARCH 2011 Staff numbers (FTE) Liverpool London Taunton Wales Total Percentage of workforce Pay Band 1 4.02 2.81 6.8 2% PB2 22.61 3.83 14.02 40.5 10% PB3 73.71 7 35.81 3 119.5 29% PB4 52.02 25.22 36.84 2.49 116.6 28% PB5 25.48 29.76 21.91 1 78.2 19% PB6a 7.73 18.23 12.66 38.6 9% PB6b 1 4.8 5.8 1.5% Senior Civil Service 5 1 6.0 1.5% Total 186.6 93.8 125.1 6.5 412.0 Percentage of workforce 45% 23% 30% 2% 100%
STAFFING FROM 1 APRIL 2013 FTE Liverpool London Taunton Wales Total % workforce Pay Band 1 0 0 0 0 0.0 0 PB2 12 1.5 4.54 0 18.0 6% PB3 50 3 31.78 0 84.8 30% PB4 36.5 21 29.61 6.5 93.6 33% PB5 13.86 19 22.29 1 56.2 20% PB6a 4 11 9.66 0 24.7 9% PB6b 2 3.8 1 0 6.8 2% Senior Civil 0 3 0 0 3.0 1% Service Total 118.4 62.3 98.9 7.5 287.0 % workforce 41% 22% 34% 3% 100% cobber Pack: U PL: CWE1 [O] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
Public Administration Committee: Evidence Ev 19
Strategic Review and New Strategic Plan, 2012–15 In May 2010, we embarked on a strategic review to re-examine fundamentally our activities as an organisation and the nature and scope of our regulatory activity. As part of the consultation, we received over 100 written submissions, over 200 responses to a survey, conducted 66 meetings with external stakeholders (representing the charity sector, the Government, Parliament and the public) and have held over 50 internal staff meetings to date. We then established a number of streams of work to turn the broad strategic approach identified during the consultation into detailed plans. A new structure and senior management team for the organisation are already in place and we are shortly to launch a further consultation on our strategic plan, as well as a revised risk framework and plans for greater engagement with charity sector infrastructure bodies. We welcome the Committee’s comments and suggestions on our new strategy and feel that this session is particularly timely in seeking input at this stage of our development. At the heart of our new strategy is the belief that the Charity Commission’s core role is to protect the public interest in the integrity of charity. This means ensuring that charities serve neither private nor governmental or political interests but rather focus on those purposes which give them charitable status and carry them out for the public benefit. Most importantly, we will concentrate on carrying out activities that only we, as regulator, can do. Two clear core priorities have emerged from the strategic review consultation: — Developing the accountability and compliance of the sector, and — Developing the self-reliance of the sector The plan (a full copy of which is enclosed with this submission) sets out how we will deliver these and fulfil the statutory objectives that were given to us by Parliament in the Charities Act 2006. As the independent regulator, we play a vital role in ensuring that charities know the rules by which they should be run. We are also the body charged with holding them to account against those rules and ensuring they are themselves publicly accountable. Therefore, we propose to define our mission as: We are the independent regulator of charities, acting in the public interest, to ensure that: — Charities know what they have to do. — The public know what charities do. — We hold charities to account on behalf of the public. We have identified four strategic priorities which we will work to achieve over the three years of the plan. Firstly, we will focus on improving accountability and compliance amongst charities. The public rightly expects us to be rigorous. We will be more pro-active about ensuring that charities comply with their wider legal obligations and will take decisive action where we identify malpractice. This will mean improving the way we identify and manage risk, and it will also require us to be better at saying no where our involvement is not proportionate. Developing accountability and compliance within the sector will further require us to develop even stronger relationships, notably with other agencies and regulators. An example of this is our charity review programme, being developed with the Institute of Chartered Accountants in England and Wales (ICAEW), which will offer charities a free review of their systems of financial management and controls. The results will be collated anonymously and analysed to gain a better understanding of the strategic risks facing charities. Secondly, we will work to help the sector become more self-reliant. Part of this will involve enabling charity trustees to take their own decisions wherever possible. Improving self-reliance also means working more closely with the sector and those who support charities. We will be reducing the extent to which we advise charities on a one-to-one basis and increasingly looking to sector umbrella bodies to provide individual support where we cannot. As we do this, we will seek to build up the strength and profile of umbrella bodies. We will place an even greater emphasis on our online guidance, ensuring that it spells out clearly the principles by which trustees must operate. Thirdly, we will improve the way we regulate through the effective use of technology. We will use the technological tools now available (including social media) to explain better to the public and to trustees what charities are and how they should be run. Our services for charities will be located online (as a number already are) with teams dedicated to improving existing services and improving access and usability. We will also make further improvements to our website, tailoring segments to the needs of different users and ensuring people can more easily find the information they need. Our recent online video tutorials on how to submit annual returns and update information illustrate how we can offer improved services whilst also scaling back our one-to-one engagement with charities. Fourthly, we will build on the work we have already been doing to improve our efficiency and we look forward to discussing with the Committee further ways in which we can achieve this. cobber Pack: U PL: CWE1 [E] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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Measuring Our Performance Under the Coalition government, we are no longer required to agree Key Performance Indicators with the Treasury. However, given that we are fully committed to accountability and transparency as a public body, we will consult on how our proposed External Performance Indicators (EPIs) would best capture the information we need to measure our performance. Our preliminary suggestion, on which we welcome the Committee’s thoughts, is that there should be just three very top-level measures and that these should be as simple as possible. These three areas should each have a single, simple to understand measure with no sub-divisions. After consideration, we believe that the three areas that the EPIs should cover are: — Cost (of the Commission). — Quality of our work. — Public confidence. The cost of the Commission is naturally a prominent concern during the present economic climate and we need to operate within our agreed budget in the coming years. Our suggestion here is to relate the costs of our actual annual spend to a tangible aspect of the sector we regulate, for example the overall income of the sector. The quality performance indicator could hinge on the single question “did we get it right first time?” measured using a sample of our external-facing work examined by an independent panel. The public confidence objective is the first objective set out in the Charities Act 2006. Since the Act came into force, we have measured public trust and confidence in charity every second year (most recently in July 2010). We hope to be able to continue to carry out research to measure levels of public trust and confidence in charities and to investigate the issues that lie behind it.
Review of the Charities Act 2006 As the Committee will be aware, the Cabinet Office is due to appoint a person to lead the review of the Charities Act 2006 by 5 November this year. We welcome the review as it presents an opportunity to re- examine the Charity Commission’s role, our powers and the scale and breadth of our current statutory objectives, functions and duties. We want the review to consider the definition of charity (including the descriptions of charitable purposes and the operation of the public benefit requirement); the registration of charities (including the impact on transparency and accountability of bringing exempt/excepted charities onto the Register and also seeking a compliance power relating to submission of accounts); deregulatory proposals to remove requirements for our permission; our powers to gather and exchange information, for example with other regulators; our powers for trustee disqualification (which are currently limited); and the regulation of Common Investment Funds and Common Deposit Funds.
Public Benefit Tribunal Hearing At the time of writing, we have not received the Upper Tribunal’s judgement on this important area of our work.
Our Compliance Work A mainstay of our regulatory activity is, of course, ensuring that charities comply with their requirements in charity law. Charities Back on Track (a copy of which is enclosed) sets out themes and lessons from our compliance work. The number of investigations and concerns raised with the Commission has remained roughly similar to last year. In total, we opened 144 investigations, three of which were statutory inquiries (compared to a total of 180 investigations and nine statutory inquiries last year). One positive development is an increase in the number of serious incidents reported to us (849 compared to 451 last year), indicating that charities’ awareness of this requirement is improving. We launched 20 investigations followed reports of serious incidents (a similar level to the previous year). The number of new concerns examined in our Assessment Unit decreased in 2010–11 (from 2,434 down to 1,845). This was due to the smaller number of cases to follow up our monitoring work after we ran data checks to identify people disqualified from acting as trustees. In nearly 77% of assessment cases, the concerns were raised with us by external sources, including members of the public, other regulators and agencies and charity trustees themselves. The principal themes arising from our wider case work this year include: serious failures in trusteeship or governance (around 56% of assessment cases); serious governance issues, such as breaches of charity governing documents, conflicts of interest and unauthorised benefits (14% of assessments); fraud and financial mismanagement (44% of reports of serious incidents and 14% of assessments); and failure to safeguard vulnerable beneficiaries (8% of assessments). cobber Pack: U PL: CWE1 [O] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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Our co-operation with other regulators, law enforcement and other agencies has increasingly resulted in effective enforcement action and the positive resolution of cases. The clear line running through all our work is protecting the public interest in charities, in the public’s capacity as taxpayer, donor, volunteer/trustee and beneficiary. We will continue to promote public trust so that people can continue to support charities with confidence. If you have any queries about this submission, please do not hesitate to contact us. Otherwise we look forward to our discussion with you on 25 October. October 2011
Written evidence from PCS Work of the Charity Commission The following is the submission of the three PCS branches representing the majority of staff working for the Commission. We had hoped to be able to make our submission in advance of your hearing on 25 October with Dame Suzi Leather, Chair, and Sam Younger, Chief Executive, of the Charity Commission; unfortunately this did not prove possible, but we hope that you might still be able to consider our submission. 1. We note that in their written submission of 13 October, Dame Suzi and Sam refer to the massive cuts to the Commission’s funding announced in the Comprehensive Spending Review (CSR) on 20 October 2010. These cuts—of 33% in real terms over four years, coming after cuts over the previous three years amounting to almost 20% with staff numbers reducing by 30%—could clearly only be met with huge further reductions in staff numbers. As Dame Suzi and Sam have suggested, the Commission is well on its way to reducing its staff by one third to 275 FTE—half what it was in the middle of the last decade. We would certainly agree with Dame Suzi’s and Sam’s assertion of confidence that the majority of departures can be made by voluntary means, which we believe has been down to improved industrial relations and consultation with the Departmental Trade Union Side (comprising PCS and FDA representatives). 2. However where we have different concerns from senior management is in the damaging effect of the cuts on the Charity Commission, its work and staff, and on charities, donors and beneficiaries. These concerns arise, of course, from the Commission’s restructuring programme in response to the outcome of the CSR and its emerging strategic plan to 2015. 3. In May 2010, the government announced its big society policy programme and said it would support the creation and expansion of charities, and support them in having much greater involvement in the running of public services. Whatever the implications of this policy,1 it is clear that a properly funded Charity Commission—as the charity regulator established by statute, with huge knowledge and expertise in charity law and best practice—is vital to maintain public confidence in charities through ensuring that charities are advised and supported, and that deliberate wrongdoing and scams are stamped out. Charity Commission staff have long worked hard to provide support, advice and regulation in the charity sector—a key component in delivering the government’s plans—whilst over many years making individual and corporate efforts at reducing unnecessary red tape for charities and the volunteer trustees who run them. However, without proper funding of a strong and independent regulator, the government’s Big Society programme may push more and more public services and money into voluntary sector bodies that are left virtually unregulated and unsupervised. 4. As you may be aware, in 1997, the Public Accounts Committee criticised the Commission for the fact that only 8% of its staff were involved in investigations,2 and subsequently government funding was provided specifically to deal with this issue. However the cuts now being implemented leave only 5% of Commission staff involved in front line investigation work.3 Yet the National Fraud Authority, in its annual fraud indicator for 2011, estimates fraud in the charity sector as £1.3 billion in 2009–10.4 As Mark Serwotka, General Secretary of PCS, has said,5 “Cuts to the Charity Commission are neither inevitable nor necessary, and will just heighten the risks of fraud and charities having to pay to receive expert advice and support [which they currently access for free from the Commission].” 1 Reaffirmed by Nick Hurd, Minister for Civil Society, in October 2011, as reported in Third Sector, 12 October 2011 (http://www.thirdsector.co.uk/news/archive/1098250/Nick-Hurd-affirms-governments-commitment-big-society-vision/?DCMP= ILC-SEARCH) 2 In its report of 1997, Charity Commission: Regulation and Support of Charities (http://www.parliament.the-stationery- office.co.uk/pa/cm199798/cmselect/cmpubacc/40xxviii/pa2802.htm) 3 This proportion has been calculated using Commission management’s proposed figures for its new Investigations and Enforcement Function, which alone will carry out the type of investigative work referred to in the PAC report). Management claims that other operational divisions will also carry out investigative compliance type work which, though we do not dispute this, is misleading in that it will be restricted to low risk cases not requiring the use of the Commission’s statutory powers of inquiry, and is thus not comparable with the type of work to which the PAC was referring in 1997. Additionally, because this function is to be carried out only in the Commission’s London office, experience of long-serving staff in the Liverpool and Taunton offices will be lost. 4 According to the National Fraud Authority’s “Annual Fraud Indicator” 2011 (http://www.homeoffice.gov.uk/publications/ agencies-public-bodies/nfa/annual-fraud-indicator/annual-fraud-indicator-2011?view=Binary) 5 PCS press release, 21 September 2011 (http://www.pcs.org.uk/en/news_and_events/news_centre/recent-news.cfm/id/ D1E3D9F6–3C76–4632-AB7A3A5F540F1A44) cobber Pack: U PL: CWE1 [E] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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5. Whilst we agree that there is a place for deregulation, we are concerned that moving inappropriately or too fast in this direction in order to take advantage of the imminent statutory review of the Charities Act 2006 risks making potentially damaging changes to charity legislation merely to enable the Commission to operate within a budget which is inadequate for it to fulfil its full responsibilities under a relatively new act—significant parts of which are yet to be implemented—which clearly represents the will of Parliament. During a drop in briefing we held for MPs in Parliament in November 2010, a number of MPs with serious concerns about the cuts agreed with us that this was a serious danger. A number of MPs have taken matters up with ministers and Commission management, as well as tabling parliamentary questions and early day motions, but to no avail. We believe that the Commission’s approach risks increased fraud and wrongdoing as well as the very viability of the Commission as an effective regulator.
Compliance Work 6. Fraud is a serious issue in the UK, costing the charity sector £1.3 billion in 2009–10.6 HM Revenue and Customs (HMRC) has stated7 that they have “identified fraud by individuals and charities registered by the [Charity] Commission and OSCR [(the Office of the Scottish Charity Regulator)], which suggests that the charity regulators’ checks are clearly not sufficient for effective tax administration,” and that tax fraud involving charities is estimated to cost tens of millions of pounds a year, possibly as much as £100 million.8 And the Commission’s former Chief Executive, Andrew Hind, admitted that the intended cuts in the Commission’s budget will probably mean that allegations of fraud by charities will no longer be automatically investigated,9 something echoed by his successor, Sam Younger.10 The government itself acknowledges that the ways in which fraudsters operate has evolved significantly, with criminals more organised and technically capable.11 7. Even before the current cuts were announced, Commission staff had long felt frustration that a lack of resource had meant that they have only ever scratched the surface in the area of deliberate wrong-doing, and are itching to address these failings, which have in the past been explained away by management on the basis of “risk and proportionality”, which is too often used where a more accurate explanation might be “lack of resources.” The Commission examined 450 reports of fraud and financial mismanagement in 2009,12 a number it admitted is a significant underestimate of the problem.13 In 2010–11 it examined 266 reports of fraud and theft of total value £6 million, admitting that this also represented “significant under-reporting,” together with a further 242 cases where there were other concerns about financial mismanagement including alleged misapplication of funds.14 8. The Independent Reviewer of Terrorism, Lord Carlile of Berriew QC, has acknowledged15 that charitable funds may be channelled to international terrorist organisations and used for terrorist purposes. He pointed out that, whilst the Charity Commission is not responsible for investigating terrorism per se, it “has limited resources for such allegations to be investigated fully…British contributors wishing to support charitable causes overseas are entitled to have confidence that their money is not being channelled in the direction of violence.” In 2010–11, the Commission had 16 investigations which included allegations of links to terrorist related activities or organisations.16 9. Professor Gareth Morgan, professor of Charity Studies and a specialist in charity law and regulation who is principal lecturer and director of the Centre for Voluntary Sector Research at Sheffield Hallam University, has compared the prospect of lighter regulation of the charity sector with that of the financial sector, which led to the current credit crisis—a point dismissed by Minister for Civil Society, Nick Hurd, as alarmist.17 But 6 According to the National Fraud Authority’s “Annual Fraud Indicator” 2011 (http://www.homeoffice.gov.uk/publications/ agencies-public-bodies/nfa/annual-fraud-indicator/annual-fraud-indicator-2011?view=Binary) 7 In a letter to charity law firm Bates Wells & Braithwaite, as reported in Third Sector, 15 June 2010. 8 As reported in Third Sector, 3 August 2010 (http://www.thirdsector.co.uk/news/archive/1019791/Tax-fraud-involving-charities- runs-tens-millions/?DCMP=ILC-SEARCH). 9 As reported in The Independent, 1 September 2010 (http://www.independent.co.uk/news/uk/politics/osbornes-cuts-will-stop-us- tackling-fraud-claims-says-charity-chief-2067117.html). 10 As reported in Third Sector, 14 September 2010 (http://www.thirdsector.co.uk/news/article/1027943/prepare-austerity-says-Sam- Younger). In The Times, 10 September 2010 (http://www.thetimes.co.uk/tto/business/industries/publicsector/article2720805.ece), he is reported as saying that investigations may have to be restricted to charities with a turnover over “£50,000 or even £100,000.” In The Guardian, 27 October 2010 (http://www.guardian.co.uk/society/2010/oct/27/interview-sam-younger-charity-commission) he repeats this possibility, albeit as a scenario “purely for debate,” but one might assume that cutbacks of this nature and magnitude will have to occur with a 33% reduction in funding. And on BBC Radio’s File on 4, 9 November 2010 (http://www.bbc.co.uk/programmes/b00vrvv0#synopsis), and reported at http://www.bbc.co.uk/news/uk-11712881, he stated that “One of the possibilities is saying that we can’t investigate absolutely every allegation [of fraud] that comes our way…we may have to put the bar quite high and say we will only investigate if a certain minimum amount of charitable funds is at risk.” 11 Fighting Fraud Together (http://www.homeoffice.gov.uk/publications/agencies-public-bodies/nfa/fighting-fraud-tog/fighting- fraud-together?view=Binary) 12 Alone worth some £21 million. 13 On BBC Radio’s File on 4, 9 November 2010 (http://www.bbc.co.uk/programmes/b00vrvv0#synopsis), and reported at http://www.bbc.co.uk/news/uk-11712881. 14 See Charities Back on Track 2010–11 (http://www.charity-commission.gov.uk/Library/track_11.pdf) 15 In his Report on the Operation in 2009 of The Terrorism Act 2000 and of Part 1 of The Terrorism Act 2006, published in July 2010, and available at http://www.homeoffice.gov.uk/publications/counter-terrorism/independent-reviews/ind-rev-terrorism- annual-rep-09. 16 See Charities Back on Track 2010–11 (http://www.charity-commission.gov.uk/Library/track_11.pdf) 17 On BBC Radio’s File on 4, 9 November 2010 (http://www.bbc.co.uk/programmes/b00vrvv0#synopsis). cobber Pack: U PL: CWE1 [O] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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asked if he would be happy to see the Commission stop investigating some reports of fraud, Nick Hurd said: “No, I would want to discuss it with them.”18 It is now clear that, owing to lack of resource, the Commission will have no choice but to stop investigating some reports of fraud, presumably by redefining its risk and proportionality criteria.
10. Public confidence in charities remains high, but the major threat to this comes from “dodgy” fundraisers and clothing collectors.19 The Commission receives hundreds of calls to its First Contact division every month about this but is unable, through lack of resource, to engage in this area as much as staff would like. Members of the public raise these issues with the Commission expecting that it is the right body to deal with them, when in reality they may fall between regulators such as the police, trading standards, and fundraising “trade bodies” with no powers or teeth. In mid-2010 Charity shops which were feeling the pinch as a result of fraudsters, planned a meeting with the Association of Chief Police Officers to discuss the issue,20 and at the same time Tracey Crouch MP tabled an early day motion calling for the government to ensure that the issue is tackled.21 Responding to the Commons debate on 13 October 2010—initiated by Tracey Crouch—Nick Hurd, Minister for Civil Society, pledged to hold a round-table debate to discuss how bogus charity bag collectors could best be tackled—to which the Charity Commission was belatedly invited.
11. These events, and increasing dissatisfaction with the policing of these activities which is complex and crosses the remits of a number of different organisations and regulatory authorities, has led to some progress on the matter. We believe that the Commission could and should be funded to play a central role in regulating and policing this area which is so vital to maintaining public confidence in and donations to charity, and a number of experts agree.22
12. Under existing legislation, anyone who wants to carry out door-to-door charitable collections must obtain a license from the relevant local authority. But under Part 3 of the Charities Act 2006, which is yet to be implemented but is due to be discussed in the upcoming statutory review of the Act, provision is made for the Charity Commission to be the national licensing body for charitable collections. But it is clear that the Commission has no resources to do this, and will no doubt seek for the implementation to be shelved. Indeed the new Charities Bill put before parliament in March 2011—which was aimed at consolidating existing areas of charity law—omitted the as yet unused legislation from part 3 of the 2006 Act that would make the Charity Commission the lead regulator for street and door-to-door fundraising,23 and by August 2010 Nick Hurd was confirming that implementation of the part of the Charities Act 2006 that would make the Charity Commission the lead regulator of public charitable collections was postponed indefinitely and that the process should instead be referred to the statutory review of the Charities Act 2006.24 25 We believe the answer is in fact for parliament to seek additional funding for the Commission so that it need not be. 18 On BBC Radio’s File on 4, 9 November 2010 (http://www.bbc.co.uk/programmes/b00vrvv0#synopsis), and reported at http://www.bbc.co.uk/news/uk-11712881. 19 Clothing collection fraudsters had reached a new level of deception in stealing upwards of £2.5 million a year from charities, according to two separate articles in Third Sector in June 2010 (Clothes collection fraudsters target Down’s Syndrome Association, http://www.thirdsector.co.uk/news/archive/1007149/Clothes-collection-fraudsters-target-Downs-Syndrome- Association/?DCMP=ILC-SEARCH, & Bogus collectors are imitating genuine, well-known charities, http://www.thirdsector.co.uk/news/archive/1006745/Bogus-collectors-imitating-genuine-well-known-charities/?DCMP=ILC- SEARCH). Since then the National Fraud Investigation Bureau has estimated the cost of charity bag fraud in the UK each year at £50 million, yet only one in 10,000 bogus bag collections result in prosecution by local councils. 20 As reported in Third Sector, 31 August 2010 (http://www.thirdsector.co.uk/news/archive/1024912/Charities-fear-multimillion- pound-hit-clothing-donations/?DCMP=ILC-SEARCH). 21 See EDM 689 at http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=41649&SESSION=905 and report in Third Sector, 9 September 2010 (http://www.thirdsector.co.uk/News/DailyBulletin/1027597/Parliamentary-motion-calls-police-tackle-bogus- charity-collectors/DD22DB80FACAF4C81A07DED881092D52/?DCMP=EMC-DailyBulletin). 22 During a debate in the House of Commons before the act was passed, Ed Miliband, then Minister for the Third Sector, described the existing system of regulation for public fundraising as “a bad combination of bureaucracy and inconsistency”. Four years on, the sector is still living with this system. Amanda McLean, chief executive of the Institute of Fundraising, said in October 2010 “The issue of bogus collectors is costing charities millions of pounds and is lowering public trust and confidence in charities at a time when it was never more important for the public to be involved in the vital work performed by charities.” And John Miley, Chair of the Midlands Region of the National Association of Licensing and Enforcement Officers, is quoted in an analysis in Third Sector, 11 October 2011 (http://www.thirdsector.co.uk/news/archive/1097797/Analysis-High-stakes-battle- bags/?DCMP=ILC-SEARCH), as saying that the problem with the existing system is that different local authorities can have different licensing policies, and he is also critical of National Exemption Orders, currently held by 43 charities, which allow them to carry out collections without licences, meaning that they can avoid the huge administrative burden of having to apply for a licence in each area in which they carry out collections, which he says is not equitable. Experts believe that improvements in the regulation of charity doorstep clothing collections could go a long way towards cutting out bogus collections. Amanda McLean, chief executive of the Institute of Fundraising, said in October 2010 “The issue of bogus collectors is costing charities millions of pounds and is lowering public trust and confidence in charities at a time when it was never more important for the public to be involved in the vital work performed by charities.” 23 As reported in Third Sector, 4 March 2011 (http://www.thirdsector.co.uk/News/DailyBulletin/1058439/New-bill-drafted-simplify- charity-law/D7080DC5B85499C02DAAA193C2A4BA09/?DCMP=EMC-CONDailyBulletin). 24 As reported in Third Sector, 17 August 2010 (http://www.thirdsector.co.uk/news/archive/1022208/Charity-Commissions-licence- role-face-to-face-fundraising-put-indefinite-hold/?DCMP=ILC-SEARCH), and discussed in more detail in an opinion piece, Points of law: Kicked into the long grass, in Third Sector, 28 September 2010 (http://www.thirdsector.co.uk/News/DailyBulletin/ 1030765/Points-law-Kicked-long-grass/100588670DC03733F73BDA25EBCF1245/?DCMP=EMC-CONDailyBulletin). 25 The Commission issued a press release on 20 September which appears to acknowledge these concerns, and asks the public to “notify the Charity Commission so that we can gather information on offenders and work with our partners to combat and raise awareness of fraud,” in addition to contacting the local Trading Standards Service and/or the police (http://www.charitycommission.gov.uk/RSS/News/pr_bogus_collections.aspx). cobber Pack: U PL: CWE1 [E] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
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13. The Commission’s now defunct Information Compliance division made great strides in increasing compliance rates for charities filing the statutory accounts and annual returns on time, so that the public and other stakeholders can assess how charities are operating. However failure to file is still an issue, with 25% of charities—representing £6 billion in charitable income—still filing late.26 The current cuts in staffing can only worsen the situation at a time when the government’s expectation is that the public will increasingly take on a voluntary oversight role in public life.
Register of Charities 14. Although formal registration of a charity with the Charity Commission is still theoretically possible for charities with incomes under £5,000, it is no longer compulsory, and in practice the Commission makes it quite difficult for charities below this level of income to register with it—this was a measure intended to relieve the bureaucratic burden both on charities and the under-resourced Commission. But charities find it does them no favours that they cannot register—quite the opposite. Our members in the Commission’s First Contact division take many calls from charities in this category which find their inability to register an obstacle to their effective operation. They report for instance that members of the public do not have the confidence to donate to them; grant making bodies will not support them as a matter of policy; their local supermarket will not allow them to collect on their premises without a charity number. As a result these charities are (often literally) begging to be registered and our staff report that finding ways of getting around the minimum income requirements is becoming a micro-industry, with charities taking out loans or trustees throwing their own money at charities, solely so that they can achieve registration. 15. There is dire need for the new charitable vehicle, the charitable incorporated organisation (CIO), created under the Charities Act 2006 but seen by some commentators as being in danger of never coming into existence. This much vaunted new form has been long called for by the sector, as it provides corporate protection to charities without the unnecessary bureaucracy and dual regulation required by its current equivalent, the charitable company. The former Office of the Third Sector is on record as saying that there were concerns about the Commission’s ability to manage information on the liabilities of CIOs and properly to support them.27 Although Sam Younger announced in 201028 that “it remains [the Commission’s] clear intention to launch this new corporate structure for charities early next year,” and Nick Hurd said at that time that secondary legislation to bring CIOs into force would be put before Parliament “with a view to the first charitable incorporated organisations being established from spring 2011,”29 implementation is not expected now until 2012, subject to parliamentary approval.30 When and if the CIO does eventually come, the Charity Commission needs to be resourced to register these organisations, advise them, and assist charities who wish to move to this new model of charity governance. 16. Andrew Studd, a partner in the charity team at Russell-Cooke Solicitors, has said31 that “with the registration of previously exempt charities, it is likely that the [Charity] Commission’s already stretched resources will be stretched even further. The knock-on effects that are already apparent are further delays in the introduction of the charitable incorporated organisation, which has been postponed again...A second inevitable consequence will be slower response times from the Commission for charities that require assistance, as the Commission struggles to juggle the burdens of increasing regulatory control, intervention and supervision.”
Reducing red tape for trustees or breaking the voluntary nature of trusteeship? 17. Sam Younger suggested as early as 2010 that one of the choices the Commission might have to make in the light of its reduced funding could be no longer to require approval for such exceptional actions as payment of trustees32 and, at a panel discussion entitled “Self-Regulation: how far can it go?” held at the Commission’s Annual Public Meeting on 22 September 2011, all three panellists agreed that trustees should be paid.33 But both Parliament34 and the public35 have continued to back the retention of the principle that charity trustees 26 On BBC Radio’s File on 4, 9 November 2010 (http://www.bbc.co.uk/programmes/b00vrvv0#synopsis). 27 As reported in Third Sector, 23 February 2010 (http://www.thirdsector.co.uk/news/985397/). 28 In his Chief Executive’s report to the Commission’s open Board meeting, 25 November 2010, (http://www.charitycommission.gov.uk/Library/about_us/paper10obm31.pdf). 29 As reported in Third Sector, 25 November 2010 (http://www.thirdsector.co.uk/News/DailyBulletin/1043081/Charitable- incorporated-organisation-model-will-available-next-year-Nick-Hurd-says/00D106A46F6A6E733EA73EA518E97F67/?DCMP= EMC-CONDailyBulletin). 30 As reported in Civil Society, 12 October 2011 (http://www.civilsociety.co.uk/governance/news/content/10681/charitable_ incorporated_organisation_delayed_until_next_year and http://www.civilsociety.co.uk/governance/news/content/10702/cio_hold- up_is_not_our_fault_says_commission) 31 As reported in Third Sector, 8 June 2010 (http://www.thirdsector.co.uk/news/archive/1007919/Change-exempt-charities-clogging- system/?DCMP=ILC-SEARCH). 32 In The Guardian, 27 October 2010 (http://www.guardian.co.uk/society/2010/oct/27/interview-sam-younger-charity-commission) he suggests this possibility, albeit as a scenario “purely for debate,” but one might assume that cutbacks of this nature and magnitude will have to occur with a 33% reduction in funding. 33 As reported in Third Sector, 23 September 2011 (http://www.thirdsector.co.uk/news/archive/1094951/Peers-agree-payment- trustees-spread/?DCMP=ILC-SEARCH) 34 Most recently in enacting the Charities Act 2006. 35 When in November 2007 the Directory of Social Change (DSC) asked its enewsletter subscribers if they agreed with DSC’s view that trustees should not be paid to perform their role, or for services delivered to the organisation. 82% agreed. See http://www.dsc.org.uk/NewsandInformation/PolicyandCampaigning/Policypositions/Paymentoftrustees. cobber Pack: U PL: CWE1 [O] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
Public Administration Committee: Evidence Ev 25
should not, as a rule, be paid. This is the much prized voluntary principle—the willingness of those who run charities to give time freely for the benefit of others and not for their own financial reward.36 Trustees can only receive remuneration where there is a specific authorisation in the charity’s governing document, otherwise they must apply for authorisation from the Commission. We believe that, in bowing to pressure from a minority of trustees and others with an interest in the sector who would like to see trustees paid in order to seek a deregulatory amendment to charity legislation which would reduce the need for Commission intervention the Commission risks the very nature of voluntary provision in this country which it is charged with protecting and which is so highly prized by the public.
Advice and guidance taken over by others or lost altogether? 18. As charities face the twin challenges of unprecedented financial pressures and their desire to respond positively to the government’s Big Society agenda, they will increasingly look to the Commission for practical help and guidance. This will be especially true of small and volunteer-heavy charities. Sadly, in a time of such financial pressure, the area of advice and guidance was always likely to be one of the casualties—as acknowledged by then new chief executive Sam Younger when in 2010 he said that cuts might mean the end of one-to-one telephone advice to charities and the scaling back of the Commission’s advice and guidance function.37 And indeed it is coming to pass that these “softer” yet vital areas of support for charities are being lost from the Commission; although valiant attempts are being made to involve the sector and the professions in provision, either on a self-funded or pro bono basis, the response from potential providers has so far been lukewarm, either because of lack of resource38 or because they realise that they cannot replace the definitive advice which only the Commission can give in many areas.39 As well as the practical problems potential providers raise, the dropping of this work from the Commission’s remit is in our view a false economy, wasting the wealth of experience and knowledge which Commission staff have which could be used to support charities as they strive to take on a greater role in delivering public services. As Debra Allcock Tyler, chief executive of the Directory of Social Change, has said,40 “Small charities that engage local citizens in local action need support and guidance, and they can’t pay for it. This is where the Commission’s role is so vital. Don’t worry about the big charities—they can look after themselves. Focus your energy where it is needed most. Serve the small. Never underestimate the damage that the failure of a local organisation can do to confidence in our sector.”
Conclusion PCS believes that, rather seeking a diminution in the Commission’s role—potentially jeopardising future funding and putting more jobs at risk and thereby letting down a voluntary sector and a wider donating and benefitting public reliant on its role—the above are just some of the compelling reasons to increase investment in the Charity Commission. October 2011
Supplementary written evidence from the Charity Commission Thank you for your fetter requesting further written evidence from the Charity Commission, following our appearance before the Committee on 25 October. I am happy to provide with you with the information as follows.
The cost to the Commission of each of the two voluntary exit schemes which have been operated during the current Spending Review period The total cost of exits approved under the first voluntary exit scheme was £1.9 million (£1.5 million charged to the financial year 2010–11 and £0.4 million charged to the financial year 2011–12; the cost of exits being recognised at the point the decision is made). The total cost of exits approved under the second voluntary exit scheme so far is £2.3 million. The average cost of a departure to date has been £34,000, which is marginally below the average annual salary level. Please note that, at the time of writing, there are decisions pending on a small number of exits so the final total cost may be slightly higher. 36 As defined in the Commission’s publication, Trustee expenses and payments (CC11) (http://www.charity-commission.gov.uk/ Publications/cc11.aspx). 37 As reported in Third Sector, 13 September 2010 (http://www.thirdsector.co.uk/news/Article/1028102/New-Charity-Commission- chief-Sam-Younger-reveals-save-money/). In The Guardian, 27 October 2010 (http://www.guardian.co.uk/society/2010/oct/27/ interview-sam-younger-charity-commission) he repeats this possibility, albeit as a scenario “purely for debate,” but one might assume that cutbacks of this nature and magnitude will have to occur with a 33% reduction in funding. 38 As reported in Third Sector, 10 January 2011 (http://www.thirdsector.co.uk/News/DailyBulletin/1048325/Navca-confirms-will- half-its-workforce-redundant/D8046A578845F9FB0F3951076989CFB8/?DCMP=EMC-CONDailyBulletin). 39 As reported (inter alia) in Civil Society, 26 September 2011 (http://www.civilsociety.co.uk/governance/news/content/10542/ umbrella_bodies_voice_concern_about_taking_charity_commission_advice_role) and Third Sector, 23 September 2011 (http://www.thirdsector.co.uk/news/archive/1094973/Charity-Commission-wants-umbrella-bodies-involved-regulation/?DCMP= ILC-SEARCH) 40 As reported (inter alia) in Third Sector, 9 November 2010 (http://www.thirdsector.co.uk/news/Article/1039534/Charity- Commission-cope-less-money/). cobber Pack: U PL: CWE1 [E] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
Ev 26 Public Administration Committee: Evidence
Whether any compulsory redundancies will be necessary to reach the target set for staff number reductions as part of the Commission’s restructuring plan The redeployment process is currently in progress and, until this is completed and all existing staff are either confirmed in post or identified as surplus, we will not know how many further staff reductions are required. We expect this position to be clear by the end of January 2012. The Commission has a strong track record of achieving staff reductions through voluntary means. If further reductions are required, we aim to make these through voluntary means but we cannot rule out the possibility of compulsory redundancies completely, should voluntary means not be sufficient.
The Commission functions principally affected by the staffing reductions The Commission, as you know, is moving to a new structure and so it is difficult to provide a like-for-like comparison between staffing levels across the various functions before and after the restructuring process. A key example of this is our former compliance function. Within our previous structure, this work was concentrated in a single function of the Commission with around 78 staff (as at March 2011). In our new structure, this type of work will be carried out across four operational teams based in Liverpool, London, Taunton and Newport (61 FTE staff in total), with an additional Investigations and Enforcement function (29 FTE staff) to deal with the most serious cases. Although the operations teams will be multi-disciplinary, it is anticipated that undertaking compliance activity will form a significant part of their workload. The largest percentage reductions in parts of the Commission where direct comparisons can be drawn are in the policy function (where there will be a 44% staffing reduction), First Contact (35%) and Corporate Services (31%). The reductions in First Contact, in particular, reflect our shift away from providing one-to-one advice to charities towards greater self-reliance throughout the sector and a corresponding reduction in the need for charities to contact the Commission in the first instance.
Efficiency savings identified by the Commission before the decision to reduce staff numbers was taken In the previous Spending Review, we faced an annual 5% reduction in our funding and so have already made significant savings in both our pay and non-pay costs over the last few years. Progress has been made to reduce the cost of our human resources, IT, finance and procurement functions, which in 2010 were at the median or better when compared to wider Government performance under the Operational Efficiency Programme. In addition, we out-sourced services to a value of £2.4 million (about a quarter of our total overhead costs) at an estimated saving of around £1.4 million in equivalent costs per annum. We also identified efficiency savings through in-sourcing, for example bringing our data storage arrangements in-house at a saving of £75,000 per annum. The tabie overleaf shows a complete breakdown of reductions in General Administrative Expenditure (GAE) at the Commission between 2007–08 and 2010–11 (the period covered by the previous Spending Review). 2007–08 2010–11 Reduction Reduction % Total staff—FTE 485 436 −49 −10% Administration costs £’000s £000’s £’000s Rentals under operating leases 3,577 1,621 −1,956 −55% Personnel related 1,525 1,097 428 −28% Non-rent accommodation costs 1,580 1,190 390 −25% Office services 2,410 2,042 368 −15% Contracted services/consultancy 486 398 88 −18% Specialist services 2,134 2,103 31 −1% Non-cash items 2,032 1,992 40 −2% Other 493 − 493 −100%
14,237 10,443 −3,794 −27% Having already taken these measures, it was that dear that we could only achieve further savings of 33% by reducing our staff base. Committee members also requested information on a number of specific points, which I am happy to supply as follows:
Organisations refused charitable status on grounds related to political activity A list of organisations that applied to register as charities in the last 12 months which have had registration refused on grounds related to political activity, and the reasons why in each case, is enclosed with this letter. cobber Pack: U PL: CWE1 [O] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
Public Administration Committee: Evidence Ev 27
Assessment of the operation of the Commission’s risk-based approach to regulation and its handling of complaints Our annual report Charities Back on Track (enclosed with the 13 October submission) contains a comprehensive assessment of our risk-based approach as well as statistical information on our casework and performance (including the number of complaints we received and the number of cases that were taken forward from assessment). Our risk-based approach is underlined by the Commission’s statutory obligation: in performing its functions...so far as relevant [to] have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be proportionate, accountable, consistent and targeted only at cases in which action is needed. (s1D Charities Act 1993). We publish our risk framework on our website and use it to make an assessment of all complaints and concerns that are reported to us. Following our strategic review, we will introduce a new over-arching risk framework for all the Commission’s work. We plan to publish this as The Charity Commission’s Risk Framework in early 2012 (a draft copy is enclosed with this submission). Our starting point is that charities are publicly accountable for the funding and privileges they receive because of their charitable status; responsibility for administration and management of charities rests with trustees; and that most trustees are doing a good job and that levels of abuse are relatively low. However, there will be situations where we will need to engage with charities or the charitable sector. Our new approach places an emphasis on prevention (including on pro-active, rather than reactive, work to identify and manage risks) and only intervening in serious cases, or where there has been non-compliance or abuse. In practice, this means that we will apply a three stage process: 1. Does the Commission need to be involved (including whether an issue falls within our territorial and legal jurisdiction)? 2. If yes, what is the nature and level of risk we are addressing? 3. What is the most effective response in the circumstances? In the most serious cases of regulatory concern, we will determine whether to use our formal investigatory powers and open statutory inquiries. Because of the potential resource implications for us, and for any individual charity, we will only enter into such engagements where it is strictly necessary.
Assessment of the potential areas where the legislation under which the Commission operates should be clarified or otherwise amended We were pleased to see that the terms of reference for the review of the Charities Act 2006, which will be undertaken by Lord Hodgson of Astley Abbotts on behalf of ministers, set out a very wide range of issues to be covered and we welcome this approach. Regarding our comments specifically about areas where legislation could be clarified or amended, we would like to suggest five areas: 1. The definition of charity The review should consider the descriptions of charitable purposes and the operation of the public benefit requirement. 2. Registration of charities The Act made changes to those charities which were formerly excepted or exempt from registration. We would like the review to consider what impact these changes had on the transparency and accountability of these charities and whether the Commission has the appropriate tools to ensure that the register is accurate and up-to-date. 3. Deregulatory proposals The Charities Act 2006 made changes which increased the flexibility that charities and the Commission had to resolve various situations which were difficult or burdensome for charities. These include modernising the purposes of a charity and dealing with appeals which have failed. We believe that the operation of these powers and other powers of the Commission, particularly where the Commission’s permission is needed for a particular action, could be simplified. As part of the work undertaken to support our recent strategic review, we have identified ways in which we can streamline our work and reduce our regulatory involvement to make it easier for trustees to take forward decisions about the operation of their charity. These will remove bureaucratic burdens from charities which need to make such changes. 4. Protecting charities from harm The public should have confidence in how charities operate and that they cannot be abused for personal gain. As regulator, the powers of the Commission to gather information and the operation of gateways for the exchange of information between regulators should be reviewed and enhanced. We would also like the review to look at our powers of intervention relating to trustee disqualification. cobber Pack: U PL: CWE1 [E] Processed: [30-03-2012 08:34] Job: 017018 Unit: PG02
Ev 28 Public Administration Committee: Evidence
5. Regulation of Common Investment Funds and Common Deposit Funds Common Investment Funds and Common Deposit Funds are a means by which charities are able to pool their funds for investment purposes. They form a particular type of investment vehicle for charities. Each fund is established by the Commission under powers in the Charities Acts and the Commission regulates them under the same provisions used for regulating other charities. The Government is considering the outcome of a 2009 consultation on the regulation of funds and the creation of a new type of fund for charities. Its response will follow the establishment of an EU Directive which will affect regulation in this area. This will not address all of our concerns about the difficulties and dangers in the current regulatory regime. Submission from three branches of PCS union You also asked for a response to the submission made by three branches of the PCS union. Our original submission of 13 October covers the main areas discussed here and I refer back to this for details of how we plan to work within our funding settlement and our future strategic plans. However, I am grateful for the opportunity to address a number of additional points raised. Staff working on investigations will in future be deployed across four operational teams and one Investigations and Enforcement team, as described above. Given our move towards multi-disciplinary working, it is not possible to draw a like-for-like comparison between staffing levels in our old and new structures in respect of this activity. Our capacity to address financial irregularity in charities and other serious risks will not be affected by these changes. Indeed, we hope to be able to direct more resources to compliance as a result of reducing demand for our services and encouraging trustees to find what they need on our website. Our investigations and Enforcement function will draw on the skills and knowledge within the Commission to deal effectively with issues such as financial irregularity, including where necessary opening a statutory inquiry. We know that our work with other Government agencies has resulted in successful convictions where criminality has occurred and developing these relationships will continue to be an important part of our work. I am aware that the public charitable collections provisions in the Charities Act 2006 are yet to be implemented. These would give the Commission the role of issuing certificates of fitness to conduct public charitable collections. It is certainly the case that the Commission could not take on this extra responsibility without significant additional resources. These provisions are, as you know, due to be considered in the forthcoming review of the legislation. The Commission has, on the other hand, made extensive preparations for the introduction of the Charitable Incorporated Organisation (CIO) and only awaits the ministerial decision to implement this measure. Lastly, I wholeheartedly share the submission’s appreciation of the dedication of staff at the Charity Commission. I was particularly grateful that you acknowledged this during the session on 25 October and I assure you that this was warmly appreciated. November 2011 Annex A ORGANISATIONS REFUSED REGISTRATION IN THE PAST 12 MONTHS ON GROUNDS RELATED TO POLITCAL ACTIVITY (AS AT 15 NOVEMBER 2011) The following organisations applied to join the Register of Charities in the past 12 months but were turned down on the grounds that they did not have exclusively charitable purposes and were not for the public benefit. Part of the grounds for refusal in each case related to the organisation furthering purposes related to political activity. Name of proposed charity Baby Milk Action Karama Environmental Vision 21 Ltd United Kingdom Association Sustainable Food Trust The Cyclists’ Touring Club
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