This report has been prepared by the Armed Forces Covenant Fund Trust for HM Treasury and is a review of all Libor Fund Grants made between 2012 – 2017 LIBOR Grants Review This report has been compiled for HM Treasury by the Armed Forces Covenant Fund Trust, which manages the administration and governance of LIBOR grants on behalf of HM Treasury. It provides an update on grants awarded under the LIBOR grants schemes. The government’s LIBOR Scheme totalled £973 million from banking fines received from the Financial Conduct Authority between 2012 and 2015. In 2012, HM Treasury announced that LIBOR fines would be used to support the Armed Forces through the introduction of the £35 million, Armed Forces Covenant Grant Scheme. As the value of income received from fines increased, the government made more announcements relating to additional schemes to which LIBOR funding would be committed. The initial pledge that the money would support Armed Forces charities and good causes was later expanded in October 2014 to include “Armed Forces and Emergency Services charities and other related good causes that represent those who demonstrate the very best of values”. 1005 grants and sub-sets of grants, across five funding schemes have been listed in this report. All have been reviewed and have been either closed or placed into active grant management. The LIBOR Grants Schemes LIBOR Funds awarded by the Chancellor of the Exchequer (the HMT LIBOR Fund) £35M Armed Forces Covenant Grant Scheme £40M Veterans Accommodation Fund £10M per annum Covenant Fund £30M Aged Veterans Fund In April 2015 the Prime Minister announced that £200 million of the fines were to be dedicated to funding 50,000 new apprenticeships for 22–24 year olds over three years. This activity does not form part of this review. Background to the LIBOR Grant Schemes In September 2017 the National Audit Office published a report into the Management of the LIBOR Fund1. This report explained how the government has distributed the money. Funding for the grants came from LIBOR fines. The Financial Conduct Authority (FCA) fined eight banks a total of £688 million for LIBOR offences between 2012 and 2015. The FCA transferred the whole amount to HM Treasury in accordance with legislation. In June 2015, the Chancellor added a £284million Forex fine to the LIBOR Fund. Up to September 2017 1 https://www.nao.org.uk/report/investigation-into-the-management-of-the-LIBOR-fund/ the government had committed £933 million of the £973 million. In November 2017 at the Autumn Statement a further £36 million was committed to 96 organisations2. The majority of this funding has been to support Armed Forces and Emergency Services charities and other related good causes. HM Treasury and the Ministry of Defence (MoD) have distributed £592 million of the LIBOR funding since 2012 to a range of different causes that they judge to demonstrate “the very best of values” and meet with the government’s pledge for the use of the funds. Of the £933 million committed to the Fund, £141 million has yet to be distributed but will support the Covenant Fund. The Covenant Fund is a scheme that will make grants up to £10 million per year in perpetuity and is funded initially from LIBOR fines. The Covenant Fund is now administered by the Armed Forces Covenant Fund Trust. Staff at the Trust also manage the: Aged Veterans Fund; Veterans Accommodation Fund, the £35 LIBOR million programme; and the grant management of HMT LIBOR grants distributed by the MOD. Not all grants from the LIBOR Fund had terms and conditions attached to them as standard until the Autumn Statement 2015. Grant holders contacted as part of the review were asked to sign a declaration regarding their grant expenditure. The NAO review (September 2017) highlighted that HM Treasury and the MoD could not, at that stage, confirm that the charities had spent all grants as intended. However, HM Treasury had already commissioned MoD in January 2017 to carry out a retrospective review of all grants awarded since 2012, in order to provide assurance as to how the grants were spent and provide information for future monitoring. Government Departments held differing levels of information on grants depending on when they were paid and from which scheme. The MoD, through the Covenant Fund is now using a grant from the LIBOR Fund for a project to help understand the needs of the Armed Forces community. This will inform the distribution of the £141 million of LIBOR funding still to be spent from the Covenant Fund grant scheme. MoD is also using a grant from the Covenant Fund to pay for the creation of a measurement framework in order to be able to assess impact on an ongoing basis. HM Treasury has committed previously to conducting an external (independent) evaluation into the impact of LIBOR funding, once it had completed this retrospective review. Planned originally for 2018, it is now assessed that it is too early to make a judgement on the impact of LIBOR funding as a whole, as a significant number of grants remain ‘live’; some grants are profiled to continue until Financial Year 2021. This impact evaluation will now report by the end of 2021; a competition to select the evaluating entity will commence in 2019 in order to allow work to commence early on grants which are complete. The Review Process The aims of the review were to examine grants awarded using LIBOR funds and to ensure that they were being used/had been used for their intended purpose. 2 https://www.gov.uk/government/publications/LIBOR-funding-applications/LIBOR-grants-2017 The review ascertained: the status of each grant to confirm whether the project was complete, or if still ongoing, the likely completion date; how much of the grant funds had been spent; and the grant holders plans to spend the remainder of the grant. Officials contacted grant holders and requested the following information: 1. A summary of the project and the difference that it is making to beneficiaries. 2. Financial information/evidence on how the grant has been spent; and the total costs of the project. 3. Information on outstanding grant balances and when the project will be completed. 4. Evidence of activity. 5. Plans to spend the remainder of the grant. As part of the process; grant holders signed a declaration electronically to confirm that: • the information in the report was accurate and true and had been approved by the governing body of the organisation. • the money from the LIBOR Fund has been used exclusively for the Activity described in the original application (if applicable), together with any changes that have been agreed with the Grant Management Team since then. • there haven’t been any significant changes to the Activity or the governance of the organisation, apart from any highlighted to and agreed by the Grant Management Team. • they have informed the Grant Management Team about all other sources of funding for the Activity and they haven’t received any duplicate funding for the activities, services or facilities that the LIBOR Fund is paying for. • they have sought to achieve value for money for the Activity by securing goods and services at reasonable prices. • the organisation keeps full and proper accounts and records, including invoices and receipts, which show how the money from the LIBOR Fund has been used. • the organisation hasn’t disposed of any LIBOR funded assets without receiving prior permission from the Grant Management Team in writing. • the organisation is following all current statutory requirements and other laws and regulations relating to the project and its work including: adherence to employers’ liability insurance; the national minimum wage; the working time directive; health and safety; safeguarding of children and adults at risk; data protection and intellectual property rights legislation. When reviewing a grant, information provided by the grant holder was used; along with other external sources, including the organisation’s published accounts and other publicly available information. The information provided in this review is therefore as accurate as those sources and the cross referencing between them allows. Reviews were conducted by experienced grant making staff. The review is an ongoing piece of work that supports the progression of earlier grants into active grant management, where grants are routinely reviewed as part of an end to end grant management process. All grants have been reviewed and no evidence of misuse of funds has been identified to date. Contact grant holder and obtain monitoring data Review monitoring data and published accounts Close grant if project complete and no further post award monitoring is required Move grant into regular grant management if activity is ongoing; using data from the review to inform future monitoiring activity Close grant when all post award monitoiring is complete Figure 1; the review process and its relationship with active grant management As part of each completed review, the grant was assessed to see if the Activity is ongoing or closed. A closed status refers to a grant that has spent its grant funds on the intended activity and where there is evidence of that Activity. 33 HMT LIBOR grants were closed as part of the review process. A further 71 grants awarded under the £35M Fund were closed or confirmed as previously closed by officials. Most grants are ongoing; the majority of these have a balance of their grant to spend and have provided information on how they will spend this. In some cases, a project may have spent all of their LIBOR grant, but it is appropriate to keep the project in grant management as the Activity may not yet have concluded, with the balance being funded from other sources.