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Examination of Witnesses (Questions 100 - 104)
WEDNESDAY 6 MAY 1998
MR NICK MONTAGU, CB, MR BRIAN MACE, MR STEPHEN JONES
100. Right. That is intriguing. That project
has now clearly ended. Is this a reflection of the number of cases
that you are actually investigating having fallen over time?
(Mr Jones) Not in recent years.
As I mentioned to you, the number of cases working at the moment
is actually higher than it was in April 1996.
101. Is the number of cases that you investigate
capped by your resources? Do you have a number that you can handle
and, therefore, if there are sufficient cases that need investigating
you will do that number, or do you just investigate anything that
needs to be investigated?
(Mr Montagu) No. We do not have
that luxury any more than any other department would do. Stephen
Jones will get his annual budget which will determine how many
staff he can afford to employ on this particular area. They will
then decide a target number of accounts investigations, charity
audits and so on, and will therefore have to direct those activities
in what they believe to be the most effective way using this risk
assessment analysis.
102. Can you tell me in relation to the
number of cases which were settled and took over three years to
settle, this is again the same figure, figure 10, why the percentage
that generated no monetary recovery has been going up? Is that
because you are investigating the wrong cases?
(Mr Montagu) No. There has been
a reduction in recoveries as time has gone on, just as there has
been a reduction in repayments. There are a number of reasons
for this. Part of the reason is that as tax rates have fallen
so the sums involved have fallen and also the transitional relief
given to charities for repayment of tax credits has led to a fall
in recoveries across the piece.
103. One of the things you need if you are
going to act as a deterrent to wrongdoing is to impose some kind
of penalty or disadvantage upon the wrongdoer when you find them.
If the wrongdoer is getting away without making repayments and,
who knows, without any penalties then it is not much of a deterrent.
Can you tell me what your policy is in respect of imposing penalties
or making sure that you prosecute? You said earlier that you could
not recall a prosecution.
(Mr Montagu) No, I cannot recall
a prosecution, Ms Eagle, that is absolutely true. We would only
prosecute in cases of serious fraud and these are quite exceptional
in the charity world. I mentioned to the Committee earlier that
our main aim is voluntary compliance. If a charity has got things
wrong in good faith, if I can put it that way, our best bet is
to get an appropriate settlement, if it is an appreciable amount,
and to educate the charity so they get it right in future. To
go beyond that in a case of genuine error and impose, if you like,
a penalty on a charity which it would have to meet out of its
charitable income would I think raise questions about whether
we were well targeted. If I might remind the Committee of a point
that came up during my last appearance, we impose penalties essentially
in cases where we think there is abuse or bad faith. We abate
penalties according to the size and gravity of the offence, the
level of disclosure and also by the level of co-operation.
104. It sounds to me a little bit like the
main deterrent effect here is the length of the investigation,
but I suppose that is a bit of a facetious comment. It is important
where you do find wrongdoing to make sure that those responsible
for it suffer for it, even if it is just to ensure that the charities
which may have been duped by an individual actually tighten their
approach to these things up. I think that ties in a little bit
with what Mr Page and Mr Clifton-Brown were saying earlier on
about liaison with the Charity Commission. I want to move on briefly,
because I am running short of time, to the question of the differences
that there appear to be between the workings and effectiveness
of your officers in Scotland and in Bootle. I do not know whether
you discussed this before I came into the room. It seems to me
that there are some discrepancies which could be accounted for
by effective organisation. Do you agree with that? I am looking
at pages 39 and 40 of the Report.
(Mr Montagu) Yes. There are a number
of differences and some of those differences arise because there
are differences in the law governing regulations and the support
for charities in Scotland as opposed to England and Wales. Some
differences, for example, reflect divergent interpretations by
English and Scots courts. Another point is that FICO at Bootle
has a much broader range as well as a bigger caseload than Scotland.
The Scottish caseload is disproportionately churches, fairly small
charitable organisations, concentrated in the fairly narrow belt
of central Scotland between Glasgow and Edinburgh. We have taken
a large number of actions to bring the practices of FICO in Scotland
and FICO in Bootle into line where it makes sense. I am happy
to give examples if the Committee would want me to.
Ms Eagle: I think that is all, thank
you, Mr Montagu.
Chairman: Thank you very much. It remains
for me to thank you, Mr Montagu, Mr Jones, Mr Mace, for coming
today. We will have a report out in due course. Thank you for
the content of your evidence which can I say in terms of delivery
and presentation was exemplary, brisk and to the point. Thank
you very much indeed.
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