Examination of Witnesses (Questions 60
WEDNESDAY 10 MAY 2000
60. I am happy to have Mr Hornsby's views on
(Mr Young) Okay. It is for them to judge at each stage
61. I think you are biding time to think.
(Mr Hornsby) I am there. I will carry on.
62. Excellent, Mr Hornsby. Fire away.
(Mr Hornsby) The concern you have, and I can understand
this, is did we only get energised when the NAO picked up some
naughtiness and that triggered us into action? If you look at
the sequence of events, I entirely accept that we hadto
use Mr Steinberg's wordrather shoddily paid money out without
the rigorous enforcement of the initial special conditions over
the detailed plans. That said, we issued a number of reminders
and visited the project in February 1998 before the NAO were on
the scene. So this was not a case in the Pakistan Centre of the
NAO having picked something up and us then saying we redoubled
our efforts. We were on the case after the initial error. We did
a number of bits of chasing, we visited them, and, as Mr Young
said, it came right at the end. Could I just refer to your earlier
comment about staffing? When we were set up we did not know, nor
was there any model which could predict, what volume of applications
we would get. On the Charity Commission register there are between
300,000 and 700,000
63. I have a question directly on that. When
did you realise and what did you do about it?
(Mr Hornsby) We staffed up with, as I say, 43 permanent
staff and we deliberately used outside assessors. Once it became
clear, which was after the closing date for the first grant round,
that the likely volume of applications would be between 10 and
15,000, we then looked again at our support systems, at the balance
between the number of outside assessors and inside assessors,
at the way we had largely decentralised the work, and we staffed
up further. So that by the time we had the volume of applications
in for the second and third round, we were better staffed. My
comments about under staffing were it would not have been practicable
to put in place a comprehensive set of staff against an unknown
volume of demand. We reacted as quickly as I think we could.
64. What you are saying is you had adequate
staff before you strengthened the procedures. The final two questions
relate to how can it be that a number of organisations received
over half a million poundsand that is on page 38without
providing either audited accounts or quotes for capital purchases?
(Mr Hornsby) Which particular paragraph?
65. Paragraph 3.26.
(Mr Hornsby) The situation there, as I have said,
was that there was not comprehensive 100 per cent compliance with
the terms and conditions at the time that these schemes were being
managed. In the event, as I have said, we did get the information,
albeit late, and, as I have said, the schemes did prove satisfactory
but there was a processing error linked with the sheer volume
of work which the grant officers had.
66. Mr Hornsby, can you tell me what the Charities
Board's view is of the relationship that it should have with local
(Mr Hornsby) We, from the outset, consulted the various
local government associations about the scope and focus of our
programmes in the way that we consulted the voluntary sector.
We provide the best information that we can to the lottery officers
and local authorities, who act as a conduit of information, and
my regional managers have regular discussions with the chief executives
of the local authorities about the volume of bids in an area or
about the particular needs and pressures. I would see local authorities
as being a valuable source of information and statutory authorities
where we would want to know what their programmes were.
67. When inquiring about something entirely
different, I had it verified for me that the Lottery Charities
Board is the only one of the lottery organisations that does not
inform local authorities of applications for grants from organisations
within its area, is that correct, and if so, why?
(Mr Hornsby) It is correct, and the reason is this:
in the case of colleagues in the Sports Council, they can grant
local authorities and there is a duty on local authorities to
produce comprehensive strategies in their area. In our case, we
grant non-statutory authorities, voluntary, philanthropic and
benevolent. When we consulted the sector, they were extremely
keen to say to us, "We want our bids looked at on merit and
completely independently. We may have had a run-in with the local
authority, we may be a voluntary body, but that experience was
a good experience. We want the judgments you take on our scheme
to be on the basis of the application and your professional assessment."
The sheer volume of our schemes, which is three or four times
that of any other lottery distributor, would cause a logistical
difficulty in consulting the local authority if we were going
to turn them round, but my board felt there was the policy point
that if we started consulting local authorities on independent
voluntary sector activity, we might be in a position where we
would be told, "Why don't you consult health authorities
or others?", and the voluntary sector itself was very clear
that it wanted an independent view, but the premise of your question
68. Turning part of your question the other
way round; if you are getting such a large volume of applications,
which I understand you are, could a local authority not help you
to weed them out?
(Mr Hornsby) I do take your point in terms of a sift.
69. We talked earlier on about the difficulties
some organisations have had with planning permission and other
difficulties that other organisations have had with premises.
Is that not an opportunity for the local authority to help out
in both of those cases?
(Mr Hornsby) I think that most of the groups who approach
us would, as a result of advice from their CVS or others, in any
case, be approaching the local authority and, as was made clear,
they would need to for development control reasons. I do not think
we need to tell these sorts of groups, "You should consult
your local authority", they would be doing so anyhow.
70. As I understand it, the policy has now changed
in relation to grants, in that you are now allowed to be proactive
rather than await applications from organisations. Is that not
a perfect case where a local authority who knows local circumstances
could assist both with finding the organisational talent and,
indeed, focusing on the need within the local authority area?
Are they not perfectly placed to be able to help with that proactive
(Mr Hornsby) I entirely accept that. As I said earlier,
our regional managers discuss with chief executives in those areas
where we are particularly targeting to drum up a richer mix of
applications. We have arranged joint seminars with local authorities,
open days, helper sessions, so what you are saying is true and
we are doing it.
71. I would go on to mention about the help
that they could provide in preparing applications, and that they
could assist in deciding whether the people concerned can provide
applications. Can I refer you to the end of the report on page
47, where it talks about key factors? This is paragraph 3.46.
It says, "Key factors which influence how each organisation".
If I go through all of them, on almost every one of them a local
authority could provide an independent view to assist your organisation
in making those judgments, yet you do not seem to be able to use
them. Are you really telling me that the sensitivities of the
local organisationsI understand those sensitivities and
I do know of a number of voluntary organisations and charities
that have had run-ins and policy differences with local authorities,
so I do not underestimate the need for sensitivity in this area,
but are there so many strong reasons why local authorities could
and should be involved in this, not least that they would know
where additional finances coming in from organisations like the
Lottery Charities Board could be used?
(Mr Hornsby) We did run, in Scotland, after discussions
with COSLA and SCVO, an experimental scheme under which we consulted
the local authorities in Scotland above a particular threshold.
I have to report that although the general reasons you give for
the advantage of that are strong, our practical case work experience
of how it worked was not particularly positive and in the tripartite
negotiations we had, we decided we would not continue to do that.
We did have a pilot to see whether it would be as helpful as we
thought it might be, and, frankly, in the event, it was not.
72. I noticed earlier in response to a question
from Mr Steinberg, you told him how many grants and the total
amount of money that was provided to Durham. I am hoping you are
now going to tell me the situation for Edmonton.
(Mr Hornsby) I am going to have find
the right crib sheet. £1,286,270.
73. I am rather pleased with that. I have been
trying to find out that figure and had some difficulty in the
past, so it is very nice to have an accurate figure. That presumably
is up until the end of last year?
(Mr Hornsby) Yes. I should say, because it is a very
relevant question, any MP who wants to know the scope, or the
number, or the details of grants in their constituencies, if they
write to me, write to the regional office or write to the Director
of England, our information retrieval system proudly boasts that
we can provide a constituency sort at the push of a button, and
that is a service we would be very anxious to provide for Members
of Parliament. We do, when we send Members of Parliament our annual
report -a thrilling readautomatically include a constituency
printout. But if, in between those statements, MPs are interested,
we would certainly see it as our duty to provide them with it.
74. Mr Young, in an earlier answer you indicated
that the overall policy framework for the lottery distributing
body was set by your department. I wonder if that policy framework
includedand this is in terms of the distribution of grant
fundseither that they should be focused on more deprived
communities, or whether there was any attention made to focusing
on communities from which the bulk of lottery funds are raised?
Do either of those appear within your remit of policy directions?
(Mr Young) The first but not the second I think is
the answer. Under the 1998 Act this Government made important
changes to the Lottery legislation. That 1998 legislation for
the first time required distributors to produce strategies for
addressing the needs of their sector. It allowed them, as has
been mentioned, to solicit applications for the first time to
address those needs. It encouraged them to go ahead with joint
schemes with other distributors. Under policy directions laid
down under the Act we require them now to ensure that all parts
of the country have access to funding. It produces a new focus
on people from all sections of society in order to tackle social
inclusion and we have focused on young people in particular. We
have helped them produce strategies which address just those needs.
Under the policy directions, which we have issued under the 1998
Act, for the first time distributors have been obliged to focus
on social exclusion issues including young people in particular
and equal and fair shares to all parts of the country. I think
that is yes to the first part of the question but that implies,
I think, a no to the second part of your question. It is not Government
policy that where more people buy Lottery tickets they get more
money out of it. In the case of the Charities Board they distribute
between regions according to a population and needs assessment
basis formula which is in line with our strategy and the Lottery
legislation does direct resources to where the need is and if
that is not where people buy tickets then it is definitely a no
to the second part of your question.
75. Can I just say for Mr Hornsby's ears that
a quick calculation shows that you are not doing too bad in relation
to the amount of money that is put in from my local area into
the National Lottery.
(Mr Hornsby) I am very grateful.
76. To the second question you seem to be doing
quite well. Can I pursue you on the first part. What changes you
have made since 1998 to respond to the new policy guidance that
has been given from the Department?
(Mr Hornsby) From the beginning we were the good boys.
The distribution of resources since its inception by the Charities
Board has been, as Mr Young has said, on a population weighted
by deprivation basis for each country and for each region within
England. What we have done post the 1998 Act is to try and take
this down to a smaller level. If I may give an example in Scotland.
In the early days Edinburgh was undoubtedly punching above its
weight, partly because of the coverage by some very effective
highly organised voluntary groups. Glasgow, which had areas of
very significant deprivation, particularly in the east, was producing
fewer applications. When we tracked this through, post the 1998
Act, what we did was we set up a separate office in Glasgow. I
think physically in terms of providing a presence and a help desk
it looks better than running it from the foot of Edinburgh Castle.
We provided a series of helper sessions. My Scotland Committee
asked for a calibration of the comparative amount and as a result
we are now making a greater proportion of grants in that area.
So within countries and within regions post the 1998 Act we are
looking at the possibility of a degree of spatial targeting where
there is a mismatch, where there are very significant needs but
we are just not getting the applications or we are not able to
make the grants. So that is the rebalancing act at a more local
level that the Charities Board is seeking to do.
77. Can I pursue you on this, and I am thinking
now about the proactive element. Recognising that deprived communities
have greater difficulties in being able to assemble the expertise
and the organisation to be able to apply for grants, what resource
in terms of assistance, education, support, can your organisation
put in as well to help engender that expertise and that commitment
from a local community that needs those resources?
(Mr Hornsby) I take the point. Under our community
involvement programme we are prepared to fund capacity building
for voluntary sector infrastructure to enable the small groups
to get the training or the learning or the skills or sometimes
the equipment which will make them more effective. We have run
a pilot scheme in BarnsleyBrass for Barnsleywhere
we have specifically said we will earmark £3 million for
potential grant and we invitedand my Chair was present
on the occasiona large mix of some of the more challenged
voluntary groups to come to a meeting and say "What can we
do to help you put in decent bids". We have tried to do exactly
what you suggest.
78. One of the restraints on being able to do
that must be the level of finance you can commit to the administrative
side of your function?
(Mr Hornsby) Yes.
79. If we assume you do need to put a greater
resource into getting organisations up and running, but I suspect
there will be a continuing role also in terms of monitoring and
ensuring that things do not begin to go wrong, as has been indicated
they have in some cases in this Report, are you going to have
to come back to the Department and say "If you want us to
implement a policy direction for giving you need to give us more
resources in order to achieve that"?
(Mr Hornsby) We are fortunate in that our source of
income is 4.7p from every Lottery ticket so we do not actually
go back to the Department cap in hand, in terms of a non departmental
public body that is grant in aid. Currently we are spending about
£24 million on overheads and administration, that is about
eight per cent of our total income, which compares well with the
percentage spent by other grant makers. I think if we work efficiently
and if we run a tight ship we should be able to release sufficient
resources for the sort of help and support work you suggest and
still keep within a ten per cent ceiling. My Board is extremely
keen on cost effectiveness. They have suggested as a discipline
that the amount we spend on overheads should be less than ten
per cent of income on the grounds each pound we spend on that
is one pound less to be spent on grants. Also, we do submit to
the Department our management accounts and our overall budgets
but I should say the Department have been both relaxed and supportive
about the switch we do where we are paying rather more now on
administration than we were in the early days, precisely because
of the developmental needs you mentioned.
Mr Love: That brings me back to my original
point about having a relationship with local government to assist
you in that very difficult task that you are now being set. I
will not ask you for an answer because we need to move on.