Examination of Witnesses (Questions 1-19)|
WEDNESDAY 28 NOVEMBER 2001
1. Good afternoon, and welcome to the Public
Accounts Committee. This afternoon we are looking at the Comptroller
and Auditor General's Report on the Charity Commission's regulation
of charities. We welcome Mr Stoker, who is our witness today.
Would you like to introduce your colleague?
(Mr Stoker) My colleague is Simon Gillespie who is
the Director of Operations, Chairman.
2. Thank you very much. This is a very important
subject. There are 185,000 charities, two million trustees. In
the past this Committee has been quite critical but there have
been improvements. I will not ask you to detail those improvements
but you will have the opportunity during the course of the afternoon
to show what progress you are making. I will go straight into
asking a few questions so that I can open up some issues for my
colleagues. There has been some criticism in the past and it is
mentioned again in this report that when problems arise in charities
the Commission's investigations are not always as rigorous and
thorough as they should be. What assurances can you give us on
this matter, Mr Stoker?
(Mr Stoker) The assurances I can give you, Chairman,
are that we recognise and have done something about the difficulties.
Over the past 18 months we have actually reviewed the procedures
for carrying out investigations pretty much from top to bottom
and for the first time we have put the result of that into a comprehensive
manual for investigations staff which addresses a great many of
the particular points which are raised in the NAO's Report, including
issues like selecting and allocating resource to investigations
on the grounds of a structured analysis of risk, such things also
as regular monthly reviews in the management line of each investigation
as it proceeds, the construction of a proper study plan for each
investigation and an organised and consistent approach to follow-up
once investigations are closed. The other thing is that we made
investigations very much a main feature of the bid that we put
into the Comprehensive Spending Review for 2000 and, as a consequence
of that, we are having a substantial increase of the order of
one million pounds being spent on investigative work which comes
on line next spring in April 2002. Those, I would say, are the
3. Thank you very much. There is a criticism
raised in paragraph 2.10 of the report that sometimes your inquiries
do not go beyond the original cause for concern. I think there
is a particular case, I think it is case two, which mentions the
problem. Would you like to answer that question? How are you ensuring
you do not get your people just to look at the original cause
for concern but actually seek to go behind the picture, as it
were, and see what is causing the problem?
(Mr Stoker) The thing here is that a lot of attention
is paid in the new procedures to what happens at the outset of
an inquiry. Among other things there is a prompt there for study
officers to consider what they need by way of professional advice.
A feature of the way that things are working, and will work in
the future, is you will have little running teams which will include
a manager who is overseeing the study officer generally, plus
often a lawyer and/or an accountant, and from that process you
will get a more rounded picture and a more rounded initial study
of the issues in the report. The other thing that the regular
monthly review by line managers in the line is supposed to achieve
is exactly to keep track of where the investigation is going,
what issues are coming up and always what the exit strategy or
the next step should be. These new procedures are very much designed
to have a broad mind, where that is required, on the subject at
4. Let us just stay on case two for a moment,
which is on page 18, and refers to unauthorised street collection
and a concern that we have, presumably you have, to help local
authorities combat these. Would you like to share with the Committee
the name of the charity involved in case two?
(Mr Stoker) I will indeed share it with the Committee
if that is what you and they would wish, but I would just point
out that to my knowledge the charity concerned has not had any
prior notice that they are likely to be identified this afternoon
in a public forum.
5. We will deal with that in private session,
thank you very much. Do you want to make any general comment about
unauthorised street collections?
(Mr Stoker) Yes, I could say a fair bit about unauthorised
street collections but perhaps what I would say on case two is
this is definitely not one of our best or better cases. It has
been followed up and the review that is referred to at the end
in the commentary has been carried out but there are continuing
concerns with this charity and an inquiry is now open into it.
6. We will come back to that in private session,
if we may, at the end. There is some concern that sometimes once
you have made these inquiries, and I know you are doing your best
on that front, you have difficulty ensuring that the charities
are actually implementing the agreed recommendations. Is this
a concern for you? What steps are you taking to overcome this
(Mr Stoker) It is a concern for me that before we
had the new procedures codified there was not a consistent approach
to this issue. What the new instructions now include is consistent
arrangements for closing inquiries which specifically require
an action plan to be put in place and revisited a suitable period
on. The failsafe would be six months but it might be more or less
in a particular case. I think this is a message that we have picked
up and are very much trying to build into the way that we do this
7. Case five on page 21, I think, shows different
parts of the Commission are operating different policies. Would
it be fair to say that your investigatory staff are under enormous
pressure? We are talking about 185,000 charities. Do you think
they have the resources to deal with the problem adequately and
to reassure the public that in this huge area things are not happening
that should not be happening that you are not aware of?
(Mr Stoker) This is page 21?
8. Case five. You do not have to worry too much
about finding your place in things, just deal with the general
point. It is the pressure on your investigatory staff given the
vast area they have to cover.
(Mr Stoker) Yes. You are always going to have a problem
of where you put your resource if you have got 500-odd people
and £21 million and 185,000 charities in the catchment that
you are trying to regulate. Inevitably that means priorities and
choices, including some things taking lower as well as higher
priorities. The way that we think this needs to be managed is
actually to apply resources as smart as we can. Examples of that
would be the extent to which we rely these days on information
technology. Five years ago we did not have a website and now we
have a website with extensive information and guidance on it,
together with other relevant information including, for example,
reports on our investigations for the first time since last year.
That has had a considerable effect in pre-empting what might previously
have come to us as specific case inquiries. We have also done
a great deal of work on reviewing and integrating the helplines
through which we give guidance to telephone enquirers. That is
now an integrated operation and we are moving towards the aspiration
of a full contact centre approach for aspects like that. The common
feature in this, and in many other features of the work that we
are trying to do, is we are trying to get the maximum return from
what we spend and to reach the maximum number of people through
all the avenues open to us, including the website.
9. That is all I want to ask you on that subject,
investigating charities, because colleagues can come back on those
points. I want to ask you a couple of questions on registering
and supporting charities. The charities themselves have to carry
out their own checks to ensure that all new trustees are suitable.
What evidence do you have that these checks are being carried
out properly and are effective, or indeed that they take place?
(Mr Stoker) The evidence that we have so far is that
the picture is patchy. We have done some survey work on this for
the purpose of a study that we are piloting for our thematic reports.
We do think that it is an area where advice needs to be codified
and brought together and we are planning to do that this financial
10. Okay. Can I ask you one question about administration.
I was sitting in the International Development Standing Committee
yesterday when the Minister said that the administration costs
for charities range from five to 12 per cent, quite a wide range.
Are you happy with that very wide range?
(Mr Stoker) I think a wide range is inevitable given
the enormous diversity of charities and the kind of work that
they do. If I could just give a couple of examples. If you have
a charity which is a hands-on operator which is delivering a service,
like care for the disabled or elderly, the chances are that is
going to have quite a high administrative cost level. If, on the
other hand, what you have is a charity which is a large, old-fashioned
endowed charity whose business is to give grants you would expect
to see a very, very much smaller percentage of total cost going
on administration. You have to look very carefully at categories
of charities within charity as a whole and the picture is a complex
one. On the wider question though, I think that there is certainly
scope for bringing pressure to bear and certainly scope for bringing
attention to bear on the performance of charities in this and
in similar respects and we intend to do our bit in developing
11. The important thing here is transparency
and the vital role of the annual reports. What role do you see
for your Commission in ensuring greater transparency in comparing
the performance of different charities with regard to the annual
(Mr Stoker) Part of it is the basic ground work of
having the accounting standards and reporting standards codified
and out there. Before accounting periods beginning in early 1997
there was no standard consistent set of accounting standards that
charities observed. We introduced those in 1995 for periods subsequent
to early 1997 and we updated them in 2000. The introduction of
that was itself a big forward step, and there were changes in
2000 aimed to encourage charities to give a better and more rounded
picture of their activities than had been the case up to then.
The cases in the NAO Report show, and I think I would agree that
they show, a general need, that transparency and accountability
has not yet taken root as much as it needs to in that area. We
intend to keep up the pressure through our general contacts with
charities to improve the standard of narrative reporting as far
as we can. We are also in discussion with the Performance and
Innovation Unit who are, of course, considering this as one of
the matters in the study that they are doing that they have rightly,
I think, seen as an area for priority.
12. Figure three shows that one of the risks
faced by the charitable sector is poor governance. What is the
Commission doing to tackle this risk of poor governance?
(Mr Stoker) I think that practically everything that
we do has got a bearing on this. The work that the Commission
does is aiming to produce good governance and good practice generally
on matters of regulatory concern through the life cycle of a charity.
The way that we deal with registrations is aimed at spotting and
handling risks of this kind at that stage. A lot of the work that
we do in the mainstream charity case work is involved with, if
you like, preventative work to give charities the advice and guidance
that they need to operate properly within governance parameters
which are acceptable. We monitor an awful lot to see what the
actual picture out there is on the ground and we do that with
the accounts each year of every charity which raises or spends
more than £10,000. Of course, if all else fails there is
evaluation and investigation. The whole thing is a continuum which
addresses governance issues right across everything that we do.
13. Can I ask you about charity support cases.
We see from paragraph 3.13 that the average time taken to clear
cases has increased from 80 days to 112 days.
(Mr Stoker) Yes.
14. Are you happy with this trend?
(Mr Stoker) I am not happy with that trend but the
hard truth is if you are in a position where your resources and
budget are capped for six years so you are being cut in real terms
by 11 per cent over a period then something sometimes has to give
if at the same time you are getting a case work increase in demand
of 42 per cent. I am not happy with it. The comfort I take from
it, to the extent that I do take comfort, is that the customer
surveys which we have now started to dowe did the first
last yearshowed that 83 per cent of our customers were
content with the standard that we delivered and only two per cent
15. A very last question to wrap up. This Committee
in the past has been critical of you, that your attitude has been
to enforce legislation, you have not had a sufficiently proactive
role. Of course, charities operate under a very traditional framework,
many of them have been set up for a long time, but we live in
a very different world now and charities are really business organisations.
Are you satisfied that you are changing the whole culture of your
Commission to take this proactive role to seek out and deal with
(Mr Stoker) I am, Chairman, yes. We have got a major
increase in activity coming up next spring. If you look at the
areas where that is happening, it is happening in IT, which is
partly connected to the Government targets but which has a big
spin-off in terms of communications and influencing the world
out there, there is putting a more proactive and structured approach,
a regulatory approach, on to the visits that we make to charities,
there are investigations where, as you will have seen from the
figures in the report, one of the trends here historically is
that more and more of what we do is generated from our own monitoring
and our own resources, and we are also doing for the first time
thematic reports taking a leaf, if you like, out of the NAO's
book to take a cross-cutting look at issues in the sector out
there and use that to highlight good practice, bad practice and
areas that need attention. I think those are all very proactive
Chairman: Thank you very much, Mr Stoker. Mr
16. Thank you, Chairman. May I apologise to
Committee colleagues and to the witnesses for the fact I have
to leave early, and that is why I have come in early, but today
is the day of the great parliamentary occasion of the year, the
Welsh Grand Committee. I have already missed a part of it and
I want to be in for the end, my apologies. May I say it is good
to see someone new here because my recollection is your predecessors
were not happy. I remember the Committee being infuriated by the
complacency and the lack of responsiveness. I am hopeful from
what I have read that will be a thing of the past. In the spirit
of wanting to help you, which is the purpose of this Committee
as well as having to monitor what you are doing, I see that you
are seeking access to the Police National Computer to check the
suitability of prospective trustees for new charities. Is that
application going favourably to the best of your knowledge?
(Mr Stoker) This is a long running story, Mr Williams,
and the person who is most up-to-date on it is my colleague, Mr
17. In that case, to save us going over the
same ground twice, can I ask the second part of the question which
is what puzzles me is that you are not seeking a role relating
to the suitability of trustees appointed by existing charities,
only new charities. Can you encompass in your answer, if possible,
both aspects of this?
(Mr Gillespie) I will take them both together, if
I might do. Firstly, the Police National Computer is something
of a long running saga. I think it is true to say that we would
welcome any support that is given by this Committee in continuing
our negotiations for access.
18. What is the obstacle? Is it data protection?
(Mr Gillespie) There are elements of data protection.
The Commission does not have a clear statutory mandate to have
access to this information so, therefore, it is a question of
persuasion and convincing rather than being able to hit with an
Act of Parliament, for example. That access will be available
to authorised Commission staff if we are given access in the first
place and that will be available for all aspects of the Commission's
work but it will obviously all be carefully controlled and the
Police National Computer Authority will make sure that we are
properly regulated in that respect. As far as checking trustee
details generally is concerned, we do conduct a number of checks
at the moment as far as the visits programme, checks into trustees
that are already in charities. There is a huge scale issue here.
As the Chairman has mentioned, there are a large number of trustees
and in many cases those turn over quite regularly, sometimes as
often as annually in the case of Parent-Teachers' Associations,
for example. Trying to keep track of everyone I think would be
an impossible task, so we will be looking to target our resources
and our access on areas of risk, not just on those trustees coming
on to the Register of new charities.
19. I can understand the logic of wanting to
deal with new appointees but I would have thought the same logic
applies under new charities or old charities, the same principle
applies, and at least if you cannot deal with the backlog you
can start ensuring that newcomers to both sections, old and new
charities, are monitored effectively.
(Mr Gillespie) We are trying to approach this on a
risk basis. We already do trustee background checks into all of
the charities that are visited as part of the review visits programme.
That is being piloted at the moment with 150 visits and as part
of the new money that goes up to 600 visits next year, so we will
be looking at the trustees of 600 charities.