Examination of Witnesses (Questions 1-19)
SIR
JOHN BOURN
KCB, COMPTROLLER AND
AUDITOR GENERAL,
NATIONAL AUDIT
OFFICE AND
MR BRIAN
GLICKSMAN CB, TREASURY
OFFICER OF
ACCOUNTS, HM TREASURY.
23 NOVEMBER
2005
Q1 Chairman: Good afternoon. Welcome
to the Committee of Public Accounts, where today we are looking
at the role of government funding in the voluntary and community
sector. We are joined by Sir John Gieve, who is the Permanent
Secretary at the Home Office, by Ms Helen Edwards, who is Director
General of the Communities Group, and by Ms Anita Charlesworth,
who is Director of Public Services at the Treasury. Ms Charlesworth,
why are you here?
HOME OFFICE
AND HM TREASURY
Ms Charlesworth: Because the Treasury
led on the Cross-Cutting Review and we are working with the Home
Office to ensure its effective implementation.
Q2 Chairman: What can you tell us that
Mr Glicksman cannot?
Ms Charlesworth: I led on the
team throughout the Cross-Cutting Review. I have a team working
with me in the Treasury in our Public Services Directorate, who
work with the Active Communities Directorate in the Home Office
on its implementation and we are doing a number of elements of
work, such as guidance to funders, to see that through, so we
thought it would be helpful if I attend.
Q3 Chairman: As the Treasury has somebody
who oversees every part of the public sector, can we now look
for a Treasury representative to always appear at the Committee
upon Mr Glicksman's retirement in two weeks' time? What is the
answer?
Mr Glicksman: Perhaps I ought
to comment, Chairman. You may have noticed I do often come with
some support from the Treasury and if the Committee wished, I
am sure that a representative of the Treasury could accompany
me at the witness table and help the Committee in its deliberations.
Q4 Chairman: What does the Comptroller
and Auditor General think about the new way of proceeding in our
affairs on Mr Glicksman's retirement?
Sir John Bourn: I think I would
put it this way to Mr Glicksman: you do get the general expertise
of the Treasury official who is concerned with accountancy and
audit matters. Today, you have Ms Charlesworth who deals with
a particular subject. In that sense, of course, what she has said
about the value of her knowledge and the re-enforcement of the
Home Office's responsibility is to give something that the Committee
does not usually have. Perhaps you will want to evaluate today's
session and see whether that would be, from the Committee's point
of view, a better way of arranging affairs.
Q5 Chairman: I think a very interesting
precedent has been set, and I think I might consider, if the Committee
is agreeable later on, writing to the Permanent Secretary and
suggesting that the Treasury always send a representative. Sir
John, over to you now. Could you please look at paragraph 11,
page 3. Sir John, would it be fair to say to you that Whitehall's
lack of expertise in joint working is limiting the role that the
voluntary sector can play in delivering services? Would that be
a fair criticism, do you think?
Sir John Gieve: Yes, it would
be a fair criticism. We think we are getting better, but this
Report says that there is a long way to go.
Q6 Chairman: That is a very fair answer,
thank you very much. After all, there are a number of recommendations;
you can find them on page 6, in paragraph 20. I just wonder whether
you thought some of those recommendations, particularly 2, 3 and
6, might be something you can work on?
Sir John Gieve: Yes is the answer
to that. I have got ticks and no crosses against these recommendations.
Q7 Chairman: So when the Treasury replies
to this Report, we will look to a yes on these, will we?
Sir John Gieve: Yes. Some will
have some glosses about how we will do it, but, generally, we
agree with these.
Q8 Chairman: While you are offering agreement,
are you happy with 7, 8, 9, 10 and 11 as well? Ticks against those
or crosses?
Sir John Gieve: I have got ticks
against them. For example, on 8, where it talks about sharing
expertise across different funders, we are trying to do that with
four Departments; we will see how it goes.
Q9 Chairman: That is fine. Two very positive
answers, Sir John. You are doing well today. Let us carry on.
Sir John Gieve: I have got the
Treasury beside me. I am going to bring them here every time!
Q10 Chairman: You are on your best behaviour.
Can you please look at this figure 8 on page 22 and it follows
on from paragraphs 2.11 to 2.13 which is headed "Good intentions
can be lost as funding flows through the delivery chain".
You will see it is very complex. I wonder how you can simplify
the complex network of funding from you to these charities as
the final recipients.
Sir John Gieve: It is much more
complex than this because you will see that local authorities
get one arrow, whereas in fact there are 400 of them. I think
some degree of complexity is inevitable because, as the Report
brings out, the voluntary community, the third sector, is involved
in pretty much every aspect of government business and we cannot
rationalise that all into one. I think the particular areas where
we are bad is where we have got overlapping funding, particularly
coming from a variety of different central government bodies to
the same voluntary body, often at local level, to do, if not exactly
the same thing, then a series of related things. I see the best
approach here as trying to get the regional offices in particular,
to draw together some of the Government's funding streams, unite
them and create a single coherent chunk of money going to the
particular frontline voluntary organisations. But it is always
going to be pretty complex.
Q11 Chairman: Thank you very much. If
we now look at paragraph 2.4, which you can find on page 20, most
Departments introduced some initiatives to improve their staff
skills, but do you believe that these staff have real incentives
to implement the Treasury Review, to improve their funding of
third way organisations, or third sector organisations—sorry—a
Freudian slip. We are not all New Labour yet!
Sir John Gieve: I think the main
incentive has to be that the voluntary community sector can do
some things better than anyone else and, in that sense, the pressure
for efficiency and effectiveness and the full performance management
apparatus should encourage, and does encourage, civil servants
to try and use the voluntary sector where it is the best value
for money. I think the lack of training and experience is a problem
in this. Many of the people do not know how to engage and that
is a problem also on the VCS side. They are not best prepared
to sell their wares to government. The incentive structure there
is less clear, if you like, but we are working with the National
School for Government, the OGC and various other bodies to put
on training courses. We hope that our Compact Plus will provide
a further spur to the Departments.
Q12 Chairman: Members of the Committee
may not be aware of Compact Plus, but there is going to be an
announcement later on this month, is that right?
Sir John Gieve: We are hoping
to announce it right at the end of the month, but we issued a
consultation document earlier in the year and there have been
various conferences about it.
Q13 Chairman: There is going to be a
Compact Plus champion, is that right?
Sir John Gieve: I think we are
going to call them a commissioner rather than a champion; that
is one of the ways we are responding to the consultation.
Q14 Chairman: They are going to have
real clout, are they?
Sir John Gieve: Yes.
Q15 Chairman: How?
Sir John Gieve: I will ask Helen
to take this on because she has been leading on it. First of all,
we are not giving them statutory powers. On the other hand, we
expect to give him or her powers to accredit or dis-accredit Departments
which do not follow the rules of the Compact and, potentially,
we have raised the prospect of some financial penalties. Helen,
you probably know more on this.
Ms Edwards: We are still working
on the detail. We have worked at it jointly with the voluntary
sector and with the Compact Working Group. We have not yet formally
put proposals to Ministers; we do that on 30 November at the annual
meeting that Ministers have with the voluntary sector. There are
arguments both ways in terms of the kind of clout or penalties
you might want to impose. What we do not want to do is to create
a large bureaucracy. As soon as we start looking at things like
financial penalties, then you are looking at who will decide at
what threshold those kinds of penalties come in, the burden of
proof becomes higher, people might want the right to appeal and
then there is the whole question of how you gather in money and
what you do with it. I think we have to look at this quite carefully
and the balance of opinion that has been put to us, I think, is
largely in favour of a naming and shaming approach. We hope that
the commissioner will have a high profile, they will award kite
marks for good practice, they will remove kite marks for bad practice,
they would do thematic reviews and publish those. We are still
looking at what the best ways for making this work are.
Q16 Chairman: Thank you very much for
that. This target you have got of increasing the role of the sector
you mentioned in paragraph 1.9, Sir John, it is 5% by 2006, is
not it? You are on track to meet that target, are you not? For
once, I will not ask you a difficult question on why you will
not meet your own target. It is not a very demanding target. What
target will you go for after that?
Sir John Gieve: This was a 2002
Spending Review target, and we have had the 2004 Spending Review
and we rolled the target forward. We have not put a number to
it. I agree with you; 5%, as it has turned out, does not look
particularly exacting and, from what we can see about central
government funding, it has gone up by rather more than that or
considerably more than that.
Q17 Chairman: Ms Charlesworth, as you
are here, I had better ask you a question, I suppose. Can you
explain to us this principle of full cost recovery, which is mentioned
in paragraph 3.21, and obviously it has not been applied in practice.
It is putting the voluntary sector at some risk. Do you think
it is time for mandatory rules issued by the Treasury so we do
achieve full cost recovery?
Ms Charlesworth: The reason for
full cost recovery is to ensure that when public sector bodies
are funding voluntary sector organisations, they think about value
for money rather than simply cost and not just in the short-term
but in the medium-term. The issue with full cost recovery is that
for organisations to remain sustainable and to continue to deliver
the services, which funders are clear are essential, obviously
the organisation needs to meet its core costs as well as the marginal
costs of delivering the service. It was clear when we did the
Review in 2002 that this was not widely happening and the fact
it was not happening was threatening the sustainability and delivery
of services which were clearly very important and had the potential
to be value for money. That is the reason why the Review came
out clearly endorsing it and, Brian is aware better than I, the
Review is the first time we clearly stated the Government expected
this to be the normal relation to the voluntary community sector.
It is not a new principle in relation to government accounting.
It is a key part of the fees and charges regime; it is not novel
in that sense. In terms of delivery, no, I do not accept—
Q18 Chairman: That is fine. Thank you
very much for that answer. Lastly, Sir John, you have been very
honest in your answers about Whitehall's lack of expertise, joint
working, complexity of funding and lack of real incentives. Are
you just going through the motions of encouraging the third sector?
Is there real commitment on your behalf to make this work? It
is still a very small proportion of government spending; tiny,
is it not? I am just wondering is there real commitment on your
behalf, on your part for government.
Sir John Gieve: The figures we
have got, which have come since this Report, show that it is about
£2 billion for the last year that we have got figures from
central government, which is pretty significant, very significant,
for the voluntary sector.
Q19 Chairman: Very significant for the
voluntary sector, not very significant in terms of total spend?
Sir John Gieve: Yes, but rising.
Yes, we are committed to this and in the Home Office, which is
what I know most about, for example in the correctional services,
prisons and probation, we, both ministers and officials, are very
committed to it and are trying to restructure the whole organisation
in order to give the voluntary and community sector a better chance
of doing what they can do best in a contestable and open way.
Chairman: Thank you very much. Before
I introduce my colleagues, I should have welcomed at the beginning
Ms Inguna Sudraba, the Auditor General of Latvia, who is with
us. You are very welcome.
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