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Charity Commission severance payments exceed salary savings by £1m

William Shawcross, chair of the Charity Commission. Image by Fergus Burnett.
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Charity Commission severance payments exceed salary savings by £1m9

Governance | Tania Mason | 9 Jul 2013

The Charity Commission has agreed just over £4.3m in voluntary redundancy packages to 129 people since January 2011, while saving £3.3m on its wage bill over the same period.

One of those severance payments was in the range £150,000-200,000; three were between £100,000 and £150,000, and 26 ex-employees pocketed payments of between £50,000 and £100,000.

Meanwhile, according to its latest annual report and accounts published today, the Commission’s salaries bill - not including social security and other pension costs - during the same two-year period from January 2011 to 31 March 2013, fell from £13.8m to £10.5m.

Its staff numbers fell from 405 full-time employees in 2011 to 337 in 2012 and 305 this year – and the proportion of women, disabled people and ethnic minority employees within the workforce have all shrunk slightly.

Fifteen individuals opted for voluntary severance in the year to 31 March 2013.

Ongoing budget cuts

The annual report and accounts for the year to 31 March 2013 reveals how the Commission coped with a 3 per cent cut in its funding settlement compared with the previous year, to £26m (£29.3m in 2011), and how it has braced itself for a further 13 per cent drop in 2013/14, to £22.6m.

A surplus of £400,000 was recorded for the year, thanks mainly to not spending as much as expected on the London office move to new premises half the size of the old office. This slightly exceeds last year’s surplus of £340,000.

New chair William Shawcross (pictured) was paid a maximum of £25,000 for his two days a week since 1 October 2012 – less than the maximum £35,000 that his predecessor Dame Suzi Leather earned for her three days a week from 1 March until 30 September.

Unlike in 2012, CEO Sam Younger did not get a pay rise this year – his salary remained flat within the band £130,000 to £135,000.

The Commission improved its cost-efficiency during the year, reducing its running costs per £1,000 of charities’ income to 43p from 47p the year before.

It incurred costs of £5.5m during the year for “specialist services”, mainly attributable to one-off charges for externally-hosted IT services.

Gift aid claims review programme

In non-financial matters, the annual report also reveals that the Charity Commission has begun a programme of inspecting the accounts of charities which it suspects might have been operating in a similar way to the Cup Trust.

In particular, it is examining whether the accounts of those charities make reference to funds being raised primarily through claims for gift aid.

Late accounts media campaign

The Commission also continued its crusade against late filing of annual returns and accounts, after 15 per cent of charities were late filing their accounts (16 per cent last year).  It measured whether late filers had a history of such offending, and discovered that late submission of accounts is indeed rather habitual.

In a bid to persuade more charities to submit their documents before the deadline, the regulator carried out a local press campaign telling papers and radio stations across England and Wales how to check whether charities in their area had filed on time. “Many journalists used this information to inform their readers about publicly-funded local charities that defaulted on their annual information,” the report said.

Internal whistleblower

One employee made a whistleblowing disclosure to management on 26 March 2013, complaining about a perceived failure by the Commission to investigate a case in which the individual had a concern about case handling.

The internal whistleblowing policy was applied by the line manager and a meeting held with the employee to discuss their concerns. However, the complaint was not upheld and “the member of staff was content with this outcome”, the report said.

Other figures show that the Commission:

  • received 171,628 phone calls, emails and letters to its First Contact team during the year, 93 per cent of which were resolved at that stage.  Complaints against charities were the second most common issues raised in emails and letters, behind amendments to governing documents.
  • received 5,949  new charity applications and registered 4,714 new charities, compared with 5,601 last year and 5,776 the year before. Some 36 applications were rejected. Education and training was once again the most popular type of new charity registered.
  • received 596 Serious Incident Reports and 98 whistleblowing reports.
  • closed five statutory inquiries (2012: nine), opened 15 (2012: 12), and used its statutory powers on 74 occasions during statutory inquiries.
  • monitored 1,908 sets of accounts, 1,065 of which were reviewed randomly.

 

Steve Edwards
10 Jul 2013

Sorry but I posted in the wrong place and would really like to make my point.

I think some people are missing the point. This is not about whether the savings outweigh the costs over the short or long term, it is about the ludicrously excessive payouts:

'One of those severance payments was in the range £150,000-200,000; three were between £100,000 and £150,000, and 26 ex-employees pocketed payments of between £50,000 and £100,000'

This is equates to these 30 people getting approximately £2.5 million or £83k each.

Are people on here seriously accepting that these sorts of payouts are justified? Sorry but that is a ludicrous amount of money for charity redundancies and the Charity Commission cannot justify them! These figures look more like the kind of redundancy payments that you would expect in the banking sector.

Phil Trowers
10 Jul 2013

Come on Tania, you're defending the indefensible here.

As others have pointed out, it's very unfair to make such a point of the costs over the savings when the savings will be recurring whereas the costs will not.

I look forward to seeing the ongoing coverage of the savings made by the commission, as promised.



Tania Mason
Group editor
Civil Society Media
10 Jul 2013

Dear Geoff, Graham and Chris

Thank you for commenting.

This is an ongoing and developing story. The point at the moment is that the redundancies have not yet delivered any savings to the Commission. If and when they do, we shall report that as well.

The Commission has already intimated that it will have to make further job cuts in the coming year to cope with its next settlement reduction, which will presumably cost it more in severance payments. I think it is interesting to track this as it goes on to see at what point the savings outweight the costs.

cheers
Tania

Sally Smith
Social Entrepreneur
10 Jul 2013
Response to [Tania Mason]

I agree with Suresh, this is an important story as the average redundancy here is worth £33K (£4.3m / 129 people).

I was made redundant after working for the same company for 11 years and received the statutory redundancy pay. In my case this was just £8K, based on a final salary of £42k.

In the real world, when a company cannot afford their staff and need to make redundancies, then most will look at statutory redundancy pay i.e. between 0.5 and 1.5 weeks pay for every year worked (dependent on age). To put the Charity Commission's average redundancy payment of £33k into perspective, this would equate to the AVERAGE employee working for 20 years on a final salary of £85k.

So why in times of austerity and dramatic cuts have the Charity Commission been so very generous in their redundancy payouts?

Graham Harkess
10 Jul 2013

Well said Chris & Geoff; you beat me to it.

Attention grabbing "Tabloid" lead lines put me off reading what may be interesting articles.

Clean up your copy editor

Suresh Lalvani
Charity Consultant
9 Jul 2013

However it should be noted that the severance and redundancy payments appear very generous coming from the Charity regulator !.

Steve Edwards
10 Jul 2013
Response to [Suresh Lalvani]

This looks to me like a charity making the kind of redundancy payments that you would normally expect in the banking sector:

'One of those severance payments was in the range £150,000-200,000; three were between £100,000 and £150,000, and 26 ex-employees pocketed payments of between £50,000 and £100,000'

Sorry but that is a ludicrous amount of money for charity redundancies and I cannot see how the Charity Commission can justify them!

Chris Zealley
trustee
various charities
9 Jul 2013


It would be surprising if the severance costs, which are are one-off, were not more than the salary savings per annum, which are year-on-year.

Why present a non-issue as if it were an issue ? By the look of it, the severance costs were not that generous.

Geoff Edwards
9 Jul 2013

The headline is not really appropriate. The costs are paid once whereas the salary savings recur annually.

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