The Public Administration Select Committee has recommended that the Charity Commission carry out a “review of lessons learnt” from the Cup Trust scandal, once the Commission has completed its statutory inquiry.
The cross-party Committee of MPs made the recommendation in its report on the regulation of the charitable sector and the Charities Act 2006. The PASC did not take evidence directly about the Cup Trust but has drawn on evidence given to the Public Accounts Committee (PAC), which published its report earlier this week.
In today’s report, the PASC advises the Charity Commission to “specifically reconsider the legal advice it received on the status of the Cup Trust, and whether it was right not to take its concerns about the Cup Trust further”.
It echoed the PAC recommendation that the Commission should come up with proposals to change the law, if it remains convinced that the Cup Trust is legally a charity.
The PASC report said: “If the Commission still feels it was restricted in its legal abilities to prevent such organisations from obtaining charitable status, we would welcome its proposals for a change in the law on the criteria for registering a charity.”
The Commission opened a statutory inquiry into the Cup Trust in April and has appointed an interim manager – action which the Cup Trust’s corporate trustee Mountstar PTC is appealing – and will publish a report once it concludes.
Following the Cup Trust scandal the PAC has asked the National Audit Office to complete a report on the Commission’s fitness to regulate. This is due to be published in the autumn.
Commission limited by its financial position
The PASC report describes the Commission's statutory objectives as set out in the 2006 Act as being too “vague and aspirational” and that its recent budget cuts mean that tasks outside of those statutory objectives are “an unaffordable luxury”. It claims that if ministers wish the Commission to be more “proactive” they should increase its budget.
It recommends that: “The Commission should prioritise the investigation of potential ‘sham’ charities but the obligation to investigate and report tax fraud rests with HMRC, recognising that the Commission’s financial position will limit their own investigation.”
And it adds: “Ministers must decide whether they think it is necessary to have a proactive regulator of the charitable sector, and if so, the government must increase the Commission’s budget and ask Parliament to clarify their powers.”
If the Commission’s budget is not increased, the PASC concludes that: “Ministers should be explicit that they accept that the regulatory role of the Commission will, by necessity, be limited”.
More on the PASC report:
Public benefit test is critically flawed, MPs tell government
PASC criticises Charity Tribunal system
PASC puts fundraising self-regulation ‘on notice’
PASC supports Hodgson recommendation to fine late filers
PASC: Charities should publish lobbying spend and public income in annual returns
Bubb: PASC report is 'regulatory madness'
