The Office for Civil Society (OCS) held back more than £40m in spending last year, in anticipation of unspecified legal costs.
This was revealed in the 2019-20 budget for the Department for Digital, Culture, Media and Sport (DCMS), which was published in December and shows that overall OCS spending fell by two-thirds compared with the year before.
DCMS declined to provide any details about the nature of the legal risk, although it is understood that the issue has been resolved.
Legal risks and financial settlements
The accounts state that expenditure at OCS “shows an underspend of £42.8m due to funding held to mitigate a potential legal risk which was not subsequently needed”.
They also show that OCS spending fell from £176.3m in 2018-19 to £58.5m in 2019-20. The change is largely down to OCS losing responsibility for the National Citizens Service (NCS), which became a semi-independent arms-length body in December 2018.
Spending on the NCS for the period covered by the accounts was also lower than expected, with an underspend of £25.6m “which relates to significantly lower levels of participation numbers than budgeted for”.
In 2019, charity The Challenge went into administration after losing a contract to deliver NCS programmes, and subsequently filed a £20m High Court claim against the NCS Trust, which oversees the work of the NCS.
The Challenge and NCS Trust reached a £2.8m financial settlement in April last year.
According to the DCMS accounts, “these costs are in line with the amount The Challenge may have claimed as irrecoverable costs for unfulfilled places”.
Minister: DCMS is ‘the department for national renewal’
Writing in her review of the accounts, DCMS permanent secretary Sarah Healey says that a third of her staff were moved off “normal work areas” during 2019-20 to help handle the impact of Britain leaving the EU.
In his foreword to the report, culture minister Oliver Dowden argues that, given the role the department has played “in the country’s recovery from a global pandemic, I think DCMS has earnt a new and important title: the department for national renewal”.
DCMS’s response to the coronavirus crisis has been heavily criticised by sector leaders, after months of delays in releasing emergency funding to charities and confusion over how grants would be made available.
In documents accompanying November’s spending review, the Treasury committed to “rationalise” the OCS.