William Shawcross, outgoing chair of the Charity Commission, yesterday told the Digital, Culture, Media and Sport Select Committee that the regulator needs more funding and greater powers.
He appeared before the committee of MPs, alongside the Commission’s relatively new chief executive Helen Stephenson, to discuss the work of the regulator, on the same morning that the National Audit Office published a report saying that the regulator had made “significant progress” but still had work to do.
Shawcross said that the Commission was experiencing increased demand. More organisations are applying to become charities and the Commission has a bigger regulatory caseload than when he became chair in 2013.
During his time as chair, around an additional 27,000 charities have registered and the number of statutory inquiries opened has increased from 12 in 2011/12 to 187 this year.
Call for more powers
In response to questioning, Shawcross said that the Commission does not have as many sanctions “as I would like” to tackle wrongdoing in charities.
He said the latest Charities Act, which gave the regulator a range of new powers, had “improved” the situation.
Shawcross said he was “incredibly grateful” to politicians for listening and giving the regulator more powers, and said the powers have been used 70 times so far.
“The number of charities abusing their position is pretty small,” he said, but they do “contribute very seriously and create a lack of trust in the charity sector”.
When questioned further, he said that he would like the power to “ask the Treasury to increase our funding, at least by the rate of inflation”.
Charging consultation next year
Shawcross and Stephenson also said the regulator is hoping to start the process of consulting charities about charging for regulation soon.
The process has been delayed by both the referendum on the European Union and then the General Election.
Shawcross said that the previous Chancellor, George Osborne, had asked the Commission to consider “how the sector could relieve the burden of paying for the regulator from the taxpayer”.
He said this will now be a task for his successor early in the new year but that if agreement to begin consulting came sooner, “that would be a wonderful Christmas present”.
He said that “to start with, only the very richest charities” would be asked to pay, and Stephenson added that this meant only the top 1-2 per cent of charities.
Speaking separately at the Charity Law Association's Annual Conference this morning, Stephenson indicated that the Commission anticipates this would mean around 2,000 of the largest charities.
‘Help fund enablement work’
Stephenson said that additional funding could be used to improve the regulator’s existing services and launch new ones for charities.
She said: “There’s a range of services I would like to provide for the sector.” She also highlighted that at the moment, the Commission's telephone advice line was only open for two hours per day, and that she thought it was reasonable to consider asking the sector to “help fund enablement work”.
This would mean that the Commission’s core grant of £22m could be focused on “compliance and regulation work” she said – but that still needs to be discussed with the Commission’s board and DCMS.
She said that one of the key messages from the Commission's recent Taken on Trust research was that “we need to more to equip” trustees, and said she wants to find ways to make guidance more accessible.
Speaking later in the day at the All Party Parliamentary Group on Charities and Volunteering, convened by NCVO, Stephenson said the regulator is really “stretched” and that there is “no fat”, but that she wants to do more to “help trustees get it right” before the Commission has to take regulatory action, which is why additional funding is needed.
Doesn’t know how much funding it needs
But when pressed by MPs at the select committee, Shawcross and Stephenson were unable to explain exactly how much money they thought the regulator needs.
Shawcross said this was because they were a “demand-led” regulator. While Stephenson suggested that it was something the regulator is working on.
“We now have a cost model to understand how much it costs to deal with various approaches and interactions,” she told MPs, adding that the regulator now has a “far better understanding of the volumes coming into the Commission and how long each might take.”
Resistance to charging for regulation
Damian Collins, Conservative MP for Folkstone and chair of the committee, expressed concern that the public might be upset if donations were used for regulation.
“People who give might ask ‘why is my donation also helping to subsidise the rest of the charity sector?’ he said.
But Shawcross said: “I hope and believe that for most major charities it is so insignificant that it won’t really be a problem.”
Stephenson added that research indicates that the public “value having a good regulator”.
Later at the APPG, Susan Elan Jones Labour MP for Clwyd South, said: “On payment of fees, I don’t like that idea at all.”
She said she understood the argument’s the Commission had put forward but it still made her uncomfortable.
Shawcross responded by saying that other sectors pay for the regulator.
'The Commission needs to be clearer about its funding proposals'
Responding to the NAO report yesterday, NCVO called on the Commission to set out its funding proposals in more detail and reiterated calls for reform of the regulator's governance.
Elizabeth Chamberlain, head of policy and public services at NCVO, said: "We have said before that the Charity Commission needs to be clearer about its funding proposals and provide more detail. It needs to outline precisely how extra money would be used and what the total cost of being an effective regulator is, so it can make a more persuasive argument for additional funding. This is particularly important if it wants to make the case for charging charities.
"The Commission’s relationship with government departments such as HMRC and the information they share is also an area for improvement, as we said in our recent submission to the annual return consultation.
"And last but certainly not least, we agree that the board’s approach should be more strategic and less taken up with specific cases. We and others in the sector have been consistently calling for measures to be taken to ensure that the Commission’s governance not only is independent, but is also publicly perceived to be so."