The Charity Commission's handling of the Cup Trust case was inadequate, according to its former chief executive Andrew Hind.
It is hard to escape the conclusion that William Shawcross and Sam Younger dug an even deeper hole for the Charity Commission last month when giving evidence to the Public Accounts Committee (PAC) on the Cup Trust debacle.
For some inexplicable reason they chose to continue the line of defence that had already proved so damaging to the Commission’s reputation as an effective regulator, by again asserting that because the Cup Trust had made grants to other charities of £55,000 it was operating for the public benefit and was therefore a charity.
That may technically be correct from a narrow, legal perspective. But it was an argument which only served to perpetuate the misreading of the public mood which has characterised the Commission’s handling of the case.
The PAC was incredulous. Its members could scarcely believe what they heard when Shawcross, the Commission’s chair, claimed that if HMRC pay the £46m gift aid claim the Cup Trust has submitted that would make it “a substantial charity”.
Labour MP Fiona Mactaggart, a former charities minister, spoke for everyone in the committee room – and no doubt many outside it – when she exclaimed: “No one in their right mind could call it a charity. Charity has to be for the public benefit.”
I do not understand why the Commission’s chair and chief executive didn’t simply state what the MPs needed to be told: that artificial charities like this are unacceptable; that joint action between the Commission and HMRC will ensure they never succeed in their attempt to receive gift aid; and that maintaining public confidence in the integrity of charity is always the Commission’s first priority.
Unfortunately, the serious mishandling of the public relations aspect of this case was compounded when it became clear that both witnesses were unaware of previous PAC reports on the Commission.
Many charity leaders found that scarcely believable. It had gone down in folklore in the sector that the Commission had been criticised by the PAC on a number of occasions in the past 20 years, most recently in 2002.
PAC seriously unimpressed
Not surprisingly, Margaret Hodge, chair of the PAC, was seriously unimpressed. She has asked the NAO to conduct a review into whether the Charity Commission is fit for purpose, following which there will be a further PAC hearing. That’s the equivalent of the bailiffs sending in the attack dogs.
The Commission’s friends – and as a former chief executive I am certainly one of them – recognise that it is hamstrung by severe resource constraints. But it has to ensure that it makes the right calls on the defining cases, irrespective of the budget pressure it is under. And when it does, it needs heavyweights in the sector to stand behind it and lend their support.
Otherwise the Commission will become increasingly isolated; contending with an unsupportive Tribunal, and a government that has other priorities.
In my judgement it is right on the line it is taking with the Plymouth Brethren. But it got the Cup Trust horribly wrong.
Following the NAO review, it’s not inconceivable that a critical and pugnacious PAC will recommend a transfer of some key Commission powers to HMRC. Lord Hodgson has already floated the idea of combining the HMRC and Charity Commission registration processes. It’s a nonsense; but in these febrile times it could well come to pass.
That sort of restructuring could signal the eventual break-up of a world-leading charity regulator. That’s why the PAC hearing was such a dark day for all of us in civil society.
