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George Osborne’s Libor grantmaking continues to raise questions

22 Mar 2016 Voices

The Chancellor's Budget speech played up personal connections while the Treasury still refuses to explain its assessment process for Libor funding, says Gareth Jones.

The Chancellor's Budget speech played up personal connections while the Treasury still refuses to explain its assessment process for Libor funding, says Gareth Jones.

This weekend Iain Duncan Smith gave one of the most incendiary political interviews in recent memory, turning his fire on the Conservative leadership and causing immeasurable damage to George Osborne’s Prime Ministerial ambitions.

One important element of his critique was that there is too much power at the top of government, with Osborne’s Treasury needing “a greater, collegiate sense on how decisions are made”.

From our perspective in the charity sector, the control that Osborne wields over government and his desire to strengthen his personal position has been evident in the way money raised from Libor fines on banks has been awarded to charities.

Scottish leader’s influence

The trend was highlighted in last month’s Budget. New community facilities in Helensburgh and Royal Navy personnel at Faslane received awards “in response to the powerful case made to me by Ruth Davidson”. Davidson is of course the leader of the Conservative Party in Scotland.

Meanwhile, funding for child hospital services in Manchester, Sheffield, Birmingham and Southampton has been awarded because “members from across the House” asked for them, rather than due to a rigorous assessment of areas most in need or of the suitability of recipients.

Then this week, it emerged that the Change Step service had been awarded £500,000 outside of the Armed Forces Community Covenant fund to which it had originally applied – the charity’s director Geraint Jones said the funding “can only have arisen through the good offices of friends capable of bringing such influence to bear”.

These are just the latest examples of murky practice. Last month, Alice Sharman described how the Chancellor has repeatedly taken personal credit for the award of grants which seem not to have undergone a transparent assessment process.

The Treasury has not helped by refusing to explain its decisions beyond giving a short statement assuring us that all charities receive “a thorough assessment”.

Criticism of grantmaking

The Public Administration and Constitutional Affairs Committee (PACAC) is among those which have raised concerns, questioning in its report on Kids Company whether there were “sufficient safeguards” in place for the Libor fund.

It also chimed with Duncan Smith’s call for less-centralised government by stating that “it should be for the relevant departments to control grants to charities, not the Cabinet Office or another department that does not have direct policy responsibility for the sector in question.”

This week’s announcement that the government is tendering for a single supplier to offer grantmaking services across government has the potential to spread good practice, but as it will not be mandatory for all grant-giving, the Treasury will not be forced to change its ways if it doesn’t wish to.

Personal patronage

At this stage the evidence is still fairly circumstantial. It is possible that Osborne is playing up personal connections in order to make himself and his colleagues look good.

However, the longer the Treasury declines to outline a detailed decision-making process for these grants, the more we will have to infer that there simply isn’t one.

With charitable funding so scarce, it is vital that every penny is directed in the most targeted, effective way. No doubt the vast majority of causes receiving Libor funding (if not all) are very worthy, but do we know that there aren’t other causes that are more deserving?

We are left to conclude that Osborne is operating a system of personal patronage rather than one of rigorous and effective grantmaking, which in the light of the collapse of Kids Company, ought to be at the forefront of his mind.