As the Conservative government prepares to implement the next stage of its austerity programme, Andrew Hind suggests that the only way to guarantee a strong regulator for the sector is for large charities to pay for it.
A political satirist couldn’t make it up.
Rob Wilson has been reappointed by David Cameron as minister for civil society, despite his distinctly uncivil behaviour when telling a constituent after the election that she was “a bad loser”, and despite (or perhaps because of?) his apparent pre-ministerial antipathy towards charity campaigning.
Wilson reports to Oliver Letwin, who has been given overall responsibility for the Cabinet Office, which among other things provides leadership to the Civil Service.
Many will remember him as the politician who disposed of Parliamentary papers in a St James’s Park litter bin, near Downing Street, in 2011.
Wilson and Letwin are now answerable to Parliament for the activities of the Charity Commission.
With the worst of the UK’s austerity drive yet to come (according to the Institute for Fiscal Studies), they will be under pressure from Treasury to make further cuts in the Charity Commission’s funding.
The Commission has already seen its budget cut by 50 per cent in real terms over the last decade and now has only 300 staff, compared to its peak of some 600 in 2004. Any further cuts and it would surely be in danger of becoming incapable of discharging its responsibilities.
It will probably be thrown a few crumbs from the table to pursue a government priority from time to time – such as the £9m over three years it received in 2014, to be spent largely on strengthening its response to terrorism and tax abuse – but the inescapable fact is that there appears to be little chance of a reversal in the regulator’s funding fortunes as far as we can see into the future.
What is to be done? The only viable alternative, I now believe, is for the sector to pay for its regulator. That’s what happens in other sectors.
It appears to be the only way we can guarantee a strong regulator, adequately equipped to promote public trust in charity – one of the Commission’s key statutory objectives and something in which every charity has a keen interest.
Starting point for debate
As a starting point for debate I would suggest an annual fee paid only by large charities. With the audit threshold recently increased to £1m, that seems like a sensible place to start.
There are roughly 5,000 charities with an annual income over £1m – were they all to be charged a fee of £5,000 that would generate £25m per annum to run the Commission (its budget for 2015/16 is £20.4m).
I’m sure that the sector would rightly argue that if it was paying for its regulator there would have to be further safeguards introduced to protect its independence; that would have to be part of the debate.
The only reason such a proposal hasn’t yet emerged – despite this being the standard regulatory funding model in almost every other sector, from banking to professional health regulation – is that no minister has ever been prepared to stand at the despatch box and propose what critics would no doubt dub ‘a tax on charity’.
Rob Wilson and Oliver Letwin are not seen by most charity leaders as the sector’s strongest advocates. But if they are attracted by this idea, and by the prospect of making a £20m saving in government spending, it could be the most important thing done to secure the future of civil society in this Parliament.
What an irony that would be.
