Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



Mr Williams

  80. Thank you, Mr Love. In fact, I will do so for you in that you refer to a pilot study on close relationships with the local authority which you tried in Scotland.
  (Mr Hornsby) Yes.

  81. You said that your experience of that led you not to develop it further.
  (Mr Hornsby) Yes.

  82. Can you briefly say or could you put in a note, if you prefer, to explain to us what the factors were which determined your finding?
  (Mr Hornsby) Indeed. I think it might be for the convenience of the Committee, Mr Williams, if I gave you a short note on that[4].

  Mr Williams: That is excellent.

Mr Murphy

  83. As always I do not mind which of the two witnesses answers the questions as long as your answers can be relatively brief because, as you have discovered, we have 15 minutes each. I come back to some of the points mentioned by my colleague, Mr Griffiths, when in the Report you signed up to you identified 150 organisations who received grants for £20,000 and from that you visited 75. I really want—and with the health warning Mr Young gave us earlier which you may wish to emphasise again—to try and extrapolate some wider information. Again, I understand the caveat based on the Report that you only visited four regions of the country. You picked four regions out of 12 and you concentrated on those four. Based on the 23 projects out of 150, if you were to extrapolate that, would I be right in saying that out of 4,689 cases, the equivalent of 23 out of 150 is 734 cases that would only have partly provided the service?
  (Mr Hornsby) The range in the NAO Report in figure 6 on page 23 is that projects which were not progressing as planned would have been between 430 and 1,000[5]. As I said, since the snapshot taken in this Report some of our "partly provided" schemes have rather lately become positive so you have to adjust those figures downwards.

  84. Mr Hornsby, would you accept, however, that on figure 5, page 19, even on the updated assessment, 23 out of 150 are only "partly provided"? Looking at that, figure 5, 15 per cent—I think it was 15.3 per cent—23 out of 150—
  (Mr Hornsby) Yes.

  85. Using that as a basis you get the figure of 734 cases which would only have "partly provided" the service.
  (Mr Hornsby) As I have said, of those 23 projects nine, subject to the adjustments in the little grey histogram snapshot, have in fact delivered more effectively. So if you then try and extrapolate that to a wider population you get a lesser amount.

  86. Based on the information we were provided with for this hearing, the information suggests that up to 734 cases have not provided the service fully?
  (Mr Hornsby) If I may just re-emphasise, it is not that they did not provide. As the NAO classification very clearly says, there was a partial degree of provision. In some of these cases that part they provided would have been as much as 60 per cent. It is not that they did not provide at all.

  87. Mr Hornsby, I think you are finding ways to disagree with me on this. I said, "They did not fully provide", that could be partly provided or 60 per cent.
  (Mr Hornsby) I accept that.

  88. So 734 organisations did not fully provide the service they were funded for. Using that, and you having accepted that, again with the health warning offered by Mr Young, which you may wish to re-emphasise, those 734 organisations, on these averages, would have received grants of over £70 million; if you want to be exact £70,518,000. Is that correct?
  (Mr Hornsby) I should reiterate Robin Young's previous comments in 2.11.

  89. Absolutely.
  (Mr Hornsby) With those major qualifications, yes.

  90. You have already accepted that up to 734 individual cases—based on the figures that the NAO has provided and you have signed up to—are over £70 million that has been granted to organisations that have not fully provided the service that you have given them money for?
  (Mr Hornsby) Could have been.

  91. I may come back on that. Let me come to this health warning that Mr Young and yourself have used about half a dozen times. I do not think it is strong enough in the report, and actually I do not think it should be paragraph 2.11, it should certainly have been near the start of the report. If you have signed up to a report of 69 pages and then when we try and question you on specifics, you say, "Well, look at paragraph 2.11", that is the caveat that gets you out of every fact or figure or extrapolation you may wish to draw. Mr Young, you said it was a snapshot at a certain time, yet at page 1 of the report it looks at progress. "Progress" suggests time line, rather than snapshots, does it not?
  (Mr Young) Yes, but the figures that you are talking about are the two snapshots. You drew our attention to figure 5, which shows two snapshots at two dates, and figure 6 extrapolates the 150 projects which they visited and extrapolates that to cover the whole of the 28,000 grants. So we are being utterly open about the method. One early question was: was that enough of a sample to take? We agreed that we may have been approaching it with the NAO, so I do not think it is useful at this stage to reopen that. What we are talking about is an arithmetical extrapolation, which you have done, and your arithmetic does not produce the same figure as in figure 6. On 2.11, although I know you think it is special pleading, the fact is that in the majority of projects where there has been a delay, the planned level of service or activity has been delivered in the end. If that is true—and it is in the report, so I hope it is true, and the NAO have written the report—then that is a very important caveat. It was not true at the time of the second snapshot, hence the extrapolation and hence your high figures, but for the majority of projects the planned level of service activity has been delivered in the end.

  92. They are not my figures, they are the figures in the report that you signed up to.
  (Mr Young) That is right, but I am trying to stress that point, because you might otherwise have fallen into the trap of thinking that the extrapolated figures describe the number of failed projects, which is why this paragraph is so necessary.

  93. Based on the fact that I expect that paragraph 2.11 would pray in aid anything else I am going to ask you, I am going to skip a whole series of questions I was going to ask, because there is very little point. Based on the organisations that have not provided adequate financial information—and I cannot recollect the exact figure, you will be pleased to hear—how many of them used as an excuse or mitigating circumstances the fact that they come from the type of deprived areas that you spoke about, for example, the east-end of Glasgow, and they cannot afford to use an accountant or solicitor to assist them?
  (Mr Hornsby) Are you talking about the quality of the financial information in the original application, or the quality of the information that we need to monitor the project?

  94. The latter.
  (Mr Hornsby) The quality of information during project monitoring? That should not be a major problem. What we have said to groups is, we try and look at our procedures in a way that is proportionate to the type of group. If you have a small entirely voluntary group, running a minibus project for the aged in East Glasgow, the statistical and financial information that we need from that group would be very simple: How much did it cost to buy the minibus? What is the passenger mileage? Have you got a volunteer driving the minibus or not? I do not think the smaller, less professional voluntary groups which I mentioned would see a major barrier in terms of accountancy skills to provide the monitoring information. It is sometimes more difficult for those groups to put together the original application, but that is a separate issue.

  95. I hope your confidence is well founded. We all live surrounded by our own anecdotes, but certainly it is a concern of some of the organisations that I come in contact with in terms of the complexity of the application and the impenetrable nature of the information that is subsequently asked for. On an entirely different area, I have a set of questions I am going to ask because it is not apparent from your report. You chose 150 organisations from 4 of your 12 regional offices, made 75 visits and identified 17 case studies for this report. That is indisputable. What was the logic of picking those 17 case studies, just briefly?
  (Mr Hornsby) I do not want to sound as if I am doing another duck-out, but this is an NAO report. We agreed the methodology with the NAO, but the decision to go for a very effective mix of looking at best practice, discussing with grant officers, doing visits and producing case studies, was an NAO decision. We have agreed the report, as is required. I am not trying to hide behind that. We need to agree with the Comptroller and Auditor General that the facts in the report are there. The methodology was an NAO choice.

  96. Let me share my concern. The 17 case studies here are of one Vietnamese organisation, two Pakistani and three Bangladeshi. More than one in three of the case studies are ethnic minorities. Is there a reason for that?
  (Mr Hornsby) The case studies looked at some minority ethnic projects that worked extremely well and some minority ethnic projects that worked less well. I do not think there is any built-in discrimination on that point.

  97. I am asking for the rationale as to why one in three of the case studies out of 28,000 organisations are chosen from ethnic minorities?
  (Mr Hornsby) It seems to me, Chair, that that is a question which should be addressed to the Comptroller and Auditor General.

Mr Williams

  98. It is the NAO's report, they agreed the content or disagree if there are any factual inaccuracies, but the sampling would have been for the NAO and the question would be better directed to the C&AG.
  (Sir John Bourn) Essentially the approach was done through the use of statisticians. In taking the question of how, we took a very large population and abstracted from that population cases which gave an illustration within ranges of reliance for the issues of interest. So it was the methodology fuelled by statistical expertise rather than a desire to look at any particular set of projects. I will ask Mr Hawkswell, who was in charge of the project, to add anything to that.
  (Mr Hawkswell) Indeed. As the C&AG says, the case study selection was a statistically representative sample which we did agree with the Charities Board. We sought to illustrate various points throughout the Report with the case study boxes. We picked the case studies which we thought best illustrated the particular point we were trying to make in the Report at that point. Constraints of space prevented us highlighting case study material for all 150 projects we examined, the Report would have been enormous. I would point out though that one of the case studies, Case Study 2 of the Nottingham Vietnamese Community Project, is actually one of the examples of good performance.

Mr Murphy

  99. Perhaps I am not explaining myself properly. I have looked at cases 2, 9, 13, 15 and 16 which are all ones which involve ethnic minorities, recognisable ethnic minorities because the other 11 may of course be heavily populated or used by ethnic minority communities but these are six of the 17 which by their very names identify themselves as ethnic minority projects. I am not suggesting that the NAO or anyone else set out to prove that ethnic minorities are not fully provided or approached on an ethnically different basis. I want to register my surprise that out of 17 case studies it can be argued statistically this is representative of one in three as identifiably ethnic minorities. On that basis, which is 28,000, we would expect to find that one in three of those 28,000 would be a similar organisation which will not be the case and nor should it be the case. I just want to register my surprise that is what is in this Report. Can I have one final question, an entirely different subject. The register of capital assets: we have read you have been complacent in not compiling or we may wish to draw the conclusion that you have been complacent in terms of not compiling a register of capital assets sooner. By the time this register is compiled what is the greatest number of years somebody can be in possession of a capital asset with the prospect of receiving a grant from you by the time this register is compiled, is it five years, six years? How long will someone have a capital asset? What is the longest period of time they can have that asset before they appear on the register?
  (Mr Hornsby) They will appear on the register the moment that the grant draw down takes place under which they have purchased the capital asset. That is true on our case files at the moment. If we grant, for example, a small voluntary group, as I have indicated, for a minibus, that will figure on the case file the moment that we get the bill for the minibus and it will figure on the asset register at the same time.

4   Note: See Evidence, Appendix 1, page 121 (PAC 1999-2000/185). Back

5   Note by Witness: Projects not progressing would have been between 430 and 1,100, not 430 and 1,000. Back

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