Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 80-99)

MR JOHN STOKER AND MR SIMON GILLESPIE

WEDNESDAY 28 NOVEMBER 2001

  80. Why not? I do not understand why you have never asked.
  (Mr Stoker) I have looked into these powers. I must confess I do not know why this power has never been used. As a matter of fact, it is not the case that the cost of the audit would fall on to the charity, rather it falls on to the trustees themselves. I suspect that historically, going back to 1993 and the periods following the Act, that may be part of the reason.

  81. Okay, but the point I was making was the cost of external auditors would not fall upon yourselves and the budgetary implications are not for you. If the trustees are going to be required to pay for the external auditors that would certainly concentrate minds. I wonder how it is you are head of an organisation which has not used a particular power? You have not said this is a useless power?
  (Mr Stoker) No.

  82. And I made the point I think it is a very wonderful one, maybe, and you have not contradicted that either. I do not understand why you have not asked the question and I do not understand why you have not issued an edict, if it is within your power to issue such things, to ensure that power is utilised in the future.
  (Mr Stoker) Edicts are perhaps not quite the modern style these days but certainly the very clear message that we have sent out for all these powers is if there are cases where they will help to close inquiries that people should use them. For example, if you look at powers such as the power to appoint a receiver and manager there is an increase in that in the last year in the figures here and that increase is being sustained into the current year. We are also running at high levels in the year to date on orders to attend meetings and provide information. It is those kinds of powers, the ones which are actually there to break logjams and speed things up, which I agree with you we ought to use where they are appropriate.

  83. Perhaps you would go away and ask the question that you have not asked so far, why you have not used that power.
  (Mr Stoker) I have asked the question, I have not been able to find out the answer.

  84. Perhaps we ought to go back to old-fashioned mechanisms like issuing edicts. You said it was old fashioned or was not the current vogue but perhaps if you were to issue edicts you might get answers to the question you have asked and have not had the replies to. I guess my time is running out fairly quickly but I want to go back to the ICR, the Independent Complaints Review. I take it that managers use complaints to guide them in terms of internal procedures, or to make it possible to identify where there are break downs in the system if one uses it in an appropriate way. The Reviewer—this is a very interesting document that we have just received dated November this year—really says that your staff react to complaints in an old-fashioned way and they tend to regard complaints in a negative way. It says it in a very gentle way. It says that other public bodies might react in such a way. I think the implication is your staff are reacting that way. It goes on to make the point Mr Williams made, that you do not even log most of the complaints and there needs to be a massive culture change in your organisation, which you are attempting to achieve. Mr Williams put it to you that you ought to consider reviewing all the verbal complaints as well as the written ones. That was not a novel proposal, was it, since the ICR has made this suggestion to you in writing? Why have you not been able to respond to the Committee and say "that is precisely what we are doing"?
  (Mr Stoker) I do not think that what Mr Williams said was that we should be reviewing all of the complaints that were put to us verbally, I think what he was saying was we did not count them, and I agree.

  85. I think I said you should be recording them and it is not a novel idea at all, this was suggested here, and it seems like a very useful suggestion. It might guide you as to where there are defects in your organisation and areas which might be improved. Why did you not say "this is something we are going to do"?
  (Mr Stoker) As Mr Williams invited me to, he said do not agree now but go away and have a look at it and I am very happy to do that. The other thing to bear in mind is that this whole complaints system is a new system and it is a pilot that we introduced because we wanted to improve our relations with and our accountability to our customers. I am not pretending that it is perfect yet but I am very happy to go away and look at ways that we can get the measure of recording these complaints.

  86. Is this an experiment that should be continuing beyond the two years then?
  (Mr Stoker) Yes.

  87. Good. Finally, you have established a committee, which I think is a good idea, no doubt an innovation that you introduced, to review the results of ICR reports and recommendations with the view of trying to identify lacunae in management. I just wonder what lessons you have already learned from those reviews since this committee seems to be in place already?
  (Mr Stoker) I think the main ones would be that you avoid trouble if you are as clear as possible up-front about exactly what you can do and what you cannot do. You need to avoid creating expectations on the part of anybody involved, whether it is a complainant or anybody else in the process, which you cannot fulfil.

  88. They are methodological, are they not? Both of those two lessons learned are methodological as to how you deal with complaints. I think I am to finish.
  (Mr Stoker) Sorry, they are not how you deal with complaints, they are how you deal with the cases that gave rise to the complaints in the first place. What you tend to get is somebody who was led to believe that you can do X for them and you can only do X minus Y for them.

  Mr Trickett: If I had another two minutes we could have had some interesting conversation but I have not.

  Chairman: If you are desperate, Mr Trickett, have one more question.

Jon Trickett

  89. The ICR is there, they made a report to make it into a committee which you have established, and the purpose of establishing the committee was to try to identify management problems and I do not think you have indicated to the Committee that you have learned anything from that process at this stage.
  (Mr Stoker) I think we have learned a good deal and we do feed back information from those complaints from the ICR directly into the casework and the Report does say in the Independent Complaints Reviewer's own words that she had been very impressed by the extent to which she has seen lessons being learnt.

  Jon Trickett: I do not know if that is exactly what she says but, anyway, I really must not press the Chairman's patience any longer.

  Chairman: Mr George Osborne?

Mr Osborne

  90. Can I pick up on an area of questioning which Mr Trickett was exploring with you, which is the use of your legislative powers. I find it rather extraordinary that you did not know why the use of these powers had declined or why, for example, you had never used the power to appoint an external auditor. Am I correct in saying, and is the Report correct in saying at 2.15 that you have never used the power to reclaim charitable trust assets from debarred trustees, or to prosecute for failure to provide information?
  (Mr Stoker) Yes, if it is in the Report it must be. We have pursued by other means assets from trustees whose conduct of their charity has been unsatisfactory. That is very largely what case one is about.

  91. There are other powers. You say you have used other means. Table 10 shows "The Commission's use of inquiry powers" and shows a dramatic fall in virtually every power with the exception of the first one, a fall in the use of the power to remove trustees from 9 in 1996 to 4 times for 2000-01, down from 89 to 21 in trustees prevented from acting, down from 58 to 39 in freezing bank accounts, down 19 to 8 in trustees appointed, down 238 to 171 in orders and directions requiring information or presence at a meeting. Why are you not using these powers?
  (Mr Stoker) The message that we are trying to hammer home to the people who are at the case level using these powers is that where they will help to resolve a case and resolve an issue they should use them. In some cases, for example receiver manager appointed and, for example, orders and directions requiring information and attendance at a meeting, that message is producing an increase in the powers. At the moment we are running at a level which would produce a considerable increase when the numbers for this year are compared with last year. I cannot pretend that there is a systematic reason that I can identify why these powers have not actually been used. I can speculate that part of the picture along with the messages we are giving about closing cases is the fact that we have just had the Human Rights Act and, along with everybody else, the organisation has been considering what its obligations are under the European Convention on Human Rights. There are a great many of these powers, particularly when you are talking about suspending or removing an individual trustees, which are slap bang in the middle of ECHR territory and the fact that, to reflect that, we have been putting separation of powers of one kind and another into the systems as good practice post HRA may have some influence, I do not know. What I would like to see is an increase in these powers to close cases when that can be done and that is the message I am getting from the current year's figures.

  92. You just said you are speculating that it might be the Human Rights Act, you are not sure and so on. When you were appointed two years ago you surely read this Committee's report into the Charity Commissioners. On Appendix 2 which helpfully summarises it, it includes conclusion (i) where it talks of the "failure to show more drive in exploiting the opportunities for greater effectiveness which the 1993 legislation provides" and it says that this is a result of a lack of management grip. You were the new manager, you came in, you must have seen that; why do not you know the answers to these questions?
  (Mr Stoker) There is no single answer, I suspect, to the reason why these powers have not gone up. All I can say to you, as I said earlier, is that it is not because of the management messages that we have been sending, it is not because of any lack of commitment to effectiveness in investigations work, as the fact we made it a priority for resources (£1 million pounds extra from next spring) and a thorough review and thorough improvement of procedure shows. This is part of the picture. It is part of the picture that I am not myself entirely happy with but I do not think that it is symptomatic of any kind of lack of commitment to effective investigations.

  93. So you are saying there is no lack of commitment from the management, that you are sending down these messages down your organisation but you are not sure why these messages are not getting through to the people you employ?
  (Mr Stoker) We are finding out why. As part of the work that we have done on the investigations systems we have got a project team which is following through the implementation of the investigations manual. As part of the work involved in that, it is looking at a range of closed investigation cases to analyse them to see what the drivers of a lot of this are. I am hopeful that one of the things that will come out of that is something which will shed more light on not so much why these powers have not been used in the past, although that is an important question and of interest, but more where they might have been effectively used where they have not been and that gives us a management handle to do something about them. I cannot give you a plain, straight, single reason why these figures are as they are.

  94. It would be good to know that we are not wasting our time by passing laws that are not then used by the organisations they are designed to be used by. Is this general approach because you as an organisation take a very softly softly attitude to investigations? In paragraph 2.12 on page 20 the NAO says: "Our case examination found that the majority of inquiries were conducted through correspondence, telephone calls and meetings with officials of the charities concerned. When inquiries included visits to charities, they were generally confined to meetings with trustees and other key personnel and in only a very small proportion of cases did they also carry out checks of control systems and file searches." So you sit round, have a cup of tea with trustees, you are satisfied with what they have said and you do not carry out a proper rigorous investigation. Presumably by the time you have turned up at the charity you have got reasons for suspicions. Is this not an extraordinary approach to take to matters of this seriousness?
  (Mr Stoker) I do not think that is a generally correct description of the attitude the investigators took towards charities, the one you have just given of a `cup of tea' culture. I accept that there was a need for more rigour and structure to be put into investigations procedures. I accept that as part of that what was needed was a more rigorous approach to case planning. I accept that what was needed was a more structured approach to making investigations officers consider what specialist professional support they needed from accountants and lawyers and that is why we have done precisely those things in the investigations manual which we have put into place from October last year. As for the cosy position with charities, I think the more indicative point of our current approach to this would be that since October 2000 we have for the first time starting putting a public report on the web site of the findings of each inquiry that we have carried out, precisely so the charities are exposed to public scrutiny and so that the lessons get put across publicly.

  95. Thank you for that answer, although one of my concerns is that your information manual, rather like your instruction to make more use of legislative powers, may not deliver results down on the ground, you may not be aware it is having an effect because you have this strange management structure where you do not even know the results of your management decisions.
  (Mr Stoker) We are an extremely quantified organisation. We have got a great many quantified targets which you will find in the appendix to the Report and, as I mentioned, one of the things we have done as part of the investigations project is precisely so that there is structured follow through, as well as keeping track of what is happening in the management line, we have actually put in place a development team to work on the implementation of the new procedures and to analyse what actually has been happening in cases that are being closed. I accept that managers need to know what is going on; that is why we are trying to find out.

  96. I am glad you are trying to find out.
  (Mr Stoker) In a structured way.

  97. Rather than in an unstructured way. I am glad you raised the issue of targets because if you turn to Appendix 3 which is on page 39 of the Report, this sets out your various targets and how effective you have been. If you look at the top box in the report which is Objective One, it is "to ensure that charities are able to operate for their proper purposes within an effective legal, accounting and governance framework". Could you tell me in that last column "target met Y/N" how many of the nine targets you failed to meet?
  (Mr Stoker) How many of the nine targets?

  98. There are nine targets in box one Objective One set out at the top of Appendix 3.
  (Mr Stoker) The difficulty I am struggling under, Mr Osborne, is in this light without my reading glasses I cannot read very easily but it looks to me like four nos and five yeses.

  99. So you have a 50/50 hit rate with your targets?
  (Mr Stoker) If you look at the targets as a whole you will find there are 32 of them, we hit 23 of them and were within five per cent of another three. One of the ones we did not hit was the forecast number of registrations which the NAO in the discussion of how we have been putting a more rigorous approach into registration would say was not a tragedy to miss that one. So I think that takes you to a slightly different proportion.


 
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