Examination of Witnesses (Questions 80
WEDNESDAY 10 MAY 2000
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.
Mr Williams: That is excellent.
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 wantand with the health warning
Mr Young gave us earlier which you may wish to emphasise againto
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.
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 centI think it was 15.3 per cent23 out
(Mr Hornsby) Yes.
85. Using that as a basis you get the figure
of 734 cases which would only have "partly provided"
(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
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.
(Mr Hornsby) With those major qualifications, yes.
90. You have already accepted that up to 734
individual casesbased on the figures that the NAO has provided
and you have signed up toare 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 trueand it is in
the report, so I hope it is true, and the NAO have written the
reportthen 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
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 informationand
I cannot recollect the exact figure, you will be pleased to hearhow
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
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,
(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
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
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.
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
Note by Witness: Projects not progressing would have been
between 430 and 1,100, not 430 and 1,000. Back