Analysis: Behind the scenes at an audit of the Compact

Documents released under the Freedom of Information Act show the influence of the Office for Civil Society on the National Audit Office's report on the Compact. By John Plummer

National Audit Office headquarters
National Audit Office headquarters

The recent National Audit Office investigation into the Compact provided a rare opportunity for independent scrutiny of the government's approach to the voluntary sector.

Central Government's Implementation of the National Compact, published in January this year, was the spending watchdog's first report on the voluntary sector since Building the Capacity of the Third Sector in 2009, which examined Labour's attempts to strengthen infrastructure.

The NAO carried out the investigation as part of its remit to "help the nation spend wisely". As an independent organisation, it usually sets its own agenda, but on this occasion the investigation into the Compact, the agreement setting out how public and voluntary sector organisations should behave towards each other, was instigated at the behest of Nick Hurd, the Minister for Civil Society. He said it would make the Compact more meaningful and transparent.

Amyas Morse, the comptroller and auditor-general of the National Audit Office, agreed to Hurd's request and the final 36-page report contained findings based on interviews and reviews of documents at nine central government departments that account for 98 per cent of voluntary sector spending.

The NAO's conclusions were mild: most departments, it said, supported the Compact in principle but "could do more" to embed it. But the story behind the scenes was more interesting. Sixty documents obtained by Third Sector under the Freedom of Information Act reveal considerable collaboration between the OCS and the NAO on what was theoretically an independent report, particularly after a draft version was sent to the OCS for fact-checking.

The OCS successfully petitioned the NAO to downplay the extent to which the Cabinet Office is responsible for the Compact in government and to flag up the fact that it is a voluntary agreement. References to the OCS being responsible for monitoring the Compact were changed after Gareth Davies, the head of the OCS, said he was unhappy with them.

The documents also reveal how much government departments spend on the third sector.

The historian Meta Zimmeck, a researcher for the consultancy Practical Wisdom R2Z, who has studied the Compact, says the documents appear to show the Cabinet Office "washing its hands" of oversight and monitoring of the Compact.

"This really is a new departure and I think it is dynamite," she says. "Nothing happens in government unless someone makes it happen, and this really is the kiss of death to the Compact."

An OCS spokeswoman says it remained "fully committed to the effective implementation of the Compact across government".

Asked whether it agrees with the view expressed by its civil servants in these documents that the Cabinet Office is not responsible for monitoring the Compact, she says: "It is each department's responsibility to ensure adherence to the Compact."


Highlights from the documents

October 2010: The Office for Civil Society instigates review

On 12 October 2010, the OCS writes to David Clarke, director for civil society and commissioning at the NAO, about the possibility of a Compact inquiry. Two days later Nick Hurd, the Minister for Civil Society, formally writes to Amyas Morse, comptroller and auditor-general. On 21 October, Morse agrees to the inquiry, adding: "It is important that I retain discretion over the work. Whatever agreement we came to could not compromise my independence or cut across my relationship with parliament." Hurd announces the NAO investigation at the launch of the renewed Compact on 14 December.

September 2011: The NAO begins 'light-touch' fieldwork

The investigation, originally due to finish in June 2011, picks up pace in September when the new OCS policy lead on the Compact writes to Whitehall departments about the investigation, saying it will be "as light touch as possible". The NAO also wants to meet the OCS "to understand its role with regard to oversight of the Compact". It sends a list of questions before a scheduled 90-minute meeting. The OCS responds by describing the Compact as a "statement of policy intent more than anything else".

November 2011: The NAO and the OCS meet to discuss findings

On 15 November, the NAO tells the OCS that Hurd can see a draft of its final report. "It would be for the OCS to decide when it felt comfortable with the messages in the draft as to when it did this," it adds. On 21 November, the NAO holds a two-hour workshop with the OCS to "present our emerging findings ... with the aim of reaching some workable recommendations".

December 2011: The OCS expresses concerns about draft report

On 7 December, the NAO sends a draft. "We would welcome comments on the factual accuracy by close of play on 13 December," it says. On 13 December, the OCS outlines its concerns, which largely relate to the Cabinet Office's role with regard to the Compact. "Technically, the Cabinet Office is not responsible for the Compact itself; it's an agreement on partnership working between the government, represented by the Cabinet Office," it says.

"We understand where the emphasis on Cabinet Office monitoring comes from and that you have to produce recommendations, but OCS resources will continue to be hard-pressed - difficult to see how this will be a Cabinet Office priority in future, so we would prefer it if the report didn't put so much emphasis on Cabinet Office monitoring, especially as Cabinet Office have never said we would monitor or regulate as it's always been each department's responsibility due to their different sector relationships.

"The Cabinet Office view is that the Compact is a means to an end, always will be, so it is its contributory role to better policy and better outcomes that needs looking into - not understanding, not awareness and not monitoring for its own sake."

Other OCS concerns relate to the use of the word "compliance", which it says turns the Compact into a regulatory instrument, "which it is not". The final report still uses this word widely. The OCS also writes, in bold: "Is there any way of stating earlier or beefing up that it's a voluntary agreement?" The voluntary nature of the Compact appears in the second line of the final report.

Revised draft sent

On 19 December, the NAO sends revised draft to the OCS. The OCS replies: "The Compact's nature as a voluntary agreement and its role is more clearly explained in this version ... appreciate the changes that have been made." The two organisations discuss delaying publication until January. Hurd is on holiday from 20 December to 9 January, and Compact Voice, which represents the voluntary sector on the Compact, says pre-Christmas publication could lead to claims the report is being "buried".

Requests for more changes

The NAO considers whether to include a reference to Compact Voice guidance on "meaningful engagement". Compact Voice drew up the guidance amid concerns about the validity of OCS consultation exercises, one of which lasted for 17 working days. The OCS replies: "I don't think this needs referencing." It does not appear. The OCS says its head, Gareth Davies, wants more changes. "He is unhappy with the continued emphasis on OCS monitoring the implementation of the Compact across departments. As we have discussed with other officials, his firm view is that it is for Compact Voice and other departments to primarily work together on implementing the Compact." The final report says all departments should focus on monitoring; it does not say the OCS is responsible for monitoring across government.

January 2012: The OCS says 'we are good to publish'

On 3 January, the OCS confirms that Davies is now "fine with the Compact report in its latest form" and "we are good to publish". The OCS proposes saying the government commissioned the report, but the NAO replies: "To reflect the catalyst for the work and the comptroller and auditor-general's independence, I wonder if it should read: 'In December 2010, following correspondence from the minister, the C&AG/NAO agreed to review'." The OCS reveals that records of the inter-ministerial group on the big society, which met 10 times from July 2010 to October 2011, show only one instance of the Compact being discussed.

Report is published

On 6 January, Morse sends copy of report to Hurd. It is published three days later. An NAO email to the OCS says: "I very much enjoyed working with you." The OCS replies: "Good to work with you too."

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