The Charity Commission will have to stop providing advice and guidance to charities if its budget is cut any further in the next spending round, according to Dame Suzi Leather, the regulator's chair.
Leather was speaking during the commission's annual appearance before the Public Administration Select Committee yesterday.
She said the commission had already achieved "very remarkable" efficiencies in response to the annual five per cent funding decrease imposed on it during the current three-year spending round.
It had, she said, cut staff numbers, moved its London office to a cheaper location, downsized its Liverpool office and outsourced some back-office functions.
"I don't think there is any fat left to trim," said Leather. "Future cuts in the next spending round will affect our core services. Our worry is that it will be necessary to cut advice to the sector, but that would be a false economy because it would be shifting costs onto the part of the sector least able to afford lawyers and accountants."
Andrew Hind, chief executive of the commission, told the committee a cut in advice services would translate into a "quick escalation" in the number of cases of mismanagement that the commission had to deal with. "Giving advice is the second arm of a modern regulator's armoury," he said. "Without it, the core fabric of charity would, over time, begin to suffer."
He said the commission recognised that public spending was going to be seriously constrained in the next spending round, but had made its point to the Treasury.
"They recognised what we are saying, but have given us no indication of what the results will be in terms of spending after 2011," he said.
Leather also admitted that it did not make sense for the commission to have offices in London, Taunton, Liverpool and Newport, Gwent. "But we are where we are," she said. "Moving from where we are would be difficult for staff and would also be expensive. A cool, rational look would say four offices doesn't make sense, but we have done what we can do."