Andrew Hind, the former chief executive of the Charity Commission, has criticised the leadership of its board and executive in the Cup Trust affair and said it was shameful that the regulator did not speak out against the lobbying act.
An article by Hind, who was the regulator’s first chief executive between 2004 and 2010, says that the Cup Trust tax-avoidance scandal in 2013 was caused by "bad judgement and inadequate leadership from the senior executive team and the board".
The Cup Trust charity was registered in 2009. Hind says that revelations about the Cup Trust, which raised £176m in donations and claimed £46m in tax relief, but spent only £55,000 on charitable activities over two years, caused "untold damage to the regulator’s reputation as a competent and effective organisation".
The exposure of the Cup Trust led to scrutiny from the House of Commons Public Accounts Committee and an investigation by the National Audit Office, which both resulted in severe criticism of the regulator.
Hind writes that the 2013 appearance before the Public Accounts Committee of Sam Younger, then chief executive of the commission, and its chair, William Shawcross, was "an embarrassment for a public body previously respected across Whitehall for its competence, if not always for its flair and innovation".
Hind writes: "The Cup Trust error wasn’t a function of not having enough money to do the job properly, nor was it the result of having been influenced by any party political pressure. The cause lay a lot closer to home. It was bad judgement and inadequate leadership from the senior executive team and the board that was wholly responsible for the mess."
Hind says that concerns about the regulator being dragged into party politics have become much greater since William Shawcross took over as chair in 2012.
He says the regulator has been accused of being over-legalistic and inefficient, but until recently it had never been accused of being politically partisan. "There is no greater threat to the commission’s reputation," he says.
In the article, Hind rates at one out of 10 the likelihood that the regulator will preserve its independence with Shawcross as its chair.
"The Shawcross era has been characterised by a continual stream of maverick interventions from the chair that have lacked context and strategic coherence," says Hind.
But he says he has confidence in the regulator’s current executive team, led by chief executive Paula Sussex, who joined last year.
Hind says the commission has a critical role to play in championing the concept of charity and seeking to defend its fundamental values and principles.
"Standing up for the right of charities to campaign in accordance with the law is a good case in point," he writes. "It was shameful that the commission’s voice was not heard in 2013 speaking out against the lobbying act."
He writes that the regulator has dropped heavy hints that it will, after the general election, review its CC9 guidance on charity campaigning, "no doubt with a view to watering it down and making it more restrictive".
He says that for many sector leaders this would be "tantamount to a declaration of war".
Hind references an interview given to Third Sector by commission board member Gwythian Prins in 2013, in which Prins said that charities should "stick to their knitting" – this was before the phrase became associated with the former charities minister Brooks Newmark.
"That was a shocking example of bad governance practice," writes Hind.
He says that the regulator had a coherent strategy in place under his leadership and in 2007 won the civil service award for the best operational delivery in the public sector. "Not fit for purpose? I think not," says Hind in the article, which appears in the Charity Finance Yearbook.