Editorial: A mauling for the regulator

The Charity Commission admitted the Cup Trust affair was a disaster. Stephen Cook asks whether it would act differently if another such case arose.

Stephen Cook
Stephen Cook

The chair and chief executive of the Charity Commission, William Shawcross and Sam Younger, received a mauling that verged on a dismemberment when they appeared before the Commons Public Accounts Committee last week to give evidence about the Cup Trust affair. Backbench MPs can be pretty merciless when they smell blood, not least because it gives them a moment in the sun, and on this occasion they did not hold back.

To his credit, Shawcross did not try to defend the indefensible. Early in the hearing he volunteered the view that the episode had been a disaster for the commission and for public confidence in charities, and that the commission was more upset about it than anyone else. But his pursuers were not much deterred by that, nor by protestations about the loss of a third of the watchdog's budget. "Everyone bleats about the cuts," snapped the committee chair, Margaret Hodge.

With hindsight, Shawcross accepted that when the trust applied for registration, someone should have noticed that it had one corporate trustee in the British Virgin Islands and run up a red flag. He also said that when it became clear that the charity, though legally constituted, was a tax-avoidance mechanism, the regulator should have gone public.

But there must be considerable doubt about whether a similar case would actually be picked up in future. The hearing dwelt on the inadequacy of the commission's methods for focusing on the wrong 'uns, and the proposition that it would warn the public about a dodgy charity does not square with its legalistic propensity to say as little as possible about anything contentious.

The overall effect of the session was to strengthen the view that the commission is - to use the phrase of its dissident former staffer David Orbison - a "no-touch regulator" that pussyfoots around sham charities. The forthcoming study of the commission's regulatory powers and procedures by the National Audit Office is a welcome opportunity to examine that thesis in more detail and determine what changes might need to be made.

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