Committee of Public Accounts

Press Notice No. 9 of Session 2003-04, dated 2 March 2004


Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today there were weaknesses in every stage of the Community Fund's work, and that the Fund must be prepared to use the ultimate sanction of withholding funds in the event that grant recipients breach its terms.

Mr Leigh was speaking as the Committee published its 9th Report of this Session, which examined weaknesses in the procedures the Community Fund applied in deciding to award grant funding to the National Coalition of Anti-Deportation Campaigns (NCADC) and the wider implications of these weaknesses for other grant awards. In July 2002 the Community Fund approved a second lottery grant to the National Coalition of Anti-Deportation Campaigns (NCADC) of £336,000 following a previous grant of £191,000 in 1998. Prior to any payment being made, Ministers asked the Community Fund to check the legality of the award, prompted by their concerns about some of the activities of the NCADC which might be considered to be political and doctrinaire. The Fund confirmed subsequently that NCADC were eligible to receive the grant but attached additional terms and conditions to the award.

The Committee found that if its earlier recommendations had been acted upon fully the issues surrounding the award of grant to the NCADC might not have arisen. In 2001 the Committee reported on grant assessment and monitoring procedures at the Community Fund and made a number of recommendations. More could have been done to implement them, particularly those on visiting projects and schemes and on assessing the achievements of grant recipients following the funding of their work.

The Fund has subsequently introduced a number of improvements to procedures and have accepted the recommendations made in the Comptroller and Auditor General's Report. It now needs a clear action plan and timetable for their implementation and a robust system of performance monitoring to ensure its procedures are enforced.

The Community Fund needs to be more robust with grant recipients who breach the terms of their grant. It needs an effective policy which contains appropriate sanctions including, for the worst cases, withdrawal of funding.

The Fund needs to make greater use of the expertise within its committee structure of independent members so that each application is subject to proper consideration and discussion by them. Committee performance should be measured to monitor the rigour of the process and learn lessons, for example through feedback from members and analysis of the reasons for rejecting the advice offered by officials.

The Fund should widen its definition of risk, and consider the context within which applicants operate, to avoid funding activities that could be considered political and doctrinaire. The Community Fund's risk profiling of the NCADC as a grant applicant was inadequate and focussed too narrowly on financial risk. Risk profiling also needs to be reviewed over the period of the grant funding through regular monitoring.

The Fund should have known how far grant funding would be used to assist the settlement and integration support of asylum seekers, and how far to challenge deportation orders. As part of their assessment of risk, the Fund needs to be aware of proposals to fund sensitive areas of expenditure.

The Community Fund should be more consistent with grant recipients which are not subject to the monitoring regime applied to registered charities by the Charity Commissioners. It currently applies more rigorous grant approval procedures to non-charitable applicants, but subjects them to the same level of monitoring as registered charities following an award of grant. But non-charitable bodies are often small, unsophisticated and unregulated, and as such are potentially more susceptible to the misuse of funds.

Faced with decreasing Lottery receipts, the Community Fund will have to prioritise its funding decisions more effectively than in the past. The Fund's policy is to provide funding for a maximum of six years even though it recognises that some projects may not be sustainable when their funding ceases. Where grants are designed to have a lasting effect, the Community Fund needs an explicit strategy to ensure applicants fully address questions of sustainability.

Mr Leigh said today:

"It is disappointing that the Community Fund had not acted more fully on my Committee's earlier recommendations. We found weaknesses in every stage of the Fund's work, from grant application, assessment and approval through to the end of grant review. The Fund's monitoring has been poor, and even when problems have become evident, the Fund has been extremely reluctant to withdraw grant. The Fund must act robustly if grant recipients breach its terms and be prepared to use the ultimate sanction of withholding funds or requiring them to be repaid."

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