Why quangos need to be reined in
21 July 2009
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Economic Theory
16 July 2009
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Trade, Development, and Immigration
4 November 2024
It was a disagreeable experience to hear Dame Suzi Leather, Chair of the Charity Commission, attempting to justify the Commission’s stance on the “public benefit” test for independent schools on the radio last week. She provided no clear rationale for the rejection of the cases of two independent schools which, despite playing an active and supportive role in the local community, were deemed not to be spending enough on bursaries.
The Charity Commission is of ancient origin, but it is essentially a quango, one of a thousand or more bodies administering government policy at arm’s length. Essentially the Charity Commissioners are now in the position of imposing a “tax” rate on charitable bodies, insisting that they must incur certain costs in order to meet politically determined goals involving opening up their facilities to the non-paying public. However, unlike a real tax, the rate to be imposed is not explicit, and independent schools and other charities are left in the dark about what they should be doing: only case law will in time tell. Meanwhile risk-averse charitable bodies will incur excessive costs in a bid to avoid their viability being threatened by an expensive and time consuming investigation or crippling court case.
It would have been better if the government had simply announced a levy on all independent schools’ incomes. The burden would still be considerable – and passed on to parents, who already pay for their children’s education twice over. But at least they would know where they were, subject to the rule of law rather than the decisions of a bureaucracy.
What is wrong with the old assumption that educational institutions automatically provide a public benefit? At the very least, private schools are releasing about £8,000 per pupil that can be spent on other public services or used to provide tax reductions. It is an irony that those who propose that governments should pay for education because it has “social benefits” wish to assume that private schools only provide private benefits.
Another example of unaccountable policy making can be found elsewhere in the education world, where the much younger quango OFFA (the Office for Fair Access) has the power to approve university agreements about access for “under-represented” groups.
When “top-up” fees were approved by Parliament, concern was expressed that some potential students from less-advantaged backgrounds would be discouraged from going to university. Higher education institutions were therefore required to use some of the money raised through enhanced tuition fees “to provide bursaries or other financial support for students from under-represented groups, or to fund outreach activities to encourage more applications from under-represented groups” (from the OFFA website).
Each institution was free to determine its own approach and the proportion of extra fee income returned to students, subject to providing a minimum cash bursary (£319 this year) to those in receipt of a full maintenance grant and reaching an access agreement with the Office for Fair Access.
Although it was originally envisaged that those institutions with fewer students in the under-represented groups would spend a larger proportion of their extra fee income on attracting, supporting and encouraging such students – the intention behind the legislation – this has not proved to be the case. For example, while Thames Valley University (with 65% of its students in “OFFA-countable” groups) spent 35% of its extra income on bursaries last year, King’s College London (with just 26% of its students in these groups) spent less than 20% of its extra income in this way. The implication is that Thames Valley had less extra funding available to deliver programmes and support students in the classroom. Partly this was their choice, but it may also have resulted from confusion about what would or would not be permitted by the quango. Again, no criteria were spelt out and the suspicion must be that many universities spend large sums on not particularly effective policies – the under-represented groups remain stubbornly impervious to this spending – simply to avoid the quangocrats’ ire.
Both of these examples illustrate the casual way in which governments have asserted the right to make policy in an area, but then offloaded the responsibility for detailing and implementing that policy – and allowed people who will never face the electors to determine matters of serious importance to the public. David Cameron is right to be concerned about this, but in awaiting detailed proposals I’m not holding my breath. After all, Gordon Brown made similar sorts of noises in opposition and Labour has significantly added to, not reduced, the scope of quangos.
The Charity Commission is of ancient origin, but it is essentially a quango, one of a thousand or more bodies administering government policy at arm’s length. Essentially the Charity Commissioners are now in the position of imposing a “tax” rate on charitable bodies, insisting that they must incur certain costs in order to meet politically determined goals involving opening up their facilities to the non-paying public. However, unlike a real tax, the rate to be imposed is not explicit, and independent schools and other charities are left in the dark about what they should be doing: only case law will in time tell. Meanwhile risk-averse charitable bodies will incur excessive costs in a bid to avoid their viability being threatened by an expensive and time consuming investigation or crippling court case.
It would have been better if the government had simply announced a levy on all independent schools’ incomes. The burden would still be considerable – and passed on to parents, who already pay for their children’s education twice over. But at least they would know where they were, subject to the rule of law rather than the decisions of a bureaucracy.
What is wrong with the old assumption that educational institutions automatically provide a public benefit? At the very least, private schools are releasing about £8,000 per pupil that can be spent on other public services or used to provide tax reductions. It is an irony that those who propose that governments should pay for education because it has “social benefits” wish to assume that private schools only provide private benefits.
Another example of unaccountable policy making can be found elsewhere in the education world, where the much younger quango OFFA (the Office for Fair Access) has the power to approve university agreements about access for “under-represented” groups.
When “top-up” fees were approved by Parliament, concern was expressed that some potential students from less-advantaged backgrounds would be discouraged from going to university. Higher education institutions were therefore required to use some of the money raised through enhanced tuition fees “to provide bursaries or other financial support for students from under-represented groups, or to fund outreach activities to encourage more applications from under-represented groups” (from the OFFA website).
Each institution was free to determine its own approach and the proportion of extra fee income returned to students, subject to providing a minimum cash bursary (£319 this year) to those in receipt of a full maintenance grant and reaching an access agreement with the Office for Fair Access.
Although it was originally envisaged that those institutions with fewer students in the under-represented groups would spend a larger proportion of their extra fee income on attracting, supporting and encouraging such students – the intention behind the legislation – this has not proved to be the case. For example, while Thames Valley University (with 65% of its students in “OFFA-countable” groups) spent 35% of its extra income on bursaries last year, King’s College London (with just 26% of its students in these groups) spent less than 20% of its extra income in this way. The implication is that Thames Valley had less extra funding available to deliver programmes and support students in the classroom. Partly this was their choice, but it may also have resulted from confusion about what would or would not be permitted by the quango. Again, no criteria were spelt out and the suspicion must be that many universities spend large sums on not particularly effective policies – the under-represented groups remain stubbornly impervious to this spending – simply to avoid the quangocrats’ ire.
Both of these examples illustrate the casual way in which governments have asserted the right to make policy in an area, but then offloaded the responsibility for detailing and implementing that policy – and allowed people who will never face the electors to determine matters of serious importance to the public. David Cameron is right to be concerned about this, but in awaiting detailed proposals I’m not holding my breath. After all, Gordon Brown made similar sorts of noises in opposition and Labour has significantly added to, not reduced, the scope of quangos.
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Stanley Brodie QC has a letter in today’s (Tuesday’s) Times saying that the Charities Act neither created a new public benefit test nor authorised the [Charity] commission to create one. He says Suzi Leather admitted as much in a speech she gave in 2007.
Among other points he makes, he says the directions given to two private schools on the basis that they have failed the test are almost certainly without lawful foundation as is the threat to deprive them of their charitable status.
My understanding is that the Charity Commission would never deprive a charity of charitable status: if the worst came to the worst it would sack all the existing trustees and appoint new ones.
Stanley Brodie QC has a letter in today’s (Tuesday’s) Times saying that the Charities Act neither created a new public benefit test nor authorised the [Charity] commission to create one. He says Suzi Leather admitted as much in a speech she gave in 2007.
Among other points he makes, he says the directions given to two private schools on the basis that they have failed the test are almost certainly without lawful foundation as is the threat to deprive them of their charitable status.
My understanding is that the Charity Commission would never deprive a charity of charitable status: if the worst came to the worst it would sack all the existing trustees and appoint new ones.
Interesting letter, which strengthens my point that unelected people like Dame Suzi are being allowed in effect to make policy. And in a particularly unpleasant way which will lead to charitable bodies incurring unnecessary costs in trying to anticipate the CC’s whims.
Interesting letter, which strengthens my point that unelected people like Dame Suzi are being allowed in effect to make policy. And in a particularly unpleasant way which will lead to charitable bodies incurring unnecessary costs in trying to anticipate the CC’s whims.
My understanding is that all charities have always had to have some sort of public benefit test but the presumption in favour of educational and religious charities automatically providing public benefit was removed by the act.
My understanding is that all charities have always had to have some sort of public benefit test but the presumption in favour of educational and religious charities automatically providing public benefit was removed by the act.
The Telegraph reports that Private schools are having to cut staff and fund free places in order to prove to the Charities Commission that they provide a ‘Public Benefit. They clearly have overlooked the fact that 511,677 pupils are being educated privately. (BBC report April 2008). In November 2008. Jim Knight, Minister of State (Schools and Learners) stated in a parliamentary reply that the real terms funding per state pupil was £4,550. I calculate that as the state pays nothing to educate these 511,611 private pupils, this saves the Exchequer £2,327,830,050 in funding during the period in which private pupils spend in school. There is no other way to describe it than ‘Public Benefit!
The Telegraph reports that Private schools are having to cut staff and fund free places in order to prove to the Charities Commission that they provide a ‘Public Benefit. They clearly have overlooked the fact that 511,677 pupils are being educated privately. (BBC report April 2008). In November 2008. Jim Knight, Minister of State (Schools and Learners) stated in a parliamentary reply that the real terms funding per state pupil was £4,550. I calculate that as the state pays nothing to educate these 511,611 private pupils, this saves the Exchequer £2,327,830,050 in funding during the period in which private pupils spend in school. There is no other way to describe it than ‘Public Benefit!