CANAL & River Trust’s (CaRT) registration with the Charity Commission in 2012 was accepted on the basis that it was independent from government.
However, it has subsequently been decided it is a' “Public Non-Financial Corporation'. It has been under government control for the last ten years.
Allan Richards lifts the lid on the charity that is not a charity but a government body.
Office of National Statistics
On behalf of government, the Office of National Statistics (ONS) determines whether organisations are in the ‘public’ or ‘private’ sector and whether they are ‘market’ or ‘non-market’ producers. ONS has determined that CaRT is a market producer and falls within the public sector. CaRT is categorised as a public non-financial corporation. 'Non-financial', in this context, means that CaRT is not a bank or similar institution.
Explaining its decision which was published in September 2015 but backdated to CaRT’s formation in 2012, ONS states:
“The British Waterways Board (BWB) was restructured on 2nd July 2012, and its English and Welsh operations transferred to a new charity called the Canal & River Trust (CRT). In accordance with the European System of Accounts 2010 (ESA 2010) and the accompanying 2014 Manual on Government Deficit and Debt (MGDD 2014), it was judged that the Canal & River Trust is a market body because there is sufficient evidence to suggest it charges economically significant prices and passes the quantitative market test. The Canal & River Trust is judged to be under government control in particular through the provisions of enabling instruments whereby the Secretary of State for the Environment and Rural Affairs has the power to approve or deny certain corporate decisions (e.g. dissolution). The Canal & River Trust is therefore classified as a public non-financial corporation (S.11001).”
Nobody told Charity Commission
Whilst CaRT and Defra would both be very aware of this decision, it seems that nobody told the Charity Commission so that CaRT could be deregistered. Instead, for seven years CaRT has been allowed to continue to act as if it were a charity rather than a public body.
Having said that, the Charity Commission are not entirely blameless. They were told in early 2014, by a private individual, that categorisation under ESA2010 would probably result in CaRT being in the public sector. The Commissions response was:
“Please note that the registration of the Canal & River Trust was dealt with at the highest level in the Commission. Furthermore, during my correspondence with you, the issue of independence has again been exhaustively looked at.
We remain confident that the Canal & River Trust meets the legal requirement for registration. Consequently, I will not be engaging in any further correspondence with you on this issue.
Any further letters you do send about this matter will be filed but not responded to.”
Within 18 months, the unnamed private individual was proved correct.
Under the grant agreement between Defra and CRT, a decision on future funding should have been made by July 1 2022. Defra could not risk making that decision without resolving CaRT’s legal status.
Defra faced a simple choice:
* Tell CaRT to own up to the Charity Commission and deregister as a charity.
* Remove the impediments that cause CaRT to be a public body.
Perhaps unsurprisingly it has gone with the second option. From CaRT’s December 2012 Board Meeting:
“A report was presented which provided an update on Defra proposals to amend Trust constitutional documents to avoid the consequences of the ONS public sector classification in respect of the Trust. This followed a presentation made to the Government Grant Review Trustee Working Group on the 7th November 2022.”
Unfortunately, part of the minutes have been redacted (i.e. removed) so we are given no indication as to what Defra think those consequences are. They could, for example, include repaying millions in tax and reimbursing donors.
The powers given to the Secretary of State for the Environment and Rural Affairs ten years ago were meant to safeguard the waterways in perpetuity.
Now it would appear that government is trying to give up that responsibility rather than admit that CaRT is a public body rather than a charity.