Government support: Getting the balance right

At a time of national crisis the role of government is critical: it needs to do whatever it takes to support the nation, as the chancellor put it. And in general, I’m pleased the government has recognised that demands on charities have increased significantly as the crisis has hit communities everywhere. 

The £750m that the government is making available for charities, when it all arrives, is an important step.

And access to the business loan schemes and bounce back loans are helpful for some. A number of organisations are able to access grants aimed at the retail and hospitality sectors. Others can access grants distributed via local authorities. The job retention scheme may turn out to be an important source of support for the sector. This financial support is critical for charities, which have been never more needed than at this time.

But this funding won’t address the medium- and long-term financial challenge for the sector. The stark reality is that charities spend £12.5bn providing services to people each quarter and that they likely have lost a quarter of their income. With social distancing likely to be in place for many months, it is not known when that income will return. 

It’s also important to note that the £750m is not a ‘bail out’ for general income that has been lost, but rather support for organisations experiencing additional demand during the crisis. In short, for organisations not deemed to be in the front line of responding to the crisis, the only options are furloughing staff or borrowing money. For some organisations, furloughing staff remains just about the worst option at a point when demand has increased. For others, loan finance is neither viable nor suitable.  

We’ve worked with other charity bodies to propose amendments to existing schemes to make them work better for charities. We welcome the fact that the government has implemented some of these proposals. But there is still work to do to consider the longer-term financial challenges for the sector. 

Lack of transparency

But we cannot lose sight of making progress on what has already been announced. As I said, the £750m announcement was significant. And money has started to flow, specifically £200m to hospices. Some more detailed elements of the package have been announced, such as money for services supporting people affected by domestic violence, modern slavery and child abuse. The National Emergencies Trust, which has received an element of match funding from the package, is distributing funds via the national network of community foundations. 

But I have increasing concerns about the pace and the process of the distribution of the remainder of the funding. Of the £750m package, it remains unclear how roughly half of the £160m allocated for distribution via central government departments is to be spent.

Moreover, this is a process bedevilled by delay and a lack of transparency. I know that some charities in some areas have been asked by departments to bid for funding, while their counterparts have heard nothing. This does nothing for confidence in how decisions are being made. The process needs to be simple and open.

We still don’t know when organisations will be able to apply for the £370m to be distributed via the National Lottery Community Fund (NLCF). Negotiations are going on behind the scenes between the government and the NLCF, but the reason for delay remains unclear. Reassurances that funding will be made available soon are starting to wear thin. I have told the government and the NLCF that this pace isn’t good enough.

Getting the balance right

I am the first to say it’s important to take the time needed to get the process right, and this is a point I have been making. We need to have the right process to make sure the money is fairly distributed to where it is most needed and make the biggest difference. But we are now well over a month on from the original announcement, which itself took some time to emerge. 

We need three things now:

  1. The government should publish an explanation of how the £160m departmental funding so far has been allocated, and plans for allocating the remaining funding.
  2. The government should set out what process and criteria each department will use to allocate the funding, and this should include an explanation of how they are taking equality considerations into account.
  3. There should be immediate clarity on how the £370m funds to be distributed via the National Lottery Community Fund will be made available (and again, when this comes we expect to see distribution criteria that shows an appreciation of the different impact of the disease among different demographics).

It’s no surprise that business organisations such as the CBI have echoed our view that support from the government needs to be swift, simple and substantial. Two months into the crisis, a significant proportion of the funds the government has allocated have yet to flow. This is taking too long and I want to see it sorted out as soon as possible now. It’s crucial you’re not left hanging on for answers at such a difficult time.

 

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