Daniel

Daniel Ferrell-Schweppenstedde

Policy and Public Affairs Manager

Charities Aid Foundation


The Queen’s Speech 2022: Will Government make use of opportunities to improve charities’ resilience?

The Queen’s Speech focused this year on the Government’s priority of containing public spending and controlling the deficit. The consequences of Covid spending and resulting pressures on the public purse are to be mitigated mainly through economic growth. Regional growth and addressing disparities across the UK featured heavily across the 38 bills included.

The cost-of-living crisis and increasing inflation are top of the news agenda, and many were looking for indications in the Speech as to how Government plans to tackle these challenges. Charities are affected by the crisis on several fronts, with increasing demand, rising utility and wage costs and people cutting back on donations. In fact, recent CAF research found that 14% of people plan to cut back on charity donations in the next six months to help manage their bills.

With a third of charities concerned about their very survival, what are some possibilities highlighted in The Queen’s Speech that could provide support for charities keen to build their financial resilience?

Making procurement reform work for charities

For charities, access to public funds comes with a procurement and commissioning system that needs to work– especially given that a competitive bidding model is set to be the main distribution mechanism for large funds such as the UK Shared Prosperity Fund (UKSPF). Government is eager to put local lead authorities into the driving seat when it comes to the distribution of the UKSPF. However, their ability to determine funding priorities within the three broad pillars of the fund needs to come with further powers to design the processes for how funding will be awarded.

The announcement of a new Procurement Bill therefore provides an opportunity to address some of the challenges that charities have come up against within the existing system. Among other potential benefits, the Bill puts simplifying procurement on the agenda and could be welcome to charities, social enterprises, and voluntary groups. Many of these are deeply embedded in local supply chains for public services. Yet these organisations often raise concerns that contracts are increasingly not delivering for them, in terms of enabling them to recover full costs, and in terms of ability to deliver a high quality of services given the funding provided. We have also heard from charities which are not able to bid for contracts in the first place, either due to a lack of capacity; a lack of bid-writing skills; the size and scope of contracts being too large to deliver; or other exclusion criteria which commercial providers can fulfil.

Government could revisit proposals on how to improve grantmaking, particularly by providing unrestricted funding. The policy landscape has changed dramatically since the release of its Civil Society Strategy (which is still one of the key documents setting out proposals that could help the sector) – but some of the ideas on grantmaking and flexible contracting are still applicable and could be worth reviving.

Better access to banking services in rural areas

Charities are also reporting that they are experiencing financial exclusion because of the closing of their local bank branch, particularly in rural areas. Between 1988 and 2012, the number of bank branches halved and between 2012 and 2021 bank branches fell from 11,355 to 6,965 – while the total number of bank and building society branches in the UK fell by 34%. This has left many smaller charities, especially those in more remote areas, relying on using a car or public transport to access a face-to-face channel for resolving problems and managing their accounts.

This is especially the case for charities led by older people, community-based charities, and voluntary groups in rural areas which might still rely on cash fundraising. With bank branches closing, they can struggle to manage their cashflow and fundraising income in a timely manner. There can also be long waiting times for updating their accounts following changes of trustees. Trustees stepping down and new trustees joining is a regular and normal process for charities of any size – but many high street banks are struggling to accommodate any changes in governance and reflect these quickly and easily on the accounts that charity customers hold with them. Perhaps even more concerningly, there are some suggestions that charities are struggling to open bank accounts in the first place.

It is therefore welcome news that the new Financial Services Bill might include measures to protect access to cash, and that it explores the future of local banking services. The Post Office has also signed a series of agreements with banks and building societies to offer basic financial services to individual and business customers, which could result in more charities gaining access. But this requires a broader understanding of their governance and funding models on the part of old and new providers, as well as a willingness not to consider them as high risk. It also needs to be acknowledged that digital technologies are here to stay and that their use will also increase for charity banking. However, some charities might not be able to afford this technological investment. Government could help charities adapt by providing additional training, upskilling, and acquiring hardware (although it should be noted that success would be predicated on efforts to improve broadband access in rural areas). This could be done by funding existing efforts or investing in new charity sector infrastructure.

Conclusion

Charities are embedded in every community across the country, delivering services and helping to create a meaningful sense of place. But they also continue to deal with the impact of the pandemic on their financials, and for many, the recovery phase might not lead to a consolidation phase. For some, they are in a continuous, reactive cycle of responding to the latest crisis and risk being overwhelmed by it, while also seeing an increase in demand on services. The Queen’s Speech included various elements that could provide some elements of good news for charities and their financial resilience, but further detail is needed to see how these develop.


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