Community and Voluntary Sector

Baroness Fraser of Craigmaddie Excerpts

Thursday 31st October 2024 Lords Chamber

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I thank the noble Baroness, Lady Morgan of Drefelin, for securing this important debate and for her excellent introduction on the—as she said, indispensable—contribution of the voluntary sector. I declare my interests as set out in the register; in particular, as chief executive of a voluntary sector organisation, Cerebral Palsy Scotland. The work that we do supports people with CP, their families, the NHS and education and social care services. It seems, however, that too many people think that we can do this for free.

This sector is not voluntary. As the noble Baroness said, it employs around 1 million people, the majority of whom work for smaller organisations with fewer than 50 employees, which will all be struggling with yesterday’s announcements regarding increased employer NI contributions and an inflation-busting 6.7% increase to the living wage. According to the SCVO’s Scottish Third Sector Tracker, Scotland’s voluntary sector is facing unprecedented challenges. We have had years of warm words and promises of multi-year funding from the Scottish Government, which have yet to be fulfilled. Crises such as the pandemic and increased costs of goods and utilities have all put the sector under increasing pressure. As costs for organisations have risen, so too has demand for services. The sector is in crisis, and many organisations are having to close their doors.

Headway is the UK-wide charity that works to improve life after brain injury. Key information and vital services provided by local Headway charities have propped up statutory services but, now that financial pressures are accumulating from all sides, this has become unsustainable. Over the last two years, four local Headway charities have had to close their doors—three volunteer-led branches have also closed—leaving many vulnerable brain injury survivors and their families with no support. Three more are scheduled to close in the next couple of months. The strain placed on families as survivors can no longer access specialist daycare services will be unsustainable. Many will not cope, leading to family breakdown due to family carers becoming unable to meet their loved ones’ needs that previously were met by Headway services, and unable to access respite care.

Small and medium-sized charities such as Headway are the most likely to close. Charities with an income of under £1 million each year accounted for over 97% of charity closures for each of the last 10 years. As these organisations have seen diminished statutory funding over the years, a decline in meaningful corporate support and not enough philanthropists, they have become over-reliant on funding from trusts and foundations.

However, in recent months, several large and well-known funders, such as the Foyle Foundation and the Schroder Charity Trust, have closed applications and are spending down their funds. Others, such as the Henry Smith Charity and the Tudor Trust, have changed their priorities. Their motivation is often rationalised by pointing out that they receive many more applications than they can fund, and how few of these can be successful.

The sector is facing a perfect storm, and I am deeply concerned about what the future looks like for many, many charities. We face a situation where organisations are closing due to cash flow, not based on their impact. This will affect beneficiaries as well as essential public services. NPC, which the noble Baroness referred to, estimated recently that charities prop up state services by £2.4 billion a year. These organisations are key partners and it is about time we treated them as such. When will there be recognition that this sector is not voluntary, it is essential?