Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No.2) Regulations 2020

Lord Foulkes of Cumnock Excerpts

Friday 9th October 2020 Lords Chamber

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, I am really grateful to the Minister for her full and helpful explanation of the regulations. Like her, I shall first say a few words to put them into context and in doing so I declare an interest as a former chair of Age Scotland and, many years ago, a director of Age Concern Scotland. I know from that experience how difficult it is to fundraise. The pressures on charities to raise money to support vital work to help poor, vulnerable and lonely people are very great indeed, even in normal times.

The impact of Covid-19 on the charity sector has been significant, in some cases devastating, exacerbating many of the financial challenges facing charities across the United Kingdom, which were increasingly relied on to provide vital services—to older people in the case of Age UK—during the pandemic. Charities such as Age Scotland and Age UK and their regional and local partners have been doing their utmost to provide services to support older people despite these financial difficulties. For example, during lockdown Age UK lost one-third of its income overnight due to the closure of 400 of its charity shops. That was £900,000 a week. While the charity has made significant changes nationally to respond to this drop in income, many local Age UK branches have also had to make significant cutbacks, closing services and making staff redundant, with consequent effects on their clients. Some Age UK branches have closed, and many more will have to make similar decisions in the coming months, as the impact of the virus on the income of the organisation is becoming clearer. For Age UK such financial hardship could likely mean that many older people were left without support in future. It is incredibly sad and difficult for the staff in the partner charities who work tirelessly to support those most vulnerable in our community. For our elderly in society this is of grave concern, especially as we slowly see the erosion of other vital services that have successfully been provided until now for older people—for instance, the withdrawal of free TV licences for the over-75s. I am worried that this is a straw in the wind and that we will see the erosion of other services for the elderly.

While Age UK has now reopened around two-thirds of its charity shops and is beginning some recovery of its income, uncertainty around life getting back to normal and the threat of local and national lockdowns are a continuous threat to the charity and others. While the Government are providing some financial support to charities—after much cross-party pressure—it does not go far enough when many are likely to face even greater financial hardship and increasing workloads over the coming months. Indeed, the advice officered by the Government to charities in managing finances is vague and impractical. The GOV.UK website suggests

“developing alternative sources of funding or launching an emergency appeal”,

which is unlikely to be possible,

“borrowing money from banks”—

again, not likely to be successful—and

“reducing actual or planned spending”,

which is what they are doing, but that reduces services. Finally, it suggests

“stopping doing some of your charity’s activities”,

which is exactly what is happening, so the advice is not really very helpful.

I now turn to some specific points related to the regulations before us. The moratorium period is said to give an organisation breathing space during which time some creditors cannot take specific action of enforcement. Why only some of them and not all creditors? The breathing space that these regulations give is provided while remedies are sought. Will the Minister say what remedies and from where? Can she enlighten us on that? Furthermore, does the Minister believe that a 20-day delay is long enough, particularly given the extraordinary circumstances that we are in? Did the Government, for example, conduct an assessment before deciding on those 20 days? As the Minister sees, I have some concerns about the position charities are in and whether these regulations will be a significant help. Nevertheless, I support them today.