INCREASES in wage contributions aimed at funding health and social care will put additional financial pressure on the very charities that are vital in delivering health and wellbeing services.
The latest VCSE Barometer Survey, conducted by the VCSE National Data and Insights Observatory at Nottingham Trent University (NTU), questioned organisations on their financial outlook and the impact of upcoming rises in the National Living Wage (NLW) and Employer’s National Insurance Contributions (ERNICs).
The results from 665 voluntary organisations showed that around half anticipated negative impacts from changes in ERNICs (54%) and the NLW (47%).
Less than half (48%) feel prepared to absorb these increased costs, and one in five (19%) said they were not prepared at all.
Large and medium organisations, which employ higher numbers of staff, are seen to be more vulnerable to the policy changes and are anticipating making changes to staffing, overheads, and service delivery, compared to only one in 10 small organisations.
Over half expect to decrease staff recruitment (59%) and hours (52%), while at the same time increasing redundancies (55%) and relying more on volunteers (68%). Of the organisations expecting to make changes to service delivery, an increase in service prices (53%), reduction in free services (45%) and the overall number of services offered (42%) were the most reported.
Daniel King, Professor of Organisation Studies at Nottingham Business School, part of NTU, leads the Barometer. He said:
“The potential harm these policy changes may cause to organisations is already well understood. However, their unintended consequences for health and social care – undermining the very goals the government aims to achieve – have received far less attention.
“Many of these larger charities play a direct or indirect role in delivering services that influence key health and social determinants, such as economic stability, education, and housing – factors that help prevent illness and reduce pressure on healthcare services.
“We are already witnessing the effects of funding cuts on direct service providers, even those who benefit from government grants.
“For example, we’ve seen headlines that Macmillan Cancer Support is facing job cuts at a time when early cancer detection rates are increasing, while redundancies and efficiencies have been announced at Save the Children during a time of increased child poverty.
“The latest Barometer results indicate that adding further financial pressure and uncertainty to essential support organisations will only be counterproductive.”
The Barometer was launched during the pandemic and takes the temperature of the voluntary sector each quarter. The latest wave shows that income, increasing demand and volunteer recruitment remain the top three concerns.
Along with changes brought by policy change, organisations were particularly worried about their funding sources, with around three-quarters rating grants from government, trusts and foundations as high or moderate risk.
Professor King added:
“The Barometer highlights the ongoing challenges facing the voluntary sector, which is under pressure from all sides. The upcoming costs increase risk, exacerbating long-term issues and potentially leaving a critical gap in community support – support that health and social care services depend on. As some respondents warn, this could be the final blow that pushes many organisations past their breaking point.”
The full results of the Barometer, which ran from 22 January to 12 February, can be found online.
