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Largest service delivery charities are standing firm against spending cuts

Finance | Tania Mason | 4 Jul 2011

Many of the UK’s biggest public-service-delivery charities are defying the odds in the face of the government’s spending cuts, with many even predicting net growth over the next year or two.

This month, civilsociety.co.uk has published exclusive research into the experiences and prospects of nearly 30 charities that have income of at least £30m and get at least 70 per cent of this from statutory sources.

The results were largely surprising: the overall picture is much less depressing than had been predicted even just six months ago. This seems particularly true for health and social care charities, which look after some of the most vulnerable people. While many are still haggling with local authorities over their settlements for the four-year spending-review period just started – and several still hadn’t agreed fees even for the current financial year – the level of cuts so far seemed to average out at around 5 per cent.  This is lower than the extent of cuts that were widely feared when the Comprehensive Spending Review was unveiled last October.

Several charities also said they hoped to compensate for price cuts by winning new business, and the general opinion was that there is no shortage of new contracts around.  This news seemed to support recent research by support services group Interserve suggesting that local authorities expect to increase their outsourcing levels by 70 per cent between 2011 and 2014.

Many respondents said local authorities were still in disarray themselves, trying to cut their own costs as much as possible, so there is still much uncertainty about the final extend of the cuts.  One also claimed that “in classic local authority tradition, they’re doing reactive, single-period planning”.

Others have forcefully – and successfully – resisted cuts to their fees.  Sindy Fortescue, finance director at the Disabilities Trust, said that if funders want to reduce any fees then “they have to assess each person to demonstrate that that level of support does not require the same level of fee”.

The full research is published in Charity Finance magazine this month. Subscribers to civilsociety.co.uk can read it here.

Our third annual survey of the finance function, in the same edition of Charity Finance, also finds grounds for cautious optimism in the sector.  The proportion of respondents that say they may have to cut finance staff this year has fallen from 23 per cent a year ago to 16 per cent, and of these 43 per cent may have to make compulsory redundancies, down from 58 per cent.

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Directory: Charity Finance
Who's Who: Sindy Fortescue