Communities will suffer if the government does not support voluntary organisations with their energy bills beyond March 2023, a group of charity leaders has warned.
NCVO and the Civil Society Group wrote a letter to business secretary Grant Shapps this week, warning that many charities are at risk of closing as they cannot afford soaring energy costs.
The signatories, which include Charity Finance Group and the Directory of Social Change, told Shapps that they are keen to work with the government to ensure charities’ needs are met when the Energy Bill Relief Scheme (EBRS) ends.
‘Charities at risk means communities at risk’
The organisations said that the EBRS is helping ease some of the pressure on charities this winter and must continue in the longer term so that they can keep providing “vital support to communities”.
They pointed out that charities are particularly vulnerable to rising energy prices, with many providing energy intensive services such as heating hospices, care homes and nurseries.
“Charities are supporting people and communities who are struggling the most with the cost of living. They therefore cannot pass on rising energy costs, as beneficiaries cannot afford it,” they wrote.
“Reducing their energy use would jeopardise the health and wellbeing of the people they support. Furthermore, many charities operate out of buildings that are not energy efficient, such as village halls or community centres, which are increasingly being used as warm banks within communities.”
They said that before the introduction of the EBRS, some charities expected their costs to rise by 200% from 2022 to 2023 while others said they could face increases of 1,000%.
“It’s currently impossible for charities to know, and therefore budget and plan for, their energy costs in 2023/24. These organisations are facing a cliff edge if they receive no further support past 31 March 2023,” they wrote.
Income sources are limited
The signatories said that charities are unable to tailor their income sources to meet increased costs as they might be at the “limit of what they can fundraise, particularly given the impact of rising costs on disposable income”.
Meanwhile, those contracted by the government or receiving grants reported not receiving uplifts in line with inflation. According to the NCVO, two thirds of charities frequently subsidise the public services that they are commissioned to provide with their own charitable funds.
The organisations told Shapps that one in four charities dipped into their reserves during Covid-19, which left them in financial limbo, and are once again using them to meet rising costs.
“It’s not sustainable or financially responsible for charities to keep using their reserves for day-to-day operations,” they said.
‘Communities will suffer’
The organisations reported that their members are seeing significantly higher demand compared with six months ago and that two in three charities are planning to cut or restrict access to their services or close altogether to deal with the pressures.
They wrote: “If charities struggling with their energy bills do not get support, communities will suffer. Charities are an essential part of the public services ecosystem. They provide efficient, high-quality services across a range of areas, including (but not limited to) health and social care, employment support, support for disabled people, domestic abuse, criminal justice, and children’s services.
“Charities warn that rising energy costs mean services are becoming unsustainable to run. If services close, in addition to the adverse impact on life outcomes, other public services will face high demand and pressures on resource.”
They added: “The risk factors that make voluntary organisations more vulnerable to rising prices must be central to plans for providing ongoing support. The mechanism to distribute ongoing support needs to be accessible and quick for charities, learning the lessons from previous schemes during the pandemic. Next year will be a difficult one for communities, but even more so if the charities that they rely on are no longer around.”
Sarah Vibert, chief executive officer of NCVO, commented: “This is not about charities, this is about the people who rely on the services charities provide. And that is millions of people in charity-run care homes and hospices, schools and nurseries, that use leisure centres and foodbanks. As well as the services that are helping stop people falling into poverty or mental health crisis.
“Charities are particularly vulnerable to rising energy costs because of the nature of the services they run and how they generate income. They can’t simply put up their prices to cover costs like a private business might do. Without ongoing government support, organisations facing exponentially rising energy costs will be forced to significantly reduce services, sell essential community buildings or even close completely. This will have a devastating impact on people and communities and can’t be an option.”