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'Some charities will be insolvent within weeks,' MPs tell Treasury

08 Apr 2020 News

copyright Parliament

The government needs to provide charities with urgent financial aid, a parliamentary committee has told the chancellor.

Julian Knight, Conservative MP and chair of the Digital, Culture, Media and Digital Committee, has written to the chancellor to demand emergency funding for charities on the frontline of the fight against the coronavirus, as well as a “stabilisation fund” to support the sector as a whole.

Without government action, Knight says, some charities “will be insolvent within weeks”.

The committee heard evidence from charity leaders last week. At the hearing Karl Wilding, chief executive of NCVO, warned MPs that charities faced a financial shortfall of more than £4bn over the next three months as the coronavirus crisis started to hit the sector’s income.

Knight’s letter also outlines why the committee believes measures already rolled out to help private businesses are not sufficient to help charities.

“Charities are unable to furlough workers under the Coronavirus Job Retention Scheme at a time when staff are needed the most, while the restrictions on organisations that receive public funds accessing the scheme present a further barrier”, he says.

“Similarly, the Business Interruption Loan Scheme will not apply to charities that receive less than 50% of their income from trading, and charities claiming charitable rate relief are not eligible for the small business grant.

“The committee fully understands the constraints that the government are working under. Yet the situation facing charities demands an urgent response: without action, some will be insolvent within weeks, and even large charities will find their reserves depleted and their work curtailed.”

Knight does not put a figure on the financial support the Treasury should provide to charities.

He also asks the government to amend some existing schemes to make them better suited to charities. This includes a request that staff furloughed by charities can return to that charity as a volunteer, an exemption for charities who need business loans but make less than 50% of their income from trading, and making sure that organisations claiming charitable rate relief are not excluded from small business grants.

Knight’s letter is the latest in a series of demands from across the political spectrum asking the government to provide charities with greater financial assistance. Yesterday the former charities minister Tracey Crouch added her voice to calls for an emergency fund. Three of Crouch’s predecessors in the job, Rob Wilson, Nick Hurd and Kevin Brennan, have also spoken out.   

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