More than half of charities are anticipating negative impacts from the rises in the national living wage (NLW) and employer’s national insurance contributions (NICs).
The latest VCSE Barometer Survey, conducted by the VCSE National Data and Insights Observatory at Nottingham Trent University (NTU), surveyed organisations on their financial outlook and the impact of upcoming rises in NLW and employer NICs.
The Barometer was launched during the pandemic. Its 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.
Less than half of charities prepared to absorb extra costs
The results from 665 charities showed that 54% anticipated negative impacts from changes in employer NICs and 47% from NLW.
Less than half (48%) said they felt 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.
‘We are already witnessing effects of funding cuts on direct service providers’
Daniel King, professor of organisation studies at Nottingham Business School, wh0 lead the barometer, said: “The potential harm these policy changes may cause to organisations is already well understood.
“However, the 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.
“The latest Barometer results indicate that adding further financial pressure and uncertainty to essential support organisations will only be counterproductive.”
The full results of the Barometer, which ran from 22 January to 12 February, can be found online.
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