Small youth charities are spending up to half of their budgets on utility bills, according to new research.
A report published today by Social Investment Business (SIB) highlights the “crushing impact” of utility bills, notably energy, on youth charities with expenditures below £50,000.
The report says that on average, these organisations spend 13% of their outgoings on utilities, with many spending as much as 50%, in buildings with poor energy efficiency.
In comparison, data from the Office for National Statistics shows that the average household spent 7.9% of its weekly spending on utilities at the height of the energy crisis in 2022-23.
NCVO’s chief executive Sarah Elliott said in response to the findings that smaller charities spending up to half their budgets on energy bills was “simply unsustainable”.
Local youth provision at risk
SIB’s report is based on actual usage and account data from applications to the Youth Investment Fund (YIF) spanning 2020-2024 and includes records from 259 YIF sites across the UK.
It says that youth charities that provided specific energy data (not including water costs) were spending as much as 34% of their expenditure on energy.
Margate Sea Cadets, which recorded a total expenditure of just over £30,000 as of 31 March 2024, had to allocate 49% of its budget to cover utility bills, the report says.
Paul Holton, the charity’s chair, said: “When we’re raising funds, we’re constantly aware that half of that money is going to just pay for the bills. It’s very demoralising.
“Local youth provision here is under risk from rising bills and funding cuts, some on the brink of closure.
“What would the young people do without these groups? The social problems that would emerge if these groups are lost will cost much more than if we get support now.”
Meanwhile, for youth charities with expenditures over £250,000, the average utility spend represented 2.4% of their budgets.
Call for 0% VAT rate
The report warns that without policy interventions, youth centres might be “at risk of closure from the combined impacts of rising costs and new government policies on energy efficiency”.
It makes seven recommendations for policymakers to address rising costs for youth and other community groups.
One of these is granting an extension to community buildings to meet new energy performance certification standards “to avoid excessively harsh penalties or unnecessary closures of vital services”.
Other recommendations include providing a new 0% VAT rate for charity energy bills and removing most other levies to instead raise money through taxes on the wealthiest.
‘Unsustainable’ situation
Commenting on the report, Elliott of NCVO said: “The fact smaller charities are now spending up to half their budgets on energy bills is simply unsustainable.
“Without action to support charities to meet rising costs, we risk seeing essential services scaled back or lost altogether – at a time when people and communities need them most.
“We support the call for urgent, targeted support for these groups – including a 0% VAT rate on energy bills and fairer access to energy efficiency schemes.
“This isn’t just about short-term relief, it’s about protecting the long-term sustainability of the organisations that hold our communities together.”
Nick Temple, CEO of SIB, said: “Rising energy costs are putting vital youth services at risk, undermining their work in towns and cities across the nation.
“Without these groups, young people could lose community, confidence and safe places to go.
“The current structure of electricity bills is regressive and unfair, forcing youth groups, charities and households in the most deprived areas, to contribute disproportionately more of their income to levies and taxes on energy.”
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