Calls for targeted support for charities when energy relief scheme ends
Charities crucial to supporting the most vulnerable in society are facing an energy crisis which could lead to some collapsing.
Voluntary organisations critical to supporting those who need help most during the current economic turmoil are those which are struggling most with fuel bills.
Groups that run energy-intensive facilities such as care homes, day centres for the elderly and disabled, and poorly-insulated community centres, are likely to find it particularly difficult to manage costs.
A major new survey of UK charities has revealed the impact of the energy crisis on the sector – with many organisations experiencing a rise in their bills of 50% and more – amid calls for the government to act as part of a review due to be published in the new year.
The survey, conducted by Pro Bono Economics and Nottingham Trent University’s National VCSE Data and Insights Observatory, found that 40% of charities are having to cope with rising gas and electricity bills. At the same time, nearly half (49%) of charities expect demand for their services this winter to exceed their ability to meet it.
More than half (54%) of charities paying higher energy bills reported that their costs have jumped by 50% or more, and one in three (33%) said their energy bills have more than doubled. As a result, almost one in five (17%) charities and community groups have been forced to reduce services and, among small organisations, more than a quarter (27%) have had to reduce the size of their paid workforce.
Over the past 12 months, energy costs have become a serious concern for charities – now ranking as the third most pressing issue for the sector behind only ‘income’ and ‘inflation’, according to the survey.
Responding to the new survey, one charity revealed its staff were now working with the lights turned off in its premises to curb energy costs, while another reported that it limited how far its staff drive in their minibus due to diesel prices. These conditions will no doubt lead to reductions in service levels and performance - with one in five (20%) charities reporting a reduction in the use of their premises and just under one in 10 (8%) cutting their opening hours.
The energy crisis and ongoing cost of living pressures pose a considerable challenge to the financial resilience of the sector, which is yet to recover from the unprecedented impact of the pandemic. This has left 55% of charities having to resort to using their reserves to meet operating costs, as demand for their services soar. Worryingly, one in five (19%) charities and community groups reported they only have enough reserves to last this winter.
With the government’s energy support package for non-domestic organisations due to end in April, and a review set to be published in the new year, the survey’s findings have led to sector-wide calls for new support for charities, including targeted grants to help charities install renewable energy generation and become more energy efficient, and calls for energy suppliers to introduce a social energy tariff for charities and community groups.
In total, just over half (53%) of the charities that responded to the survey stated that they pay energy bills directly to their supplier through commercial energy contracts, and close to a third (30%) said they pay for their energy through their rent. A very small proportion (4%) reported they have domestic energy contracts, rather than commercial arrangements.
Currently, the 53% of charities on commercial energy contracts are receiving some support from the government with their energy bills through the Energy Bill Relief Scheme, which has provided non-domestic consumers of energy with a discount on the unit price of gas and electricity. The 30% of charities which pay for their energy through their rent have also likely benefited from the scheme’s protection, though indirectly.
The variation in the methods of energy payment in the charity sector is significant because it means different parts of the sector have different levels of exposure to rising energy costs, and have varying ability to control, negotiate or respond to rising energy costs. For example, a charity which owns a building can improve its insulation, switch suppliers, and reduce its own energy consumption. But a charity which is based in a shared community facility may be less able to take any of these actions.
Matt Whittaker, CEO of Pro Bono Economics, said: “Having just about weathered the unprecedented squeeze of the pandemic, charities around the country are now having to cope with a new economic crisis in the form of inflation and soaring energy prices. This new study provides an insight into the sharp cost of the energy crisis for these organisations – with many charities paying an extra 50% and more for their energy.
“Many of these charities are at the forefront of tackling the challenges facing the most vulnerable in society this winter, often providing shelter and care to those who need it most, such as the elderly and disabled. The very charities which are crucial to many people surviving this winter are the most badly impacted by the energy crisis.
“Simultaneously, these organisations are facing soaring demand and rapidly depleting resources – a pressure cooker which threatens to push many charities to the brink.
“With this in mind, it is imperative that these organisations receive continued targeted support when the government’s current support scheme expires in April. There is also an opportunity for the government to further its environmental ambitions by investing in renewable energy initiatives for charities, which this study shows would be well-received.”