Digital, Culture, Media and Sport Committee
Oral evidence: The impact of COVID-19 on the charity sector, HC 281
Tuesday 31 March 2020
Ordered by the House of Commons to be published on 31 March 2020.
Watch the meeting
Members present: Julian Knight (Chair); Kevin Brennan; Steve Brine; Clive Efford; Julie Elliott; Damian Green; Jo Stevens; Giles Watling.
Questions 1 - 65
I: Karl Wilding, Chief Executive Officer, National Council for Voluntary Organisations (via video).
II: Martin Houghton-Brown, Chief Executive Officer, St John Ambulance (via video).
III: Chris Wade, Director of Engagement, Motor Neurone Disease Association (via video).
Witness: Karl Wilding (via video).
Chair: This is, as you can guess, a new format for parliamentary Committees, so I am grateful for your co‑operation and to the Members present. As you know, we are taking one witness at a time, 30 minutes in duration. I will invite Members to put their questions to each individual witness. The sound operator will unmute your microphone when you are asked to speak. We are, I remind you, live broadcasting today, so, where we are able to continue throughout without any technical hiccups or misunderstandings, we will; if not, we will briefly suspend.
The first matter of business before we turn to the first question is declarations of interests. I am going to ask all the Members in turn whether they have any declarations to make in terms of their connections with charities.
Kevin Brennan: I am a trustee of trac, which is a Welsh folk music charity.
Damian Green: I am a trustee of the Godinton House Preservation Trust, which is a local trust for a house in my constituency.
Clive Efford: I am chair of the trustees of Samuel Montagu Youth Club and I chair a panel for Charlton Athletic Community Trust.
Steve Brine: None, Chair.
Jo Stevens: There is no declaration from me, thank you.
Julie Elliott: I am a trustee of the Commonwealth Parliamentary Association.
Q1 Chair: Thank you very much. I have no declarations to make myself.
The first question is to our first witness, Karl Wilding, the CEO of the National Council for Voluntary Organisations. Karl, since we announced this session, we have been inundated with what I can only describe as cries for help from the charitable sector. What is the position of the charitable sector and why is the charitable sector so exposed at this time?
Karl Wilding: Good afternoon, Chair. NCVO supports charities and volunteering, and, like you, we have been inundated with calls for support and help, but also offers of help, so maybe more on the latter later.
We are estimating, based on a mix of survey data and data that we collect on charity accounts, that we would expect, in the next quarter, charities to generate income of about £12.5 billion, and we are expecting the loss in the next quarter to be in the region of £4 billion. That is for two reasons.
First, over the last two decades charities have shifted from a model where they were receiving predominantly Government grants and donations to much more of a mixed economy where they trade just like businesses, and, just like businesses, their trading income has halted. Secondly, lots of charities fundraise in ways that require people to come together. You all know the London marathon of course, but there are many other smaller community events, and, because of the social distancing measures, those events have stopped.
That is not to say that the British public, or indeed businesses, are not incredibly generous—they are—but it is in the nature of things that that fundraising has stopped, so we find ourselves in a situation where the level of need that many organisations are facing is increasing, but the income that those organisations generate, whether trading or donations, so that they can carry out those public benefit activities, has stopped.
Q2 Chair: Your black hole, effectively, is £4 billion. Would that be fair to say?
Karl Wilding: The £4 billion is our estimate based on removing all the income that we know will stay in place. If you deliver services under a contract, we have discounted for that. If you are receiving income from trusts and foundations, we have removed that from the calculation as well. We have also removed all the charities that, for want of a better expression, the public would not perceive to be charities. There are public bodies, for example, that have charitable status; we have removed all those from the calculation. When we get down to what we think is the most accurate number, based on the survey data that people are giving us, we think £4 billion is an accurate representation to cover the next three‑month period.
Q3 Chair: Charities are, I believe, eligible for the coronavirus job retention scheme. Is an option, effectively, to furlough employees, and is that always the answer in this regard, or does it mean that some charities literally cannot do it because of statutory requirements or because of the work that is entailed in fighting coronavirus?
Karl Wilding: The furloughing scheme is welcome, and it works for some organisations. We agree with the intent, but, unfortunately, the design does not match the intent. Our very rough calculation is that a maximum of one in three charities can deploy the furloughing scheme.
The problem is that the furloughing scheme, or laying staff off, means that you are standing down staff at exactly the time when you want them to step up. Mothballing staff when demand is increasing is the opposite of what we need to do; we need to mobilise them. Indeed, with all those wonderful people who are coming forward to volunteer, we want to mobilise them as well.
If you are a charity where, because of the social distancing regime, you have closed your building—it might be an arts and heritage organisation, for example—furloughing your staff at this point in time may well be the best possible thing you can do because your main activity is no longer being undertaken. If you run a hospice, for example, you may be able to furlough or stand down some of your shop staff, but the last thing you want to do now is furlough the very people who are delivering a service that is taking pressure off our precious NHS, or indeed our other public services as well.
The situation I am trying to describe is that many charities deliver services that the public depend on; it is just that they are not part of the public sector. You would not want to furlough public sector staff at this point in time, and, equally, you would not want to furlough many charity staff.
Finally, on the design of the scheme, lots of charities these days deliver public services on a sort of mixed model, where they combine a mix of public sector funding topped up or matched by voluntary income in the form of donations or grants from funders. The furloughing rules are very clear: if you receive any public money that contributes to your employment costs, you cannot furlough those staff, so, again, even if the intent is right, the design simply does not work for vast swathes of the charity sector.
Q4 Kevin Brennan: Should there be an exemption for charities from the furloughing scheme so that they can actually take advantage of the furloughing scheme but allow their staff to continue to volunteer essentially in the same roles as they already carry out?
Karl Wilding: We have what I am sure is an unintended consequence of the design of the scheme at the moment whereby if I furlough the staff in my organisation who are running the building that I operate, which generates income to provide services for charities, they can volunteer for another charity but they cannot volunteer for me. One natural result of that is that we may end up, to be frank, wasting huge amounts of charitable resource setting up an exchange scheme for volunteers to go and volunteer in other organisations.
Q5 Kevin Brennan: Does that mean that a general exemption would be a good idea for charities?
Karl Wilding: Of the options available to us, first and foremost I would prefer a stabilisation scheme, but, if we are going to try the approach of a general exemption, I have to be realistic that we would have to give HM Treasury, and indeed the public at large, comfort that we were deploying those staff in ways that were absolutely helping out with the crisis now. I would prefer a stabilisation scheme, but exploring a general exemption is worth thinking about.
Q6 Kevin Brennan: Crisis said that it has been quite successful in making a special appeal and raised £575,000 recently. Is that because of the particular area it works in, so perhaps it has an advantage in being able to appeal to the public more directly? Is there more room for charities to find different ways to get donations at this time, perhaps using online events, for example, or direct appeals to the public?
Karl Wilding: First, I want absolutely to assure people who are already fretting about the impact of this on the Exchequer that the worst possible thing we could do now as charities is to stop mobilising people, whether it is in giving time or in giving money. We do not want the public’s tremendous generosity to stop, and we will do everything we can there.
Some organisations are very good at times like this in connecting with the public, because their cause is very visceral and people can see the direct link. But there are large swathes of our sector that have always found it difficult to fundraise and indeed will carry on finding it difficult to fundraise. A good example would be women’s charities that work on issues such as domestic violence and rape crisis centres. They find it very difficult to fundraise at the best of times, and it is not a solution for them. That is why we need a stabilisation fund.
Q7 Kevin Brennan: What is the difference between the impact the crisis is having on very large charities and medium-sized and small ones? Is there a difference in the kind of impact it is having and how they can respond to it?
Karl Wilding: Inevitably, coming into the crisis, we were concerned about the financial health of the sector as a whole. Roughly speaking, we think 25% of charities hold reserves in some form or another that would help them through a three‑month period like this. Those reserves tend to be held by larger organisations, and even then they are held by trusts, foundations and research charities. We know that smaller organisations are inherently weaker in the sector, and some of those are organisations you want to survive not only for the crisis that we are now in but for after the crisis, because they are the social infrastructure that will take us through.
Martin, who follows me as a witness, may wish to talk to this as well. You will also find that even the larger organisations that have reserves to take them through a three‑month period tend to have quite fixed costs, because even with the furloughing scheme, if, as Barnado’s has just done, you furlough 5,000 of your staff, many of whom are working in charity shops, you are covering your labour costs but not your other fixed costs as part of that.
Kevin, you asked me about large versus small. It is absolutely incumbent on me to say that bits of the sector are in serious trouble at the moment. I am particularly thinking about organisations working with black or minority ethnic communities and working with the people who are most marginalised: they came into the crisis already in some trouble. They are helping people who are furthest away from the state, and it is critical that we get support to them.
Q8 Kevin Brennan: We had a letter from the Secretary of State today that indicates a relatively new thing called the National Emergencies Trust and he is pointing towards that as a possible source of help to the sector. Is that going to help?
Karl Wilding: I began my evidence by saying that we think that the financial gap at the moment is in the region of £4 billion. The National Emergencies Trust, for those of you who do not know, is a domestic equivalent of the Disasters Emergency Committee. It was set up after Grenfell and the London Bridge and Manchester attacks so that the British population who wanted to give had a rallying point where they could all go to one place.
Thus far, the National Emergencies Trust has raised in the region of £11 million; that is my understanding. I think less than £1 million of that has come from public fundraising so far. The balance has come from trusts and foundations and from corporates. Philanthropy, including the National Emergencies Trust, has a part to play, but I think I estimated that, as a proportion of the gap, the figure is 0.29%.
Q9 Kevin Brennan: That is very helpful to know. How are banks treating charities during this crisis?
Karl Wilding: We are seeing a mixed picture. First, on the British Business Bank and the loan facilities that are offered through the British Business Bank, the design of that scheme says that at least 50% of your income has to come from trading. That discounts a large proportion of our sector who do not receive 50% of their income from trading so they cannot access loan finance. Loan finance potentially is a tool because, if it was not obvious from what I have said already, cash flow in charities, just like any other sort of business, is what will ultimately do for many organisations right now.
We are hearing a mixed picture not just from charities, but from social enterprises right across the social sector, about banks’ willingness to lend to our sector. We are, for want of a better expression, edge cases for the banking system because they do not understand our trading models at times. They do not understand the blend of trading and donations, and their doing the due diligence that will give them comfort is not going to take place within a sufficient amount of time in terms of what we have.
A positive thing is that there are some really small, knotty practical issues that we are trying to work through at the moment. If you are volunteering and taking food to someone’s house, you are paying for that out of your own pocket at the moment, and we need to work with the banking system to try to solve what you do if the person you are delivering the food to does not have online banking. There is more to do with the banking system.
Q10 Kevin Brennan: I am glad you mentioned social enterprise, because I was going to ask you about the impact on social enterprise. You made the point that perhaps the business interruption loan might be more applicable in social enterprise, where they are more likely to have more than 50% of their income from trading, but they are not all large organisations.
Would it be useful if the Government were to tweak the business interruption loan and perhaps also the small business grant to make it more suitable for charities to access? What is the impact of that and what role can credit unions play in the current situation?
Karl Wilding: First, on social enterprise, Social Enterprise UK, the umbrella body, shares our concerns. Those are organisations that were already, for want of a better expression, offering market solutions in areas of market failure. When the market is not operating, the operating models do not work, so they share our concern there. We absolutely want to talk to Government about all the tools in the toolbox that might help us through this. I do not just want to do special pleading and say, “Give us money.” I want to see what is the widest possible range of solutions that we can come across.
On the role of credit unions, we have been talking to a fantastic charity called Turn2us. If you look at the amount of money that our sector hands out in grants every year, quite a large proportion is to individuals in crisis situations. We are desperately trying to find ways with Turn2us and their member organisations of getting money to people as quickly as possible.
I began by saying that we need something that is simple and substantial, but swift. My real concern is not just for charities but for individuals, for people who are at the end of food distribution networks or who are being helped by credit unions, where literally every day counts, and it feels at times like this is an academic exercise in Government.
Q11 Damian Green: You have made a very powerful and eloquent pitch for a stabilisation fund. Have you had any indications yet that the Department is listening?
Karl Wilding: My staff every day for the last two weeks—every day, not every working day—have provided the Government with evidence of need. At times it feels like the same evidence in new and different ways.
I feel at times that we are informed but not involved. I think it was last Wednesday at Prime Minister’s questions that we were told the Government are working on a package. I have no details of what that package will look like and I have no details of what the scale of that package will look like.
Q12 Damian Green: It is interesting that you talk about the scale of any potential package because we all heard that at Prime Minister’s questions and have been waiting ever since. The nearest and I suppose the most recent comparable event to this was the financial crash in 2008, when the financial package offered by Government at the time was about £40 million. You are asking for 100 times as much. What explains that disparity? Has the sector got that much bigger or is this just a much more existential crisis than that was?
Karl Wilding: Yes, £40 million is the figure I recall; indeed I think I was involved in negotiating it. Two things have changed.
First, the sector has got bigger for a number of reasons, but predominantly because the state—the Government—wants to work much more in partnership with the sector to deliver public services, and it wants to deliver services in different ways. To use an old expression, it has taken on more of a steering function, not a rowing function, and we are doing lots of the rowing of the boat called public services. Our sector is bigger because bits of Government have been charitised, or they have been mutualised; they have been turned into our sector, and we have a different business model that includes philanthropy.
The second thing is that in the crash of 2008 there were some serious risks to our sector—Icelandic banks that held our assets, and so on. The big difference this time is that our income has literally stopped overnight. I run an organisation where we have a conference suite and we use the surplus generated by that to pay to mobilise volunteers. My income stopped by 40% overnight, but my costs are still there. That did not happen in 2008.
Q13 Damian Green: It is a different level of crisis. On a slightly different line, how are you working with the Charity Commission? What help are they being in this crisis?
Karl Wilding: The Charity Commission is our regulator. I want to say positive things about the Charity Commission in the sense that it has come out and helped the sector deal with what may seem insubstantial but are nevertheless important issues, such as advising us on whether or not we are allowed to hold our board meetings in the same format as this evidence session. For some charities it was not clear from its governing documents whether they could do that. It is trying to help us in things like conversations about whether the deadline for filing our annual reports can be shifted to later in the year. The commission can take a little bit of pressure off in terms of our costs. Believe me, I do not want to be thinking about filing my annual report while I am trying to work out how to stay afloat. Yes, it is helping.
Q14 Clive Efford: What assessment have you been able to make from your involvement in the charity sector about the resilience of what will be left if the Government do not act? I take your point about the fact that the cash flow for many small charities has disappeared. In the charity I am involved with, our money stopped overnight; we run a social enterprise, where people pay for sports facilities and space, and that money has completely stopped. For many organisations the bills will not have stopped, but they will stop getting income. What could you say about the readiness or resilience of the charitable sector to be part of the recovery once we are through this crisis?
Karl Wilding: I believe absolutely that our sector works alongside the public sector to provide a social infrastructure for this country. I believe absolutely that not only are we part of the crisis but we have to be part of rebuilding this country after the crisis. But we are a fragile sector in terms of our finances.
I said earlier that one in four charities holds reserves that will last for three months, and, when the deputy chief medical officer said at the weekend that this could go on till September, I am sure you do not need me to tell you that that will be too long.
I have examples that will shock and surprise you. Little Miracles, a charity that supports families who have children with disabilities or life‑limiting conditions, will be insolvent on 13 April. The Royal Trinity Hospice in Clapham has lost £3 million in three months only. Forget Me Not children’s charity in Huddersfield is in desperate straits as well. We have to be part of the network getting the country back on its feet, but we have to be part of the network of resilience now.
To give you another example, in London, food poverty before the crisis struck was such that one in five people was in a position of food scarcity. I could give you examples of volunteer centres in London where before the crisis they were feeding 120 families a week; they are now feeding 500 families a week. This is quite desperate stuff.
Q15 Clive Efford: Would you also say that the crisis has required us to rethink what our priorities are? Do you think that things need to change in Government policy towards the charitable sector in terms of its ability to be flexible and able to fill in the gaps between public services that you talked about just now?
Karl Wilding: The first thing I would say in terms of Government policy is that we are not just here with a begging bowl; we are not here because I think charities have some sort of right to survive. I do not. But I absolutely think that people have a right to the services that we provide.
I feel frustrated at times at the perception of us in Government—I do not know if it is policy or political; the understanding of what the role of the modern voluntary sector is lags somewhat behind the reality. We are not better than the public sector, but we are partners with the public sector. We should be helping to solve the problem, and indeed we are helping to solve it already. Just look at what the Youth Hostels Association has done: it cannot keep its youth hostels open for their intended purpose, which is for young people who are travelling, so it has repurposed them to look after homeless people.
We are part of the solution, and it is frustrating sometimes that we are not seen as part of the solution—that we are seen more as a problem.
Q16 Clive Efford: I have one last question. It is about the ability of the charitable sector to respond to public demand. Quite often things that happen in communities happen because people perceive a need, come together and get things going. There is a sort of democracy in action from the grassroots up that comes through the voluntary sector. Do you think we recognise that enough?
Karl Wilding: I think we do, and if you look at the mutual aid groups that have responded, or suddenly appeared in response to the crisis—I think 2,000 COVID mutual groups have been established—individuals like you and I are always the first responders in our community. We have to try to recognise that people like those 1.5 million people the NHS knows will respond to the things they see, but lots of the need in our society is hidden from view. For those volunteers to be effective, they need mobilisation and co‑ordination, and that is why you need a voluntary sector to work alongside individuals who respond.
Chair: Thank you very much for that. We now have two very quick‑fire questions. The first will come from Giles Watling and then I will call Julie Elliott, but, if we can keep this brief, it would be very helpful.
Q17 Giles Watling: Thank you, Chair. I will be very brief. You touched on this just now, Karl, and I want to expand it a bit further. Have you made representations to Government about a possible extension to filing charity accounts due to auditors perhaps not being able to fully audit accounts?
Karl Wilding: Yes, we are talking to the Charity Commission. Also, the measures Government put in place for company directors, who in our world are charity trustees, in terms of trading while solvent, are helpful.
Q18 Giles Watling: How would that help? In what way would that help individual charities?
Karl Wilding: In the former, the extension would be helpful to me, because at the moment my finance director is trying to work out what our cash‑flow situation is rather than working with auditors right now on preparing the accounts. Secondly, in terms of trading while insolvent, charity trustees are just like company directors, but in our case they are volunteers, and there is a huge risk to them that, if their charity is perceived to have traded while insolvent, they, as the volunteers responsible for the organisation, are personally liable. It is an extremely invidious position and it leaves charities in situations where the balance of risk is such that you will close rather than stay open.
Q19 Julie Elliott: Going back to what you were saying about furloughing, I have come across what you were describing not just for charities but for SMEs—some of the issues with banks and the process and what have you. What single thing do you think the Government and banks could do to make this process, which has certainly been put in place with the best of intentions, work better?
Karl Wilding: Government could talk to us a bit more about the design of the furloughing process, so that we could try to come up with something where the intent matched the design, but I still come back to my opening statement, Julie: we need a stabilisation scheme and we need one that comes quickly and is substantial and simple.
Chair: Thank you for your evidence today, Karl; it was really compelling.
Examination of witness
Witness: Martin Houghton-Brown (via video).
Q20 Chair: We received your extensive written evidence before the session. Could you describe for the Committee briefly the work that St John Ambulance is doing right now in order to tackle coronavirus?
Martin Houghton-Brown: Today, we have 100 volunteers at the NHS Nightingale Hospital at the ExCeL. That will grow to 500 volunteers a day at the Nightingale Hospital in London and will extend to Nightingale Hospitals as they deploy across the country.
We have 35 ambulances out today. That will grow to 100 ambulances supporting NHS ambulance services across the country in the coming days and weeks. We have 100 teams of volunteers mobilising to support hospitals. Today, we have 20 hospitals that are being supported by St John Ambulance volunteers in those hospitals.
Crucially, it is important to recognise that we are two weeks away, we think, from the peak of this, so we have been training and upskilling our volunteers, because it is different from our normal activity. While they are clinically qualified and understand patient care, there are extra skills they need. This weekend alone, we trained 2,500 of our volunteers in a COVID‑19 skillset, and we have 3,500 volunteers awaiting training next weekend. There are 20,000 volunteers, of whom 8,500 are clinical, non‑registered volunteers—they hold operational first‑aider or above certificates—preparing to fully deploy.
In addition, airlines are asking us to be their conduit to healthcare volunteering, and other agencies who have first aid or medically trained but not registered staff are asking us to be their conduit to the volunteer workforce.
Q21 Chair: What is your experience of PPE equipment and its distribution to your volunteers?
Martin Houghton-Brown: Initially, we were working with ambulance trusts to obtain PPE over and above our own stock and supply. We are now relying on NHS England, and this evening at 5 o’clock a full load is due to arrive at our central hub and will go out to our 30 ambulance hubs across the country. At Nightingale, the supplies are being administered directly at those hospitals.
Q22 Chair: You are saying that just today your ambulance crews are getting PPE?
Martin Houghton-Brown: The delivery is due today and I have been absolutely clear, and my chief operating officer has been absolutely clear, that we will not deploy volunteers without the proper equipment. We are not going to put them in harm’s way; if the equipment does not arrive, we will not be deploying them.
Q23 Chair: You have effectively been waiting due to safety concerns for your own employees—very understandable ones?
Martin Houghton-Brown: Yes. Thankfully, we have good relationships with the ambulance trusts and hospitals, and, so far, the equipment has been supplied ad hoc, but without that strategic delivery tonight we will not be able to continue into the weekend.
Q24 Chair: Effectively, that has been holding back support for the fight against coronavirus—the lack of delivery of PPE equipment until now?
Martin Houghton-Brown: So far, we have had everything we needed, but we recognise that we are only beginning to accelerate; 1 April really is our go live date, so we need it tonight.
Q25 Chair: In your written evidence, you state: “We believe all charitable organisations now redeploying their resources into directly supporting the national response to coronavirus must receive the financial means to deliver to that national effort.” Is that not happening? Is it possible that the response to coronavirus has been damaged as a result?
Martin Houghton-Brown: It is clear that St John had a sustainable income model, like a lot of independent charities that do not depend on Government. We receive from our training business and from our event business £1.5 million a week, and that helps us to subsidise our support for the nation, both in how we deliver to communities and to homeless services, and in the night-time economy and so on.
The cost of delivering for COVID‑19 operations is £1.6 million a week, so we have had £1.45 million turned off and £1.6 million turned on. While the NHS have been superb in their co‑operation and support for us, they cannot lift this on their own. We need central Government; we need the Treasury to step up, as Karl said, to support organisations.
There are, I think, three tranches of charities. There are those that can mothball, that do not need to operate and can fully furlough, even though they have fixed costs. There are those that have to hold the line, like Marie Curie, for example, that must ensure that vulnerable people in their care have their care supported. All their shops have stopped, so they need support.
Then there are those of us that have to step forward. Our entire organisation is now delivering for COVID‑19, and, quite frankly, if the support does not come, we will run out of money. If we run out of money, our trustees, as Karl was describing—our volunteer directors—expose themselves as well as the charity to financial harm. It is only reasonable that, if the Government say no, they will have to make very difficult judgments about the future of St John Ambulance.
Q26 Chair: How long have you got?
Martin Houghton-Brown: With the NHS money that has been deployed so far, we think we can keep going until August, but we are in a lucky position in that we have assets that we could take huge debt finance against. The question is the fees and rates against that finance—how much of it we want to leverage and how long the directors and trustees of the charities want to continue to trade as—
Q27 Chair: Martin, let’s get this straight: you are having to borrow at potentially high rates of interest in order to fight coronavirus, and, even doing that, you think you only have money until August. Is that right?
Martin Houghton-Brown: I think we have money until August, and, if the current situation was to go beyond August, we would require heavy borrowing.
Q28 Giles Watling: I have to declare an interest. I am a vice‑chairman of the Royal Theatrical Fund.
Martin, thank you very much for being here. There are two parts to this question. You announced that you are working with NHS England and the national ambulance strategic adviser. How does your relationship with those organisations work?
Martin Houghton-Brown: We are very lucky that NHS England has enjoyed a very positive relationship with us. For example, we are designing a new NHS cadet scheme that would enable the nation to have young people trained up to enter as nurses, doctors and paramedics, so we have an ongoing relationship. We also step up as volunteers through the winter months when hospitals and ambulance services struggle to meet increased demand.
We have re-oriented those relationships to this particular operation. Anthony Marsh, who is the national ambulance adviser, has ensured that we have a voice at the national ambulance top table, and that we get heard by NHS England. That partnership between the volunteering department and the ambulances has meant that in every conversation we have been able to ensure that our people are properly trained and deployed in the right places.
Q29 Giles Watling: You are integrating at the top level. Are you integrating all the way down through the ranks, as it were?
Martin Houghton-Brown: Yes. The chief nurse said that she was delighted that we would be standing side by side. We use some quite military terms in our organisation, so our tactical commander for Nightingale sits at the same level as the tactical commander for the NHS for Nightingale. Our experience is that the NHS welcomes our people and values them as trusted allies.
Q30 Giles Watling: Is it working? Are people deploying, or are you deploying in the same places? Thus far, is it all working as far as you are concerned?
Martin Houghton-Brown: Yes. The big challenges right now are systems challenges. Setting aside the money, some of the systems are not working, so we have announced—this is an absolute delight and I called for it at the very beginning of the process—volunteering leave certificates.
If you were a Territorial Army soldier, you would be released immediately to battle, if that was what was required. I have maintained for a long time that those of us who maintain the auxiliary to the national health service, as St John does, and as the Red Cross and the Royal Voluntary Service do, should be able to deploy people in a similar manner. The volunteering leave certificate announced in the Bill does not go all the way because it is only four weeks in 16, and we probably need more time than that, but nevertheless four weeks for those volunteers full time in the NHS is the right thing to do, but there is no guidance, no clarity and no confirmation about money.
I have seen bits and pieces from the Local Government Association, but right now employers are saying to me, “Martin, I want to release people into the field to get on with this, but I have no assurance from Government.” Just before this Committee, I read through the pages on the Government website about guidance for employers and employees. There is no guidance on the volunteer leave certification. It is vital that we get people out in the field right now.
Q31 Giles Watling: That is what you want? You want clarity as the No. 1 issue?
Martin Houghton-Brown: Absolute clarity. I believe that those volunteers should not be financially punished for volunteering for their nation. If, as they would in the reserve forces, they are going to put themselves forward into very difficult and challenging environments, they should not be financially disadvantaged.
Q32 Giles Watling: We all have a tiger by the tail with this COVID-19 outbreak. We do not know where it is going, but we are planning. One of your fundamental cores—I believe in your history that is what you were set up for—is training people in first aid. I understand that you train about 250,000 every year. In the future, you are going back to that. I assume that you are thinking beyond this outbreak and how you are going to re-form back to what you were originally. Are you planning for that?
Martin Houghton-Brown: Yes. We have planning and task groups related to recovery, but I cannot emphasise enough that, if we are financially depleted, I am not sure how quickly we will be able to get back to certificating the nation so that they can go back to work. You understand that everyone has to have workplace first aiders certificated, and we provide over a third of the certificates for the country. Without being able to redeploy, that goes by the wayside.
I am quite sure that we will all need a really good sports game or recreational concert to go to and relieve the pressure of this nightmare. We provide the first aid for those, too. If we are disadvantaged through delivering for our nation’s health at this moment of crisis, we will stand in the way of being able to rebuild the nation’s culture and community when we recommence.
Giles Watling: Thank you; you made your point very powerfully.
Q33 Steve Brine: Martin, you have covered the point about emergency volunteering leave, so I won’t harp on that. To return to football grounds and music festivals, St John Ambulance provides a lot of support and a lot of cover. I have seen you there myself. Obviously, a lot of events have been cancelled for this summer, which I suppose in many ways takes the pressure off you.
Longer term, they will bounce back in the autumn, for those that take place at that time of year, and next year they will be back big time. Glastonbury will have its big festival next year instead of this year. What will be the impact long term for a charity such as yourself and for the events if you cannot support them?
Martin Houghton-Brown: It would simply be impossible. To take the premiership alone, it would be impossible to turn the premiership back on if St John was unable to step back into that role. As you may be aware, there were other charities delivering first aid at events but they stepped back from that role. We are left as the only national provider now.
The reality is that it is important that, coterminous with the process of us reaching to those most affected by the virus, we are building the infrastructure for the future. This is a huge opportunity to restructure our society and put volunteering at the heart of society, even more than it has been.
We have one of the best voluntary sectors in the world. In a matter of weeks we had 750,000 volunteering for the Royal Voluntary Service NHS responder scheme. What a brilliant outcome that is. What are we going to do with all those people when this is over? We have a civil society that has huge amounts of need and social care. We know that we do not have the solution yet. We could be using this to say, “Let’s learn the lessons and reposition our sector to stand side by side with the public and the Government to deliver for all of our needs, both recreationally and in health and social care.”
Q34 Steve Brine: Certainly the big festivals make a lot of money. The Premier League is one of the wealthiest domestic leagues in the world. Have you thought about how they—certainly the latter—could help you at this time to get over this problem so that you can exist to help them fulfil their events in the future?
Martin Houghton-Brown: I have been knocking on every private sector door I know, and every philanthropist’s door I know. I am delighted that we have seen some very big six-figure cheques coming through the door from the private sector. We have seen donations from chains that had bought PPE and did not need it because they were closing down; they have sent that to us. It has been fantastic.
I am absolutely sure that it is right for big business to look, first, to make sure that they are sustainable themselves, but then to look at what their role and contribution is. Morrisons has made an extraordinary contribution, and it is an example of how I think the private sector should be behaving at this time.
Q35 Steve Brine: On the private sector, I take your point, and I echo your thanks to them. What about the Premier League itself?
Martin Houghton-Brown: I would be delighted if the Premier League was to say—
Q36 Steve Brine: Has it approached you?
Martin Houghton-Brown: It has not at this moment.
Q37 Steve Brine: Have you approached it?
Martin Houghton-Brown: I have not, personally. I do not know whether my team have yet.
Steve Brine: I reckon that is going to be your next call.
Q38 Chair: We heard from our previous witness, Karl Wilding, that the whole sector needs effectively a £4 billion bail-out package to keep going. I see that you are nodding your head. In terms of your own operating costs, what figure do you think you need in order to continue operating throughout this crisis?
Martin Houghton-Brown: I need about £450,000 a week to be able to continue operating in the crisis, in order to make sure that I can sustain the effort. My concern is that there might be a second peak. We cannot rule out a second peak, and we need to be ready, mobilised and equipped for that second peak. We cannot afford to run ourselves dry.
One official asked me whether or not I thought it would be a good idea if we just ran our reserves dry until July and knocked on the door of the Treasury at that moment in time. I said I did not think that my trustees would think that was a great idea.
Q39 Chair: That is a really interesting point. Was that an official in DCMS or was it the Treasury?
Martin Houghton-Brown: The Treasury.
Q40 Chair: Is that indicative of the approach from the Treasury? Do they think that charities should run down their reserves first before they come knocking?
Martin Houghton-Brown: I have not seen a clear narrative from DCMS or the Treasury on the finances. The good news is that I am talking to people, so it is good that there is a dialogue. If I contrast that with the work of DHSC and the NHS, there is a vibrancy around their activity and their dialogue. This is not just a healthcare crisis; it is a national crisis and it requires all of us to co-ordinate together to deliver the solution.
To take other charities, the Scouts estimate that they will lose £5 million in this time. They are an organisation that looks after our young people. There are nearly 500,000 volunteers involved in that organisation. What do we really want when we come out of all this for our nation’s wellbeing?
Q41 Chair: It is quite startling that you need £450,000 a week. That works out at £12 million for half a year. You are a relatively well-placed charity. There must be smaller charities in your sector, within this space, that must be at the edge of oblivion. Are you hearing anything like that?
Martin Houghton-Brown: Yes, I am. I am a former chair of the YMCA movement. I know that there are local YMCAs that are right on the brink. They have a matter of weeks left before they have to declare themselves insolvent. Their income for youth services is generally based on gymnasia. They bring people in, and of course a lot of them work with the most vulnerable and the youngest in society. They have a very mixed bag of income. They run quite precariously, frankly. They do not have reserves. They do not have a great deal of money. There are smaller local charities up and down the country that are genuinely vulnerable. If we do not move now, we will lose them in a matter of weeks.
Q42 Chair: Presumably, therefore, the implications of that will be damage to the Exchequer long term because the public sector will have to step into the breach when it comes to that provision?
Martin Houghton-Brown: Let us be clear. We have already seen the result of cutting youth services. We already know that we face a knife crime epidemic because of the cutting of youth services. That case has been made clear and the Government have already decided to step up.
We know how reliant we are on the voluntary sector for childcare—think about the vast amount of money that the Chancellor quite rightly wants to put into childcare—but right now existing voluntary sector childcare organisations across the country are at risk of going under. What will we do if we want to go back to work and our childcare infrastructure is annihilated?
Chair: Thank you very much for your evidence today, Mr. Houghton-Brown.
Examination of witness
Witness: Chris Wade (via video).
Q43 Chair: Our third witness is Mr Chris Wade, the director of engagement at the Motor Neurone Disease Association. Mr Wade, thank you for joining us.
You have been listening in on the sessions with Karl and Martin previously. Do they echo what you are finding? What is the impact of coronavirus and the shutdown in the economy on your organisation?
Chris Wade: It is unprecedented. One of the Committee members spoke earlier about the financial crash of 2008. I remember that being quite a tough time, but in those days we could at least carry on raising money. It was maybe at a lower level than before, but we could carry on running our services.
Today, we are a £17 million to £18 million charity in terms of income per year. We are expecting to lose anywhere between £3.5 million and £5.5 million over this period. That is on the assumption that we are back to some semblance of normality in about six months’ time. Obviously, as somebody said, if we have a second dip, it will go beyond a third of our income to a much larger amount.
We have reserves; we have quite a conservative and prudent reserve policy, which at the moment is standing us in reasonably good stead, but it is not unlimited. Four to five months’ worth of reserves will soon disappear when you are losing money at that kind of level. At the same time, of course, as Karl eloquently indicated, we are being called on for help, perhaps even more than normal. We are trying to help some of the most vulnerable people in society, and sometimes we fill the spaces that the health and social care system leaves behind. Everybody is rightly being redeployed into dealing with the COVID situation. At a time when we are needed the most, we are trying to find ways to reduce our cost base.
Furloughing is a good help towards that, but at best we may be able to find £500,000 through that scheme. It is only going to make a small dent in the problem. In terms of fundraising, you cannot furlough staff who are the source of the limited income you still have coming in. There is a large number of staff that we cannot put out to pasture, so to speak.
Q44 Chair: What percentage of your staff can you furlough?
Chris Wade: If we can furlough, realistically, 40% to 50% of our staff, we will be doing very well. I say that very reluctantly because it means stopping a lot of the research we do into finding a cure. We are in a situation where we are incredibly close for the first time ever to some clinical trials, which may take us towards a treatment for a horrific and fatal disease. It means cutting back on a lot of the support and information that we would provide to people with MND. It is a double-edged sword.
Q45 Steve Brine: To add to the declarations we made at the start, I am a charitable trustee of the Commonwealth Parliamentary Association. I wanted to put that on the record.
Mr Wade, thank you so much for joining us. People with MND are not listed as extremely vulnerable on the Government list. I, like many constituency MPs right now, have had contact from constituents concerned about that. Could you tell me why that is important and what work you are doing to get the Government to change it?
Chris Wade: Certainly. Thank you for raising it. It has been a good chunk of our work, as you can imagine, over the last week or so. Motor neurone disease, if you do not know, is a very fast progressing neurological disease that effectively stops the signals between the brain and the spinal cord and muscles in the body. People who are very fit and healthy lose the ability, often over a period of two years or sometimes less, to move their arms and legs, and most of the muscles in their body, including their ability to breathe. It affects respiratory functions very severely, even in the very early stages of the disease. Ultimately, it is fatal.
When the original list came out, when the crisis broke, MND was mentioned on the front page of the Department advice on vulnerable people, so we were rather surprised when the shielded and extremely vulnerable group list came out on Tuesday of last week. Suddenly, MND was not there. Obviously, we work very closely with all the big consultants, professors and clinicians in the MND field. They were all rather astonished to find that that was the case.
At the moment, we are asking people to register on the website themselves as having severe respiratory problems. That is a step in the right direction, but we are concerned that many people will be lost in the confusion. As a result, as you know, people like Morrisons and Sainsbury’s will not be prioritising them for free deliveries. We are very concerned that some of the most vulnerable people in our society are being put at risk.
What have we been doing? As you have seen yourself, you have been getting letters.
Q46 Steve Brine: Yes. You have written to the Secretary of State as well. Have you had any response?
Chris Wade: We had a response to say that we were okay to tell people that they can register as having severe respiratory problems. That is a good step in the right direction, but we have not yet had any sign that the listing will be changed. We very much need that to happen.
Q47 Steve Brine: Are you concerned, Mr Wade, about your ability to continue your work? Yes, you are all right in the short term. You can furlough workers and all that, but in the long term are you concerned that there will be damage to the organisation? It has been around for a long time and has helped a lot of people and their partners in desperate times. Are you frightened about the long-term impact?
Chris Wade: I am not frightened but depressed by it, to be honest with you. We celebrated our 40th anniversary last year. We are not the only charity in England, Wales and Northern Ireland looking out for people with MND in those communities; obviously there are other charities, but we are the big charity.
If there is a double dip and this comes back, I worry very much about the really severe impact that would have on our ability to function, if not to survive. Even if that does not happen and we get some help, clearly I am worried. We are now a £17 million or £18 million charity, but all of that money is committed to finding a cure and to helping people in their community. We are helping with financial advice and partnering with the health service. We provide support to the health service so that they can provide co-ordination and specialist staff. We know that increases length of life outcomes. All those things would be at risk. People would inevitably have a smaller service from us.
Q48 Steve Brine: At a more local level, obviously you facilitate and support groups. I mentioned the partners of people with motor neurone disease. You provide an absolute respite lifeline for them. Would that be the sort of thing that might fall by the wayside if you cannot make this work?
Chris Wade: Yes—the work for partners and young children. Even now a lot of partners are really concerned about their ability to carry on working, because employers are telling them that they need to work. They cannot afford to lose their job, but they cannot afford to put their loved one at risk either. We are providing help, quite possibly financial help, to those individuals, to soften those difficult decisions.
Our branches and groups raise £2.5 million a year, but at the moment naturally they are all sitting at home pretty much unable to raise a fraction of that amount of money.
Q49 Steve Brine: You are the big charity in this area but there are other areas—I say this as a former public health Minister and former cancer Minister—where there are lots of charities working in the same space, albeit with a slightly different focus. Breast cancer is a good example of where they have consolidated into one.
Is there a case for the Government, in looking at how they can support the sector right now to get it through to the other side while continuing to provide a service, to provide support to a hub charity by area and by condition? Would that help you?
Chris Wade: It is a difficult one. In my space, the MND Association is by far the biggest player. There are some smaller charities that speak to us and work quite closely with us. They try to supplement the work we do rather than replace it. That dialogue is always really important. In other charities I am sure there is some duplication, but sometimes competition and the sphere of different organisations are important.
There may be a role for hub charities to co-ordinate some of the funding that goes to some of the smaller ones, to make sure that there is co-ordination where it does not happen organically.
Q50 Damian Green: This may be a little premature, since, from the discussions we are having today, getting through the rest of the month, and certainly the next couple of months, is the immediate problem. Looking slightly longer term, one of the things, across the piece, that the country is going to have to look at is resilience, and whether we are resilient enough in our key services, where your sector, as we have heard today and we know already, is one of the vital sectors.
Has there been much discussion, either for you as a charity or across the sector, about looking at the long-term resilience of the sector? As we can observe, big disasters come, maybe not as big as this, but things that really affect your fundraising and trading abilities can happen. How much resilience planning goes on?
Chris Wade: Karl would be much better placed to answer that across the sector. In our organisation, obviously we have contingency plans and we do scenario planning, but I do not think any of us had planned for something of this magnitude.
There are some lessons to be learned. For instance, I said that we had four or five months’ worth of reserves, which is more than a lot of charities. Some funders, including potentially Government funders, sometimes look at that and say, “Well, why do charities have such reserve levels?” They often frown on that. This might be telling us, once it dies down a bit, that the traditional mantra that charities should hold three months’ worth of reserves may need looking at again. Karl would be much better at answering the question across the sector, but I think it would be useful for NCVO to convene something after this to look at those sorts of issue.
Q51 Damian Green: I take that point. Inside your own charity you have always operated with three, four or five months of reserves. Have you had pressure from the regulator, from the commission, that three, four or five months is too much?
Chris Wade: Not from the commission; not personally, anyway. We certainly get it from donors. It is a difficult balance. You have to look at your cash flow and operating model to work out what the best reserve policy is. Our trustees are very strict on examining that on a regular basis, and it changes. We are lucky that we are slightly towards the upper end of our reserves policy, which is fortuitous at the moment.
Funders sometimes do not even look at grant applications because the reserve levels—certainly in cash—may be too high. It is an issue across the sector. It is more of an issue for the more grassroots charities than for us, perhaps. They are far more reliant on local community funding, where I have seen more of that.
Q52 Damian Green: Where does the bulk of your funding come from? Is it from grant-giving bodies?
Chris Wade: We have a good cross-section of funding, but a very large proportion, where we get a lot of money, is from community fundraising, and that is where we are having the biggest problems at the moment. We have an amazing network of volunteers, supporters, members and donors right across the country. They do the usual things—running marathons, jumping out of aeroplanes and all those kinds of thing—to raise money for us. A lot of our volunteers run things at fêtes and charitable events. All of those are not happening, at probably the busiest times of the year. Spring and summer are when most of that income comes in; for instance, our branches and groups, which are all volunteer run, raise £2.5 million each year for us. Most of that is raised in the summer months.
Q53 Damian Green: You are having to assume now that literally none of that will come in, or a bare minimum?
Chris Wade: Yes. We have seen events cancelled already of course, and most of those are cancelled certainly into the late spring. If we are out of lockdown by then, which we all hope we will be, the hints are that social distancing will continue for some time, so some of those events are still going to be quite problematic, certainly into the early part of the summer.
Q54 Chair: How is your bank treating you right now?
Chris Wade: We have not had to go begging to our bank just yet. I do not think we have had those kinds of dialogue just yet, so I cannot say that they are treating us badly. I have nothing particular to report.
Q55 Chair: You are just keeping a low profile with them? Do you think that banks view charities as a bad bet right now?
Chris Wade: What is a good bet right now? I do not know. As Karl outlined earlier, it is difficult. At some levels, you could look at some of the larger charities and say that they have been going concerns for a long while, they are well governed and have a mixed economy of income coming in. I do not know if we are bad bets for a loan. Trustees are traditionally nervous of seeking that kind of finance to run charities. That is something we could look at.
At the moment, as Karl indicated, we are not eligible for the loan finance put forward by the Government in any case, because we have hardly any trading income. You would have to ask a banker, I suppose, but we have not had to approach ours just yet.
Q56 Chair: It is a cash-flow method rather than trading income?
Chris Wade: Yes. We manage cash flow very closely, but our income comes from a mixture of community fundraising, individual giving, major donors and individuals. Legacies are a large component of our income. There is a whole mixture of incomes. As a charity, we do not have any Government grants, but we bring in some grant funding from the usual charitable trusts.
Q57 Clive Efford: You mentioned, in regard to the shielding list, that you featured in the Government’s early thinking. Do you have any explanation as to why you were not on the final list?
Chris Wade: No, we do not have an explanation yet. We are pushing for that explanation. We are pushing for it to be changed, but nobody has yet been able to explain why to us.
Q58 Clive Efford: It has not been indicated to you that there was some sort of error? If it is the case that there seems to have been some sort of thought behind it, they have assessed motor neurone disease as not being at higher risk as a result of COVID-19. Is that what they said to you?
Chris Wade: We have not been able to ascertain why yet. I can only speculate. As I say, it was on the list before and it is not now. I do not really understand how.
Clive Efford: I have been contacted by constituents, too. When I have looked into it, it is shocking and surprising. Thank you for that.
Q59 Giles Watling: I would like to ask how you allocate your expenditure. I imagine that you help people with kit that helps them exist. We all saw the kind of kit that Stephen Hawking needed, for instance, to help him get through life. I imagine you helped with that. Of course, you also spend money on looking for a cure. As yet, I understand that there is no known cure. We do not really know the causes—correct me if I am wrong—but you are spearheading research into that.
In the current crisis, I imagine that you would reposition that expenditure so that you perhaps spend more on helping people with the disease rather than looking for a cure at this time. I do not know, but I ask you the question.
Chris Wade: Yes. Our priority at the moment is to make sure that people who are living with the disease and the people who are caring for them get support. They are already very isolated people, as you can imagine, because of the disability they live with. They are even more isolated now. They are concerned that people coming to their house may have the disease, and people may not wish to go and support them, for the same reasons.
We are trying to ensure that they are connected. In fact, we are trying to make sure that we can give them some financial support if they need it. The state is inevitably moving away from some of this space in its own focus, so we have a new escalation process in place to identify the changing needs of people living with the disease, which progresses very fast. We are trying to advocate for them and work with the health and social care sector to fill those gaps.
We are doing some campaigning, as Members demonstrated by asking me about the vulnerable list. We are diverting money to that, and we have had some conversations this morning about how we split our funding. At the same time, it is worrying. We understand the disease a lot better than we ever have done, and we have a number of very promising treatment clinical trials in the pipeline that we are desperate to get on with. Ultimately, the longer that takes, the more people are dying of the disease.
There is some reshaping going on. We convene neurologists from all around the world at an annual conference. That is under threat at the moment and there is a cost to us of about £200,000 if we have to cancel that event. There is a changing economy in terms of how we deal with things. As a charity, it is so frustrating to let go of any of those things and prioritise one over the other.
Q60 Giles Watling: Do you envisage some difficult decisions coming up?
Chris Wade: Yes. We have to make decisions on furloughing staff in the next week or so, to be perfectly honest, because the window is closing. It is three months from 1 March, so if we are going to save any money from that we need to move fast. Sometimes that is making decisions before you have all the facts at your fingertips, but we have to do it.
Q61 Kevin Brennan: I can confirm that your lobbying has been very effective. I have had much contact with constituents about the vulnerable list and motor neurone disease. Let us hope that today’s session draws the Government’s attention to that more directly, and the need to get it right.
What I have detected across all three witnesses is perhaps a frustration that the Government are not talking directly to the sector about its needs. Is that fair and true, do you think?
Chris Wade: We can all understand that the Government are busy. Everybody wants to talk to them, so I do not want to be too quick to call. In Karl’s position in particular, it is essential that the sector is talking to people like the NCVO and the Association of Chief Executives of Voluntary Organisations and umbrella bodies who can speak on behalf of the whole sector, with some real knowledge about the sector, to help the Government to come up with a workable solution. I strongly encourage them to do that.
Q62 Kevin Brennan: Would you agree with the point that Karl made in the first session that the National Emergencies Trust is effectively a little scratch on the surface of the problem facing charities at the moment and should not really be cited as an answer to this particular problem?
Chris Wade: I do not want to call it a scratch. It will certainly be useful to some charities, but it is not the answer I would expect from Government as a solution to this. From my understanding, it is quite limited in its scope as well as in terms of which charities can call on it. I think it is very much focused, understandably, on those who are involved in frontline work on COVID at the moment. That is a scratch of the charitable sector.
Q63 Kevin Brennan: You mentioned earlier to Giles that you were facing the prospect of furloughing, with a decision about that in the very near future. Would it be helpful if the Government were to offer an exemption to charities that allowed them, on justifiable grounds, to furlough because of their financial situation, but allowed their vital workers to continue to volunteer in the sorts of role they are already doing, given the importance of their roles to people in this crisis?
Chris Wade: Yes, that would be a help. As I understand the furlough scheme at the moment, you cannot dip in and out of it. You cannot furlough somebody who is seasonal and who you only need for one day a week. You cannot cut their hours down; you have to stop them for three weeks or more. Some flexibility in the system would be useful.
Q64 Damian Green: I am slightly confused about whether MND is on the list or not. Just before the session started, I had a message from my office saying, “Thank God, it’s been added,” because we all want it added. In the wake of what you said, Chris, I have been checking it out. On the social distancing gov.uk guidance page, in a list of chronic neurological conditions, it is there as an underlying health condition. Is what you were saying that it is now recognised and is on that list, but maybe not directly in some way?
Chris Wade: Unless things have changed, it was originally on the list that told people to isolate, but it was not on the list that listed people as extremely vulnerable and therefore should be shielded and could have access to things like shopping from Morrisons and so on. Unless it has happened in the last few hours, it was not on there.
Q65 Damian Green: It is for, as it were, not the most serious group but the next one down from that? Is that what you are saying?
Chris Wade: Yes. If you remember, a week or so ago people received letters and texts from their GPs to tell them they were in the extremely vulnerable group. It is that list they are not on.
Damian Green: Thank you for clearing that up.
Chair: As there are no other questions, we will finish the session. I thank our witnesses, Karl Wilding, Martin Houghton-Brown and Chris Wade, and I thank Members for dialling in today.
 Correction by witness: 24% of charities do not hold any reserves.
 Correction by witness: Actual figure is 3,000.