LONDON — NGOs in the United Kingdom’s development sector face a fragile and uncertain future, despite the latest economic measures announced Thursday by Chancellor Rishi Sunak.
The U.K.’s finances were thrown into disarray by the COVID-19 pandemic, which brought large swathes of economic activity to a standstill. NGO budgets were hurt by a £2.9 billion ($3.74 billion) cut to the U.K. aid budget in July and the disruption of fundraising activities.
But unlike many businesses, which are seeing reduced demand for products and services, NGOs say they are having to balance the twin pressures of increased demand for their work and less money to pay staff.
That means the government’s latest measures are a poor fit for the needs of the sector.
“There’s more demand and more work to do than ever before — but we don’t have the money to pay the staff to do it,” Martin Drewry, CEO at Health Poverty Action told Devex by email. He added: “It’s incredibly hard for us to reduce staff hours … what we need is help covering the cost of employing them while fundraising is curtailed.”
The flagship announcement of the government's Winter Economy Plan was the introduction of a Job Support Scheme, to replace the furlough scheme that will end Oct. 31.
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The Job Support Scheme is designed not for the third sector but to “protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce.”
The scheme will help organizations whose employees work at least a third of their normal hours, with the government paying a third of the wages for time not worked, capped at £697.92 per month.
But with many NGOs unable to reduce staff working hours — and those who do are required to pay a share of the unworked hours, meaning the scheme remains relatively costly for employers — Richard Sagar, policy manager at the Charity Finance Group, predicted “significant job losses in the sector in the coming months.”
The measure is only “likely to benefit a relatively small number of larger [nongovernmental] organizations,” according to Mike Wright, director of membership, communications and training at Bond, the U.K. network for NGOs.
“Many charities, particularly smaller ones, have struggled to make use of the schemes put in place during COVID-19, which haven't been designed with some sectors, such as ours, in mind,” he said.
Clarity is needed over whether staff employed globally or just in the U.K. count toward the scheme’s size thresholds — small and medium-sized organizations are automatically eligible, while larger ones need to meet additional criteria — and whether employees can work voluntarily, according to Drewry.
Staff working voluntarily on top of their paid hours could make the Job Support Scheme “viable for some posts,” Drewry said.
But if voluntary work above contracted hours was not allowed, it would be of “little or no benefit” to his charity “as we need our staff to keep working in order to cover the organization’s core costs and keep it alive.”
Similar concerns are believed to apply across the U.K.’s development sector.
“We estimate that less than 10% of the smaller organizations that make up the bulk of the sector have made use of the furlough scheme, and are even less likely to make use of its replacement,” Wright said.
“Meanwhile, the international development sector as a whole is in a perilous and precarious funding situation, fuelled by government cuts and the impossibility of restarting public fundraising, with many organizations uncertain about their future beyond the next six months.”
Drewry called for restrictions on existing government grants to NGOs to be temporarily eased in order to cover the core costs of running organizations, and to reduce bureaucracy around renegotiated grants.
