Matt Whittaker, CEO 

Charities and social sector organisations across the country have been a crucial part of our national response to the pandemic, and MPs and policymakers throughout local government believe charities will be crucial to the recovery and to levelling up.

Yet, just as the Covid crisis enters what we hope is its end game, the country is now facing up to a new challenge in the shape of soaring inflation and an accompanying squeeze on incomes. The social sector is already being called upon to once again play its part in helping the country navigate the situation. But after two years of running hot, its ability to fulfil that role is stretched.

The cost-of-living crisis currently unravelling will impact people across the country. Already in the month to March 13, 2022, more than four in five (83%) adults across the UK have reported experiencing an increase in their cost of living. However, lower income households already most severely impacted by the pandemic will bear the brunt.

New analysis of the Bank of England’s NMG survey of households shows that, even before inflation began to bite:

  • Almost half (46%) of the country’s highest income households reported that the pandemic had caused them to increase their savings, while three in 10 (30%) of the lowest income households reported a fall in their savings associated with Covid-19.
  • Almost three in 10 (29%) of the lowest income households reported having no savings whatsoever, with more than half (53%) having less than £1,000 to fall back on.
  • Two-fifths (42%) of the lowest income households were already concerned about their levels of debt – with nearly one in five (17%) saying they were “very concerned”.
  • One in six (17%) households reported last autumn that they had faced difficulty keeping up with their housing payments over the previous year due to Covid-19, with one in three (33%) of the lowest income households in this position.
  • One in three (35%) of the lowest income households reported needing to cut back on spending in order to pay their rent or mortgage.

Many thousands of charities across the country provide vital support to those households which have felt the financial impact of the pandemic. Not only those charities providing essential goods to those who can’t afford them, but those organisations which support individuals to access work, to recover from crime, to deal with mental health difficulties, to overcome housing challenges and many more. These areas of need are likely to grow as the cost-of-living crisis deepens.

It is inevitable that organisations within the sector will step up – they always do. But the capacity of charities and others to meet any surge in requests for help is likely to be constrained by the extent to which they are already running hot having faced elevated demand for much of the last two years. PBE surveys show that more than half (55%) of charities were reporting a Covid-related elevation in demand persisting towards the end of 2021, against a backdrop of funding challenges for a substantial proportion of the sector. Three in four sector leaders polled in October 2021 were already worried about burnout among their managers (76%) and other paid staff (75%), with no end in sight.

There is cause for optimism: social sector organisations are nimble, many have invested in new technology capabilities through the pandemic which will help them scale, and public sentiment towards charities and community action is strong. The response to the outbreak of war in Ukraine and the resulting increase in refugees demonstrates that keenly.

But there is no mistaking the pressure on those organisations key to supporting the lowest income households, who were already in a perilous position before inflation began to escalate. Whether the Chancellor uses the opportunity of the Spring Statement to provide adequate support to those families will be watched carefully throughout the charity sector.

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