Special report: Charities at breaking point

Providers struggle to cope as costs rise, state support falls and staff recruitment becomes more difficult


Communal welfare charities are facing unprecedented problems at a time of record demand for their services, a JC investigation has found.

Leading providers are having to raise millions more to take account of diminished statutory support and the cost of implementing the National Living Wage. Already struggling to attract staff, they are now concerned about the impact of the Brexit vote on recruitment - and whether post-Brexit uncertainty will make key donors less generous.

Once differentials are taken into account, Jewish Care calculates that the living wage alone will add £4 million to its budget by 2020. But chief executive Simon Morris says that the underlying problem - funding from the state not covering the actual cost of care - has not changed in his 12 years in the post.

"We have been saying consistently, as have other care providers, that the money we get from government through local government has not kept pace with inflation and has lagged behind the increases we face."

His sentiments are echoed by his Norwood counterpart Elaine Kerr. The children and families charity deals with 64 local authorities and Ms Kerr reports that many of the negotiations are dispiriting. "In the past, local authorities funded people to have a life. So they've funded their bed, board, day services, travel, the occasional meal out, holidays. As they started to reduce those, Norwood made up the difference with voluntary funding. We are now in a position where we can't do it any longer."

What implementing the National Living Wage will add to Jewish Care's budget by 2020
Amount Nightingale Hammerson needs to raise annually from the community
Norwood cuts after review of services
Weekly drop in local authority contributions for a resident at The Fed's Heathlands home in Manchester

Ms Kerr cites the example of a client's health or behaviour deteriorating, possibly through dementia.

"Instead of 60 hours' support a week, they need 80 hours. We get them assessed and the local authority says: 'We agree they need more hours but we actually need to pay less than we were already paying you for the shorter hours.' There are ridiculous conversations we are having."

The bulk of the 1,000 people on the books of Manchester's main communal charity, The Fed, are helped through services such as mental health, social work, carers' support and advice and information on a range of topics.

"A number of years ago, people would be entitled to home care services at an earlier stage," explains Mark Cunningham, its chief operating officer. "Now they [councils] concentrate on people with the highest need."

Assistance such as shopping collection or taking someone's dog for a walk might not sound hugely important. But Mr Cunningham argues that early intervention saves money down the line.

"Increasingly, our contracts are short-term. Where before you had one or two years, now it is six months. It brings uncertainty for staff.

"We receive no funding whatsoever for our mental health service, which includes drop-in and outreach work. Mental health is very much the Cinderella service. We could certainly do more given that opportunity.

"We are lobbying for fair fees and trying to cut costs without affecting the quality of care. And the complexity of needs of the people we care for is increasing. We are looking to reduce spending in many areas. We have had to rationalise and there will be some staff cuts in community services."

Around 40 per cent of the residents at Nightingale Hammerson's two properties are council funded and chief executive Helen Simmons says that the gap between payments and the true care cost is ever widening.

Ms Simmons explains that, depending on needs, a resident's care costs between £1,100 and £1,500 a week. In some cases, as little as £500 is received from the resident's local authority.

"There is a limit to the amount of time we can spend haggling. We understand the problems councils face but we have to point out that they are failing in their legal duty."

All charities offering residential care report an increased age of admission and a high proportion of clients suffering from dementia, requiring specialist and more expensive care.

In April, the JC reported that Bury's Clinical Commissioning group wanted to slash the weekly contribution towards nursing care for new residents at The Fed's Heathlands home from £750 to £557. Although an "improved" rate of £610 has since been negotiated, that still represents a £140 shortfall on its past contribution - and is far below the amount required.

In such cases, "the family should be willing to contribute to the cost of care," Mr Cunningham says. And mostly they have.

Jewish Care had welcomed the olive branch in former Chancellor George Osborne's autumn statement to allow up to a two per cent social-care addition to council tax. It was "maybe not to the level we wanted," Mr Morris says. "But it was quite a radical thing.

"However, we are disappointed that the additional money hasn't [always] materialised in additional funds for Jewish Care.

"Barnet increased their council tax by 1.7 per cent, which is good. But, because of political decisions, they cut in other areas. So the net effect was no increase in council tax. They haven't utilised the vehicle the government gave them."

Mr Morris adds that, in contrast, "Brighton have increased council tax by almost four per cent, utilising the two per cent additional money. They've offered us a two per cent uplift in fees."

Discussions are ongoing with Barnet, the charity's biggest customer. "They did give us an increase in October of last year for the previous year so we are still in negotiation. The hope is that they will understand the pressure we are under.

"What weapon do we have? The only weapon is to stop taking Barnet-funded local residents. That penalises the people who need us - and, as a care organisation, it goes right against the grain to do that. It's not what we are about.

"I know from talking to the chief executives of private care companies that, unless they get increases from local authorities, they will stop taking publicly funded individuals. If you are Jewish, you have access to the community's social care services. But nationally, the impact on social care will be massive."

Jewish Care has never been in greater demand. Care home occupancy is at 93 per cent (98 per cent in north-west London), its social work service is operating at record levels and it is estimated that the charity touches the lives of 10,000 people weekly, whether through direct assistance or support for families and carers.

Its help desk receives 15,000 calls annually. "The ability to be at the end of the phone to help or reassure people is absolutely vital," Mr Morris says. "And we don't get any government money for that."

Four years ago, Norwood conducted a strategic review to provide a blueprint for its future operations. "At that point, we were starting to run with a recurrent deficit," Ms Kerr recalls.

The following year, £1.4 million of central costs were cut, there were subsequent reviews of its children and educational services and the charity began a restructuring of its adult provision.

After further evaluation, it has taken the decision to close or "reshape" some of its services, particularly where local authorities will not fund them; there is duplication in the Jewish community; and questions of "sustainability arise because of changes in policy or commissioning". Another factor was the reach of a service - basically how many people would be affected by closure.

Recreational groups at its Somers Family Centre in Hackney have been axed and its Hope facility - helping children and young people with a wide range of educational and therapeutic needs - is closing. Hope used the pioneering methodology of clinical, developmental and cognitive psychologist Professor Reuven Feuerstein. It was "a highly specialised service and extremely expensive. We cannot sustain it," Ms Kerr says. "Much less than 10 per cent of children who use our educational services went to Hope."

She would like its other educational service, Binoh, used by 800 children, to incorporate some of the Feuerstein method into its teaching. If children from Hope are unable to transfer to Binoh, "we'll work with the families to find alternative provision".

It also recently confirmed that Drugsline activities - a once-a-week evening drop-in centre, and drugs awareness workshops for schools and youth groups which it has run for the past three years - were being axed in the refocusing of resources. It will continue to support those with addiction problems through its social work and counselling teams.

The latest cuts have trimmed £1.1 million off the budget. Added to the previous £1.4 million, "that gives a saving of £2.5 million. We have been running an operational deficit of between £1.5 million and £2 million for the past two years. We have to get it under control."

The changes have involved staff cuts affecting "less than 20" from a workforce of around 1,240.

Norwood has been "very transparent about our difficulties" to donors. "Unfortunately, we have to go back to the same people, so we owe it to them to become increasingly efficient. No one wants to give money to a sinking ship."

Charities are not just losing out on statutory funding. With more organisations competing for trust or grant monies, there is less to go around.

"Two-and-a-half years ago, we won a grant of £500,000 from Sport England for our sport and leisure services," Ms Kerr recalls. "That comes to an end soon. We don't know yet if we can reapply. So half-a-million pounds over three years may go."

At north London special needs charity Kisharon, Beverley Jacobson's mantra is that "if you can't run services to a high standard, you shouldn't be running them". She says that in her eight years as chief executive, she has made its operations more efficient, freeing up money.

Yet, during this time, funding cutbacks have impacted on the lives of people "who would be classified under the old system as mild or moderately disabled. Those people have the most ability and yet, without support, can fall furthest.

"One of the services that isn't funded is our employment service. And this is a pretty vital key to the success of our supported living. One of the things I feel most strongly about is getting people to live in the community independently."

Dr Jacobson makes the point that those with a learning disability have it for life. "It takes a bigger chunk per capita than the elderly. So there is this thinking that it's over-funded. It's not. If you put in the resources at the outset, you create much less dependency later on."

When it comes to the living wage, the charity chiefs are unanimous in their commitment to remunerate employees fairly.

"One of my big bugbears is that pay people get in the care sector is low," Mr Morris says at Jewish Care, the biggest employer with 1,400 staff. "And we are asking them to do a difficult and responsible job." In addition, recruitment is difficult.

Mr Cunningham cites the example of domiciliary care staff at The Fed being paid £8.40 an hour on guaranteed contracts. "It's £1.20 above living wage but we are struggling with recruitment." He adds that a knock-on effect of the living wage is that suppliers have also been hit and will pass on the cost.

At Norwood, implementing the living wage has been less of a headache than for other charities as "we are already paying our support workers £9.30 an hour", Ms Kerr explains."We pay in the top quarter and we still can't recruit. We have to use agencies."

The problem is acute at its Ravens-wood Village in Berkshire - home to 130 people with learning difficulties - "because there is no transport going through and we've got night staff.

"When the country has low unemployment it's the care sector that suffers. At the back of our office is a banner from Lidl, 'customer services assistants wanted'. They are paying £9.45 to £10.45. Deal with someone with challenging behaviour or sit on a till in Lidl. So it's not the living wage, it's the marketplace."

Brexit has lessened the potential of Nightingale Hammerson's planned recruitment drive in Portugal - it will now be taking its staff search to South Africa via a Skype campaign.

Eleven per cent of its 376 employees are from EU countries including Poland, Spain, Hungary and Greece. At the annual Nightingale staff barbecue, Ms Simmons felt they were noticeably subdued. She understands their anxiety over their future and is concerned about the impact on the home if they decide to leave the UK.

At Jewish Care, where 15 per cent of staff are EU nationals, Mr Morris has picked up on the post-vote fears. "It's about people's well-being and it affects their motivation. From the fundraising side of things, people's ability and propensity to give has come under scrutiny."

Up to 20 per cent of The Fed's employees do not hold a British passport. "They realise that Brexit won't happen immediately," Mr Cunningham says. "But I think there is a concern. We are keen to retain skilled and committed staff."

He also highlights the importance of a strong volunteer force in a difficult financial climate. The Fed recently received the Queen's Award for Voluntary Service and its 500 volunteers are "our lifeblood, helping with admin, manning the phones and running activities". The oldest is 94, the youngest, 16.

They often have to step into the breach as cutbacks bite, serving as a link to the community and helping to keep clients safe. "Our volunteer team is having to do more with less."

In such a challenging operational climate, Ms Kerr considers it a positive that Norwood has faced up to some difficult decisions.

"I think it's good news that we are not waiting to go bankrupt," she says.

"If I was in charge of an organisation making widgets, I could turn on the production line according to how many buyers. We're dealing with people's lives. We have got five young people moving into a new home later this year. They are going to be with us for 60 years. How can we not have any money in 10 years' time?"

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