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Charities: National Minimum Wage

Volume 836: debated on Thursday 29 February 2024


Asked by

To ask His Majesty’s Government what steps they are taking to support charities which might struggle to pay salaries following the planned rise in the national minimum wage in April 2024, particularly those which provide support for adults with serious learning disabilities, and their families and carers.

My Lords, charities are vital to the delivery of social care services and to the support of families and carers across the country. His Majesty’s Government have made available an additional £8.6 billion in this financial year and next to support local authorities on adult social care and discharge. In addition, DCMS has awarded £76 million to charities and community organisations delivering front-line services, with a further £25 million to follow.

My Lords, I am grateful to the Minister for that Answer. I declare an interest as patron of the Myriad Centre, a small and very successful charity providing adults with profound and multiple learning difficulties, and their carers and families, with support and a programme of activities in Herefordshire, Worcestershire and the West Midlands. It is heavily reliant on local authority support. It does not oppose the increase in the national minimum wage, of course, but if the minimum wage is increased by 9.8% and the contribution from Worcestershire is going to rise by only around 6%, there is going to be a shortfall that will widen year on year. This is one example. Will the Minister look at the problems of charities in that sort of situation—I have had correspondence from Mencap, which makes the same point—and see whether these gaps can be filled in some way?

The noble Lord rightly points to the 9.8% increase to the national living wage, a record cash increase of £1.02 an hour from 1 April, which will give a pay rise to around 3 million workers. He is also right to talk about the implications for organisations such as charities. As I mentioned in my first Answer, the Government have made available up to £8.6 billion to support local authorities with adult social care and discharge in the next financial year. That includes £500 million announced last month to support local authorities with the cost of social care. In addition, the accelerating reform fund for adult social care will invest £42.6 million for local projects focused on transforming the care sector. We are providing support to those who are providing important care to vulnerable people in our community.

My Lords, many early years providers are charities and voluntary organisations, including preschools and nurseries. Three-quarters of their costs are salaries, and many of their employees are on the national minimum wage. Since 2017 the national minimum wage has gone up by more than 50% but the funding rate from local authorities has gone up by 21%, undermining the viability of those organisations at the very time when entitlement to free childcare is going up. Will my noble friend the Minister make representations to the relevant department to see that the funding rates are increased, so that those organisations can continue to provide a quality service?

I will pass on my noble friend’s representations; he is right. The impact assessment for the increase in the national living wage shows that the cost to charities and voluntary organisations is around £200 million over the next six years. That is the evidence we have, which we will share with relevant partners to make sure that they can carry on their work. As I have pointed to, DCMS provides substantial support for charities and all the wonderful work they do in so many ways across our country, including through our energy-efficiency scheme of more than £25 million to help them with the rising costs there.

My Lords, does the Minister agree that we are very lucky that a lot of charities take on a lot of the heavy lifting that you could reasonably expect the state to do? They provide care for vulnerable groups. If the Government will not support charities directly, do they have a plan for if they fail?

The noble Lord is right to point to the important contribution of civil society and charitable organisations—the Government recognise that. We saw that very clearly during the coronavirus pandemic, when we pledged £750 million to ensure that voluntary and civil society organisations could continue their vital work supporting the community during the pandemic. As I have pointed to, we see that in the face of the rising cost of living now.

My Lords, can the Minister say whether he has had representations from museums and galleries about this? If so, what steps will the Government take to support them in the light of this change?

Yes, I have discussed the same issue with museums and arts organisations. The rise in the national living wage has implications for employers of all sorts. Through our increased grant in aid, Arts Council England is supporting a record number of organisations in more parts of the country than ever before. I continue to discuss these issues with organisations of all sorts.

My Lords, I am very pleased that the Government recognise the contribution that civil society organisations, including social enterprises, make in delivering essential public services and that they stepped up magnificently during Covid. The Digital Markets, Competition and Consumers Bill currently before your Lordships’ House contains provisions on subscription contracts that charities fear will undermine gift aid provisions. Given that the Bill’s Report stage is fast approaching, what assessment have the Government made of the potential loss of income for charities if they remain subject to the new subscription rules? I accept that the Minister may not have that answer now, but it is an important question.

It is indeed; I have been discussing it with my noble friend Lord Offord of Garvel and Kevin Hollinrake, the Minister in another place. We have had some useful meetings and representations from a number of charities and arts organisations with which DCMS deals. My noble friend Lord Mendoza has been pressing the issue from the Back Benches. I am glad that conversations are continuing as the Bill heads to Report.

My Lords, independent schools are not among the very smallest charities in our country but they are pretty small, with 75% of them having fewer than 500 pupils and 25% having fewer than 150. The issue that this Question raises will affect them. Will not the Labour Party’s proposal to slap 20% VAT on their fees do them grave harm, forcing many of those small charities educating children and families in their local communities to close? I declare my interest as president of the Independent Schools Association, which represents 650 schools, most of which are small, local charities.

My noble friend speaks with great authority as the president of the Independent Schools Association, as he mentioned. He is right to point to the valuable work that independent schools do, not just for those they educate but for the community more widely, and to dangers of the policies advanced by the party opposite.

My Lords, I am sure we all agree that workers in the charitable sector should receive decent pensions, but many charities are currently struggling with their pension provision, both financially and structurally. Will the Minister ask his officials to engage with representatives of the Pensions Regulator and the DWP to try to provide a practical way forward for charities that have this problem?

Yes. My right honourable friend Stuart Andrew, the Charities Minister, regularly meets charities. I will ensure that the noble Lord’s point is passed on, so that he can have those discussions.

My Lords, in the course of this short debate the Minister has produced a large number of statistics involving sums of money that are eye-wateringly large if you look at them on their own, but it is very difficult to understand how those figures relate to the actual need in the sectors to which they are being applied. If I can take him back to the question from his noble friend—the noble Lord, Lord Young—the gap between the need of the early years providers and what is available to fund them is very considerable, and it is not being improved by what is happening in local authorities. Can he tell the House how that gap is to be addressed?

The noble Baroness is right that these are eye-watering figures. As people live longer and the pressures on local authorities to deliver social care grow, we can see the implications for their budgets and spending. Those are part of the conversations that the Government have with local authorities all the time. As I said, just last month another £500 million was announced to support local authorities with the cost of social care, which we know is rising. Overall, local authorities’ core spending power is set to increase by 7.5% this year. We continue to have discussions to make sure that there is money available to local authorities to deliver that statutory responsibility and to continue to support the wonderful arts organisations, charities and others for which they do not a statutory responsibility but which can be part of delivering their statutory obligations by looking after people in so many ways.

My Lords, does my noble friend the Minister recognise that the problems facing charities because of the rise in the minimum wage also affect hundreds of thousands of small businesses up and down the country? Furthermore, by increasing the minimum wage, surely there is a saving to the Government on benefits, such as housing benefit. Can that saving not be deployed in the interests of those charitable bodies addressed by this Question?

The Government follow the recommendations of the independent Low Pay Commission. The evidence to date shows that the national living wage has given a pay rise to millions of people and reduced inequalities, without significantly harming employment prospects or having other adverse impacts. There are implications for businesses and charities—the Low Pay Commission’s impact assessments provide that evidence—but we are proud that, through the increase that comes in on 1 April, we will be giving a pay rise to around 3 million workers in this country.