Bank of England Returns to Discuss Impact of Rising Costs

Bank of England Rising Cost of Living Discussion

Earlier this year we welcomed Will Dowson, Agent for Scotland at the Bank of England to a round table discussion with our members at the Albany Centre. Round Tables provide members with an opportunity to meet experts and decision makers in an open and informal setting; at that time to discuss growing Economic Challenges for Sector. More recently and amidst the cost of living crisis, we invited members to gather again with Mr Dowson to share their challenges and concerns which we highlight in our blog.


 

A lot has changed in the few months since we last met with Mr Dowson, when events in Ukraine were unfolding and economic recovery from the pandemic was foremost priority at home. It feels that the term ‘unprecedented’ has now been replaced by ‘permacrisis’ as organisations of all kinds face further rising costs and challenges. Despite this, it remains crucial for open discussions to take place so that institutions like The Bank of England are able to make fully informed decisions. In fact we began by hearing from Mr Dowson how sobering and valuable it had been for him to meet third sector organisations from across the city. He reminded those gathered that one member told him:

‘What you have to take away from here today is that some people are starving to death’.

In fact, we were truly saddened to hear this has been the case in recent months as the costs of living crisis has taken hold.

The discussion began with acknowledgment of the current position; rising inflation and interest rates, higher cost of borrowing, supply chain issues, labour shortages due to Brexit, and of course, increased costs and energy prices.

Hearing from GCVS members large and small, each representative shared real life examples of the challenges being faced.

Being able to ‘afford to work’ was raised by those running employability programmes. While third sector programmes often play a key role in getting people into work, many roles can’t compensate for the rising cost of childcare, clothing, transport and food. Those on benefits are on a tightrope of managing what is financially most beneficial for them. Organisations are also seeing increasing numbers of working people accessing third sector services to feed and clothe their families, while stigma and lack of awareness of services prevents these numbers being higher still.

‘We’re don’t want to take people out of poverty into working poverty. There’s less of a safety net in work poverty’

‘These people don’t know what support is out there – they’re not used to having to ask for help’.

We heard from a local Housing Association who perfectly illustrated the unsustainable impact of rising costs. Every supplier has passed on vast price increases to build and repair housing, from kitchen fitters, to roofs and bathrooms. They face unaffordable costs to continue providing much needed social housing. Meanwhile existing tenants need increasing support but services face cuts to reduce costs.

How had challenges changed for organisations?

Many of the challenges discussed earlier this year remain, but some key changes appear to be worrying organisations:

  • Rising Costs – in every area, organisations see their costs rise from utility bills and salaries, to supplies and running costs of services.

One member shared the difficulties they had experienced opening a new cafe which is now 18 months delayed. Not only is their project taken over budget, the delays mean a huge gap in their projected income generation the cafe was scheduled to bring in.

  • Increased Demand on Services – from those providing food and basic services, to financial advice and housing provision, the numbers accessing third sector services are rising across the city.

For instance, recent school holiday programmes were overwhelmed with demand for food provision with one organisation telling us they saw a 1400% rise in uptake this year.

  • Recruiting and retaining staff – this continues to be an increasing difficulty for third sector organisations who compete with private sector salaries and conditions. It has also been a challenge for high turnover in volunteer roles such as Trustee positions.

Childcare, financial support and communications roles were just a few of the examples shared where roles went unfilled. Many find they are advertising posts multiple times, meaning higher costs and in some cases services were pulled in response to lack of staff.

  • Staff exhaustion – raised during the pandemic, the feeling of being ‘overwhelmed’ continues to feel unresolved for staff in the third sector.

We heard from members that constantly having to adapt to new challenges and escalating issues is demanding too much of staff over such an extended period. The feeling of continual crises was mentioned by many.

 

While it can feel difficult to draw out the positives from this and other discussions taking place right now, it’s important to see the value that they have. Mr Dowson commented on the resilience of the sector and advised on the importance of establishing strong governance to absorb the shocks when they come. He said:

“Have the decision-making run really robustly is the core”. He also highlighted “how valuable it is to hear how you’re operating as organisations and where the pressures are building up.”

 

Mr Dowson again expressed his gratitude to the group for their openness and honestly, and GCVS, for inviting him to this opportunity. We will continue to build open communications which work towards better economic stability and bring to the forefront those who are struggling most.


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