The upcoming increase to the national minimum wage could cost charities and voluntary organisations about £200m over the next six years, parliament has heard.
A debate in the House of Lords last week covered how the wage increase could affect the voluntary sector.
The national minimum wage is set to increase by 9.8 per cent from £10.42 to £11.44 an hour on 1 April.
The Labour peer Lord Faulkner asked the government how it was supporting charities that “might struggle to pay salaries following the planned rise”, particularly those that provide support for adults with serious learning disabilities.
Lord Parkinson, a minister at the Department for Culture, Media and Sport, said the DCMS provided “substantial support for charities”, citing the emergency £100m package the government announced in last year’s Spring Budget, which included £25m to support voluntary sector organisations to improve their energy efficiency.
“Charities are vital to the delivery of social services and to the support of families and carers across the country,” he said.
Parkinson said the government’s impact assessment for the increase in the national minimum wage showed that the additional cost to charities and voluntary organisations would be about £200m 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,” he said.
The Conservative peer Lord Young pointed out many early years providers are charities and voluntary organisations.
“Three-quarters of their costs are salaries, and many of their employees are on the national minimum wage,” he said.
“Since 2017, the national minimum wage has gone up by more than 50 per cent but the funding rate from local authorities has gone up by 21 per cent, undermining the viability of those organisations at the very time when entitlement to free childcare is going up.”
The Liberal Democrat peer Lord Addington said charities took on a lot of the “heavy lifting” that the state could reasonably be expected to do and questioned what the government’s plans were if charities failed.
In response, Parkinson said the government recognised the “important contribution” of charities and civil society organisations, citing the £25m energy efficiency scheme.
The Labour peer Lord Davies addressed pensions in the charitable sector and said many charities were “struggling with their pension provision”.
Parkinson said Stuart Andrews, charities minister, “regularly meets charities”.
He said: “I will ensure the noble Lord’s point is passed on, so that he can have those discussions.”