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| TX: 16.01.06 - Scope PRESENTER: JOHN WAITE |
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| Downloaded from www.bbc.co.uk/radio4 THE ATTACHED TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY. TX: 16.01.06 - Scope PRESENTER: JOHN WAITE WAITE Scope, the charity which helps people with cerebral palsy, is in financial crisis, with a deficit of more than £10 million predicted for this year. You and Yours reported last year how Scope was closing some of its residential units as a cost saving measure. But now 50 of its charity shops will have to close and more of its properties be sold as a result of its ongoing problems. The charity blames a lack of government funding as a major reason for its woes, Scope estimates that it's subsidised the government to the tune of £174 million over the last 14 years. Tony Manwaring is the chief executive of Scope and he's with us. You say the government's been under-funding the services you provide, in what way Tony? MANWARING Well there's a debate going across the sector which is becoming more intense now, which is about the need to ensure that modern charities, which increasingly provide frontline services, are able to recover the full costs of those services in providing those services. And Scope, for a long period in its 50 odd year history, has been cash rich and asset rich and it's not really needed to address the issue of ensuring that the contracts that it's negotiated have and will fully recover its costs. But as that asset base and those monies have begun to run out then that becomes an ever more pressing issue. WAITE But you choose to run these schools, these care places, whatever it is, why didn't you do something sooner in the face of that government under-funding - 14 years, you say, you've had these problems - surely it wasn't prudent to carry on as long as you have hoping things would get better? MANWARING Well the trustees have put a huge effort into reducing the amount of that subsidy and if you look at the trends it has reduced considerably. But shaking that out of the system is very hard and it's much more difficult at the moment because there is a real pressure through the social service system - and this is common to many charities that are in this area - where the funding for out of county placements has been drastically reduced, efficiency savings have been sought and so on. And so the capacity to ratchet up these and get that full cost recovery right now is much harder than it's ever been before. WAITE But aren't you guilty of tardiness in another sector - these 50 charity shops I mentioned that you're going to close, they haven't been making a profit for three years now, again why has it taken so long to bite the bullet? MANWARING Whilst I wouldn't accept the criticism on our service side because I think the trustees quite rightly took the view that if they had the money they would use that money to maintain the services. I actually do think there is something to the challenge you've just said, and I think the other simple argument is that we have a number of shops, they've been loss making within the overall chain, where most of the shops are very profitable, and every effort was being put into seeing whether those individual shops could be turned around, others - Sue Ryder, for example - over the last two years have closed some 50 shops, so we're not alone in this but I think we probably could have done that one a little sooner, yes. WAITE But also your pension scheme has been in deficit for the past five years with a shortfall of some estimate of £16 million, isn't that another problem you've allowed to get worse? MANWARING And again that one is common across the sector. I think Barnardos have a pension deficit of something like £68 million, which is costing them something like £4 million a year. So there are many charities which have similar issues. The underlying thing that hasn't yet been said is that the costs of supporting people with high levels of impairments and high support needs are very high and there is a government commitment on the one hand through the Improving Life Chances report from the Prime Minister to seek to improve independence for disabled people to fulfil their potential but on the other all the financial pressures on the funding mechanisms are to cut back costs and that is a very sharp ratchet. WAITE Well Paul Farmer is professor of voluntary sector management at City University Cass Business School here in London, he's with us too. Paul, Scope there saying they've been subsidising government services but I mean that's in effect what charities do these days isn't it. FARMER In part. It actually goes back to a piece of legislation back in 1988 - Community Care Act - in which everyone got quite surprised because everyone assumed that most services from the state would be transferred to the private sector and instead Sir Roy Griffiths, who did the report, actually recommended a greater role for the voluntary sector. I think it is quite important to recognise that when a charity looks at a service in many respects much of the 20th Century history has been that charities have campaigned to actually get services taken on by the state. I mean when Scope was then the Spastics Society was founded in the mid 1950s it was exactly because children with cerebral palsy, parents, just couldn't get support from the National Health Service and part of the campaign was to actually get that taken on. WAITE Well they were very rich in those days, weren't they, because of some historical funding from the football world. FARMER They were, they had a very interesting levy applied and indeed it was, in management terms we would call it a cash cow, that they had for close on for about 12 years and unfortunately I think it was in 1968 a legislation, the [indistinct word] Act was passed that actually removed that. WAITE And they've never really got over that? FARMER I think - well I think by the mid 1990s the organisation was well over it but certainly up to that point I think there was always a feeling that they had been sort of short-changed and robbed. And often many charities do have a flow of income that has either come from a benefactor or through - in that particular case - a unique part of history that the charity relies upon and then having to come to terms and still wanting to deliver that campaigning message, still wanting to deliver those services, and then fails to be able to do so because of the new economic reality. WAITE Well Tony Manwaring you've got a very sharp economic reality to turn around - a £10 million deficit - and you've promised to do by 2008, that's a very tall order for just two years, how are you going to do that? MANWARING Well over the last couple of financial years we've reduced our expenditure by well over £2 million moving on, and we're looking very hard at our expenditure right now and I think there will be some quite tough decisions that the trustees are going to have to take because at the end of the day the books have to balance. Alongside that we now have in place a management team that I think will be well able to secure a much better level of fee recovery and we're looking to develop new ways of providing services which are much more in tune with the future, which are much more in tune with the way the local authority market is developing. WAITE Paul, what's your advice for how Scope can get out of this mess? MANWARING Well I think the first piece of advice is in the same way as Marks and Spencer's and IBM and other great companies over the last few years have got in trouble and then re-emerged out of trouble again is that obviously they need to re-look at some of the costs, they need to look at, for example, the overhead forecast recovery, they need to look at their - they've obviously addressed the shops issues, which is a major issue for charities now, it's been again a classic example of good news for charities, I think shops are probably coming to their end for some charities in terms of an income and they've obviously addressed that and they're aware of that so that's good news there. The management is aware of it, that's always the key point, is the management aware - they are, therefore they're probably on their way back. WAITE So back to the drawing board. Professor Paul Farmer, Tony Manwaring, thank you both very much. 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