Peter Cardy: What happens to charities when the UK leaves the EU?

The only certainty is a long period of uncertainty

Peter Cardy
Peter Cardy

I’m writing while it is still unknown under what terms we shall leave the EU, and there are endless what-ifs and caveats. I’ve tried to guess at some of the ways in which Brexit could affect charities. The only certainty, just as for the referendum itself, is uncertainty, and those who assert otherwise are fantasists.

I had the rare experience 10 years ago of reworking a tiny piece of EU law, an arcane piece of legislation about a small category of ships. It took two staff members six months to unwind this from UK law. The present dense web of UK-EU arrangements took more than 40 years to establish, much of it unseen. Unravelling this might take as long, but it will be much more intrusive and frustrating. However Brexit happens, we can expect a period when it isn’t clear to us or to other nations which rules are in force.

There will be turbulence, and some of that will affect charities, more or less according to the nature of their work. Since there is no typical charity, there is no list of effects for all charities. It will affect charities in the same way as people and enterprises in general: at best it will be inconvenient, at worst it will put some out of business. The best analogy I can think of is 1973/74: an oil embargo, a hung parliament, a minority government and the miners’ strike converged, leading to petrol queues, three days of electricity a week, shortages of everyday stuff, hoarding and profiteering.

Stocking up on essentials

A common question is whether it’s possible to offset some of the effects by stocking up at today’s prices. Well, yes, but only if you have the money to do it and a means of storing commodities. Hedging against the future cost of oil – which in any case is traded in dollars – or electricity is impossible to contemplate for most of us. But perhaps they will become targets for future corporate partnerships.

Look around your desk and shelves in the office and at home and identify what was made in the UK. In the past four decades we have increasingly imported what we own or use, or manufactured from imported raw materials. Then think through what is essential to your way of life or your charity and how you will ensure continuing availability. Stocking up sensibly on food or clothing might help to smooth the transition in prices or availability until the new normal is established.

If your charity supports poor or homeless people, they will be affected worse by Brexit than the comfortably off. Foodbanks are likely to become even more important. At the bottom of the supply chain, prices are proportionately higher and, without bulk-buying, there will be no discounts. One tin of beans costs more than one in a case of 48 tins. If your charity provides food or clothing it is likely to become more expensive until new supply arrangements are in place.

Shortages ahead?

As with stockmarkets and currency values, predictions are mostly guesswork, so charities will be anxiously watching their investments and reserves – again. The general effects are likely to include reducing the value of the pound, which makes imports more expensive.

Since we import a large proportion of everything that organisations use – consumables, hardware, technology and machinery, furniture – the cost of these is likely to rise. Replacing computers, buying ink cartridges, updating equipment, putting fuel in vehicles, heating premises and homes – all could be affected by currency and tariff changes.

Choice might change or be more limited as imports are rearranged. Will there be shortages? Almost certainly: in 1973/74 there were incessant, random, inexplicable shortages, mostly artificial. Toilet rolls, salt and sugar were rumoured to be in short supply; by the time you heard it they had gone off the shelves. Word of mouth has been replaced by social media, so shortages will be instantaneous. People with limited communications or mobility will be at the back of the queue.

Scarcity raises prices even if no one is trying to corner the market. Will there be hoarding and profiteering? Call it what you like, if it’s your business or the bread on your family’s plate you will do what you can to provide and protect it. If you have something that other people want, you’ll sell it at the price they are willing to pay, regardless of intrinsic value or today’s prices.

Just-in-time supply chains are the norm, which means stocks are now mostly at sea rather than in warehouses: 95 per cent of our trade is by ship and unseen. The wreck of the container ship Napoli a decade ago was a revelation. As well as the famous BMW motorbikes, it was carrying disposable nappies, wood pulp, chocolate biscuits, frozen duck, VW car parts, nickel metal. One shipload caused a blip in the economy of South Africa, the country to which it was sailing.

Will there be a parallel economy or a black market? Certainly, and charities will probably engage in it energetically and creatively. If you’re trying to protect your beneficiaries, you’ll barter and trade outside regular channels to secure what they need.

Few people now have access to an agricultural or primary products economy as they had even in the 1970s, where goods and services could be exchanged for essentials. But resourcefulness will not be in short supply. I used to engage in philanthropic smuggling of mobility aids from Northern Ireland, where they were VAT-free, to the Republic of Ireland, where they were taxed.

Employment uncertainty

If your charity involves the movement of people, this will become more difficult and expensive. The government has made clear its intention to erect barriers and the EU will be doing likewise. Unskilled people, or those whose skills aren’t on the list, will find it more difficult to come here. If you are a care provider with a workforce including EU residents, they might not be readily admitted in future.

Even if the rules permit it, people from EU countries already feel uncertain about their residence and how welcome they are in the UK. The government has made it clear that doctors and nurses from outside the UK will be welcome, but the law of unintended consequences will be in operation and irrational obstacles will arise.

If your charity funds or hosts research and has been a recipient of EU finance, the government has given assurances that lost grants will be replaced. But the labour of winning grants in the first place is likely to have to be repeated for their replacement. In many institutions, research has come almost to a standstill as certainty about the movement of funds and academics is awaited. It might be possible to restart, but there will be a whole raft of new procedures and protocols to implement.

In two or three years perhaps we shall have largely adapted to the new economic order, though the socio-political environment is harder to fathom. The rise of nastier forms of chauvinism, intolerant nationalism and bigotry, legitimised by Trump and his UK counterparts, will mean more to do for charities whose business is fairness and justice.

The already uncertain boundaries of campaigning by charities will be tested further as the political landscape is re-ordered.

Peter Cardy is a former charity chief executive

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