Have charity shops become charity cases?

Even good-cause retailers are struggling in the current economic climate. Ahead of Rachel Reeves' Budget today, in the latest blow to the high street, they warn of surging costs, mounting thefts and poor-quality donations

- Jennifer Pinto

THEY were once a treasure trove of finds for bargain hunters. But many charity shops are struggling for survival as costs rise and sales slump in a challenging economic climate.

As Chancellor Rachel Reeves prepares to deliver her autumn Budget today, retailers have warned that any further price hikes following rises in employer National Insurance contributions, energy bills and rent could trigger new closures.

The warning comes after Cancer Research UK recently announced its plans to close 200 shops. Disability charity Scope is also shutting 56 stores across England and Wales, while Oxfam and Barnado’s have reported sluggish sales.

Separately, industry experts say a deterioration in the quality of donations is also harming sales, more of which to follow.

Robin Osterley, chief executive of the Charity Retail Association, says the sector has faced substantial costs despite trade being strong since Easter.

“It’s mainly the increase in the National Insurance threshold for employers because a lot of our members have been part-time staff who have been involved in the National Insurance system for the first time through the threshold, and it certainly hurts in terms of cost,” he explains. “Profitability has taken a bit of a nosedive.”

Tom Abbott, director of income generation at St Christopher’s Hospice, says people assume charity shops are cheap to run when, in fact, they have many of the same costs as other retailers.

Despite help from tax relief and the Gift Aid scheme which lets charities claim an extra 25p for every £1 donated Tom says these measures don’t cover the full cost of keeping shops open.

“We still have to pay rent, utilities, insurance and employ trained staff to manage volunteers and comply with regulations,” he says.

“And waste disposal costs mean that operating costs can remain high. Every pound we raise in our St Christopher's shops takes real effort.”