Changes to Charity Operational Model Exposed as Uneconomic and Inferior
29 May 2015
Top accountants confirm CVT’s switch away from its original Vocational Volunteer Co-worker (VVC) Model has already reduced Frontline Services by 13% and costs nearly twice as much to operate. Meanwhile separate figures show increased cost to taxpayers by 3000% through in-work benefits.
In a comparative analysis this week, using figures derived exclusively from Camphill Village Trust’s (CVT) own 2010 and 2014 published accounts, it has been shown that their new operational structure not only costs almost twice as much to run as the original VVC model, but also provides worryingly reduced hours of actual support to the learning disabled beneficiaries. It is these residents who are supposed to be at the heart of the Charity’s stated purpose and for whom the Trustees ultimately have a legal responsibility to care.
The change of model was implemented and has now been completed across eight of the nine CVT sites apparently without any assessment of the economic impact to the charity being undertaken at any stage, nor any assessment of the impact on or wishes of the beneficiaries.
After rejecting a previously commissioned report, which praised the Co-worker system and offered five choices to move forward, some that could have preserved this, changes were implemented by CVT management following a second report commissioned from ‘In Control’. This report on CVT’s communities, delivered, in 2012 was rejected by the families but accepted and endorsed as setting their future direction by the CVT Trustees. This endorsement was notwithstanding the fact that no analysis had been provided in the report of both the financial impact of their recommendations, or of their compliance with the Charity’s memorandum - so it was not known if this was financially viable, nor if this in fact complied with the founding articles and ethos of the Charity at the time it was accepted.
Over the last four years parents, Co-workers and other stakeholders have repeatedly requested and been promised detailed figures for the economic implications of the system change that have simply failed to appear. Most notably this was promised (within a week) to members at the last AGM in December 2014 by Mark Barnish, Company Secretary and Chief Financial Officer.
It is obviously normal business practice to conduct a thorough financial analysis before making any substantive change to the operating systems of any organisation. Figures of one such analysis are available from another non-CVT Camphill who did conduct a proper evaluation before deciding whether to start such a drastic change. These show that it requires 1.4-1.75 support workers to replace one Co-worker and that it was incredibly uneconomic to do this, nearly doubling the costs for each hour of support. This is hardly surprising as VVCs support on average 60 hours per week and support workers are engaged for only 37.5.
What’s more, campaigners also claim that the quality of care being provided is inferior with less experienced, low-paid, carers taking the place of VVCs with decades of experience. Co-workers have on average 15+ years of experience whereas CVT’s shift-working support workers normally have much less, as having experience would warrant a higher hourly rate. Many of CVT’s new staff have been recruited without any relevant background of learning disability, some even coming from the drug rehabilitation, prison or probation systems.
“We have always known that the care quality under CVT’s new system was often not as good because of the concerns from residents and families” says Neil Davidson, Chairman of campaign group of Action for Botton, “now it has been demonstrated that the actual quantity of support is also seriously reduced under their new system as well accompanied by the massive costs increase, which includes large sums going into the salaries of management”.
He continues, “It is hard to credit that the CEO of any organisation would authorise such a drastic restructure without a thorough and clear understanding of all the financial consequences, to do so is simply financially unsound. It seems CVT management have undertaken this restructure without regard to the psychological, emotional, spiritual, financial and practical consequences to the Charity or its beneficiaries”.
He adds, "CVT was so concerned about the revelations in this release that it put out a pre-emptive denial. In effect it claims that its accounts have been changed so they cannot be used as a basis for the conclusions drawn. This from a Charity where the lack transparency of the accounts was criticised at its December AGM and they were asked to explain but failed to do so".
As if the financial issues thus created for the charity’s long term wellbeing are not bad enough, on top of these the new model also adds an additional financial burden to everyone in the wider society through a large increase of the in-work benefits paid to these new low-waged employees (not including the resulting benefits claimed by the ousted, now unemployed, Co-workers). The dramatic increase in in-work benefits alone takes the Exchequer from a small net gain in 2010 to a much larger net loss by 2014. If CVT succeeds in fully implementing the changes they propose to this system, the loss to the taxpayer will run at a staggering 5000% more than under the original VVC system.
John Coan of Unite says: “In-work benefits are, in effect a government subsidy that goes from the Taxpayer directly into company profits and/or management salaries. In this case it seems that CEO Mr Huw John’s salary increased significantly from when he started in 2011.” He adds: “at UNITE we have campaigned for a living wage over many years and are pleased to support the Botton community in it’s struggle”.
Brian Knight, father of a long term Botton Village resident, said: “Huw John once quoted the following in a brochure entitled ‘Our Lives Our Friends –The Camphill Village Trust 2012’.
‘We are working to align our values and achievements with the requirements of 21st century social care…. /… To secure this future we must be safe, compliant, accountable and financially viable – four non-negotiable aspects for al social care organisations and charities whatever their founding principles and historic ethos’.
So according to Huw John financial viability is not negotiable and yet he has no trouble in endorsing and committing the Charity to taking forward the key recommendations as detailed in the In Control and Groundswell Review which was prepared to help shape the future of the Charity. However, the report clearly states on page 32 under a heading of ‘Funding and Sustainability’ that ‘CVT finances and financial modeling have not been part of the review brief’.”
Click here for a summary of financial information referred to in this article
Please see also our related news item of 17 February 2015, Calls for Independent Accountants' Review to Clarify Worrying Changes to Charity’s Annual Accounts, where we reported the concerning findings of a separate accountancy firm, that support the findings of the new report: "A substantial increase in running costs by 85% to nearly £6M during a time that the business itself actually shrank as two Scottish sites (of the original eleven) demerged from the charity, when costs ought naturally to have reduced."
Click here for a letter to the charity's board of trustees regarding this new financial information in the context of CVT's past actions and communication.
"More bureaucracy, increased costs and fewer hours of care for residents"
Radio Interview with BBC Business Correspondent Ian Reeve explaining the accountants' report that reveals the Millions spent on management and staffing in CVT's controversial new care model: