At the start of 2020, we used analysis to try to understand what the next few months and years had in store for us. We looked at the likelihood of different scenarios, and whether the charity had enough financial resilience to survive those scenarios. Regrettably, we realised we were going to need to reduce our costs further in order to cope with the longer-term effects of social distancing and lower levels of trading, so we made a plan to reduce our annual spend by £100m by changing the way we operate and reducing our payroll and budgets.
In addition, we were able to use the Government’s furlough scheme and drew on the Bank of England’s emergency coronavirus loan schemes to help us through the short-term impacts of the crisis. But with our inability to recruit more members because our places were closed, which would have a much bigger impact on our income in the future, we had to think much longer term.
At the front of our minds during this financial planning was minimising the effects on our staff, which is why we initially focussed on stopping or pausing some of our project spend and then turning to non-pay cuts. Once we had exhausted those avenues, we still hadn’t reached our £100m per year savings and so regrettably had to look at where we could find savings in our staff budgets, which led to the 1,767 redundancies confirmed in our annual report.
Some have asked why we didn’t use our reserves to save jobs. We did. At the end of the 2019/20 financial year, we had £320 million of ‘unrestricted reserves’, which are funds that we can spend wherever the need is greatest. This is just under six months’ worth of costs. As we moved into this crisis, we knew we had some resilience, but half a year’s worth of costs can disappear very quickly when so many sources of income dry up. We had to dip into them but as they continued to dwindle we had no option but to find savings elsewhere. It was only later in the year, when we started to receive some exceptional income, such as Government grants, a large insurance claim and improved income from our shares as the stock market recovered, that we were able to start replenishing our reserves.
But we’re not out of the woods yet. We’re still recovering from the pandemic and we’re still feeling the effects, including in hospitality trading and visitor numbers at some properties. We will feel the repercussions of the financial effects for many years to come, but with the financial plans we put in place last year – our 125th anniversary year - coupled with the fact most of the places in our care have reopened and a member is signing up to the Trust on average every 25 seconds, we’re confident we’ve been able to safeguard the National Trust – hopefully for at least another 125 years.