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31 May 2017

Economies of scale are illusory

In 2015, City of Edinburgh Council chose to engage the services of the Manchester based mega-charity – Lifeline  – to provide Edinburgh’s  alcohol and drug addiction services rather than continue working with community based voluntary organisations that had been delivering these services for over thirty years. Despite widespread concern at the folly of this decision, particularly from the medical profession, the Council pushed ahead.  And now, less than 18 months later, Lifeline has collapsed. Ironically, one of the community projects that Lifeline replaced, Craigmillar’s Castle Project, closed its doors permanently only days beforehand. When will we learn?


 

By Rebecca Cooney, Third Sector Magazine

Almost 1,500 staff face uncertain futures as the Manchester-based charity closes its doors


The charity's services have been transferred to Change, Grow, Live for the time being.


The £60m drug and alcohol treatment charity Lifeline Project has collapsed amid concerns about its financial management, leaving almost 1,500 employees facing uncertain futures.


The Manchester-based charity appears to have closed its doors yesterday, although many of its staff and services are being transferred to the health and social care charity Change, Grow, Live for at least the near future.


Staff were informed of the decision to close earlier this week.


The latest available accounts for the charity on the Charity Commission website show the charity had an income of £61.8m in the year to the end of March 2016, an increase of 45 per cent on the year before and more than three times the income it had in 2011/12.


According to the accounts, nearly all of the charity’s income came from government contracts,  including the provision of services in a number of prisons, young offenders institutions and hospitals.


The most recent accounts say: "The majority of Lifeline's funding derives from statutory sources and as such reductions to funding in this sector represent a major financial risk. Lifeline operates in a competitive commissioning environment and has invested significantly to increase capacity to meet these future challenges."


The accounts add that year-end cash balances remained "healthy", with reserves totalling £6.3m.


In 2013, one of the charity’s trustees, Paul Flowers, the disgraced former chair of the Co-operative Bank, resigned amid an investigation into allegations of false expenses claims.


Mike Pattinson, executive director at Change, Grow, Live, told Third Sector that Lifeline Project had approached CGL about taking over its services a number of weeks ago.


"We have been working with Lifeline Project over the past few weeks to see how we can ensure a smooth transition of most of its services, create continuity of service provision, ensure the service users are protected and protect the employment of staff," he said.


He said service users could expect the same level of treatment and care and referrals would continue as normal.


Pattinson said the transfer would include "most, but certainly not all" of the charity’s services, but was unable to give exact details because CGL was still in communication with the services’ commissioners and prime contractors.


"We’ve agreed most of the service provision and, as part of that, we’ve agreed to take on employment of the staff who are at the centre of the organisation," he said.


The jobs of staff who were transferred were guaranteed in the short term while the transfer process was under way, he said, but once that was complete CGL would examine the finances to ensure all services could be run "on a stable, sustainable financial footing".


The Charity Commission declined to confirm reports in the national media that it had opened a case into Lifeline Project shortly before its collapse because of concerns about its finances, but added that it did not have an open statutory inquiry into the charity.


David Holdsworth, chief operating officer at the Charity Commission, said the case highlighted the need for tight financial management and oversight by charity trustees.


"We are sad to hear of the charity’s planned closure, though we note that the trustees have worked to ensure that the majority of its services will continue and the impact on beneficiaries and staff is managed and minimised," he said.


"In the meantime, we are engaged with the charity and its trustees, both to assess the events that have led to this outcome, and to ensure that trustees fulfil their duties and responsibilities in winding the charity up and passing its services to another charity."


A spokesman for Lifeline Project declined to comment or confirm that the charity had actually closed, but the charity’s website has been removed and a telephone contact number for the charity listed on the commission website was unavailable.

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