National Trust in crisis: ‘What will be lost will impoverish Scotland forever’

Since then the trust has grown to become the country’s biggest conservation charity, amassing a large and diverse portfolio of national treasures that encompass built, natural and cultural heritage, archaeological sites, grand estates and gardens, farmland and crofts, wildlife havens, paintings, furniture and a whole lot more. Bute House, the First Minister’s official residence in Edinburgh, Charles Rennie Mackintosh’s iconic Hill House in Helensburgh, the remote island of St Kilda, Culloden battlefield and the mountains of Glencoe are just a few notable landmarks in its care.

But now, nearly 90 years later, the “cabinet” is looking very shoogly as the NTS faces imminent collapse due to the effects of the coronavirus pandemic.

Lockdown measures have seen all earnings virtually wiped out. Forecasts predict income will be down by £28 million this year alone, in addition to £46m of investment losses due to stock market conditions. Next year’s takings are also expected to take a major hit, potentially dropping by around 30 
per cent, as some properties are unable to reopen. On top of all that, a “significant” number of members have quit the trust since social-distancing was put in place and almost no new ones have joined up.

So last week the trust announced that 429 permanent employees – more than half of its 751 staffs – could be axed and non-heritage land and property sold off in a bid to cut costs. It is also seeking support from the Scottish Government and grant-giving bodies and launching its biggest ever fund-raising drive.

The NTS has said current support schemes in place for charities are insufficient to help them, insisting “radical” action is needed to safeguard “the birthright” of future generations of Scots.

“These are unprecedented times and the trust is facing an uncertain future,” NTS chief executive Simon Skinner said. “We are highly likely to lose at least half of our annual income, and with income likely to be reduced next year too we are having to take action now to ensure we have a sustainable cost model in place before the end of the current financial year.”

The NTS brings in 98 per cent of its money from four main sources – membership, commercial income from visitors, investments from endowments and fundraising and legacies. Only a tiny fractions – less than one per cent – comes from the Scottish Government, and this is usually in the form of grants for specific purposes. Meanwhile, the vast proportion of properties operate at a loss, with only five bringing in more than they cost to run. Each financial year begins with an operational shortfall of up to £10m.

A policy set out by the board of trustees requires the NTS to always keep a minimum reserve bank balance equivalent to six months of running costs – currently £30m – to ensure it can survive unforeseen emergencies or losses and continue as a going concern.

Over the past five years the NTS has been striving to reduce its operating deficit, invest in conservation and boost reserves for a “rainy day”. The reserve balance stood at around £35m when the Covid-19 crisis struck.

However, it looks certain this is not going to be enough.

“With nowhere to visit, we have for the first time seen significant membership cancellations and virtually no new members joining,” Skinner said.

“Our commercial income from retail, catering, holiday lets and events has been wiped out and the fall in the stock markets saw £30m off the value of our investment assets in just one month.

“In the face of such losses and with some measure of social distancing expected to remain in place for the balance of this year, we know we will not be able to recoup lost income through trading – which means that without action our reserves will be used up by the end of this financial year.”

But the conservation body’s emergency rescue plan, which comes just two years after staff lay-offs during a controversial restructure in 2018, has drawn fire from many quarters. After going cap-in-hand to ministers, bosses have been told they will not receive extra public funding while hundreds of staff are threatened with redundancy.

Scottish Culture Secretary Fiona Hyslop said she was “not impressed” with the NTS proposals, describing the scale of potential job losses as “hard-nosed” and urging a rethink. In a meeting of Holyrood’s Culture, Tourism, Europe and External Affairs Committee, she said: “This is very serious indeed. The National Trust for Scotland is an important institution in Scotland; it is also an independent charity, so they make their own decisions and they obviously have taken a very harsh approach to tackling this issue.”

It is hard to comprehend how such a mighty organisation could be on the brink of financial disaster after only a few weeks of public lockdown. So how could this happen?

The reasons are twofold, according to NTS chief financial officer Louise Page. Firstly there is the sheer scale of the trust’s obligations and then there are the laws and regulations it operates under as a charity. The NTS is not actually completely penniless, but its disposable income has been cut off and looks set to remain way short of what is needed to stay afloat.

“The core truth is that the trust is facing a funding crisis not of its making and that has led us to take drastic and wholly unwanted action to save it,” she said.

“The rainy day came – and was longer and more brutal than we could have imagined. The lockdown from mid-March, which shut down all our properties, cut most of our income off at the knees. While the government furlough scheme has helped to some extent, we’ve been eating into those carefully assembled reserves and if we carry on at this rate they will be gone in a few months. That would cause us to no longer be a going concern and we would be effectively finished.”

So what about money that came in before lockdown from endowments and donors? Well, this is where the exacting requirements of charity law and regulations come in, she says.

Funds held and used by charities may fall into three distinct categories: general, which can be used for any charitable purposes, designated and restricted.

Designated funds are a portion of general funds that the charity has earmarked for a specific purpose. These can be released for other purposes, but only if the trustees deem it necessary or prudent.

Restricted funds may only be spent subject to legally binding rules, applied by the donor and accepted by the charity, and generally relate to the purpose or activity money may be used for. These commonly come from grants, donations, appeals and legacies – including endowments, which have a clause that demands the cash be retained and only capital raised from investing it can be spent. This means the trust cannot access endowments and restricted funds even in an emergency, so is reliant on the general income fund.

“We’ve used this to react to the pandemic in the short-term to keep the trust afloat after our income ceased,” Page said. “It’s this that will run out unless we act now.”

Efforts are currently under way to establish whether any designated funds can be released or restricted funds reorganised. However, any changes to restricted funds require permission and assistance from the Office of the Scottish Charity Regulator, and it is unclear at this stage when – or if – this can be achieved.

A new taskforce including Scottish Government officials is being set up to help find solutions. Meanwhile, it’s hoped Westminster’s furlough scheme – which has recently been extended to at least October – will give the charity some “breathing space”. But time is rapidly running out to navigate a way forward.

Skinner is set to retire at the end of next month, later than originally planned, after five years as chief executive. As he prepares to hand over the reins to Philip Long, founding director of V&A Dundee, he remains deeply concerned over the future of the NTS. He believes “Scotland would have part of its soul hacked out” if it was to go under, and all Scots would feel the effects in some way.

“Some people may not care that a charity is in trouble or see heritage as having little importance just now, but if the trust goes down then what will be lost will impoverish Scotland forever,” he said.

Covid-19 is currently wreaking havoc on society in Scotland and across the globe. It has been killing frail and elderly citizens and healthcare workers en masse, thwarting children’s education, damaging mental well-being and inflicting economic injury on a devastating scale. Surely this disease should not be allowed to cause us to neglect our nation’s treasures – especially when the population needs them more than ever. With phase one of lockdown easing due to start this week, there are few folk who are not counting the minutes until they can get out more.

Scotland is renowned for its breathtaking scenery, internationally important wildlife and rich history. It has often been voted the most beautiful country in the world, attracting hordes of visitors from near and far. We are lucky here to have the right to roam over land and inland waters throughout the country. But that freedom has a price. And the NTS is among those picking up the tab.

There’s no question we are living in straitened times, with many households and sectors struggling for their very survival. But the work of the NTS touches millions of lives each years – usually for the better – so urgent action must be taken if it is to continue to take care of all these treasures which are so symbolic of who and what we are. Do we want well maintained paths that help us explore the country’s wildest and most remote places? Do we want habitats improved for iconic species like puffins, red squirrels, pine martens and otters? Do we want to be able to go back in time to discover the ancient history of Scotland’s magnificent castles?

As we begin taking the first tentative steps out of lockdown this week, it’s worth thinking about what we all want and need.

The NTS has asked for a “significant amount of funding from the Scottish Government”, but that looks unlikely if large-scale job losses remain on the tables – and not forgetting potential bailouts for national conservation body Historic Environment Scotland, which is facing a projected drop in income of £21m.

As the charity gears up to launch a £2.5m fundraising campaign – its biggest ever – to help fill part of the hole, it is worth considering its mission statement, which says: “We do it so our heritage will always have a home. We do it so our countryside will remain unspoilt and accessible. We do what we do… for the love of Scotland.”

Now it’s about to find out if Scotland returns its affections.

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