Earlier today the Chancellor delivered the combined Spending Review and Autumn Statement in the House of Commons, setting out the Government’s spending plans for the duration of this Parliament, as well as making changes to fiscal policy. As ever, within George Osborne’s statements were a number of changes impacting upon charities and voluntary groups. (You can get all the documents here.)
The Cabinet Office has had a significant reduction in its yearly budget, falling from £141 million in 2015-16 to £112 million in 2019-20. The Office for Civil Society (part of the Cabinet Office) “will continue to provide a range of support to the UK’s third sector” but will be forced to reduce its headcount. The Charity Commission sees its budget set at £20 million for each of the next five years, although this will mean a real terms cut once inflation is taken into account (assuming inflation returns to above 0%).
An indication of the Office for Civil Society’s priorities is given by the provision of extra funding to boost the National Citizens Service, seeking to deliver up to 300,000 places by the end of the Parliament. This will help to get more young people engaged in giving and social action, which is important if we are to secure the future of the charity sector. Social Impact Bonds are also set to be a focus for the department, with £105 million set aside to deal with issues including homelessness, poor mental health and youth unemployment.
The Gift Aid Small Donations Scheme is set to be reviewed, with the Government due to publish a call for evidence next month to check that the scheme is being operated effectively. It was also announced at Prime Ministers Questions (and reiterated by the Chancellor) that the Big Lottery Fund will be protected from rumoured spending cuts, which will be a significant boost to those community groups who had feared that their funding was under threat.
As he has in previous financial statements, the Chancellor is again using revenue raised from LIBOR fines to support an array of charitable good causes. Organisations supported in this way include Guide Dogs for Military Veterans, Direct Skeletal Fixation, SkillForce, Care After Combat, The Jon Egging Trust, Invictus Games, Alabare Christian Charity, NOW, The Commonwealth War Graves Commission, The Victoria Cross Trust, The Mary Seacole Memorial Statue Appeal, The Tavistock Square Memorial Trust, The Royal Marines Museum, The National Army Museum, The D-Day Museum Portsmouth, The Bentley Priory Battle of Britain Trust, The Winston Churchill Memorial Trust and The Hooton Park Trust.
It was also announced that the Government will match funds given through the Independent and Evening Standard’s Christmas Appeal, which is this year raising money for the Great Ormond Street Hospital.
Women’s charities were also named as a recipient of support from the Government. The Chancellor announced that money paid as VAT on sanitary products will be administered by the Government as an equivalent donation for women’s charities, which will amount to £15 million a year. To kick-start the programme, an initial donation of £5 million will be made to The Eve Appeal, SafeLives, Women’s Aid and the Haven. However, the Chancellor also announced that the Government would seek approval to the EU to levy a ‘zero-rate’ of VAT on sanitary products, which would presumably mean the end of this fund.
Changes to local government spending might impact on charities too. Uniform business rates are set to be scrapped, with local authorities freed to levy their own rates, including an additional 2% on council tax to fund social care. This might mean signification variations across local government regions, where receipts vary significantly. It is also unclear whether the rules affecting business rates for charities will now be determined by individual local authorities, which could present a real problem for many charities.
Another change will see local authorities able to keep 100% of the receipts from selling public assets, which will act as a form of short-term funding. The impact of this will encourage councils to sell assets at the highest possible price, which may potentially disadvantage voluntary sector organisations and Community Land Trusts that would otherwise be seeking to purchase assets at below market value.
Commenting on the measures within the Spending Review and Autumn Statement, CAF’s Chief Executive Dr John Low said:
“As the Government makes potentially big changes to the way government funds and delivers services for people, ministers must work with charities to ensure people have the support and help they need if the state pulls back.
“The Chancellor’s emphasis on expanding the National Citizen Service and his windfall grants to a number of charities are undoubtedly good news for those involved, but the impact of the longer term financial settlement on charities is yet to be fully understood. At a time when there is a need to strengthen local communities, we need to ensure that charities retain their pivotal role in society and are not simply expected to fill the gap left by cuts.
“It’s more vital than ever that charities invest in building public trust and support so they can operate in difficult times ahead.
“Clearly we have to secure our own future rather than look to Government. Charities must pull together to ensure the long term health of the sector on behalf of all our beneficiaries.”