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Bruce Rothberg

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2020 Budget: What does it mean for charities?

11 March 2020

Balancing the budget

The intended impact of Chancellor Rishi Sunak’s record £600 billion investment in infrastructure over five years has been partly obscured by the urgent necessity to spend heavily on measures relating to Coronavirus. After all, the Bank of England announced a cut in interest rates from 0.75% to 0.25% as a reaction to the outbreak, before the Chancellor even began his speech.

This Budget represents a fundamental shift away from recent trends on public borrowing, fiscal responsibility and policy priorities. But these plans to change the “economic geography” to “level up” the country were based on assumptions about the future of the public finances – which are now uncertain given the global health and economic situation.

So did it manage to balance the competing priorities of managing public health, economic volatility and expensive election commitments?

Here is our roundup of what may impact the civil society sector.

Key announcements of interest for charities

Today’s budget included measures that sought to “unleash the potential” of businesses, stimulate entrepreneurialism and invest in research and development. There were also innovations to support those on low wages by raising pay, cutting taxes and reducing the cost of living by freezing duties on fuel and alcohol. The Government reiterated its concern for the most vulnerable in society, committing to helping people find a clear route to work and navigate the welfare system.

Charities will indirectly benefit from major investment in transport, communications infrastructure and the job creation outside London as well as specific funding packages for flood relief, devolution and regeneration.

  • The Government announced a financial plan for tackling Coronavirus that combines strengthening the social safety net (with measures on benefits), financial support for small employers (like tax relief, grants and loans) as well as funding for public services. We have joined calls alongside others in the sector to make sure that this funding is extended to charities.
  • It included environmental policies such as tax reforms for utilities and fuel and investment in carbon capture and storage technology. A range of new institutions have been announced like the Nature for Climate Fund, the Nature Recovery Network Fund and the Natural Environment Impact Fund. Other initiatives include a new plastic packaging tax, the expansion of charging points for electric cars and financing for green transport.
  • Public services will benefit from a range of new measures such as funding targeting at specific education interventions, affordable homes and housebuilding alongside help for rough sleepers, to be funded by raising the stamp duty for non-UK residents.
  • Campaigners will be pleased with the abolition of the so-called “reading tax” (applying a zero rate of VAT to e-publications) and the so-called “tampon tax” (removing VAT on women’s sanitary products). There will also be a significant donation to civil society to fund mental health support for veterans.
  • Other charities will be interested to see renewed NHS support for people with learning disabilities and autism, a new a £250 million Cultural Investment Fund and changes to the regulations for credit unions.
  • Finally, there were hints of further important announcements to come. For example, there was a brief reference to the new UK Shared Prosperity Fund, which would match current levels of funding for each nation from EU structural funds at a minimum, with confirmation that further details will be seen in the Comprehensive Spending Review later this year. Similarly, the Government will also be clarifying new responsibilities for charities as employers, relating to changes to off-payroll working regulations.

   
A “temporary, timely and targeted” plan?

Responding to today’s Budget, Sir John Low, Chief Executive of the Charities Aid Foundation, said:

Chief Executive of Charities Aid Foundation, Sir John Low CBE

“It’s good news that the government is making a robust response to the economic threat posed by the coronavirus. As organisations that work to support individuals in communities everyday, the charity sector has a critical role to play in supporting the country. Just as business will need support, charities too expect to struggle if the virus affects the economy and we are already seeing the impact of Coronavirus through issues such as the cancellation of fundraising events.

“We urge the Government to confirm that the announcements to help businesses weather the storm will be extended to include charities across the UK. Indeed civil society plays an essential role in many of the aims outlined in the Budget despite not being mentioned, from supporting society’s most vulnerable, the levelling up agenda and tackling issues such as homelessness. We hope the Government will support their crucial role.”

While headline-grabbing announcements about record-breaking investment will dominate the headlines, this Government’s social agenda of opportunity, fairness and prosperity should now look to community-building as well as supporting the social economy. Therefore, when this public money is spent, we hope that the contracts include meaningful commitments to Corporate Social Responsibility and empowering community involvement.

Because if the Chancellor truly wants this Government to “gets things done” and “level up” the country, then they will need the expertise of the civil society sector.

If you have any comments or would like to get in touch, email us at campaigns@cafonline.org or tweet us @caf.

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