andy Frain 120

Andy Frain

Campaigns and Public Affairs Manager

Charities Aid Foundation

The Budget: A Missed Opportunity to Support Civil Society

4 March 2021

This week, Chancellor of the Exchequer Rishi Sunak delivered his 2021 Budget. Charities were left disappointed, as calls for additional support to recognise the challenges they face and the contribution they make to society appear to have gone unheeded.

At a time when their services have never been more needed, charitable organisations all over the country are facing historic challenges. CAF’s own research has shown that more than half of charity leaders (55%) say that achieving financial stability is a major challenge for the year ahead and UK Charities expected an income shortfall of £10.1bn in the second half of 2020.

Charities stepped up during the pandemic stretching resources to supporting those most impacted by the crisis, but it also plays a significant role in the vaccine rollout, as well as the recovery ahead. One aspect which often goes under discussed is the commercial heft of the voluntary sector,  with an economic footprint almost double the size of the agriculture industry and employing more people than the automotive industry.

A call from the sector for additional emergency funding  in the run-up to the budget was supported by over 1000 charities and a coalition of leading charity voices including CAF called for a Gift Aid Emergency Relief Package, which could provide £450m of much needed funding. But the budget announcement contained little in the way of direct support for charities.

There were undoubtedly some positives. The continuation of a number of coronavirus support measures, most notably the extension of the furlough scheme until June, will come as a relief to the many charities who have relied on the support it has offered throughout the pandemic.

Spending to benefit specific causes

The chancellor also announced spending that will benefit charities working in specific cause areas. £10m will be provided for armed forces charities helping veterans with mental health needs, as well as £475,000 to support the development of a digital and data strategy for the sector. There will be also a £40m down payment for victims of the Thalidomide scandal with a guarantee for future funding. An additional £19 million will go towards tackling domestic abuse, including £4 million to trial a network of ‘respite rooms’ across England to provide specialist support for homeless women facing severe disadvantage.

Community groups will be able to bid for matched funding to buy local assets including sports club or grounds through the £150m Community Ownership Scheme. Charities that fulfil eligibility criteria are also expected to be eligible for support through the ‘Restart’ grant programme which provides £5bn of funding to help high streets shops and hospitality firms. Eligible charities will also be able to make use for cuts to VAT for hospitality businesses which will benefit from reduced rate of 5% until September 2020 and interim rate 12.5% for another 6 months.

There were also some very small improvements for fundraising charities. The legal limits for contactless payments have been increased to £100, which should tie in well with the large and sustained increase in cashless giving since March. Much of this has been driven by a push towards greater hygiene, however, and as pandemic restrictions ease it is likely we will see a small swing back towards in-person cash giving.

Many of these changes are to be welcomed but it left many with the feeling that Treasury failed to take into account the specific needs and requirements of the charities and voluntary sector. Calls for further direct support including the Gift Aid Relief proposal enjoyed widespread support, both inside and outside of Parliament, but was notable by its absence in Wednesday’s announcement. The Budget was the ideal opportunity for the Government to make this vital change and CAF is not alone in hoping that the Chancellor will reconsider the matter as a point of urgency.

Charities excluded

The budget was also notable for the absence of further details on the UK Shared Prosperity Fund (UKSPF) which will replace EU funding streams many charities have benefited from in the past. Government has committed to replacing EU funding, but it will be vital for charities to have more information on the administration of the fund and around eligibility criteria to make full use of the funding. The budget included announcement for a £220m UK Community Renewal Fund to provide funding for projects investing communities and local areas but it is yet to be seen how this is linked to the implementation of the UKSPF.

Worryingly, charities have been left specifically excluded from the Government’s “Help-to-Grow” campaign, a scheme designed to help build digital, financial and organisational skills in smaller organisations. The charity sector is experiencing the same digital and logistical changes as the rest of the economy, and its exclusion from the scheme sets a concerning precedent.

In these unusual circumstances, the Government has by any measure acted radically to protect the British economy and has moved mountains to offer sector-specific support in a number of areas. But measured against the immense social (as well as economic) value it provides, the voluntary and charitable sector appears to have been underrepresented in that support.

The Government’s £750 million support package was announced last April and nearly a year on charities, like the country as a whole, remain under strict pandemic restrictions. The last 12 months have shown the value of charitable and voluntary institutions to society as a whole. It is therefore more vital than ever that the Government’s economic support reflects that value.

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