Sector umbrella bodies respond to the Emergency Budget of 2010.
The announcement of George Osborne’s Emergency Budget has led to concern among leading sector umbrella bodies.
The budget includes plans to:
• Increase VAT from 17.5 to 20 per cent which is likely to lead to a rise in demand for charities’ services as access to welfare benefits are tightened and unemployment rises.
• Cut 25% from Government departments across the board, with the exception of health and aid spending.
• Cut the welfare budget by £11 billion.
• Substantial charity donors HMRC intends to replace the current rules and will be consulting informally on this through the summer. Full legislation will be published in the autumn.
• Review the current National Lottery taxation arrangements.
Neil Cleeveley, director of policy and communications at NAVCA, said the government needed to provide more information on their ideas for the Big Society:
“This is further evidence of just how tough public spending cuts are going to be. That’s why we need to know the government’s plans for the big society.
“We need to know that local charities and community groups will get the support they need to help communities through these hard times.”
ACEVO chief executive Stephen Bubb agreed that any plans for the Big Society must be as a result of consultation with the sector and showed concern about the rise in VAT:
“The scale of the challenge facing charities as a result of this Budget is enormous. The spending cuts outlined today will impact on frontline services. The vulnerable will likely receive less support, charities will be asked to do more, and will have to do so at a time that their cost base is rising due to the VAT rise.
“The Government has made clear that as it rolls back the state it wants a Big Society to flourish in response. If this is to happen, it is crucial that now the state works with us in genuine partnership, that we are fully engaged in the Spending Review and that it is not a PR process as some Conservatives have suggested.”
The rise in VAT was a concern also for the Charity Tax Group (CTG) who warned that the increase could cost charities £150 million a year.
Helen Donoghue of the CTG said:
“We fully understand the Government’s urgent need to tackle the deficit through spending cuts and tax increases.
“But it has also emphasised the need for fairness and protection for the least well off and, as our research has shown, the impact of this VAT increase will have a detrimental and disproportionate effect on the charity sector.”
The social enterprise sector said the budget lacked detail on the Big Society and did not offer anything directly to social enterprises.
Investment executive at Local Partnerships, Dan Gregory, said:
“If the big society is to mean anything in practice, and not just as a cover story for cuts, then the big spending departments and local authorities will have to take it seriously.”
“A handful of speeches and initiatives emerging from the Cabinet Office, communities or treasury departments will not make the big society, but we haven’t seen any evidence of either in this budget.”
“What is clear, however, is that the days of government throwing another fish over the side to social enterprises a couple of times a year have gone.”
To view the full budget document click here (opens in new window).
HM Treasury, 25/06/2010