Budget warning for the sector

The Budget will place a huge burden on charities and voluntary organisations, third sector umbrella bodies have warned.
The agencies were reacting to the principal measures announced by the Chancellor, George Osborne, which include a 25 per cent cut in the budgets of Government departments other than health and international development over the next four years.
They were also concerned about the effects of the rise in VAT from 17.5 to 20 per cent and a likely rise in demand for charities’ services as access to welfare benefits is tightened and unemployment rises.
Stephen Bubb, head of chief executives body Acevo, said the scale of the challenge facing charities as a result of the Budget was enormous.
"The spending cuts outlined today will impact on frontline services," he said. "The vulnerable will likely receive less support and 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."
It was vital that the Government talked to the sector about the way forward, he said.
Neil Cleeveley, director of policy and communications at NAVCA, said: "This is further evidence of just how tough public spending cuts are going to be. When the state retreats from providing services, the voluntary and community sector fills the gap.
"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."

Key points in the Budget for the voluntary and community sector:
Government departments: Departmental budgets face an average real cut of around 25 per cent over four years, apart from health and aid spending which is protected. (Final departmental settlements will be set in the Comprehensive Spending Review, due to be presented on 20th October).
VAT: VAT will increase to 20 per cent in January 2011. Although this will impact on the sector, the Government has said it will work with sector bodies to assess the feasibility of implementing the EU cost-sharing exemption in VAT. A formal consultation on this will be launched in the autumn.
Council tax: Councils which propose low council tax increases will be offered extra funds to allow them to freeze council tax for one year from April 2011.
Regions: A Regional Growth Fund will be created to help fund regional capital projects over two years. Regional Development Agencies may be abolished via a public bodies bill and replaced by local enterprise partnerships.
Welfare: The welfare budget has been cut by £11 billion. Benefits, tax credits and public service pensions will increase in line with consumer prices rather than the retail price index. Child benefit will be frozen for the next three years and caps on housing benefit will be introduced.
National Lottery: Alongside the Government’s consultation on the allocation of good causes funding from the National Lottery, the Government will review the current National Lottery taxation arrangements.
Charitable giving: The Budget included a commitment to improve the Gift Aid system and to encourage more charitable giving. HMRC intends to replace the current rules on substantial charity donors and will be consulting informally on this during the summer. Full legislation will be published in the autumn.
Public sector: There will be a two-year public sector pay freeze on staff earning more than £21,000. Staff earning less than £21,000 will each receive a flat pay rise worth £250 in each of the two years.
Transport: The extension of the Metrolink will go ahead – to Didsbury, Ashton-under-Lyne, Oldham and Rochdale.

♦ A briefing from the Manchester-based Commission for the New Economy considers key Budget measures and their particular impact on Greater Manchester (see link below).