Charities needed this budget to be an intervention – an intervention to properly resource charities and increase their capacity to address needs. Charities needed the budget to set a vision for how needs will be met in communities.
Unfortunately it did not deliver a whole lot. It’s not so much a question of what’s in the budget that affects charities – to understand what this budget means for us we also have to look at what’s not in it. To see what is actually in the big red book, view it here.
This is a brief overview of the main things that are, and are not, in Budget 2016/17 with a few questions to help you navigate. First, here are some of the main highlights (or lowlights):
The new sugar tax
The main headline grabber was the new ‘sugar tax’ of up to 24p per litre on soft drinks, with the stated aim of tackling obesity among children. Many will no doubt be thrilled and disappointed that the tax does not extend to alcoholic drinks in spite of comparable amounts of sugar and their obvious link to the Great British beer belly. (Red Book p32; 1.90-1.96)
Cuts to disability allowances
The fallout from the budget is proving to be somewhat of a crisis for George Osborne, who is seeking a £1.3bn cut to the welfare budget. Last week saw Conservative heavyweight Ian Duncan Smith, Minister for Work and Pensions, resign from cabinet and launch a damaging attack on the budget, and broader social policy, describing it as ‘unfair’.
Changes in how people are assessed for the Personal Independence Payment may see those using specialist appliances and aids, such as grab rails, score fewer points in assessments and will therefore be eligible for less financial help. The Institute for Fiscal Studies has estimated that as many as 640,000 people could lose an average of £3,500 per year. Disability charities are already campaigning loudly against the measures and a backbench rebellion seems to be brewing.
Are you a charity?
Charity Commission funding (or lack thereof)
In spite of calls from many in the sector, the budget did not contain provisions to bolster the funding of the Charity Commission. The Commission’s funding has been halved in recent years to approximately £21m and is set to decline further, in real terms, with its budget frozen in last year’s Autumn Statement. Forced to roll back vital help and advice services, the Commission is considering the pretty desperate move of charging charities to help cover its costs. There are many, many reasons not to. (Not in the Red Book)
Does your charity use an office, shop or other property?
Business rates relief for charities to remain as is
A big worry for charities before the budget statement was whether or not the Chancellor would slash the mandatory 80% business rates relief for charities. You may be glad to know the budget made no mention of this and the treasury has made assurances to the sector that nothing will change here yet. So we’re safe for now. (Not in the Red Book)
Positive changes to Small Business Rate Relief scheme
Some charities may benefit from changes to the Small Business Rate Relief scheme – 100% relief on properties with a rateable value of £12,000, while those with a rateable value between £12,000 and £15,000 will receive more favourable rates. (Red Book p108; 2.122)
Does your charity employ someone?
Increase to employer’s national insurance allowance
Charities may be made fractionally better off as the national insurance allowance rises by 50% to £3,000 per year. This is a minor change, likely to benefit smaller charities a bit more. (Red Book p44; 1.155)
Increase in personal tax allowances
The person or people you employ may be happy (if sarcastically) to know they have an extra £80 in their pocket this year as the personal tax allowance rises from £10,600 to £11,000. But that’s not all, personal allowance will rise to £11,500 in 2017. The higher rate will increase next year from £43,000 to £45,000. (Red Book p96; 2.20)
No provisions for assistance with National Living wage
Many charities’ funding agreements still do not factor in the increased wage bill they will have to meet when the National Living Wage (NLW) comes into effect next month. The sector called for a scheme to assist charities but the budget made no provisions for this. (Not in the Red Book)
No provisions for assistance with the Apprenticeship Levy
The introduction of the Apprenticeship Levy from April next year won’t affect many charities because it only applies to organisations with a wage bill over £3m. Nonetheless, bigger charities will be charged a levy of 0.5% of their wage bill. Like the National Living Wage, the budget makes no provisions to assist charities with the additional cost. (Not in the Red Book)
Does your charity work in a specialist area?
Is your charity a museum or gallery?
You may well benefit from a smaller VAT bill as the government expands the eligibility requirement for a VAT rebate. (Red Book p104; 2.87)
Does your charity work on poverty alleviation and homelessness?
The budget provides for a £115m fund to address homelessness, but the detail on this is a bit thin. It is not clear if this will include funding for prevention. (Red Book p126; 2.302)
Does your charity help veterans or work on gender issues or health?
You might be one of the lucky ones to receive money from the pot of Libor fines and “tampon taxes”. You might not even know it yet, because its not very clear how they decide which charities get it. (Red Book p93-96; 2.15)
Does your charity work in international development?
The international aid budget is sticking on the 0.7% of GDP target which is good news. (Red Book p23; 1.59)
Have you ever applied for Lottery funding?
The government has stuck to its word not to raid the Big Lottery Fund this time. Last year there were fears that the Autumn Statement would be used to take money from the Fund to shore up cuts elsewhere. However, for the fourth consecutive Budget since 2012 it also makes no provision to repay the £425m that was raided from the Big Lottery Fund to pay for the 2012 Olympics. (Not in the Red Book)
Do you not understand finance but hate waiting on the phone to HMRC?
The budget factors in a £71m investment into HMRC customer services which will make it ‘quicker and easier for individuals and small businesses to deal with HMRC.’ Don’t roll your eyes! (Red Book p51; 1.186)
Like us, are you a bit odd and want to read more about the budget?
Our brilliant colleagues in the sector have also prepared briefings on the budget which are well worth having a look at: