Much has changed since the Budget in March – the country has voted to leave the EU, triggering years of political-economic uncertainty, a slump in the pound and talk of another General Election. Dave and George have been issued their political P45s. We have a new Prime Minister and a new Chancellor, Phillip Hammond.
Hammond gave his first post-Brexit Treasury set-piece, the 2016 Autumn Statement, on 23 November. The big macro-economic news was that growth is expected to bumble along at between 1-2% for the foreseeable future. As a result tax receipts and therefore the public finances look grim, with government debt projected to be 90% of GDP in 2017/18. The last government’s plans to balance the books by 2020 have been ditched.
His statement prioritised business as the main driver for growth, backed up by tax breaks and billions of investment in infrastructure. Apart from the now customary sprinkling of Libor fine cash to a range of fortunate military and emergency services charities, there was little support for the country’s vital ‘social infrastructure’ – the hundreds of thousands of charities and community groups which keep our society going.
Below we round up what there was for charities (and also, crucially, what there wasn’t!), along with references and page numbers to the relevant paragraphs in the Autumn Statement document.
Does your charity work with people on low incomes?
The Government says it is concerned about ‘JAMs’ – or people who are Just About Managing. Another less fuzzy euphemism might be the ‘working poor.’ Due to predicted inflation, the dropping value of the pound, and economic uncertainty, people on low wages may come under increased pressure in the coming months. The following were packaged as help for the ‘JAMs’:
- Minimum wage – the government’s so-called ‘National Living Wage’ (NLW) will increase from £7.20 to £7.50 in April 2017. The government will also follow recommendations from the Low Pay Commission to raise the hourly rate for workers under the age of 25 by 5p or 10p depending on age. This is a good thing for working charity beneficiaries but charities may struggle if they cannot convince funders to cover additional wage costs. However this is old news – the rises were announced in Budget 2016 (ref 3.46, p32).
- Tax thresholds – another re-announcement confirmed George Osborne’s plans to boost the threshold at which people start to pay tax. Tax-free allowance will be raised by £500 to £11,500 in April 2017, rising to £12,500 by 2020. Welcome for working people on low incomes, but worth about £100 per year, or £1.90 per week – or a loaf of bread! (ref, 4.5 p35).
- Childcare – A trial of previously announced tax-free childcare, up to £2,000 per child, will begin in early 2017 and will subsequently be rolled out (ref. 5.11 p44).
- Universal credit – The taper rate at which universal credit is withdrawn is to be lowered. This means that, starting from April 2017, once an individual is earning above the work allowances for Universal Credit, it will be withdrawn at rate of 63p per pound earned, rather than 65p (ref. 5.3 p43).
- Fuel duty – In a final announcement aimed at the JAMs, the Chancellor said that the fuel duty escalator will be frozen from April 2017 – for the seventh year in a row. This will also help charities which need to use vehicles, like community transport groups. (ref. 4.35 p40).
Does your charity help people with housing needs?
There were quite a few specific measures announced in this area – including a forthcoming White Paper with further reforms, and it looks like a priority for some of the infrastructure spending. In the meantime some proposals may help charitable beneficiaries:
- Letting agents’ fees – in a victory for campaigning by charities such as Shelter, the government says they will ban letting agents’ fees for renters, ‘as soon as possible’. It is not clear how landlords will be prevented from passing on the costs to tenants in other ways (ref. 3.41 p31).
- Right to Buy pilot – there will be a large-scale regional pilot of Right to Buy for housing association tenants – potentially problematic for the future availability of social housing (ref. 3.13 p27).
- ‘Pay to Stay’ plan scrapped – this would have seen social tenants earning over £31,000 facing higher rents (ref. 5.7 p44).
- Delayed cap on housing benefit and Local Housing Allowance rates in the social housing sector, until April 2019. The government will also provide local authorities with funds to meet the additional costs of supported housing (ref. 5.5. p44).
- Rough Sleeping Fund – The government is committing a further £10 million over two years to the Rough Sleeping Fund. This will double the size of the fund, which will support and scale up innovative approaches to preventing and reducing rough sleeping, particularly in London (ref. 5.12 p44).
Does your charity use a building, need insurance or do social investment?
- Rural business rates – To remove the inconsistency between rural rate relief and small business rate relief the government will double rural rate relief to 100% from 1 April 2017. Details are thin, but the implication is that central government will reimburse Local Authorities for rate relief, which could help local government maintain reliefs for businesses and charities in rural areas (ref. 4.33 p40).
- Social Investment Tax Relief (SITR) – From 6 April 2017, the amount of investment social enterprises aged up to 7 years old can raise through SITR will increase to £1.5m (ref. 4.34 p40).
- Insurance Premium Tax (IPT) – The standard rate of IPT will rise to 12% from 1 June 2017. IPT is a tax on insurers – if they pass it on this could mean higher premiums for charities that need insurance (ref. 4.40, p40).
Are you a military charity, or working with women’s rights/gender-based violence?
- Grants from Libor banking fines – The government has committed a further £102 million of banking fines over the next four years to support Armed Forces and Emergency Services charities and other related good causes. The lack of a strategic approach in using this money unfortunately continues, although the government has started to address the lack of transparency in the process. See the Grants for Good campaign for more information (ref. 5.14 p 45).
- Tampon Tax Fund for women’s charities – The government will award £3 million from the ‘tampon tax’ to Comic Relief to distribute to a range of charities for programmes that tackle violence against women and girls. Applications open on 1 December (ref. 5.15 p45).
Does your charity work with refugees?
- Disability benefits for refugees – Refugees and their family members will be exempted from the Past Presence Test, meaning that they will no longer have to be resident in the UK for 2 years before they can receive disability benefits (ref. 5.5 p43).
Some BIG things the Chancellor missed completely
- Future of EU funding – About several hundred charities receive EU funding totalling £200m from a variety of programmes. The future of these schemes is now uncertain, as is the approximately £10.7bn of EU structural investment funding which supports areas of deprivation. There was nothing at all about this in the Autumn Statement – it was as silent as the Government’s negotiation position on leaving the EU.
- Social care – again no mention anywhere of the term in the document, let alone how to reform the system to support an ageing population and integrate better with the health service. A massive issue which seems stuck in the ‘too hard to solve’ box.
- Local Authorities – again there was next to nothing about local authority funding or policy specifically, apart from some mentions about the ‘Northern Powerhouse’ and associated infrastructure funding. This policy area is critical for charities because Local Authorities are the sector’s biggest source of statutory funding, and most relationships between charities and the state happen locally.
Millions of people depend on the services provided by charities, community groups and social enterprises for their basic needs. Yet this Government still has not got the message that our society would quite simply collapse without these organisations, and they need to be supported. It’s not just about money – though this Autumn Statement shows that can be found when required – it’s about policy priorities and political will. The sector needs to find its voice and make the case afresh to the new government that #EverybodyBenefits.