As the 2017 Autumn Budget approaches we’re gearing up for the big event. Much is uncertain – and we’ll be sifting the statement and documents for anything that could affect the charity sector. The funding situation of the Charity Commission and the future of EU funding for charities are particularly pressing issues.
1. Resourcing the Charity Commission
Recent governments have slashed the Charity Commission’s budget from £40m to around £21m – and further cuts could well be on the horizon. As a result, there is an ongoing debate about charging charities to plug the gap. DSC opposes this and runs the Campaign Against Charging Charities. Find our arguments against what we call the ‘charity tax’ here.
The Commission’s CEO, Helen Stephenson, revealed that the Commission is toying with the idea of raising £7m per year from the 2,000 biggest charities on the register. They want to consult on this next year. Will the Budget shed any light? A well-resourced Charity Commission is vital for the work of charities, but we believe that diverting charitable resources to fund the regulator is wrong.
So we wrote to the Treasury to make the case for increasing the grant that the Charity Commission receives. We got back some bleurgh saying that a future financial settlement would bring Commission finances ‘more into line with the model of other regulators’ – meaning that the regulated pay for their regulation. But they’re not just any other regulator, and the sector they regulate isn’t like any other sector! So why not write to the Treasury yourself? There’s still time – find a template letter here. Feel free to adapt as you like – give your own examples and reasons!
2. UK charities could face Brexit funding cliff edge – or a Shared Prosperity Fund?
The future of EU funding that many charities receive remains uncertain. DSC will shortly release a new paper on the topic, showing that hundreds of millions of pounds of EU funding are at risk because of Brexit. Despite these clear risks, charities are not even among the 58 sectors that have been consulted on the potential impact of Brexit.
The 2017 Conservative Party manifesto promised to use EU funds that come back to the UK after Brexit to create a ‘Shared Prosperity Fund.’ Since then, it’s been radio silence. A written question about the issue asked what steps were taken in order to ensure that charities could bid for funding from the Shared Prosperity Fund. Tracey Crouch, Minister for Sports and Civil Society, answered: we are still working on it.
Charities need to know the overall level of funding which will be maintained post-Brexit now. A government consultation about a potential UK Shared Prosperity Fund could be a first step in the right direction.
3. A Big Lottery Refund – at current rates paying charities back could take 30+ years!
In another written parliamentary question, we learned that the sales of the Olympic assets by the London Legacy Development Corporation (LLDC) and its predecessor have generated total revenue of £57.5 million since the Olympic Games.
Government has mentioned in the past that the process of paying back the Lottery will start in the ‘mid-2020s’and will be ‘potentially’ be completed by 2030/31. But at the current rate it would take another 30+ years to get to the full amount of £425 million owed to the Big Lottery Fund! In the meantime, Big’s is down by £60m compared to last year. This means less funding will be available to communities.
Progress on asset sales and development of the Olympic Park is slow and riddled with uncertainty. But a simple solution could be applied in order to ensure that the Lottery will be paid back sooner. Government should pay back the Big Lottery Fund immediately, and take on the role of creditor for repayment from assets sales from the LLDC. Will the Autumn Budget include any news? Charities need this money paid back now!
4. How dormant assets could support local communities
The Commission on Dormant Assets recently concluded that there might be between £1-2bn dormant financial and non-financial assets, which could be put to social use. Prior to the release of the Autumn Budget, NCVO, ACEVO and UK Community Foundation wrote to the government on how to ‘use dormant assets to support local communities for a generation to come’. This is a long-standing idea which would put resources in the hands of communities to solve their own problems.
They argue that ‘Investing half of the maximum total from dormant accounts – £1bn – could generate a return of £40m per year for local grant-making in perpetuity’. This infusion of capital could make a huge difference by widening the network of better endowed community foundations. Investment returns could be used to strengthen communities by making grants to small and local charities, and potentially drawing in match funding by government, philanthropist and businesses as well. Fingers crossed!
5. Social care reform – progress or procrastination?
Social care reform is a huge issue affecting millions of people and a huge chunk of the charity sector. It was a hot topic in the spring budget, when the Chancellor offered an additional £2bn stop-gap funding over three years for England. Even this stopgap wasn’t what many were hoping for.
During the Spring Budget, a Green Paper consultation for ‘later in the year’ was announced which has not materialised. Will it on 23 November? Fundamental reform on social care will take years to implement, and Brexit is sucking up any political oxygen. Meanwhile, many social care charities are threatened by a hefty £400 million bill in back-pay to care workers for sleep-in shifts that looms over the whole social care sector. Many care providers and social care charities could be collapsing under the additional costs they face!
Finally – any collateral damage or sneaky changes in the fine print…
Unanticipated financial and regulatory burdens imposed on the sector are always a risk at Budget time too. Let’s hope the ‘red briefcase’ has some clear announcements to offer and won’t be another washout for charities like we experienced in the spring!