Budget set to be a major burden on charities
The charity sector has warned that the George Osborne's
Emergency Budget of 22 June 2010 will place a huge burden on
charities and voluntary organisations.
Key points of the budget for the voluntary and community sector
include:
- departmental budgets to face an average real cut of around 25%
over four years (apart from health and aid spending which is
protected)
- VAT to increase to 20% in January 2011. Although this will have
impact on the sector, the Government has committed to 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
- a bank levy will be introduced, applying to UK banks and
building societies and the UK operations of foreign banks. Smaller
banks will not have to pay. This is expected to raise more than £2
billion a year
- 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
- a Regional Growth Fund will be created to help fund regional
capital projects over two years
- the welfare budget has been cut by £11 billion
- the Budget includes a commitment to continue to work with the
sector, including the Gift Aid forum, to improve the system and to
encourage more charitable giving. NCVO will be working to persuade
the Government of the need to simplify the current system through
its work with the Gift Aid forum and wider representations to
Government.
Stephen Bubb, head of chief executive body Acevo, said
that the scale of the challenge facing charities as a result of the
Budget was enormous. In particular, concerns have been raised about
the effects of the rise in VAT from 17.5% to 20% and the likely
rise in demand for charities’ services as access to welfare
benefits is tightened and unemployment rises.
Mr Bubb said that "The spending cuts …. will impact on
front-line services. 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."
He added that "It is crucial that 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."
