Budget 2012: what the Chancellor didn’t say
21 March 2012
The last two coalition Budgets have held interesting developments for the sector—the focus on ‘Big Society’ and changes to gift aid last year were a pretty big deal.
By comparison, this year’s announcement contained no such big stories. From a macroeconomic perspective there was little new. The forecasts are still for low growth, way below the 2.5 % promised not long ago, and there was no real change to public spending. Broadly that means that the needs of the people which charities try to serve will continue to grow, whilst the resources charities have from public sources will continue to diminish. Hard times will continue, not least as the Chancellor strongly signaled more welfare cuts ahead.
What was fascinating from the voluntary sector’s perspective was less what the Chancellor said, but more what he did not say. OK, one can be a bit over-sensitive, but I counted only one passing reference to charities in his speech. And that once key phrase ‘Big Society’ did not get a look in this year. Clearly the hyper politically savvy Chancellor is not a fan.
At a time when the Chancellor had little to say on growth—unless you are a believer that scrapping the 50p tax rate and some corporation tax reductions will do the trick—I would have expected a bit more about how he was creating a new economy with social enterprise, social investment and dynamic not-for-profits at its heart. Digging down into the small print, the sector did get a promise of a review of financial barriers to social investment, but with little sense of urgency.
There were also nods to the sector on some aspects of Gift Aid, and on highlighting that the reduced rate of inheritance tax is to come into being soon. The story that the sector seems to be focusing on is the cap on tax relief, with the Chancellor announcing that anyone seeking to claim more than £50,000 of these reliefs in one year would be subject to a cap at 25% of their income. While a sensible sounding policy overall, it has the potential to adversely affect giving by high-net-worth individuals. The detail of the Budget document shows that the government plans to ‘explore with philanthropists ways to ensure that this measure will not impact significantly on charities that depend on large donations’. Easy to say but no doubt hard to achieve. We shall wait and see the results of this exploration with interest.
This Budget will probably be recalled for marking the scrapping of the 50p rate and as a result raising the question of how much we are still ‘all in it together’. But for the sector, I doubt it will be much of a Budget to remember.