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Some goodies for charities in the Autumn Statement. But the worst isn’t over yet

By Dan Corry 3 December 2014

This afternoon’s Autumn Statement confirmed the big news for the charity sector: austerity is not coming to an end anytime soon.

The Osborne plan should have had the deficit well under control by now. The debt should have been in falling mode, bringing a welcome impression that the worst was over. But the borrowing figures announced today are in fact pretty troublesome.

The deficit forecast for this year and next are higher than six months ago at budget time. The Chancellor has taken comfort from the OBR being more optimistic on the deficit in future years, but longer-term forecasts must be always be treated with caution. And to hit such targets, Osborne’s plans mean that public spending will fall to 35.2% of GDP by 2019-20. This is the lowest level in 80 years—and one which many commentators feel is simply not viable.

Of course, like any a pre-election event, goodies were spread around, many of which will help charities going about their work. Money for the NHS, flood defences and garden cities, for instance, will be of great interest to certain organisations. But the continued squeeze on welfare spending will probably be of more significance to most of the charity and community sector. There is no let-up in sight in the cuts demanded of local government.

Specific charity sector moves seemed this time few and far between. The reforming zeal on philanthropy of earlier times is clearly not deemed important enough in the run up to an election. Nevertheless, the continuing use of LIBOR fines to support military and emergency service charities is better than nothing—so long as they are distributed sensibly—and VAT reductions both for hospices and air ambulance organisations will be helpful.

It is also important that the tax break for social investment has been increased very substantially, so that it comes more into line with other tax breaks in the private sector. This is a welcome move, following on from the government’s encouragement of impact investing through the recent G8 Impact Investing Task Force. Whether this is enough to get this market really moving, though, remains to be seen.