Spring is upon us. Flowers are blooming, birds are finally singing—and the sound of tweeting will reach deafening levels this week as the change of seasons also brings a new Spring Statement from the Chancellor. But as new beginnings go, the outlook has looked brighter.
A lot has happened since the somewhat optimistic-feeling autumn budget, and not much of it has been good for the charity sector: a war in Europe, the subsequent economic and social fallout, and spiralling living costs across the country. With this backdrop, ‘levelling up’ has dropped down the agenda, but it cannot be forgotten. More than ever, we need to see the budget deliver for marginalised groups who are most vulnerable to these social and economic shocks.
What will be the big themes of the budget?
In the short term, the overall economic outlook is pretty bleak. Inflation is rising to 30-year highs and may hit double digits, with another spike likely in the autumn. Disposable income is set to see the largest annual fall in 50 years. The government already announced a rise in the National Insurance rate—and although they may be scrapping this for the lowest paid workers, it will provide little salvation to those most affected by rising costs. The Chancellor has teased that rising food and fuel prices are likely to be confronted with a package of support, in addition to the £350 package announced in February—which now seems like a drop in the ocean. However, rumoured defence spending rises and support for Ukraine may limit the Treasury’s ability to ease people’s concerns.
We also have huge labour market vacancies, with around 1.2 million fewer people in the labour market compared to pre-pandemic trends. This is driven both by the young, but also by over 50s who have left the labour market completely. The Treasury will likely be thinking closely about this and an update to the plan for jobs is expected on Wednesday.
What should charities be expecting?
There may be tough times ahead for the charity sector. The combination of rising costs, rising demand and inflation, leading to a decline in value of grants and donations, could be a serious one for charities. What is certain is that as an abstract ‘cost of living crisis’ moves into a desperate ‘can’t heat my home’ crisis, charities will be ever more in need.
Along with the support for household bills already mentioned, there have been some rumoured benefit changes which the Chancellor may employ to try and soften the blow. For example, lowering the taper rate of Universal Credit again, or raising child benefit or pensions, but in the short term this is unlikely to seriously alter the circumstances of many people that charities support.
Charities whose work concerns Ukraine should also expect specific announcements around the crisis—both in terms of more support for resettling people in communities here, and also in terms of increased aid for organisations working closer to Kyiv.
What about levelling up?
With everything else that’s in the news, the mission to ‘level up’ the country has fallen down the agenda. However, the pain people will be feeling over the coming months means that this support is needed more than ever.
The largest levelling up fund yet to be allocated is the UK Shared Prosperity Fund (UKSPF). This is meant to replace EU funding for business support, community infrastructure, and employment and social exclusion support. The prospectus for the UKSPF is due soon, and allocations to lead authorities may be made as early as the Spring Statement. Given the labour market vacancies, this would be welcome.
What may be missing, however, is support for tackling social needs. In the pre-launch guidance for the UKSPF, the government quietly revealed that new funding for people and skills may not be available until 2024 / 25. As we outlined in our recent briefing, this could leave a three-year gap in new funding which will affect the most marginalised in the country the most, and will risk progress on the levelling up agenda.
At NPC, we’re worried this is going to blunt charities’ ability to deliver for communities around the country at a time when they are needed most. Following on from our briefing, we will be running an event on the UK Shared Prosperity Fund next month, focused on how charities and local government need to work together to ensure people don’t lose out on support. This will be vital viewing for anyone trying to tackle social exclusion or improve employment in communities around the country. Further details announced soon.
Longer-term, we are focused on ensuring that the lessons from projects working on social issues around the country are kept at the heart of future levelling up plans. Later this year, the government will be launching its Strategy for Community Spaces and Relationships. We know how much there is to learn from work that’s already happened, and we will be pulling together best practice from community initiatives across the country, along with fresh thinking, to design plans that can genuinely tackle the social needs that people see as key to the success of levelling up.
The Spring Statement is unlikely to bring a new start for the charity sector, but we know many charities have already planted seeds which address the issues communities care about. We want to help them grow and thrive elsewhere.
Get in touch with Theo.Clay@thinkNPC.org if you want to learn more.