spending review being cut by scissors

The 2015 Spending Review: What charities need to know

By Dan Corry 25 November 2015

George Osborne was handed a gift in advance of this afternoon’s Spending Review. The Office of Budget Responsibility had predicted that government revenues would be substantially higher than initially expected. This gave the Chancellor more money—and more space politically—with which to outline his plans. This had a number of consequences for the charity sector.

First, the good stuff. Even amid austerity (and the cuts are substantial: 26% from the Cabinet Office, 25% from the Department of Health), there is some largesse towards parts of the voluntary sector. One surprising but very welcome announcement is that £15m a year raised from the 5% VAT on sanitary products will go to domestic violence charities. In that area of the charity sector, £15m is very serious money. As NPC has pointed out many times, domestic violence charities are woefully underfunded.

Less surprisingly, the Chancellor has routed millions more to military charities from LIBOR fines, a move which is becoming a staple of big Treasury set pieces. In the past, NPC has called for industry fines to go towards charities helping relieve the worst effects when that industry misbehaves.

There are also grand plans for the National Citizens Service (NCS). NPC would offer a word of caution here. We were involved in evaluating the pilot version of the NCS, and we aren’t yet convinced that anyone knows enough about its long-term benefits. In this context, an awful lot of resources are being pushed towards NCS, even though it’s possible they could be used better by other parts of the voluntary sector.

The 2% precept on Council Tax for social care is hardly going to solve funding shortages for care on its own, but it’s a welcome move nonetheless, and helps Councils out of one hole. But the care sector’s basic funding from government is due to be hit very hard, which will affect many charities. And funding for public health also looks to be at risk.

We also saw two welcome reversals. Firstly, the feared raid on Big Lottery Funds to plug gaps elsewhere never materialised (there was widespread opposition in the sector when these rumours first emerged, and I argued that taking cash from BIG would have been politically daft).

Secondly, there will also now be no change to tax credits. This may not be a cause for that much celebration, as this is simply a decision not to do something which would have made things much worse. Nonetheless, charities already scrambling to keep services up and running for people in financial trouble may be saved from trying to find extra resources for people suddenly losing out.

And we can hardly missing swingeing cuts at the Cabinet Office of 26%. The death of the Big Society has been announced many times, but it really is hard to see the idea surviving if the only bit of government dedicated to it is stripped down or spread out across different departments.

As usual, everyone will need to pore over the small print. This is no where more important than on housing. This was the set-piece of the spending review: a commitment to build more homes for ownership and the extension of Right to Buy for social housing tenants (the pilots start at midnight tonight).

But where does that leave people who are homeless or at risk of homelessness? Additional supply focused solely on increasing home ownership won’t help those most excluded from good quality, affordable housing, and the availability of social housing at lower rent will be restricted. In other words, even if supply goes up, this won’t actually help a lot of the people at the bottom of the ladder. From advice to service delivery, charities may see more demand as a result. While it only applies to new tenancies, the impact of Housing Benefit cuts for social renters will create extra pressures for housing charities too.

And one area close to NPC’s heart—the best use of administrative data at the Ministry of Justice, where the ground-breaking Justice Data Lab is up and running—also needs scrutiny. The government has promised a 50% cut to the MoJ’s administrative budget by 2019/2020. That will probably hit some umbrella bodies and work to co-ordinate rehabilitation efforts. One hopes that it won’t negatively affect the Justice Data Lab, one of the most innovative approaches to data and effective interventions currently underway in Whitehall.

The charity sector won’t have been under any illusions about what to expect—so such big cuts won’t have come as a surprise.  Hopefully charities will already have their plans in place to deal with tough times. The Chancellor may have had a few treats for the sector in this Spending Review, but the future remains full of challenges.