the Chancellor's red box

What does the 2016 Budget mean for the sector?

In this budget’, the Chancellor announced this afternoon, ‘we choose the long-term‘. The next ninety minutes showed how tough his own long-term would be.

The economic growth forecasts have been downgraded, with 2016 now down at 2.0% from 2.4%. Those forecasts weren’t very rosy to start with; they are now lower than the UK long term average. As our colleagues over at NCVO were quick to point out, all sectors struggle when the economy struggles, charities included. And some people will suffer more as a result than others: the single biggest revenue-raiser over the next five years will be the cut to support for disabled people through the Personal Independence Payment.

But how will all this impact more broadly on the voluntary sector?

Some new money

The proceeds from the Tampon Tax will again be distributed to charities, with the Rosa Fund, Breast Cancer Now and Comic Relief all mentioned as recipients of part of the £12m windfall. When cash is tight, this is naturally very welcome, although NPC has long worried that money given out at the political whim of the Treasury isn’t necessarily going to bring about the greatest impact that it could (there certainly seems little obvious logic to the long list of payments listed by the Treasury). There may be better charities out there that could use this cash—in truth, it’s highly unlikely that anyone has checked.

And there’ll be a little new money for Social Impact Bonds (SIBs) to tackle homelessness—although there are a number of barriers to this being as effective as it could. The Rough Sleeping SIB aims to raise cash for ‘innovative’ approaches to the housing crisis (and riskier, ‘big ideas’ are well suited to this form of investment), but the promise to double the funding from £5m to £10m doesn’t tally with reference in Autumn Statement to an allocation of £20m. Neither is the demand really there from charities to make the success of SIBs a foregone conclusion.

There’s an additional £100m to pay for 2,000 accommodation places for people moving out of crisis refuges; but if this is capital spending then cash-strapped local authorities (and commissioned charities) may still struggle to meet the costs of running new services. It is also an example of the Government scrambling to clear up a problem exacerbated by its own earlier policies. Smarter, earlier decisions might have avoided this sort of spending now.

Losing the Money Advice Service

Even before the Chancellor stood up in the chamber, the Treasury had confirmed that the Money Advice Service (MAS), founded to provide free and independent financial advice, would be abolished.

The writing had probably been on the wall for MAS since the Treasury Select Committee issued a damning report on the service back in 2013—but as austerity bites still harder, demand will only rise for the sort of services provided by MAS, especially on personal debt. The Budget papers refer to a ‘slimmed down money guidance body’ to replace it, with money directed to the front-line, but we’ll need to keep an eye on what this replacement looks like.

In MAS, the voluntary sector is losing a body which stored evidence on effective money advice and championed collaboration between different funders. This is all useful stuff, and will be a big loss if no one else in the sector can pick up the slack.

Changes to schools

The mandatory introduction of academies stole all the headlines, and it will raise issues for charities that work with primary schools. But education charities will also have an eye on the announcement that the school day will be extended. It is unlikely that teachers will cover all of this additional time, which leaves a gap for charities (who may already be involved in breakfast groups, tutoring and the like) to bring their skills to extra hours working with pupils.

And even before the Budget started, the Prime Minister used PMQs to herald a new £14m one-to-one mentoring scheme, with charities, volunteers and businesses all touted as partners.

Sugar tax, and a victory for campaigners

In one of the bigger surprises of the Budget, Osborne announced that a new levy would be placed on producers of sugary drinks—in other words, a sugar tax, to come into force in two years time. It’s projected to raise over half a billion pounds in its first year.

This is a big win for campaigning charities like Action on Sugar and the World Cancer Research Fund, who have argued that the health damage done to future generations will be chronic unless the Government takes action against producers. This move won’t of course be solely down to charities, but their voice will have been part of this success. And there’s cause for celebration among those charities working on obesity and poor-health among school-age children: the cash raised from the drinks industry will go to double the provision of sport in primary schools.

It is also a bit of a reversal for the Institute of Economic Affairs. Their lobbying on publically-funded charity advocacy bore fruit in new legislation last month, but they have been a dominant voice making the case against a sugar tax. This time, a small handful of charities have trumped the IEA.