Increase in National Insurance to hit Charities hard

17th April 2002

The Charity Finance Directors' Group has today expressed disappointment that the Chancellor chose to increase National Insurance from April next year. The 1% increase in employers contributions will cost the sector at least £50 million extra. This will have an effect on charitable work ranging from hospice care to education and care of the elderly. CFDG hopes however that the Chancellor will find a way in the next year to relieve charities of this extra burden.

Les Jones, CFDG Vice Chairman, commented "This increase will have a direct effect on much charitable work and I very much hope Gordon Brown will look at ways that the Charity Sector can be relieved of even more pressure on its costs and services."

CFDG were also disappointed that the Chancellor has yet again ignored the impact of VAT on charities. It is estimated that charities lose between £400million and £1billion per year due to irrecoverable VAT.

Shirley Scott, CFDG Director, commented "The failure of the Chancellor yet again to deal with the irrecoverable VAT problem is a massive setback. Charities already play an important role in public service provision including the health service. The Chancellor needs to sort out the VAT issue if charities are to play their full part in the Governments' aspirations to improve health and other services".

CFDG welcomed the announcement of future fiscal and other incentives to promote volunteering; the fact that donors can backdate their Gift Aid tax claims to the previous year; and the small concessions on VAT rules and administration. CFDG also welcomed those initiatives to help small businesses which will also benefit small charities.

However, CFDG were disappointed that the Chancellor did not chose to announce that the 10% Government top up on payroll giving would be extended. They were also disappointed that there was nothing to encourage corporate involvement in charities.

Stephen Burgess, Chief Executive of Life Education Centre and member of CFDGs' Public Affairs Committee commented "I welcome the Chancellors announcement to encourage volunteering and the increased funds which will go into the education system. These will all help my charity achieve its objectives and improve education aimed at drug prevention."


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