As part of the Civil Society Group (CSG), Charity Finance Group (CFG) has written to the Chancellor ahead of the Spring Budget on 6 March 2024.
The group’s submission sets out four main policy asks on behalf of the charitable and voluntary sector. If implemented, the proposals would support and protect the immediate and longer-term financial health of the charitable sector by providing greater financial and operational certainty.
The measures would also ensure that the UK’s most vulnerable and disadvantaged communities would not be left stranded by gaps in vital service provision.
Commenting on the submission, Richard Sagar, Head of Policy at CFG, says:
“Charitable and voluntary sector organisations continue to work harder than ever to support their communities, particularly those that remain hardest hit by ongoing economic pressures. At the same time, we have seen very few real improvements in the sector’s operating environment; very little has changed economically or politically since Chancellor Jeremy Hunt presented his autumn statement in November 2023.
“Many organisations that are doing important and often vital work are finding it increasingly difficult to meet demand for their services. The Civil Society Group is calling upon the government to do more to ensure the most vulnerable and disadvantaged people are better protected, and that charities can continue to provide their critical services."
Reviewing the charity tax system
Among the raft of policy measures the CSG has detailed in its submission, is a streamlining and review of the charity tax system. This is partially in response to a potential cutting of basic rate income tax and changes to the inheritance tax framework.
Richard explains: "Should changes to the inheritance tax framework and basic rate of income tax be announced in the Spring Budget, a review would include preserving the fiscal incentives for charitable bequests and ensuring charities do not financially lose out. If the basic income tax rate is to alter, for example, we urge government to introduce automatic transitional relief for at least three years for Gift Aid.
The CSG is also asking the government to review the rules around irrecoverable VAT and introduce a new, special charity VAT rate.
Supporting the most vulnerable
Among the other asks in the CSG's submission is the call for an ‘Essentials Guarantee’ so that the social security system guarantees that life’s essentials are provided. The group is also urging government to meet its Levelling Up commitments by extending the Levelling Up funding, including UKSPF.
Richard continues: "Many charitable organisations that work with vulnerable groups are seeing that the basic needs of those on Universal Credit are not being met. The Essentials Guarantee would support these people. And by extending Levelling Up funds, the government would also be helping to address the harder to tackle issues, such as long-term unemployment. This will provide greater, longer-term certainty for our most disadvantaged communities."
Greater certainty and sustainability can also be achieved by ensuring local government contracts and grants cover full service provision.
"The charitable sector is a critical partner in delivering public services and nearly half of those that deliver services through public sector grants and contracts say that true costs of service delivery are not being met", says Richard.
“We are therefore urging the government to ensure that future grants and contracts have inflationary uplifts built in. Charitable organisations simply don’t have the reserves or resources to plug gaps in public service provision.
Sector's critical work must continue
Richard concludes: "Our sector desperately needs greater certainty. We need to know that those organisations providing charitable and voluntary services will not be inadvertently and negatively impacted by new measures and policy announcements.
"Charitable organisations must be able to continue in their vital work to support people and communities across the UK, but many are now facing existential threats. We urge the government to continue its dialogue with the sector and do all it can to support our sector's critical work.”
About the Civil Society Group
The group is made up of more than 50 organisations that support the UK charity and voluntary sector. The tens of thousands of charities and community groups that CSG works with range from micro volunteer-led groups to national 'household name' charities.
If you have any questions about this submission or the CSG's or CFG's policy work, please email the team.
Look out for CFG's Spring Budget briefing on 7 March 2024!
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