Over £1bn of government income wiped from charities
- Friday, 04 April 2014 00:01
UK charities lost over £1.3billion in income from government as spending cuts kicked in, new figures published today show.
The data, drawn from charities’ annual accounts, show that income from government to the UK’s charities fell by nearly 9%, or £1.3bn, in real terms, between 2010/11 and 2011/12, the latest data available (1). The figures show that government cut spending with charities at a faster rate than overall spending cuts.
The vast majority of government income to charities is in return for running public services.
The National Council for Voluntary Organisations (NCVO) said it was inevitable charities would be hit by public spending cuts, particularly given the tough spending settlements for local government. But it has called for the government to review the way public service contracts are awarded, as charities are often squeezed out by larger companies.
Sir Stuart Etherington, chief executive of NCVO, said:
‘Given the government’s deficit-reduction priority, it was inevitable that charities would feel the impact of public spending cuts. But these figures show that charities bore more than their fair share of these cuts.
‘The government has set out an ambitious agenda to open up public services, but there is a long way to go before reality matches the ambition. Unfortunately, most charities simply can’t compete with the financial muscle of large outsourcing companies. Our members tell us they are at risk of being squeezed out of public service provision as government contracts grow larger, meaning only big companies can afford to bid.
‘The taxpayer could be getting better value for money in public services. Charities can provide high-quality services tailored to local needs, and do so with a human touch. But the government must take action to ensure charities can compete on fair terms when services are commissioned.’
At present, charities report barriers in public service commissioning including overly large contract sizes, a move to payment-by-results contracts which require potential providers to hold very high levels of capital reserves, and overly bureaucratic procurement practices.
Today’s data also shows:
- Charities’ expenditure fell by £450m from 2010/11 to 2011/12
- The voluntary sector employed 800,000 people in 2012
The data comes from the UK Civil Society Almanac 2014. Now in its 18th year, the Almanac is regarded as the best source of financial information about the charity sector (2).
(1) Government contracts with charities fell £500m from £11.6bn to £11.1bn in cash terms from 2010/11 to 2011/12. Adjusted for inflation, the real terms fall was nearly £900m, from £12bn
to £11.1bn. Government grants fell £300m from £2.9bn to £2.6bn in cash terms; just over £400m in real terms, from £3bn to £2.6bn.
(2) The Almanac data is derived from a sample of the published accounts of around 10,000 registered charities. Charities accounts for 2011/12 are the latest data available, as charities
are allowed 12 months following their year-end to submit their accounts to the Charity Commission or the charity regulators in Scotland or Northern Ireland. NCVO, with the support of the Third Sector Research Centre, then inputs data from around 10,000 of these accounts and weighs them to the profile of all UK charities. The Almanac 2014 data will be online from Friday 4 April – last year’s data is currently available at the same address.