Dear Chancellor,
Congratulations on your first budget as Chancellor. Your plan to increase investment in local government, SEND provision, and housing are all welcome. They will support many of the communities we serve and reduce the need for us to step in and provide essential, sometimes crisis, services to those in need. However, the impact of these investments won’t be immediate, and our sector will have to continue plugging the gaps until then.
Ahead of the budget, we have been clear that charities are in a dire situation as they try and meet the demands of rising need in communities while their own costs escalate and funding declines. The decision to increase employer National Insurance Contributions (NICs) - and not to carve out an exemption for them - will place another major strain on charities at a time when we are already struggling.
Charities employ almost 1 million people, meaning charities of all sizes will severely feel the impact of the employer NICs increase. NCVO’s initial estimates have found the increases will create an annual additional bill of £1.4bn.
Our sector will have less flexibility than ever before to absorb these increasing costs. Many of us will have to make difficult choices in the coming months as a result. The harsh reality is that many organisations may be forced to reduce staff, cut salaries, and most importantly, scale back services for the very people they strive to support.
Many of us already subsidise the shortfall in our government contracts using fundraising or cash reserves. Research from NCVO found that almost 3 out of 4 charities are withdrawing from public service delivery or considering doing so, and most are reducing their services in order to reduce costs. This is unsustainable for our communities. Not only do charities deliver almost £17bn worth of public services every year, but many of us also provide support when public services fall short, without receiving any public funding at all.
The Prime Minister spoke eloquently two weeks ago at the launch of the engagement on a Civil Society Covenant about our sector’s essential role in working alongside government to deliver a decade of national renewal. You have recognised the challenging impact of raising employer NICs in your decision to reimburse the cost to public sector organisations. As essential partners of the state – both through direct public service delivery, and through providing preventative services where austerity has left a void – the voluntary sector requires the same support. We urge you to commit to reimbursing voluntary organisations’ increased employer NICs, the same as you will do for the public sector.
We are wholly committed to fostering a stronger partnership with the government to ensure that future budgets fully consider the vital role of charities in delivering essential services. Our work with the Prime Minister and the Secretary of State for Culture, Media and Sport on the Covenant - as a new agreement to reset the relationship between the voluntary sector and all levels of government – is key to this. We look forward to working with you to support the voluntary sector to play its role in building stronger, more resilient and connected communities.
Yours sincerely,
Sarah Elliott – Chief Executive, NCVO
Jane Ide OBE – Chief Executive, ACEVO
