Spring budget 2023: funding and implications for charities

Charities have struggled with rising demand for their services, falling income and increasing operational costs for over a year now. Many are worried about surviving.

We’ve campaigned relentlessly with partners to highlight the impact on charities and the communities they support. We submitted a joint budget submission earlier this year and last week we wrote to the Chancellor.

The commitment in the 2023 Spring Budget to support the voluntary sector shows the power of our collective voice.

Here are our reflections on the budget, and what it could mean for voluntary organisations.

We’re delighted the Chancellor recognised the vital role that charities play in supporting communities. He announced significant additional funding, including:

• £100m to support charities with service delivery and energy efficiency
• £63m to support public pools with cost pressures and energy efficiency
• £10m to provide grant funding to suicide prevention voluntary, community, and social enterprise (VCSE) organisations

We’re speaking to government to make sure this funding is allocated quickly and fairly to the organisations that need it most.

We’re also raising concerns that there still isn’t enough local government funding to cover the cost of charities delivering public services. We don’t think planned increases in departmental budgets will be enough to keep pace with inflation.

Worryingly, two thirds of charities reported they were already subsidising underfunded contracts long before inflation hit double digits.

NCVO welcomes measures that can help the voluntary sector to recruit and support a diverse workforce.

Funding has been announced to support parents to stay in work, including 30 hours of free childcare for 38 weeks of the year. This is a good ambition but we know childcare providers may worry about delivering what’s been promised.

The budget includes plans to support disabled and older people to stay in work. One quarter of the voluntary sector’s workforce are over 55, and one in five are disabled. We welcome support for these groups but think it’s vital that schemes are supportive and don’t take a punitive approach. We echo the concerns of many charities about the plans to increase sanctions.

We’re interested in how the new ‘returnerships’ (apprenticeships for people over 50) and an occupational health pilot for small organisations could help charity sector employers. We have some concerns about whether getting more people into work will have an impact on volunteering rates.

We think the budget has missed an opportunity to allow the UK Shared Prosperity Funding to be spent immediately on people and skills. This would help many more voluntary organisations work with people who face barriers to work. We know many organisations have closed their employment support services due to a lack of funding.

We're pleased to see additional support for households, particularly those struggling the most with high energy costs. This includes the announcement that the Energy Price Guarantee will be extended for three months.

The government has committed to removing the premium paid by households on prepayment meters. Many of these households are on lower incomes and living in fuel poverty. This will provide welcome relief to those who need it most.

We’re disappointed there was no announcement on the following issues.

• Making sure local housing allowance keeps pace with rising housing costs.
• Reforming universal credit to ensure that everybody can afford the essentials.
• Considering options for a social tariff.

This would have provided long-term support for people on low or no income.

£400m was announced for 20 new Levelling Up Partnerships. We’d like these partnerships to recognise the role of social infrastructure – the spaces and places that connect us – in driving growth.

There has also been no movement on the strategy for community spaces and relationships. This was something promised in the levelling up white paper.

The Chancellor announced further plans for devolution. The government also intends to withdraw power from local enterprise partnerships (LEPs) by April 2024. We expect a consultation on LEPs soon, and more policy details to be shared in the summer.

The budget included several tax measures of interest to charities.

• A call for evidence on options to reform VAT relief for energy saving measures. This includes extending relief to buildings intended for charitable use. If you’re considering installing energy saving measures, we recommend responding to the consultation.
• Restriction of charitable tax reliefs to UK charities and community amateur sports clubs only from April 2023, with a transitional period to April 2024.
• Extension of the higher rates of tax relief for theatres, orchestras, museums, and galleries, phasing out by 1 April 2026.
• Expiry of the social investment tax relief as of 6 April 2023.

We’re disappointed that the Chancellor did not announce two important policy changes that would support the sector:

• introducing a unique VAT rate on purchases made by charities
• reviewing the approved mileage allowance payment (AMAP) rate to ensure it fully covers volunteer drivers’ costs.

Look out for further updates about the implications of the announcements for charities.

We’ll continue to work across the sector and with government to develop long-term solutions to the cost of living crisis, funding of government contracts and local government services, and challenges in the energy market.

Read reactions from ProBono Economics and Charity Finance Group.

Read the official budget documents.

Please contact the policy team policy@ncvo.org.uk if you have any questions or concerns