UK Charities Hit in Spending Review

UK Charities could face up to a £4.5bn (AUS $7.5bn) hit to their funding in the year ahead after the Coalition Government announced it's budget called the Comprehensive Spending Review, according to a NFP peak body.

The Association of Chief Executives of Voluntary Organisations (ACEVO) says in it's response to the Comprehensive Spending Review that charities face major challenges in the months ahead with what it estimates could be as much as a £4.5bn reduction in funding.

Stephen Bubb, the CEO of ACEVO said however that he welcomes the government’s recognition that these are tough times for the NFP sector and that the sector needs support.

Bubb said there was a strong theme of public service reform with a bigger role for the sector reaffirmed throughout the Chancellor’s Review speech.

In particular he says ACEVO strongly welcomed the news of a £100m transition fund to support medium and large sized charities to gear up to deliver more public services in challenging times.

But what is important now he said is that charities work with both central and local government to ensure that the hit charities take in the year ahead doesn’t become the banana skin on which the Government’s Big Society plans fall flat.

Hannah Terrey, Head of Policy and Public Affairs at the UK Charities Aid Foundation agrees saying the Government has accepted the difficulties facing charities and voluntary organisations, in attempting to deliver the ‘Big Society’ and these words have been backed up with a £100m fund to ease the transition.

However, CAF is concerned that the 12 month lifetime of the fund may not be sufficient to support the sector to play its full role in the radical transformation of public services that the Government clearly aspires in building The Big Society.

Terrey says the Review increases local authorities’ freedom to manage their budgets, but will require tough choices on how services are delivered within reduced allocations and the onus is now on those local authorities to take full advantage of this new freedomo

CAF says charities and voluntary organisations must play a central role in this transformation, due to their capacity for delivering cost-effective, user-focused services and called on local authorities to work in partnership with the voluntary sector during this period of change and not look for short-term and easy savings.

CAF says the sector also look forwards to seeing more detail on the announcements made on charity financing, including payment by results, equity investment in charities and new measures to encourage philanthropy.

The Directory of Social Change (DSC) in the UK says policy decisions announced in the UK Comprehensive Spending Review have left a host of unanswered questions for charities,

Debra Allcock Tyler, DSC’s Chief Executive, who was recently a guest speaker in Australia said the headline decisions have been made, but it will be some time until the full implications are known.

Allcock Tyler says charities will also be struggling to get to grips with radical reforms to welfare and criminal justice, and to provide support to the individuals they exist to help.

She says the most important decisions for most charities will come from the reaction of Local Authorities, in the wake of significant cuts to their settlements.’

She says charities today are no nearer to knowing how resources might be distributed. A figure of £470m has been announced to support capacity building in the voluntary and community sector, but could be split any number of ways between a range of priorities.

Allcock Tyler went on to issue a rallying call, arguing that the Not for Profit sector’s campaigning role would become more important.

She says whether you agree or disagree with the Government’s program, charities are the ones who are equipped to respond.

She says now is not the time to remain silent just because a NFP needs that government grant or contract -now is the time to speak out openly and truthfully about how these changes affect their beneficiaries.

The UK Chancellor, George Osborne, presented the Government’s Spending Review, which fixes spending budgets for each Government department up to 2014-15.

The Spending Review comes at a time when the Government says it is spending significantly more money than it raises in taxation and is having to meet the gap by borrowing at record levels. The Review announced some £81bn in funding cuts over the next four years with UK media reporting that this will result in more than 400,000 job losses in the public service.