Local authorities urged not to reduce spending

Acevo and the Community Alliance have urged local authorities not to reduce their voluntary sector spending in the wake of the Icelandic banking crisis.

In a letter to Margaret Eaton, chair of the Local Government Association, Acevo told local authorities to resist squeezing their grants to and contracts with third sector organisations.

Scores of councils stand to lose money after the collapse of several Icelandic banks.

The letter, from Stephen Bubb, chief executive of charity chief executives body Acevo, read: "It would be a disaster if at precisely the moment where the third sector's services are needed most, local authorities sought to reduce their spending by cutting back on grants and contracts with local third sector groups.

"In times like these, small charities that rely on local authority grants are extremely vulnerable to cuts. We must prevent local authorities from making small charities' grants the next victims of the economic crisis."

The Community Alliance, which is a partnership between community sector bodies Bassac, the Development Trusts Association and Community Matters, is calling on government to take measures to protect charities from the impact of the banking collapse.

"We urge the Treasury to limit potential losses that will impact heavily on already poor and deprived communities," a statement from the Community Alliance said. "The possible fallout of this situation, coupled with the current economic climate, could result in negative investment behaviour at the local level."

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