£20m Hardship Fund for charities announced in Budget

Darling pledges support for charities helping people worst hit by recession and funding to create 'socially useful' jobs

A £20m Hardship Fund for charities delivering services to people affected by the recession is the most significant measure for the sector in today's Budget.

The fund will make grants to organisations suffering "cash flow difficulties" caused by increased demand and is in addition to the £42.5m third sector action plan launched in February.

The Budget, announced earlier today by Chancellor Alistair Darling, also contained a pledge to fund voluntary organisations and local councils to provide 100,000 new jobs in "socially useful activity" for 18-24 year olds who have been unemployed for at least a year.

They will also be funded to create 50,000 new jobs in areas of dense unemployment. Ten per cent will be "green" jobs.

The Government promised a consultation on a new Social Investment Bank, funded by money from dormant accounts. The Office of the Third Sector has been charged with producing substantive proposals on the bank, which is intended to increase the supply of investment to the sector.

"The Government's announcement of a new £20m Hardship Fund could help support the voluntary and community sector deliver front-line services to the most disadvantaged in society," said Stuart Etherington, chief executive of sector umbrella body the NCVO.

"At a time when the sector is being forced to balance increased demand and falling resources, the need for help charities to unlock additional resources has never been greater.  As yet, we are unclear how and when these funds will be allocated."

On Gift Aid, the government said it had commissioned research on the effect of redirecting relief, currently claimed by higher-rate taxpayers on the difference between standard and higher tax on donations, to charities.

An informal consultation with the sector will also take place on anti-avoidance measures for substantial donors to charity. Legislation is promised for 2010.

Moves to bring Common Investment Funds more fully under FSA regulation were also announced. But the Government said that existing tax reliefs on the funds would be kept.

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