A clean Brexit without membership of the single market would "have the most potential for allowing the UK charity sector to thrive", according to a new report from the Charity Finance Group.
In a report, A Brexit that Works for Everyone: Brexit Opportunities and Risks for the UK Charity Sector, published yesterday, the CFG says that remaining in the single market after Brexit could leave the charity sector with "the worst of both worlds": EU-compliant tax, state-aid and procurement policy without the ability to change regulations.
The report says that this is a situation the government should avoid and remaining in the single market and customs union "could hold back the ability of charities to deliver public good and support the most disadvantaged communities".
The report says the CFG has not taken a position on whether the UK should leave the EU, but it is clear that the debate has moved on, and with an appraisal of all the evidence available to it, "a ‘clean Brexit’ would have the most potential for allowing the UK charity sector to thrive".
But the report stresses that if the UK’s economy is adversely affected by leaving the European Union, this would outweigh many of the benefits of a clean Brexit.
The government will also need to make "positive choices in favour of supporting UK charities" for a clean Brexit to be a success, the report says, while acknowledging that recent Budgets have not seen "any significant investment" into the charity sector.
The report highlights a six-point plan for a successful Brexit, including the ability for the UK to change VAT rules and a flexible immigration system that allows charities to hire the workers they need.
The UK government should also commit to funding services currently financed by the EU and ensure the UK can still pool resources to access EU funds in areas such as international aid, the report says.
It adds that state aid should be reformed to prevent charities being tied up in red tape and there should be more flexibility with public procurement so that more grants and contracts are awarded "on the full social, economic and environmental value that could be created, not just on cost".
The report cites evidence from polling commissioned by the CFG and carried out by ComRes during this year’s general election, which found that only 5 per cent of respondents believed the government would prioritise "people like me" during the Brexit negotiations.
Brendan Costelloe, EU analyst at the National Council for Voluntary Organisations, said some of the messaging in the CFG’s report was "unhelpful", especially on the alleged benefits of cutting red tape.
He said EU regulations safeguarded vulnerable people and the public and that cuts to regulations after Brexit were "something that our members are deeply worried about" and the single biggest cross-sector concern.
"It would be fair to say that the current system is not favourable for charities, but I don’t think it should be a priority in the negotiations," said Costelloe. "The priority should be a deal that helps the UK economy and public."