Spending Review 2015: What should charities look out for?

The sector needs to brace itself for Super Wednesday when the Chancellor reveals his Autumn Statement and Spending Review, writes Andrew O'Brien

Andrew O'Brien
Andrew O'Brien

Next week is a ‘Super Wednesday’, with a combined Autumn Statement and Spending Review so it is important that charities take note. A number of other reviews or reports are also likely to be released on the day.

Charity Finance Group has been working hard ahead of next week’s announcements to bang the drum on behalf of the charity sector. I think that we have made a strong and persuasive case and put forward sound proposals. But we approach events with a sense of realism, knowing it is likely that bodies which spend a large amount with the sector are going to face large scale cuts.

Here are three things that I think charities should be looking out for.

Local government

Around 50% of all government spending with charities come through local government, so our sector is particularly dependent on the settlement that councils receive in the Spending Review. The prognosis at present is grim.

The Office for Budget Responsibility has calculated that local councils already have to make savings of £8bn over this Parliament before the Spending Review and the Local Government Association predicts that £3.3bn of savings will need to be made in 2016/17. We’ll be watching closely as to whether the Chancellor spares local government further pain or decides to ask for additional cuts to fund other policies.

One ray of hope (for charities in any case) is the rumours that HM Treasury is thinking about a cap on councils' reserves. With a little digging you can find a number of councils that are building up significant unrestricted reserves. These reserves, if used wisely and invested in preventative services, could be a useful resource and charities are perfect partners to spend them with. If this cap does get implemented, charities must be quick off the mark to engage with councils.

National Living Wage

The government has come under a lot of pressure about its welfare reforms, but the National Living Wage has continued to be popular. One of the challenges, however, for many charities that deliver contracts or grants is whether they will receive any additional funding to cover the increased costs. Local government believes that the National Living Wage will increase their wage bill by £1 billion by 2020 and we believe that it will cost charities hundreds of millions as well. Will the Chancellor listen to the concerns of public service providers, particularly care providers, and provide additional resources?

Business rates

This is the issue which is giving many charity sector policy wonks sleepless nights. Worth over £1.7bn to charities, it is vital for organisations to deliver services. Without it, many charities may have to wind up parts of their work or cut back on provision.

The government is undertaking a review of business rates which we have strong reason to believe will be announced as part of the Autumn Statement, although officially they have till the end of the year to report. Devolution of rate relief would be very damaging for charities, as hard pressed local authorities have already cut back on much of the support they give to the sector and would in all likelihood make cuts to business rates to fund other services. This is likely to be one of those ‘small print’ changes, so we’ll be going through the documents with a fine-tooth comb.

We must continue to make the positive case to government on why spending with our sector is a sound investment in improving communities and changing lives. But we also need to prepare for hard times ahead. On Wednesday, we’ll find out just how hard they will be.

Andrew O'Brien is Head of Policy & Public Affairs at the Charity Finance Group

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