Charities are likely to lose £1.7bn in public funding between 2010/11 and 2017/18, according to a new report from the National Council for Voluntary Organisations.
Counting the Cuts 2013, published today, says that public funding for charities could be 12 per cent lower in 2017/18 than the £14.2bn it was in 2010/11.
The report is an update of one published in 2011, which predicted that charities would lose £2.8bn in public funding between 2011 and 2016.
The NCVO used Office for Budget Responsibility forecasts of public spending and data from the NCVO UK Civil Society Almanac on charities’ income sources to estimate the impact of reductions in public spending on charities.
According to the report, total net public expenditure in 2017/18 will be £13.5bn lower than it was in 2010/11. If the cuts passed on by local authorities are proportionate, then the sector will lose an estimated £1.7bn by 2017/18 at 2010/11 rates. But if the cuts passed on to charities are disproportionately large, then the sector’s income could be as much as £2.1bn lower than it was in 2010/11, the report says.
The report says that in 2011/12 the sector would have lost £396m in funding from statutory sources if cuts made to voluntary sector statutory funding were proportionate to cuts in public expenditure.
However, Freedom of Information Act requests made by Compact Voice – the organisation which represents the sector on the Compact – found that 71 of 141 local authorities in England had cut voluntary sector grant funding disproportionately in 2011/12. This suggests that the scale of the cuts so far could be higher than £396m, the report says.
A comment in the report from the Local Government Association says that by 2020 there would be a £16.5bn gap between predicted funding and the cost of providing services at current levels. "The amount of money available for services outside of social care, waste and concessionary fares will have shrunk by 90 per cent," it said.
"Faced with these mounting pressures, councils and voluntary and community organisations must continue to find innovative ways of working together on behalf of local people," the LGA said.
Sir Stuart Etherington, chief executive of the NCVO, said: "Our analysis suggests that charities delivering local public services are most vulnerable to forthcoming public spending reductions. Of course, whichever charities lose funding, it is people and communities who lose services and support.
"It is of the utmost importance that local commissioners engage fully with charities in their area and think creatively about how to manage the issue of declining resources. The voluntary sector excels at innovation and adaptation, so local authorities must embrace its ideas in order to best serve their communities.
"Large new payment-by-results programmes offer some opportunities for the sector but it is important that these schemes are structured so that they suit charities of all sizes."