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NCVO forecasts £2.1bn statutory funding drop by 2017

NCVO forecasts £2.1bn statutory funding drop by 2017
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NCVO forecasts £2.1bn statutory funding drop by 2017

Finance | Jonathan Last | 15 May 2013

NCVO is predicting that public funding for charities could drop by 12 to 15 per cent by 2017/18, losing the sector an estimated £2.1bn.

The umbrella body’s report Counting the Cuts uses Office for Budget Responsibility forecasts of public spending and NCVO UK Civil Society Almanac data on charities’ income sources. The prediction is made in comparison to data from 2010/11, the latest year for which it is available.

The analysis estimates the impact that reductions in public spending will have on the voluntary sector, and states that such reductions are likely to focus on departments which are important sources of income for charities. Local government will be hit especially hard, the report speculates.

“If the cuts are passed on proportionately to charities,” NCVO says, “the sector’s income will be £1.7bn (12 per cent) lower in 2017/18 than it was in 2010/11, using 2010/11 prices.

“If cuts to charity contracts and grants are disproportionately large, as evidence from Compact Voice’s survey of local authorities in England suggests they have been, the reduction could be as much as £2.1bn (15 per cent).”

The government is due to announce the outcomes of its spending review for 2015/16 in June, which NCVO’s report says “is one factor that could have an impact on forecasts for 2015/16 and beyond”.

The umbrella body also states that with the general election due in May 2015, an incoming government will have the opportunity to set out new spending plans – therefore “estimates beyond 2015 should be treated as provisional”.

Sir Stuart: ‘Commissioners must engage with charities’

Sir Stuart Etherington, chief executive of NCVO, said the analysis suggests that charities delivering local public services are most vulnerable to forthcoming public spending reductions.

“Charities deliver high-quality, professional services,” he said. “When their expertise is lost it can be hard to regain. 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.”

The NCVO CEO added that while large new payment-by-results programmes offer some opportunities for the sector, it is important that these schemes are structured so that they suit charities of all sizes.

You can download NCVO’s full Counting the Cuts report from its website here.

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