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Acevo report warns of £5.5bn sector cuts

Acevo report warns of £5.5bn sector cuts
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Acevo report warns of £5.5bn sector cuts

Finance | Jonathan Last | 5 Mar 2012

Acevo has reported that civil society faces funding cuts of between £1bn and £5.5bn in the current financial year.

In its internal document Cuts to the Third Sector: What Can We Learn from Transition Fund Applications?, which was leaked to shadow minister for civil society Gareth Thomas, the umbrella body analyses applications to the government Fund. It reports that cuts to the charity sector in the UK in 2011/12 will range from “just under £1bn (£970m) in the very best case scenario, to just over £5.5bn (£5,556.9m) in the very worst case scenario.”

Ralph Michell, Acevo’s director of strategy, told civilsociety.co.uk that the report gives two clear messages. “Charities are being hit disproportionally hard, and the impact is more severe in the most deprived areas,” he said

“Our findings focus on the Index of Multiple Deprivation, rather than specific geographical regions, and show that the correlation between depravation and the volume of applications to the Transition Fund is quite striking,” Michell added.

The Report's other findings include:

  • A total of 1,725 organisations applied to the Transition Fund, 81 per cent of them registered charities and 12 per cent social enterprises.
  • They reported facing total cuts of £524.4m in 2011/12. Of this, £412m was accounted for by registered charities.
  • On average, applicants to the Transition Fund face losing 45 per cent of their total income as a result of the cuts.
  • The majority of applications came from medium-sized organisations (income between £100,000 and £1m), who accounted for 70 per cent of all applicants. But small organisations applying to the Fund (income of less than £100,000) have been disproportionately hard hit by cuts.
  • Charities applying to the Fund lost less, as a percentage of their income, than social enterprises (42.72 per cent on average as opposed to 56.01 per cent), and tended to request less from the Transition Fund (with an average request for £97,004 compared to £113,997).

Reaction to the Report

Gareth Thomas said of Acevo's report: “Charities and community groups across the country have taken a huge and completely disproportionate hit in funding just when demands for their help are rising fast.

"David Cameron's claim that in his Big Society we're all in it together was never credible, but this leaked report confirms that ministers were being given independent evidence showing that charities were going to be hit very hard by funding cuts, with the poorest and most deprived areas being hit hardest. Yet ministers have failed to act, doing next to nothing to help, confirming again just how out of touch they are.”

However, a Cabinet Office spokesperson called the report “a misrepresentation". It said in a statement: “[The Report] is only based on applicants to the Fund and not all voluntary organisations. Our analysis shows that some applicants over-stated their expected reductions and therefore we do not consider these figures reliable.
 
“We recognise this is a difficult time for charities, voluntary organisations and social enterprises and that’s why we set up the Transition Fund to help them manage the transition to a tighter funding environment and take advantage of future opportunities presented by the Big Society.”

Ralph Michell countered that the report gives a range of possible scenarios from optimistic to pessimistic, and that the picture would not be any less dire if it had covered charities who had not applied to the Transition Fund.

Meanwhile, Navca has called for politicians to focus on the effects of charity cuts rather than worry about exact figures.

“Let’s not get sidetracked into an argument about whether the cuts are one colossal number or another – the fact is they are happening," said Joe Irvin, Navca CEO. "What we know is the damage they are causing as charities across the country reduce services and lay off staff. We also know that some are being hit harder by unfair and disproportionate cuts.

"The important thing to remember is that the cuts hurt the most disadvantaged communities and vulnerable people most. The elderly, people with disabilities, and children are all suffering as cuts mean charities are less able to support them. The cuts are severe and that is why we have joined with other national organisations to ask George Osborne to use the budget on 21 March to provide extra support for charities working in the most disadvantaged communities.”

The Cabinet Office has now published the full Acevo report on its website.

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