Charities respond to spring statement

14 Mar 2019 News

Philip Hammond, Chancellor

The chancellor Philip Hammond delivered his second spring statement yesterday, in which he announced the government’s plans for a number of consultations that could affect the sector.

As with last year’s statement, Hammond held back from making any major tax and spending decisions, to the frustration of some charities that had hoped for a funding boost.

Hammond was particularly cautious in yesterday’s statement, as it came amid a series of parliamentary votes around the UK’s withdrawal from the EU, the nature of which is still yet to be clarified.

However, Hammond announced a review into the operation of insurance premium tax and calls for evidence on the use of Social Investment Tax Relief (SITR) and on how to improve the VAT partial exemption regime and the capital goods scheme.

Meanwhile, the Office for Budget Responsibility has downgraded its expectations for growth in 2019 to 1.2 per cent from its previous estimate of 1.3 per cent in the autumn budget.

Here is what charities have said in response:

NCVO: ‘All eyes on the spending review’

Speaking to Civil Society News, Paul Winyard, senior policy officer – funding and finance at NCVO, welcomed the consultations that had been announced but said the government’s three-year spending review later this year would be more significant for the sector.

Winyard said insurance premium tax has had a disproportionate impact on small charities that have buildings to maintain.

He said that take up of social investment tax relief had been “quite disappointing” and said that NCVO's main concern with this was the eligibility criteria.

As for the call for evidence into the VAT partial exemption regime and the capital goods scheme, Winyard said these systems had been “particularly complex for charities”.

However, Winyard said the sector would be anticipating greater announcements in the government’s three-year spending review, which Hammond said is expected to be completed alongside the next autumn budget.

Winyard said he hoped this would provide clarity on the government’s plans to replace EU funding post-Brexit.

The UK Shared Prosperity fund has been repeatedly delayed since 2017 and Winyard said charities were keen to get an idea of the size of the pot.

SEUK: ‘Failing economic model’

Andrew O’Brien, director Social Enterprise UK, dismissed the spring statement as “just another attempt to keep the UK’s failing economic model limping on”.

He said: “The billions being poured into private business is not going to transform our economy. The chancellor’s current approach is like pouring water into the bath without putting in the plug. Unless we redesign business to focus on long-term investment and public good we are not going to see the economic and social turnaround we desperately need.  

“The public wants a fresh direction. We need an ambitious partnership between government and social enterprise, with major support given only to businesses which put social good at the heart of what they do. This will not only boost growth but build a more inclusive economy which works for everyone. 

“We must stop tinkering with small initiatives such as Social Investment Tax Relief and focus on bold solutions which can turbocharge growth, improving lives and protecting our planet.”

CAF: ‘Charity campaigns successful’

Rhodri Davies, head of policy at the Charities Aid Foundation, said: “Overshadowed by Brexit, it’s not surprising that the spring statement included relatively few big announcements.

“It’s good news that the chancellor was able to respond to strong charity campaigns on some issues, such as offering free sanitary products in schools.

“We will need to look beyond the current situation to the longer term decisions that will be fleshed out by the spending review in the summer, and it will be important that the government works with civil society to look at the big issues facing our communities.”

VODG: ‘Social care reform delayed’

Umbrella body the Voluntary Organisations Disability Group (VODG) expressed disappointment at a further delay to the government’s long-planned social care reforms.

Chancellor Philip Hammond had pledged to publish a social care green paper “shortly” at last year’s autumn budget.

But in yesterday’s spring statement Hammond said a review of social care will come as part of a departmental spending review in the summer.

Rhidian Hughes, VODG chief executive, said: “The case for a clear policy direction for social care is clear and is something VODG has argued for powerfully and repeatedly.

“While Brexit is a priority for government – and will have an undoubted impact on social care – it is not an excuse for it to drag its heels over social care.

“Government’s inability to produce the long-awaited green paper has a human impact because older and disabled people rely on social care.

“Ministers are effectively leaving a vital national support system in limbo instead of giving it financial resource and strategic direction it urgently needs.”

Hft: ‘700 days overdue’

Similarly, Robert Longley-Cook, chief Executive of social care charity Hft, expressed disappointment at the lack of extra funding for social care.

He said: “It is hugely disappointing that, once again, social care has not been granted any additional funding by the chancellor.

“The government is right to acknowledge there is a recruitment crisis in social care, and its national recruitment campaign will go some way to address that.

“However, without additional funding to help us pay a competitive wage, the campaign is simply window dressing. For as long as the sector is subject to an enforced low pay model means, we will be unable to recruit and retain the right candidates, resulting in high staff turnover. 

“The government can no longer provide short-term solutions to long-term problems. We are more than 700 days overdue for the government’s planned green paper on the future of social care funding.

“With 11 per cent of providers warning that any further funding cuts could result in a deterioration of the quality of care they are able to provide, it is vital that the government brings forward sustainable funding solutions as a matter of urgency.”

Action for Children: ‘Another wasted opportunity’

Imran Hussain, Action for Children’s director of policy and campaigns, said: “The spring statement is yet another wasted opportunity for the government to get to grips with the very real crisis facing children’s services which play a critical role in keeping our children safe from neglect, abuse and harm.  

“While we welcome the chancellor’s emergency package to tackle knife crime, we should also be looking to deal with the root causes. Children’s and youth services play a crucial role in stepping in early to prevent family breakdown which can eventually lead young people into problems such as gangs.

“Whether we leave or remain, the government cannot continue to press pause on supporting the UK’s most vulnerable children and if this year’s spending review doesn’t give councils the funding they need to provide these vital services, our children will continue to pay the price.”

CFG: 'Charities suffering from government cuts'

Richard Sagar, policy manager at Charity Finance Group, said the calls for evidence into the simplification of the VAT partial exemption regime and capital goods scheme were welcome, "as many charities do find them far too complex".

He said: "We have long called for charities to be exempt from insurance premium tax, so if the operational review allows this to occur, we fully support it. 

"However, it was disappointing that the chancellor failed to divulge the overall spending envelope for the upcoming spending review, as significant cuts to local government have seen charities and their beneficiaries struggle.

"We call on the chancellor to live up to his promise and end austerity to help put local government and social care on a more sustainable footing.” 

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