Councils facing insolvency have been reducing the grants they make to voluntary organisations, according to new research.
The Directory of Social Change (DSC) found that UK councils’ grant spending with voluntary, community and social enterprise (VCSE) organisations increased to an estimated £599m in 2023-24.
However, it found that the number of grants to VCSEs decreased by around 10% to an estimated 44,212 in 2023-24 following an increase the year before.
More than two-thirds of the 30 councils deemed to be at risk of financial hardship by the government had cut grant spending to VCSEs in 2023-24, the research found, while most other local authorities reported an increase.
Of the at-risk councils that had cut VCSE grants, a quarter had reduced spending by more than 75%.
Boost to council funding urged
DSC sent freedom of information requests to all 378 local authorities in the UK and received more than 300 responses in June to October 2024.
Commenting on the findings, DSC’s director of policy and research Jay Kennedy urged the government to boost funding for councils in its current spending review, which is due to conclude next week.
“The collateral damage to communities – and to the VCSE organisations that serve them – when councils are in financial crisis can no longer be ignored by central government policymakers and politicians,” he said.
“Decades of cuts and underinvestment in local services have taken a heavy toll. In the upcoming spending review it’s critical that the UK government invests more in local government and the ecosystem of vital local services that people depend on, which are often delivered by charities.
“Otherwise there’s a real risk that people’s health, well-being and social cohesion will deteriorate.”
‘Difficult decisions’ for councils
In response to the report, the Local Government Association (LGA) also called on the government to take action in the spending review to stabilise council finances.
Heather Kidd, chair of LGA’s safer and stronger communities board, said councils gave voluntary and community organisations £7bn a year as part of their “vital” partnership.
However, she added: “Local government faces a substantial and challenging funding gap which is playing a part in placing a record number of councils in challenging financial situations, where difficult decisions on a range of spending, including grants, have to be made.”
A Ministry of Housing, Communities and Local Government spokesperson said: “This government is under no illusions about the financial issues facing councils, but we are determined to make progress on the inheritance we’ve been left.
“That’s why we have made available over £69bn to council budgets across England, and are bringing forward the first multi-year funding settlement in a decade to deliver improved public services and drive forward our Plan for Change.”
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