The coalition government draws to a close today, following five years in which it has often had a turbulent relationship with the charity sector. We look back over some of the key issues.
1. The Big Society
The charity sector was front and centre of government policy before it even came into office, with David Cameron promising that his party would focus on big society, not big government by rolling back the state and giving people more responsibility for their own lives.
However the policy offering was relatively slight in comparison to the rhetoric, and the idea that people should do more for themselves was seen as a mask for cuts. The charity sector treated the idea with cynicism, and Cameron appeared to have little buy-in for his central concept from his Cabinet. An organisation set up to promote the idea, the Big Society Network, has faced continual criticism.
Gradually, the big society has faded away from the national consciousness.
The phrase has not been abandoned entirely – it featured in the Conservative manifesto – but nor has it left much last mark. Earlier this year, an analysis concluded it had failed.
2. The National Citizen Service
Another central plank of government policy was the NCS – an opportunity for 16 and 17-year-olds to learn and volunteer together. The scheme has been expensive, but has grown and grown over the course of the Parliament. It is now open to 150,000 young people each year, and will grow further under a Conservative government.
3. Big Society Capital and social investment
The last five years has seen a government-backed push to grow the social investment market, particularly with the launch of Big Society Capital, a £600m social wholesaler, an explosion in the number of social impact bonds, and the introduction of a new social investment tax relief. Recently a £100m Access Foundation has been launched to give grants to encourage social investment.
However there has been a backlash against the movement, with charities questioning whether this form of finance is good for the sector.
4. Cuts
The government’s austerity agenda has inevitably had an impact on the funding of charities. After a decade of huge increases in sector funding, charities faced a decline in total income for the first time. Last year’s Civil Society Almanac, published by NCVO in partnership with the Third Sector Research Centre, showed a drop in public sector funding. As a result of this total income for the sector fell sharply after a number of years of growth.
5. The Work Programme and Transforming Rehabilitation
As well as cutting overall funding, the government has shown a tendency to move away from grant funding to contracts, and to aggregate contracts together into larger and larger lots. It has also increased its emphasis on payment-by-results funding.
At the highest level, this has been exemplified by the Work Programme and Transforming Rehabilitation, two giant programmes to move people into work and run probation services. In both these programmes, the role of the voluntary sector has been trumpeted heavily by government, but prime contracts have been won by extremely large private sector bodies.
6. New tax reliefs for the sector
Early in the new Parliament the government announced a slew of new tax reliefs for the sector, including a 10 per cent reduction in inheritance tax for anyone giving 10 per cent of their estate to charity, and the Gift Aid Small Donations Scheme, intended to help charities collecting bucket donations. Little is known about the effectiveness of the inheritance tax relief, but the GASDS has not had the impact anticipated. Umbrella bodies, led by the Charity Finance Group, claim the rules are too bureaucratic for small charities to understand.
7. Give in Back George
In the next Budget after announcing these tax reliefs, however, George Osborne produced a policy which was potentially disastrous for the sector: a cap on tax relief available to any major donor giving more than a quarter of their income to charity. The sector estimated that this had the ability to reduce giving by up to £500m a year, and launched a campaign, led by NCVO and the Charities Aid Foundation, to exempt charities from the tax cap. After several months of hard lobbying the sector was successful and disaster averted.
8. The Lobbying Act and independence of voice
The charity sector has faced a number of attacks over the last five years, over both its remuneration policies and its right to speak out. At first, complaints came primarily from Conservative back benchers, however later in the Parliament the Ministry of Justice introduced plans to reduce charities’ ability to bring a judicial review, and the Lobbying Act was brought before Parliament.
The Act as originally proposed placed serious burdens on any charity wishing to campaign during election periods, even if it did not back any party. Extensive lobbying by NCVO and Acevo led to most of the worst provisions of the bill being removed.
9. Hurd and Newmark
For most of the Parliament the minister for the charity sector was Nick Hurd. After four years in power, Hurd resigned to plaudits from across the sector. His successor, Brooks Newmark, proved less fortunate. After telling charities they should “stick to their knitting” to widespread derision, Newmark fell victim to a tabloid sting that saw him text a picture of his penis to a reporter, and resigned immediately. His successor, Rob Wilson, has so far had little time to make an impact in the sector.
10. Charity Commission
The Charity Commission has faced heavy funding cuts over the course of the Parliament, with its budget reduced by 50 per cent in real terms from its peak funding. It also came in for heavy scrutiny from the National Audit Office and the Public Accounts Committee, following its failure to take action against the Cup Trust, a tax avoidance scheme with charitable status.
Recently the government has taken steps to address the issue, introducing a bill with a number of new powers for the Commission, and offering an additional £9m of funding.
