On Thursday the Chancellor will deliver his Autumn Statement. For the first time since he took office, it is likely that he will have positive economic news to report with growth forecasts likely to be higher and a potential undershoot of the deficit target for 2013/14.
We already know some of what will be announced in the Statement – a £50 cut in energy bills, universal free school meals for under-7s and a marriage tax allowance. But what else can we expect and what will it mean for the voluntary sector?
Here are five things to watch out for…
1. Details on the welfare cap
The government confirmed in the Spending Review 2013 that it would place a cap on Annually Managed Expenditure (AME) of around £100bn of social security spending with the first cap to be set in Budget 2014.
AME comprises spending that is usually demand-led e.g. pensions, tax credits and debt payments. AME accounts for around half of all public spending and the largest component is the state pension (around £80bn).
The proposed cap would exclude the state pension and Jobseeker’s Allowance but include other working-age benefits. Charities are concerned that the cap – as its currently planned – could drive short-term decision-making about social security and impact on the lives of many people, for example, disabled people.
Look out for further details on this cap including how they will set it. Read Charlotte’s post to find out more about the AME cap.
2. Social Investment Tax Relief
The Government has been consulting over the summer about a “Social Investment Tax Relief” to attract investment into social enterprises and level the playing field with other existing tax reliefs for businesses.
The tax relief will be fully revealed in Budget 2014, but organisations should watch out for any further updates on the scope and size of the relief.
This may be of interest to those voluntary organisations which have social enterprise trading arms or which are looking to access loans or other types of investment to expand their activities.
3. Business Rates
The Chancellor has been put under considerable pressure from business lobbies to freeze or cap the planned increase in business rates. Business rate relief is the largest source of tax relief that the voluntary sector receives from government, so any changes to be announced to business rates will be monitored carefully.
The BBC has reported a 2% cap in business rates is likely to be announced and this could benefit some charities that do not get or have lost discretionary rate relief from their local authorities.
4. Gift Aid and the future of “Digital Giving”
The Government recently finished consulting over the future of digital giving and how Gift Aid may be collected on behalf of charities. This looked at new roles for intermediaries such as banks, mobile phone operators and online fundraising portals and how the Gift Aid process might be simplified in order to make it easier for charities to claim it.
The Chancellor may touch upon when further details will be announced and the direction that the government may take.
Gift Aid is an important source of income for the voluntary sector and changes to simplify Gift Aid could have a positive impact for the sector – but the devil will be in the detail.
5. Spending plans post-2015/16
At the last Conservative Party Conference, George Osborne stated his ambition to run a budget surplus without raising taxes. This would mean proceeding with his current plans to cut government spending significantly further over the next five years.
Although it is unlikely that the government would want to reveal more details of this ahead of the election, look out for any clues about how the Chancellor will define a “budget surplus” and whether he will set a date for when he wants to achieve it.
This would give the voluntary sector a clearer understanding of how long austerity measures will continue for and the headwinds that charities will face in the next Parliament should the Coalition continue.
These are just a few things to watch out for and you will be able to join our discussion about the Statement and its impact on the sector via Twitter #volsecbudget on Thursday 5 December from 11:00.
Andrew was NCVO’s senior policy officer. He covered issues around funding, social investment, tax and the impact of the economy on the voluntary sector. Andrew has left NCVO, but his posts are kept here for reference purposes. 
