Five things charities should look out for in Budget 2014

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On Wednesday, George Osborne will deliver his fourth budget and with an election on the horizon there are likely to be a number of high profile decisions which will set the tone for May 2015.

We are only half way through the Government’s proposed cuts and NCVO will be analysing any more detailed spending announcements on the day to understand the impact that they will have.

However in addition to this, there are likely to be a number of announcements which could affect voluntary organisations. Here are five things to look out for when the Chancellor speaks:

1. Confirmation of a new £40m sustainability fund for 2015/16

Nick Hurd recently announced that the Cabinet Office would be consulting on a new “sustainability fund” to help improve the resilience of charities. The fund is likely to combine grants as well as advice – although awards will not be made until March 2015.

The Minister has stated that he expects the fund to be worth at least £40m, but listen out in the Budget to see if that is confirmed or whether the Chancellor has decided to be more generous in his support for the sector.

2. Changes to Gift Aid

It wouldn’t be a Budget unless there were changes to Gift Aid and this year is no exception. Last year the government launched a consultation on the future of Gift Aid and updating it for the digital age. The consultation looked at a number of areas including: changing the Gift Aid Declaration to make it simpler for donors; increasing the role for online giving platforms (such as JustGiving) and text donation operators in the operation of Gift Aid and the creation of a Universal Gift Aid Database (which would mean that donors would only have to fill out one Gift Aid Declaration).

The government has said that it will announce which proposals will be taken forward in Budget 2014, so listen carefully to see what changes are announced in the Chancellor’s statement and which are in the red book…

3. Details of the Annually Managed Expenditure (AME) Cap

The government has committed to putting in place its first AME cap in this Budget – this cap will set the total amount (in cash terms) that the government can spend on certain areas of social security spending. The cap will cover each of the next four years – up to 2018/19.

The cap will cover all social security spending except JSA, housing benefit for those on JSA, state pensions and spending by local authorities on support for council tax and discretionary housing payments. The total cost at present of the spending covered by the cap is around £116.8 billion – so any cap close to this figure would represent a tough settlement for welfare.

Many charities are concerned that the new cap could cause greater hardship for recipients of social security spending, such as disabled people. NCVO has written to the government alongside some of the UK’s leading charities to call for more preventative action to address people’s needs. We will be looking closely at the Chancellor’s announcement to understand his plans in this space.

4. Rate of relief for Social Investment Tax Relief (SITR)

Following the announcement in Budget 2013 that the government would be introducing a new Social Investment Tax Relief, there was a consultation last autumn and draft legislation has been published. Individuals who make social investments (such as providing unsecured loans or buying shares) in charities, Community Interest Companies (CICs) and Community Benefit Societies will be eligible for tax relief. While we know a fair amount about its structure and criteria for eligibility, there is one important thing we don’t know – the rate of the relief.

The rate of relief will determine how much income tax investors can claim back on their investments. We have recommended a rate of relief which is comparable with higher rate Gift Aid in order to ensure incentives to give are not eroded. The Treasury consultation suggested 30% for illustrative purposes; but the final decision will be announced by the Chancellor on Wednesday.

5. Extra spending on improving public sector procurement

The government came under criticism from two select committees last week about poor performance on procurement and lack of competition within the delivery of public services. Given the tight spending environment this issue is unlikely to go away.

The Cabinet Office has already set up a Commissioning Academy to help train local and central government commissioners to secure better value for money and the Office of Civil Society has been supporting the delivery of Masterclasses to help voluntary organisations and social enterprises bid for public service contracts. However the Chancellor might be tempted to put more money into these initiatives in order to show that the government is dealing with these challenges. This would be good news for charities.

Last month NCVO, Charity Finance Group, Association of Charitable Foundations, Institute of Fundraising, Voice for Change and Big Society Capital wrote to the Treasury ahead of the Budget with our recommendations for how the government can support the sector.

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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.

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