Budget 2016: A sigh of relief

This was very much a budget about what the chancellor didn’t say. Here are our top four things you need to know.

Business rates

The treasury have confirmed that the business rates review will make no changes to the existing 80% level of mandatory relief that charities receive. The treasury is due to publish a summary of responses to the review later in the month which will confirm this position. The further consultation due on details of implementation are not expected to reopen discussion on reliefs.

This is an issue we have long been calling for clarity on, and it will be a relief to organisations across the sector to know that this critical support will not be changed. We’re grateful that representations from the sector were heard.

The other major announcement on business rates are changes to reliefs for small businesses. The starting threshold for the standard business rates multiplier is rising from £18,000 to £51,000, meaning that if an organisation has a rateable value between £18,000 and £51,000, they’ll now be paying the lower small business multiplier. Voluntary organisations with smaller premises should see a small reduction in the 20% of their business rates bills that they’re liable for.

The small business rates relief is also being doubled, meaning that if you are a social enterprise with a rateable value of anywhere up to £12,000 you’ll get 100% business rates relief, tapering to 0% as you approach a rateable value of £15,000.

The cost of these changes is around £6.7bn, but the treasury has said it will be compensating local authorities for the lost income, so claims there shouldn’t be an impact from this specific decision on local government finances.

Further spending cuts

Budget speeches tend to only deliver the good news, and it’s important to take today’s announcements on things like raising the personal tax allowance and lifetime ISAs in context.

Perhaps most notably, the chancellor confirmed changes to personal independence payments that would save £4.3bn over the next five years, reducing payment eligibility. Disability charities have been responding to this announcement.

For lower income households, the changes made to universal credit last year will still have the most significant impact on their finances compared to the measures announced today. Keep an eye out for the IFS’s distributional analysis tomorrow.

Departmental spending is still seeing the large reductions over the course of this parliament, with an additional £3.5bn of cuts in 2019/20 announced today. The sector is still likely to see something of a cliff edge in funding from government sources from this April as grants and contracts end and may not be recommissioned accessibly or at all.

And some scattered funding

The chancellor announced another set of LIBOR fine giveaways to charities, and further funding announcements for money raised by the tampon tax. While this will be welcome for those organisations, it doesn’t demonstrate a particularly strategic approach to funding for the sector.

It is however encouraging to see that the government has opted to use existing grant funders like Comic Relief and Rosa to redistribute around £6m of this money to smaller organisations.

Also announced was a £115m fund to tackle homelessness, around £5m of which be added to double the existing social impact bond.

Finally, the apprenticeship Levy is likely to cost larger charities around £60-70m. Today’s announcement was a 10% government top up on employer’s monthly payments into the scheme. More interesting perhaps is the news that we’ll be hearing further details on how it will work in April.

The future is local

It’s also worth noting the devolution deals announced today. New deals were announced for East Anglia, the West of England and Greater Lincolnshire, alongside additional deals for Greater Manchester and the Liverpool City Region.

These include announcements about key public services. The East Anglia, West of England and Greater Lincolnshire deals all give combined authorities input into designing the Work and Health Programme, with the former two deals identifying the voluntary sector as a partner.

Greater Lincolnshire and East Anglia’s deals look at health integration. Manchester’s deal includes greater devolution of criminal justice provision and a ‘Life Chances Investment Fund’.


This entry was posted in Policy and tagged , , . Bookmark the permalink.

Like this? Read more

Avatar photo Michael was our senior policy officer until January 2019, covering issues around charity tax and finance (including social investment) and the impact of the economy on the sector.

Comments are closed.