EU referendum: Implications for the voluntary sector

We held an online event on 7 July, looking at implications of the EU referendum for the voluntary sector. This post summarises the highlights – you can also watch the online event recording.

Political implications

Chris Walker, who leads on NCVO’s parliamentary work, began by mapping out the current state of affairs and how it affects the voluntary sector. He explained that advocacy by voluntary sector organisations is currently affected by uncertainty surrounding the leadership of both the Conservative and the Labour party.

However, this could also provide some opportunities. The recent series of Labour frontbench resignations, for example, means that remaining Labour MPs might be more reliant on external briefings during this time.

Good point @_c_walker As MPs focused on internal pol they will welcome briefings from external bodies on relevant parli business #ncvobrexit

— Chloe Stables (@ncvochlo) July 7, 2016

When creating new alliances, charities should be aware of divisions within parties as well as between them, in order to tailor their messages and respond quickly to changes in the political dynamic.

In the long term, charities may be affected by economic instability, with the autumn statement or emergency budget possibly introducing increased taxation and cuts in public spending. The future relationships between the devolved governments of Scotland and Northern Ireland and the rest of the UK are also characterised by uncertainty.

Funding and finance

Elizabeth Chamberlain, who leads NCVO’s policy work on charity law, governance and fundraising, cited the Financial Stability Report by the Bank of England, which states that the ‘current outlook for UK financial stability is challenging’.

With regards to EU funding, it is most likely that current funding from the EU programmes will remain available to UK charities until the withdrawal process is completed. Likewise, existing commitments are likely to be honoured. UK organisations may face challenges in applying for future EU funding, even while we remain formally part of the union. For example, the vice chancellor of Sheffield Hallam university has already reported that UK-based academics have been asked to withdraw from joint applications for research funding with EU partners due to fears it weakened their applications.

Further implications that charities should be aware of are linked to the wider economy, such as: the reduced buying power of organisations working abroad through the drop in value of sterling, a potential reduction in charitable giving, and implications for stock markets and pension fund commitments.

Social impacts

Maps and polls of voting patterns in the EU referendum reveal dividing lines along factors such as age, background, class and education; as well as people’s opinions on questions of immigration, multiculturalism, social liberalism, and other issues.

The social divisions laid bare by the referendum are likely to have an immediate impact on organisations whose activities focus on equality and diversity. Those working in health and social care are also going to be affected, as this sector relies to a significant degree on EU nationals.

Elizabeth reiterated Sir Stuart Etherington’s plea for the voluntary sector to restore trust and bring communities together.

Absolutely. We need to bring communities together. This is where our sector can really make a difference. #ncvobrexit

— Stephanie Harvey (@fundfuriosa) July 7, 2016

Legal and regulatory implications

Philip Kirkpatrick, charity law specialist at Bates Wells Braithwaite, clarified some questions around the process of withdrawal from the EU. He explained that, once article 50 has been invoked by the UK government, a formal Brexit will only occur upon reaching a withdrawal agreement with the European Union or automatically after two years following the triggering of the article – unless this deadline is extended, by unanimous vote of the other 27 members.

Philip explained that European regulations, which are directly enforceable in the UK without being transposed into national law, would immediately stop being applicable if the European Communities Act were repealed. Directives, on the other hand, will remain applicable, as they have been formally transposed into UK law. It is likely that all EU law will be retained initially and then changed over time. The adaptation of the legal framework is likely to dominate parliamentary business over the next five to ten years.

#ncvobrexit @p_kirkpatrick @BWBCharitySocEn Parliament #Brexit legislation process could be 5-10 years, very little else will get attention

— Glen Tarman (@GlenTarman) July 7, 2016

Charities have been particularly concerned about some areas of law that are crucial to the way they operate. If the UK wishes to remain part of the single market, UK law in the areas of state aid, public procurement and data protection is unlikely to change significantly because it will have to remain compatible with EU law.

Find out more

At the end of the online event, there was an opportunity for viewers to ask questions. We’ll be recapping the main points of discussion during the Q&A later this week, in another blog post.