While the Autumn Statement made little explicit reference to charities, its measures will be felt by the charity sector, whether that’s in increased wage bills due to the uplifted National Living Wage or the impact on demand from those that rely on charities’ services. Lourens Du Plessis, member of the Charity Community’s Advisory Group and Managing Director of Church and Charity Professional Services at Stewardship, shares his reaction to the Chancellor’s Autumn Statement.
General feedback:
- There is very little directly of benefit to charities. Some ring-fenced amounts were announced for specific areas of focus, such as tackling antisemitism and mental health for veterans, but these are relatively limited and it is unclear how this money will be spent.
- Many measures were billed as pro-growth but the charitable sector’s vital contribution (particularly where it is stepping in more and more to deliver services the government is unable to deliver) received no real mention
- The individual tax cut (reduction in national insurance) is likely to be more than offset by keeping the tax thresholds frozen
- While measures to get more people back into work are in and of themselves good, the measures announced are untested and could potentially be quite blunt. This is likely to have a knock-on effect for charities having to pick up support for vulnerable individuals who lose government welfare support. Effective and fair use of these measures depend on the DWP bureaucracy working in a compassionate and accurate way. The uprating of the housing allowance is positive for people on low incomes and at risk of homelessness and the additional money (£120m) given to prevent homelessness is welcome too – but likely a fraction of what is needed.
How well the measures meet the needs of charities:
- There is little to support charities, who are struggling with (amongst other pressures) government contracts not having kept track with inflation and charitable giving under pressure due to a difficult economic climate
- The measures aimed at companies (super-computing hubs, full expensing of investment spend, etc.) will have little to no direct benefit for charities
- Reducing national insurance, rather than income tax, is helpful for charities in that gift aid reclaim rates will not reduce accordingly
- VAT relief on energy saving materials is very positive. Ongoing support for charities with high energy costs, particularly as we enter the winter, is however lacking. Only very limited support is now available to charities, who deliver crucial services throughout this period. An example that is directly relevant is the Warm Welcome campaign, where churches and other charities open their doors to provide warm spaces for people struggling with heating bills.
- The increase in the National Living Wage, while very welcome to address economic pressures for people being paid this rate, will increase the cost pressures for charities – again, without any real contribution to offset that increase in cost
What was missing from the Autumn Statement?
- Charities’ income is under significant pressure, they face rising cost pressures and increasing need for their services. There is very little recognition in the Autumn Statement for the burden charities carry.
- While “growth” was front-and-centre (meaning growth of the economy), the need for charities’ services grows daily and there was hardly any contribution towards their funding
Click here to read ICAEW's analysis and reaction to the Autumn Statement.
Find out more about the impact on charity tax by visiting the Charity Tax Group and read their reaction to the Autumn Statement.
*The views expressed are the author's and not ICAEW's.