Sector responds to first Labour budget for 14 years
Melanie May | 30 October 2024 | News
Sector organisations have responded to the first budget of the new Labour government, announced today by Chancellor Rachel Reeves.
Among the key announcements were the plans for raising £40 billion through tax rises, including through increasing employers’ national insurance contributions – with allowances for small businesses. National insurance, income tax and VAT for working people will not increase, while the minimum wage will. The government will also extend a freeze on the threshold for inheritance tax, allowing £325,000 to be inherited tax free, while Capital Gains Tax increases.
Reeves also confirmed that tax breaks for private school fees would be removed, with VAT to be introduced in January.
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There was no mention of any uplift to Official Development Assistance (ODA) funding, which international charities had lobbied for.
The government did announce that work is to begin on developing a social impact investment vehicle, led by the Chief Secretary to the Treasury, working with DCMS, to support the government to deliver its missions. This, it said, will bring together socially motivated investors, the voluntary sector and government to tackle complex social problems. It will be designed and developed through engagement with the sector, with further details to be announced at Phase 2 of the Spending Review.
The UK Shared Prosperity Fund will also be extended for another year.
Sector responses
“Profoundly disappointed” on ODA
Commenting, Hannah Bond, Co-CEO of ActionAid UK expressed disappointment on this point:
“We are profoundly disappointed that the Chancellor has chosen not to uplift the Official Development Assistance (ODA) budget in the Autumn statement today. For a government that came to power pledging to reset its global relationships and place tackling climate change at the core of its foreign policy, this statement is an indication it plans to do anything but.
“After the previous government took a wrecking ball to projects aimed at tackling gender inequality, Labour is following in their footsteps by further abandoning women and girls when they need it the most. We urge them to rethink this decision and consider what it signals to the rest of the international community.”
Ramifications of NI increase could be ‘huge’ for charities
Speaking on the impact of the National Insurance increase, Amy Brettell, Managing Director of Zurich Municipal said:
“A national insurance increase will be tough for many organisations but for the charity sector the ramifications for this could be huge especially given the increase in the National Living Wage to £12.21 per hour as well. Absorbing the additional cost at such short notice could see critical services cut if additional funding cannot be raised. At a time when financial pressure on the voluntary sector is already so acute, making them exempt from this is essential for the survival of many to allow them to continue to fulfil such a vital role in society.”
Inheritance tax decision welcomed
Remember A Charity has welcomed the Government’s decision to keep inheritance tax (IHT) incentives in place for individuals who choose to leave a legacy gift to charity.
Alex McDowell, Vice Chair of Remember A Charity said:
“Fiscal incentives play an important role in inspiring more people to leave a legacy gift and encouraging professional advisers to make their clients aware of the option and benefits of including a charity in their Will.
“Legacy gifts are not only a deeply meaningful way of giving, but they are vital to society, helping to fund everything from hospice care to emergency services, homeless charities to community care supporting people who are alone and vulnerable. The Government’s preservation of these crucial incentives is instrumental in helping to safeguard the long-term sustainability of charitable causes in the UK. These incentives could become even more impactful should more estates qualify for IHT as a result of the IHT thresholds being frozen.”
Remember A Charity also said that it hopes that the 2% productivity and efficiency savings target set for all Government departments next year will mean that further improvements will be seen in the probate service. In recent months, the situation has seen marked improvement — something that Remember A Charity would like to see continue.
On this, McDowell commented:
“A smooth-running probate service can reduce the stress experienced by bereaved families. It can also ensure gifts kindly included in charity supporters’ Wills can be put to good use sooner, enabling charities to plan and deliver their essential services.”
Matthew Lagden, CEO of the Institute of Legacy Management (ILM) has also welcomed the Chancellor’s decision to keep IHT relief for charitable gifts in Wills and to maintain the exemption from capital gains tax on the sale of property or assets donated to charity.
He said:
“Charities rely heavily on legacy giving and there will be a unanimous sigh of relief within the charity community that the Chancellor has seen fit not to make any changes to this incredibly important pipeline of financial support.”
Social impact investment vehicle announcement “hugely significant”
Responding to the announcement by Chancellor Rachel Reeves of a social impact investment vehicle, Better Society Capital Chair Robin Hindle Fisher said:
“This announcement is a hugely significant one. We have seen through the growth of the social investment market the value that impact-aligned capital can provide to tackling complex social problems. At such a critical time for the UK. We stand ready to work with the Treasury and DCMS to ensure that impact capital fulfils its full potential in changing lives for those that need it.”
Potential opportunity to talk to people about charitable giving
Also on a positive note, Bob Collins, Global Managing Director at TrustBridge Global Foundation, and former Goldman Sachs Chief Investment Officer, suggested that there was opportunity to talk to people about charitable giving as a way to reduce their tax burden.
“Charitable giving is exempt from tax, regardless of the size of the gift, but despite this, individuals are not getting the crucial guidance they need in order to make important decisions about how they can be more generous, and how.
“Research shows that just 1 in 20 financial advisors feel ‘very confident’ discussing charitable giving with their clients, so it’s never been more important for specialised philanthropy advice training to ensure that the third sector in the UK continues to receive the funding it needs, helping donors to maximise both their generosity and taxation benefits.”
Some good news on levelling up funding
With the Long-Term Plan for Towns to be reformed into a new regeneration programme, Power to Change said this honoured the commitments to funding made to communities but added that communities are still awaiting confirmation that Round 4 of the Community Ownership Fund will be completed.
Tim Davies-Pugh, Chief Executive of Power to Change said:
“Pre-Budget, Power to Change identified £2.5bn of levelling up funding that was stuck in limbo. Ending the uncertainty and honouring the commitments made to communities is the right choice for government to make – one we commend them for making in difficult circumstances. People who live in the areas promised funding will be greatly relieved that the Government is keeping to the commitments made to these places.
“Alongside this continuity, community businesses urgently need clarity on the continuation of the Community Ownership Fund. Government should also keep listening to the public and make sure councils work with their local community to make sure the money is well spent on the things people care about. The move towards a new model of regeneration funding that is allocative and based on need is the right one and we will work with government to get this right for communities.”
Long-term funding certainty essential for social housing sector
The Chancellor also announced an increase in the Affordable Homes Programme funding to £3.1bn, a top-up of £500mn. Dr Henrietta Blackmore, National Director of Habitat for Humanity Great Britain, commented:
“The government’s top housing priority should be stimulating investment in social homes. Long-term funding certainty is key to enabling councils, housing associations and the sector to invest with confidence. Social housing providers work to time horizons of a decade and longer and need to know the rug won’t be pulled out from under them.
“The 5,000 “affordable” homes that will be unlocked with the top up to the Affordable Homes Programme will be welcome, but we need to see the Government go further. Many of the homes produced with this funding will remain out of reach of those most in need, and meanwhile hundreds of thousands of people remain stuck in often inappropriate temporary accommodation.”
“Mixed bag” for older people
Independent Age Chief Executive Joanna Elson, CBE said there was some good news, including through an extension to the Household Support Fund, but voiced concerns about Winter Fuel Payment plans, commenting:
“Today’s Budget was a mixed bag for older people in financial hardship. There were some welcome announcements from the UK Government including the continuation of the Triple Lock, changes to the earnings limit for Carers Allowance, investment in Discretionary Housing Payment and an extension to the Household Support Fund. All of these have the potential to help older people in financial hardship.
“However, many older people living on low incomes will be incredibly concerned that the UK Government is going full steam ahead with plans to means test the Winter Fuel Payment. At the very least, this change shouldn’t be made until Pension Credit take-up is substantially increased. The latest figures show that up to 970,000 eligible older people could be missing out on Pension Credit, and now they will lose the Winter Fuel Payment despite living on a low income. This will have a devastating impact on older people in financial hardship across the country.
“Many people experiencing poverty in later life will feel their voices have not been heard today with few policies that will quickly get financial support to them. For example, the UK Government could have widened the Winter Fuel Payment eligibility to include those receiving Housing Benefit, and committed to the annual uprating of Local Housing Allowance.”
Little of benefit to hospices
Toby Porter, CEO of Hospice UK, which represents the UK’s 200 hospices, was disappointed there was no move to help address the urgent crisis in the hospice sector. He said:
“Yesterday, we were pleased to hear the Health and Social Care Secretary acknowledge that the current funding formula for hospices is not fit for purpose. However, we are disappointed the Chancellor hasn’t immediately addressed the crisis in the hospice sector in today’s Budget.
“This couldn’t be more urgent – the number of people dying each year in the UK is going up significantly, and right now, hospices are making service reductions and redundancies. Without an exemption to the rise in Employer National Insurance Contributions, hospices will face even further financial burden.
“Hospices ease pressure on the NHS and mean more people die in their preferred place of death with the care they need. It makes good sense for patients, families, and the taxpayer for this to be recognised in the upcoming spending review and NHS ten-year plan.
“Emergency funding and long-term reform to the way the sector is funded will mean hospices can play a huge role in moving more care into the community. We look forward to working with the government to get the hospice sector onto a more secure financial footing and are glad to hear the Health Secretary plans to prioritise end of life care.
“We are also pleased to see an increase in the earnings limit for Carer’s Allowance, which is something we have called for in our recent report on death, dying and financial hardship. However, there is still much more to be done to protect people dying in poverty.”
Disappointment from Refuge at no specific funding for violence against women and girls
Abigail Ampofo, interim CEO of Refuge, said:
“Refuge is disappointed that the Autumn Budget does not include detail about how much funding has been set aside to tackle violence against women and girls (VAWG) specifically. We welcomed the Government’s pledge to halve VAWG within the next decade. Specialist services will be essential to delivering this mission, and urgently need investment to reverse chronic underfunding and put them on a sustainable footing.
“Last week, Refuge, along with 21 other leading VAWG organisations, called on the Government to provide an annual funding settlement of £516m or more per year for refuge and community-based services, and separate ring-fenced funding at a minimum of £178m to fund specialist ‘by and for’ organisations to support marginalised survivors who face even more extensive barriers to accessing vital support.
“We were pleased to see that funding for law enforcement will be used to support the safer streets mission to halve violence against women and girls in a decade. Women and girls’ confidence in the criminal justice system is at an all time low and needs to be urgently restored. We look forward to seeing more detail on what government funding to address this will include.
“We are facing an epidemic of male violence against women and girls. Around 1 in 4 women will experience domestic abuse in their lifetime and 1 woman is killed by a partner or ex-partner in England and Wales every five days. If the Government is serious about tackling VAWG, we need to see long-term, dedicated funding for services to ensure women and girls can access lifesaving support when they need it. ”
Funding for NHS welcomed but “much work” to be done
Increased funding for the NHS was also announced, and responding to this, Ellie Orton OBE, CEO of NHS Charities Together, said:
“We are pleased to see the UK Government committing to increased funding for the NHS. The NHS and its staff are under pressure like never before with unprecedented staff shortages, while demand continues to rise. More than 3 in 4 NHS staff surveyed last winter reported experiencing poor mental health in the past year, and, without investment, this is unlikely to improve, especially as we face the particularly tough and busy winter period.
“There is much work to be done to safeguard our NHS for future generations, in addition to increasing funding. Our diverse network of over 230 NHS charities across the UK are working tirelessly to help ease pressure on the NHS, improve staff wellbeing and break down the barriers patients face in accessing healthcare. Working closely with our incoming UK Government, we can collectively work towards a brighter future for our much-loved NHS – improving the experiences of staff, patients and communities.”
“Promise of end to austerity will be welcomed” but needs to be felt “in real terms”
Locality’s Chief Executive, Tony Armstrong also commented on the budget, saying:
“Rachel Reeves’ budget marked a significant shift of fiscal and economic policy. We welcome the Government’s investment to improve health, housing, economic opportunities and local government services. The promise of an end to austerity will be welcomed by our members, although this needs to be felt in real terms. Like our public services, community organisations have faced multiple crises, increased demand and tighter budgets. Many will find it difficult to cope with additional staffing costs without new income sources.
“Much of the budget’s impact on communities will be in the detail. We do know that the Government has committed to work in partnership with the VCSE sector and this needs to be delivered on. Community organisations play a crucial role in driving economic development, providing vital services and bringing people together. We look forward to working with the Government on specific investment and support so that community organisations can really help their neighbourhoods thrive.”
Pay increase for those on national living wage welcomed
Also responding to today’s budget announcement, Claire Stanley, Director of Policy and Communications at the Chartered Institute of Fundraising, said:
“Fundraisers are the backbone of the third sector, engaging daily with members of the public to raise awareness of the vital work charities do, so we are particularly pleased to hear that those who are currently earning the national living wage will receive a well-deserved pay increase for the valuable work they do. We are pleased to see that the new government is listening to the conversations it is having with civil society. Going forward, as we reset the relationship with government, we hope to have further dialogue about how fiscal policies affect giving and explore new ways to reward donors’ generosity.”
NCVO analysis
For more, NCVO has shared its initial analysis of the budget, here, including several measures that will likely help the voluntary sector and those it supports, as well as potential challenges.
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.