The Charity Commission will see its budget frozen until 2020, according to figures published in today's spending review, in a move its chair suggested could increase pressure on charities to fund the regulator.
The Commission budget was frozen at just over £20m until the end of the current Parliament.
The decision could “translate into a real terms cut should the Consumer Price Inflation index revert to an inflationary position over the period”, the regulator said.
A budget freeze would mean a real terms cut of around 10 per cent if inflation continues at historic levels.
However the Commission has received additional capital funding to drive efficiencies.
'More sustainable funding base' needed
Today the Charity Commission’s chair William Shawcross said the freeze would put “more pressure on staff”, forcing it to “seek a more sustainable funding base” to enable it to continue “protecting individual charities from abuse and uphold public trust and confidence in the sector”.
“I will continue my discussions with charities to explore how this might be achieved,” he said.
Shawcross said there was “little the regulator could do” to make further cost savings without affecting its regulatory work.
“We have already focused our expenditure on the highest risk work: fraud, safeguarding and counter-terrorism,” Shawcross said. “We expect new systems we are installing to deliver productivity gains, but there is little more we can do to reduce our costs without it affecting our regulatory work.”
The Charity Commission has seen its funding cut from £40m to £20m in real terms in the last few years – with staff numbers cut from 600 down to fewer than 300 over the last 10 years.
The Commission has received a 10 per cent increase in capital funding over the past two years – rising to £1.2m. This builds upon £8m funding provided to the regulator to “invest to save” and streamline the way it works.
Jay Kennedy, director of policy at the Directory of Social Change, said there was a real danger that the budget announcement “could call into question the Charity Commission’s viability as a regulator”.
“With such a small budget and such a wide regulatory remit, the reality is that any significant further degradation of the Commission’s budget would call into question its viability as a regulator,” he said.
“Unfortunately I also don’t think this takes the threat of charging charities for their own regulation off the table.
“The Chancellor could have very easily found £8m or so to bring the Commission’s budget back to its 2010 level, but he didn’t. Maintaining the current direction of travel means the charging discussion isn’t going away – and charities will have to continue to fight the idea.”
Over the past year, Shawcross has repeatedly warned that charities would be forced to fund the regulator.
At the Charity Commission’s annual general meeting in September, he said the possibility was “inevitable” and would soon be open to a consultation.
A charity-funded regulator would reflect existing funding patterns across “many other parts of society”, he said.
Shawcross repeated the claim at a Public Accounts and Constitutional Affairs Committee earlier this month, warning that cuts to the regulator's budget and resulting reduction in staff it was struggling to do its existing role, let alone take on something new.
