Charity sector organisations have called for measures to address the sector’s £1.5bn irrecoverable VAT bill and for a strategic framework to improve government grant-giving, in a joint submission ahead of the government’s Autumn Statement.

Sector bodies also called for funding for better voluntary sector technology, partnership hubs to develop stronger relationships between local voluntary sector organisations and public bodies, and funding for the transfer of public assets to the local voluntary sector.

Read the full Autumn Statement submission here

 

Chancellor Phillip Hammond will make his Autumn Statement, which identifies government spending plans for the next year, on Wednesday 23 November.

Ten charity infrastructure bodies including NCVO, Acevo and the Charity Finance Group wrote to him last week outlining their main priorities.

Change irrecoverable VAT

The charities called for a reduction in the irrecoverable VAT bill, which costs more than £9,000 for each registered charity in the UK.

“This gap is the unforeseen circumstance of the exemptions and exceptions that charities received when VAT was created in order to ensure that they were not forced to charge beneficiaries for their services,” the submission said. “However, this redirects charities’ resources away from their beneficiaries and creates an uneven playing field for charities that wish to engage in public service delivery as public bodies already have a rebate mechanism for their irrecoverable VAT.

“The tax system should be fair to charities, and resources should not be wasted due to complexities within the VAT system that was not designed with the unique position of charities in mind.

“In Autumn Statement 2014 and Budget 2015, the government set up a rebate scheme for hospices, blood bikes and search and rescue charities, proving reform is possible without the need for European action. This should be the start of a process to develop a sector wide rebate scheme.”

Strategic framework for grants

The letter also said that the government has given a lot of grants to charities, but lacks any kind of strategic framework to decide which organisations get money.

“Since 2013, the government has committed over £450m of Libor fines to good causes – predominately, military charities, air ambulances and health charities,” the submission said. “These funds have been a welcome income boost for the individual organisations that have been able to benefit from them. However, this funding was allocated without reference to the strategic funding needs of the wider voluntary sector.”

The submission said that there should be a “transparent, evidence-led process for determining the distribution of direct Treasury funding for voluntary organisations”.

Full list of signatories:

• Caron Bradshaw, chief executive, Charity Finance Group   
• Sir Stuart Etherington, chief executive, NCVO
• Neil Cleeveley, chief executive, NAVCA     
• Tony Armstrong, chief executive, Locality
• David Emerson, chief executive, Association of Charitable Foundations    
• Kunle Olulode, director, Voice4Change England
• Asheem Singh, interim chief executive, ACEVO     
• John Barrett, acting chief executive, Small Charities Coalition
• Peter Holbrook, chief executive, Social Enterprise UK        
• Peter Lewis, chief executive, Institute of Fundraising