Rachel Reeves’ spring statement yesterday was a damp squib for charities, with the sector not mentioned in either the chancellor’s speech or the accompanying documents.
In their responses, some sector membership bodies highlighted the absence of support for charities. The Charity Tax Group and Charity Finance Group both expressed disappointment that Reeves announced no measures to ease the impact of her previously announced employer national insurance contributions (NICs) rise, estimated to cost charities £1.4bn a year.
Disability and welfare charities voiced deeper concerns about Reeves’ confirmation of benefit cuts, which will push 250,000 people into poverty over the next five years according to the government’s own analysis.
Meanwhile, NGOs bemoaned the previously announced cuts to the aid budget, which will reduce from 0.5% of gross national income (GNI) to 0.3% to boost defence spending.
But while NCVO and ACEVO both mentioned the impact of benefit cuts in their responses, they refrained from criticising Reeves, urging the government instead to work with charities to deliver its public spending reforms.
Charities are facing intense financial pressures following the Covid-19 pandemic, cost-of-living crisis and impending NICs rise. These challenges – accompanied by increased reported demand for services and declining numbers of people donating and volunteering – have led to charities of all sizes cutting staff or closing altogether.
With this in mind, some charities might wonder why their representative bodies have not been more critical of the spring statement’s lack of support for the sector. They were arguably punchier in their response to the previous Conservative government’s failure to include measures to benefit charities in some of its financial statements.
Diplomacy
One explanation for the change in tone is that the Labour government plans to return to a single major fiscal event per year – the autumn budget – lowering expectations of its spring statements such as yesterday’s.
The government is also due to complete a spending review in June, so may be keeping its powder dry on some interventions before then.
Perhaps the most significant change in context for charities, however, is that the sector’s umbrella bodies – led by NCVO and ACEVO – are working with the government on the upcoming Civil Society Covenant.
This piece of work, due to be published in the coming months, aims to “fundamentally reset” the relationship between charities and the government and will essentially replace the Compact, last updated under David Cameron’s coalition administration.
As umbrella bodies focus on this substantial project, it is understandable that they might err on the side of diplomacy in their communications.
It is fair to point out that following the autumn budget last year NCVO and ACEVO led a campaign outlining the impact of the Labour government’s NICs rise on charities and calling for an exemption or other support, neither of which have been offered.
But after that vocal opposition to a government policy, perhaps they are picking their battles in the hope that the covenant will deliver significant change for the sector.
Risk of being ‘seduced’?
Some in the sector have expressed concerns about a closer relationship between charity bodies and the government.
Former Lloyds Bank Foundation CEO Paul Streets previously warned charities to avoid being “seduced by government” through the covenant and that they must maintain their independence to challenge policies that could impede their work.
“I’m sure NCVO and ACEVO, between them, will do what they can to get the best out of it,” he told Civil Society. “But it’s very seductive being invited into the centre of government and appearing to be right in the centre of power.”
In response to that concern, ACEVO chief executive Jane Ide said the covenant work “isn’t about being best buddies” and that her organisation’s conversations with ministers over the NICs rise had been “anything but cosy”.
“They are not asking us to abdicate our right and responsibility to challenge government, or indeed anybody else, when they are saying or doing things not in our sector’s interest,” she said.
On the covenant, culture secretary Lisa Nandy herself said in Westminster last year: “We are very keen that [charities] understand that they don’t just have a right to speak up, but they have a duty to speak up on behalf of their beneficiaries when they think we’re getting things wrong.
“We think we will make better decisions as a government if they understand that that’s the relationship we want with them.”
So, there does not seem to be any public pressure from the government for charity groups to curb their lobbying due to the covenant. But it will be interesting to see whether it delivers the change in relationship charities want and whether their representative bodies change tone after it is published.
The Civil Society Group – of which NCVO and ACEVO are members – has called for the spending review to include several measures to support charities, including long-term financial support. So, it will also be intriguing to see sector bodies’ response when this concludes in June.
