Government and the Voluntary Sector, Finance & law, Policy, campaigns & research

Budget 2021: what a difference a year makes…?

DSC's Director of Policy and Research, Jay Kennedy, summarises the key point's from the 2021 Budget.

In some ways, a lot; in other ways, not that much.

It was just shy of one year ago that Chancellor Rishi Sunak MP presented his first Budget, having only been in his post for a matter of weeks. We were then on the cusp of the onrushing pandemic that would change our lives in ways we couldn’t imagine.

In his second Budget speech, the Chancellor illustrated how government borrowing has now far surpassed that achieved during the financial crisis – we’re now at levels not seen since the world wars. His overall strategy has been to use this borrowing to try and salvage as much of the economy as possible, so we’ll be well-placed for a strong economic recovery once the pandemic ends. Economic growth and tax increases will then drive revenue to help manage and hopefully reduce the debt mountain in future years.

Space robots and black holes

The top-level logic broadly makes sense, but when it comes to the social sector, or even the policy details of providing public services and addressing trenchant social problems, there’s a gaping black hole. Like space robots programmed only to speak the language of business and macro-economics, the Chancellor and his colleagues simply don’t understand or value the central role played by charities and other voluntary organisations not just in the economy, but in supporting and providing public services that millions of people rely on. Even in purely economic terms, this is colossally unwise.

Over the past year, people from charities large and small across the country have attempted many times in every conceivable way to educate them. So far, the robots have been resolutely impervious to learning. It’s not for want of trying. The paradigm we seem to be facing is one where government views business development and economic growth as the primary answer to most policy issues or social problems. So, we get whizzy soundbites like ‘freeports’ and ‘super-deductions’ for investors, and environmental policy framed as a job for the City and a new ‘infrastructure investment bank’.

Social policy and the role of civil society is conspicuous by its absence. Apart from the spending measures to deal with the pandemic, health needs barely got a mention, other than a fleeting observation that in the future there will be ‘substantial mortality and morbidity impacts, in the medium and long term.’ Gee, no kidding. The social care crisis was kicked down the road yet again. What on earth will freeports, super-deductions and investment banks have to do with resolving any of these issues, which themselves have massive economic impacts?

Not much, I’d say. But I do know that tens of thousands of charities and millions of volunteers will play a role in resolving them – and could do even more with government’s understanding and backing. But there’s never any acknowledgement that Britain’s charities save the State billions, and that without them that bill will need to be picked up by the State, or people will suffer. Once charities close down, and cut or mothball services, they won’t be around to help rebuild the country and address the devastating aftermath of this crisis – whether in mental health, education, employment, or the myriad other social needs of people young and old.

Of course, business is hugely important. Jobs are important. But they’re not everything. With a few notable exceptions this Budget ignored the ticking timebomb of social needs that have built up over the past year, to say nothing of the deep fissures of structural inequality the pandemic has shone a blazing light upon.

So, was there anything at all to celebrate or take note of? It was possibly the bleakest budget in years from a charity sector perspective, but there was good news for some.

Worthy winners

There were a few policy areas where the Chancellor made some spending allocations that will no doubt be appreciated by many people working on those causes.

  • Domestic abuse funding – the Chancellor announced an additional ‘£19 million towards tackling domestic abuse, including £4 million between 2021-22 and 2022-23 to trial a network of ‘Respite Rooms’ across England to provide specialist support for homeless women facing severe disadvantage.’
  • Veterans’ mental health – There will be an additional £10m in 2021-22 for the Armed Forces Covenant Trust to support veterans with mental health needs. It’s not clear whether this will be funded from the proceeds of banking fines as it has been in the past.
  • Arts, sports and culture – ‘an additional £300 million to extend the Culture Recovery Fund (already £1.57bn) to continue to support key national and local cultural organisations in England as the sector recovers.’ Also ‘£90 million for continued support for government-sponsored National Museums and cultural bodies in England.’
  • Rough sleeping – The Budget confirmed ‘£237 million announced by the Prime Minister for accommodation for up to 6,000 rough sleepers and provided a further £144 million for associated support services and £262 million for substance misuse treatment services which, when fully deployed, is expected to help more than 11,000 people a year.’

Making do and mending

The main areas of promise for charities in the Budget were again around initiatives aimed at business which some charities might be able to take advantage of. Specifically:

  • Extension of the Coronavirus Job Retention Scheme until the end of September. There will be no change to the terms for employees, but employers (including charities) will have to make greater contributions from July. The government routinely points out that charities are eligible to use the scheme, but often this means furloughing staff that are needed to serve rising demand. The Budget revealed that the scheme has supported 1.3 million employers so far, but official data doesn’t even tell us how many of these are charities – a best estimate may be fewer than 10,000.
  • Restart Grants – also trailed in advance of the Budget was a revised scheme to provide grants for retail businesses as the ‘road map to recovery’ unfolds over the coming months and different sectors of trading resume. It remains unclear whether charity shops will be able to benefit – it seems likely but there are unresolved complications with State Aid restrictions that the Chancellor didn’t address, despite concerted efforts by the Charity Tax Group and the Charity Retail Association.

Social is excluded

Conversely, some of the headline grabbing initiatives explicitly or implicitly seemed to exclude charities or other social organisations from being involved at all.

  • Help to Grow – the Chancellor announced a new scheme that will give SMEs advice and guidance on business management and digital development. Bizarrely, the guidance explicitly states that ‘charities are not eligible’. Around 150,000 charities have incomes of less than £500k p.a. (easily definable as ‘SMEs’) and could conceivably have benefited from this scheme, but at this point it looks like they won’t.
  • Levelling Up Fund – the Treasury released a ‘prospectus’ for a fund to ‘level up’ areas in England, building on the Chancellor’s announcement last year and proposals from Danny Kruger MP’s report last summer. On first reading, the language is focussed mainly on physical rather than social infrastructure, with local authorities, MPs and government departments in the driving seat about priorities and decisions. One notable exception may be a planned £150m Community Ownership Fund to facilitate community takeover of buildings and other assets, but details are thin.

Signals lost in space

Hundreds of charities and representative bodies have spent more than half the year working up clear and evidenced proposals that could support civil society in the short, medium and long-term. Despite the sustained efforts of thousands of campaigners, sadly there was no mention in the Budget of an Emergency Support Fund, a Community Wealth Fund, Gift Aid Emergency Relief, or repurposing the National Fund for social causes. The UK Shared Prosperity Fund to replace EU funding after Brexit was mentioned, but it was mainly a repeat of previous announcements with the added note that ‘the government will set out further plans for the Fund including at the CSR [Comprehensive Spending Review].’

The Budget is only a plan, and the measures within often quickly fall apart, are adapted, or are never delivered. DSC is not giving up and we’ll keep fighting for policy solutions that can boost the resilience of #NeverMoreNeeded charities and voluntary organisations. Stay tuned at @DSC_Charity and

Other briefings and documents

Full Budget 2021 ‘Red Book’ document

Charity Tax Group roundup