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

Spring Budget 2023 – Chancellor announces major funding for charities

Jay Kennedy, Director of Policy and Research at DSC, analyses the Budget and what it means for charities and the voluntary sector.

Since the calamity of his predecessor’s so-called ‘mini-budget’ last October, our latest Chancellor of the Exchequer Jeremy Hunt MP has been trying to settle nerves in the markets and repair the reputation of UK plc. At the same time, the country has continued to face the challenge of huge energy prices and inflation not seen in decades, which threatened to bring the country into recession.

This Budget wasn’t initially expected to be a major event, but in the end it delivered some substantive policy changes. The cost-of-living crisis, problems in the labour market and mounting social issues haven’t gone away, as legions of charities including DSC have continued to point out. With that in mind, Hunt had several important announcements that will benefit many charities and their beneficiaries.

In the run-up to the budget DSC and other members of the Civil Society Group wrote to the Chancellor calling for targeted funding to support charities with energy bills, support to safely reduce charities’ energy use, uplifting contracts to cover the cost of delivering public services, and a continuation of energy bill support for households.

The Chancellor clearly responded to three of these asks and mentioned charities several times in his speech, which hasn’t happened for years. As ever, more details and analysis will filter out over the coming days which may take some of the shine off the headline-grabbing items.

Major funding for charities coping with rising costs and social needs

The most welcome initiative in the Budget for charities was the announcement of over £100m to be distributed by DCMS in England, and ‘targeted towards those organisations most at risk, due to increased demand from vulnerable groups and higher delivery costs, as well as providing investment in energy efficiency measures to reduce future operating costs.’ [Budget Red Book 4.19].

This is a huge win and follows months of intense lobbying by charity leaders. However it’s unclear why this announcement is England-only and what if any funding might be available for charities in other parts of the UK. There are also many questions still to be answered about how the scheme will be run, what organisations are ‘most at risk’, and whether it’s all new money.

Similarly, the Chancellor announced ‘over £60 million to support public swimming pools in England, to help with immediate pressures and invest in energy efficiency measures’ [Budget Red Book 2.28]. While this won’t go exclusively to the charity sector, there will be some charitable leisure centres and community sports clubs that should be able to benefit from this funding.

Hunt also announced that ‘government will make £10 million available for a grant fund for suicide prevention VCSE organisations in England across 2023-24 to 2024- 25 to support people experiencing suicidal thoughts or approaching a mental health crisis.’ [Budget Red Book 4.24] – some good news for mental health charities and their beneficiaries.

Relief on household energy bills extended

As was widely trailed in advance, the Chancellor announced that the Energy Price Guarantee (EPG), which caps the unit cost of energy for domestic bill-payers, will remain in place for three more months through June. Hundreds of charities and the Money Saving Expert Martin Lewis had campaigned for this, which effectively prevents a potential spike in average household bills from £2500 to £3000 coming at the end of this month.

At a time when people have already been paying huge bills through winter even with the EPG in place, and when other support schemes to subsidise people’s bills are also coming to an end, ending the EPG in March as planned would have heaped more pressure unnecessarily on already struggling households. Wholesale energy prices have been going down and we are heading into the summer months when usage will be lower, so this move is expected to smooth things out until a more ‘normal’ situation resumes.

A big boost for childcare and parents of young children?

Another policy area trailed before the Chancellor’s speech involved reforms to the childcare system. This is complex and charities working in this area are already analysing the implications. The Chancellor said that government would provide ‘£4.1 billion by 2027-28 to deliver 30 hours a week of free childcare for eligible working parents of children aged 9 months up to 3 years in England’ and will also ‘provide £204 million in 2023-24 from September, followed by increases each year, to uplift the funding rate for the existing childcare offers.’ [Budget Red Book 4.163]. The intent is to bridge the gap in government support for childcare between very young children and toddlers, so that parents (particularly women) can re-enter in the workforce. But will it be enough?

Other reforms include startup grants for new childminders, increasing the staff-to-child ratios from 1:4 to 1:5 for two-year olds, and changing the way childcare support is paid for Universal Credit claimants. The government will pay for childcare places up front rather than claimants having to front up fees in advance, which will surely be welcomed by many charities. However, a major problem in the system is not just the cost but the lack of available provision and staff, and there will surely be more analysis to come about whether and how these initiatives will help solve those problems (or not).

Workforce reforms – a mixed bag?

Billed as a ‘back to work Budget’, much of the Chancellor’s statement was about policy measures to try to boost various parts of the population into the workforce. This included changes to help disabled benefit claimants to seek work without risking losing their benefits, more support for mental health and musculo-skeletal health, and measures to get over-50s back into employment, as the Chancellor claimed that 3.5m people of pre-retirement age are not part of the labour force.

Disability and employment charities will be closely scrutinising (or celebrating) the abolition of the ‘Work Capability Assessment’ alongside new measures like ‘new funding for Work Coach support’ and a ‘new Universal Support programme [that] will match individuals in England and Wales who want to work with existing job vacancies’ [Budget Red Book 3.19-3.21].

While these initiatives may signal improvements to the current system, they also introduce uncertainty about what happens next and risks that some people fall through the cracks as new systems are rolled out. Other measures that would seem to increase coercion on benefit claimants could have more negative effects, especially for people with disabilities and long-term health problems, with the Chancellor announcing that ‘the government is strengthening the way the sanctions regime is applied.’ [Budget Red Book 3.25].

Conclusion – charity campaigning is having an impact

Nobody ever gets everything they want in any Budget, and there are likely to be a few damaging things that slip under the radar, such as the announcement that the government ‘will restrict tax reliefs to UK charities and Community Amateur Sports Clubs only from April 2023’ [Budget Red Book 4.34], with a transition year for EU and EEA charities claiming relief until April 2024. This could have negative impacts on cross-border giving and the operations and fundraising of UK-registered organisations in other countries.

Still, it’s hard to remember a recent Budget that contained this much positive news for charities, nor a time when a Chancellor appeared to have clearly listened to charity campaigning and made policy changes as a result, which we should take heart from.