Show us the money: what small charities need from the Budget

Chancellor Phillip Hammond

Ahead of next week’s Budget statement, Lloyds Bank Foundation’s Policy and National Programmes Manager, Caroline Howe explains what small charities need to hear from the Chancellors statement.

Here at the Foundation we’ve been calling on Government to re-think how services for people facing complex issues are funded, to make sure those places and people who need support most can access it.

Of course, the Chancellor has a tough task: ending austerity while balancing the books and stabilising the economy over the anticipated turbulent months ahead, as anyone who has tried the Institute of Fiscal Studies NHS funding tool will know. But that shouldn’t draw our attention away from what is needed: enough money to deliver key services where they are needed.

This year the government needs to look at three key areas:

We need funding for local areas

It’s hard to miss the discussions about ‘place’. Whether it’s place-based funding, or places that have been left behind, ‘place’ even got its own chapter in the recent Civil Society Strategy. Yet research we published last month shows how local authority funding, the funding that underpins so much that happens in a place, is broken. The huge cuts to local government funding are sobering – particularly given that 97% of the cuts to services for people facing disadvantage have fallen in the most deprived fifth of local authorities. That is, the areas with highest demand. This demand is set to further grow too, with cuts in preventive services to cater for rising crisis support. Cutting preventive support might help balance the books in the short term but it will only lead to more costs long term as more people are pushed into more costly crises – as shown in housing in the graph below.

NPI - Preventive and crisis spending in housing servicesAs local councils lose out on centrally-administered funding, they are having to rely on generating their own income. Inevitably this is much harder in poorer areas. It’s difficult to foresee how under the current arrangement councils will be able to provide the services that local people need. Central Government needs to shift local authority funding to a system based on need, so that those areas with the highest service demands can afford to provide the services that people need.

We need funding for local people

That brings us on to who this is all about: local people. People are at the heart of local places yet it’s not just council funding that is bringing challenges. The benefits freeze and reduced budget for Universal Credit is making life even more challenging for people who need support. As costs of living continue to rise, it’s ever more important to end the freeze and make sure benefits align – 90% of Local Housing Allowance rates don’t cover the rents they were designed to. The result? Hardship and homelessness. One of the original key intentions of Universal Credit was to help ensure work always pays yet the cuts Government subsequently made to the Work Allowances have seriously damaged this. Small changes by Government can have a huge impact here. Research by the Child Poverty Action Group shows that if the work allowance taper rate was reduced to 55%, child poverty could be reduced by 200,000. Reducing the rate seems a small price to pay for lifting 200,000 children out of poverty.

In response to the concerns raised by a wide range of charities, MPs and others the Government has announced a new pause in the roll-out. They must now take this opportunity to fix the well documented problems that remain in Universal Credit – both the systems it uses and the levels of benefit themselves and particularly to ensure it better supports people facing complex problems. Alongside this Government needs to make sure that people can get the right support and advice they need to access the right benefits.

We need funding for local charities

Small and local charities clearly have a core role in supporting people to access the help they need. We know they’re under pressure. We’re calling on government to secure new funding for charities which are, as Theresa May would say tackling “burning injustices” across the country. There is funding that exists to help with this. It just needs to be released or allocated in a way which makes sure it reaches the organisations and communities which need it most. The UK Shared Prosperity Fund is due to replace the European Social Fund after we leave the EU. It’s critical that this funding is ring-fenced so that it can continue to support people who other agencies fail to reach – i.e. through locally rooted, small charities, and through payment mechanisms that are proportionate and appropriate such as grants.

The release of dormant assets – money in bank and building societies that has been left unclaimed – also offers opportunities to secure long term funding for local charities too. There is a clear opportunity to allocate this windfall to strategic, long term investment in charities who are the heart of a thriving civil society.

For some time we at the Foundation have been calling on government to use money available in a more effective way – through better commissioning and more use of grants for small charities. But we cannot overlook the importance of the amount of funding that is made available too. That’s why next week’s Budget is so important, for people, places and charities and why we’ve made our own submissions to government as well as joining other sector leaders ahead of the Chancellor’s statement.


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