Voluntary sector notes on Summer Budget 2015

News from the government’s additional Budget in July 2015 of particular relevance to voluntary organisations.

The official Summer Budget documents are available from https://www.gov.uk/government/topical-events/budget-july-2015. Selected extracts from the main Budget document are included below, indicated by paragraph references.

HM Revenue and Customs Summer Budget page of relevant documents and links.

See links in the commentary section below for information on welfare issues and housing association impact.

This article may be updated with further links and comments.

National Living Wage

A National Living Wage (NLW) is to be introduced from April 2016, in addition to the National Minimum Wage, for over-25s (paragraph 2.94). This will initially be 50p above the NMW, i.e. £7.20 an hour, and the government target is for the hourly rate to be over £9 by 2020. (The reduction in tax credits should be taken into account when comparing rates against what campaigners for a ‘living wage’ have wanted.)

Future charity budgets, contracts etc. will clearly need to take this into account. Charity Finance Group points out that a third of people employed in the voluntary sector are in social care roles, typically low paid.

Note: NICVA has already looked at the impact of a Living Wage of £7.20 (as at 2012) for Northern Ireland, but presumably this also included tax credits in the pay equation.

NIC Employment Allowance

1.127 The government recognises that this new NLW may increase costs for some businesses.  Therefore on top of other reductions in business tax, from April 2016, the government will increase the National Insurance contributions (NICs) Employment Allowance from £2,000 to £3,000 a year.  This will help all businesses and charities, particularly smaller ones, with additional wage costs.

Insurance costs

An unplanned cost increase for many charities.

1.209 From 1 November, the standard rate of Insurance Premium Tax will be increased from 6% to 9.5%.

Sector specific mentions

General charity mentions, social enterprise and specific causes.

2.27 Social impact bonds – The government intends to expand its support for social impact bonds at the Spending Review and will consult with experts to identify suitable options.

2.47 The use of banking fines – The government has committed nearly £70 million of banking fines over the next 5 years to support military charities and other good causes ….

(The non-military causes include Children’s Air Ambulance, Ludlow Museum geological collections. See CFG commentary below.)

2.50 Support for victims of domestic abuse – The government will set up a £3 million fund to encourage innovative approaches including refuge provision to help those suffering from domestic abuse.  Ahead of the Spending Review, the government will draw together evidence from frontline professionals to review how services for victims of violence against women and girls are funded and delivered and feed into a refreshed Violence Against Women and Girls strategy in the autumn.  

(HM Treasury tweet said “We will increase funding for domestic abuse victims and women’s refuge centres”.)

Also see Communities Department news release.

2.121 Research and development (R&D) tax credits: universities and charities – The government will correct an anomaly in the R&D tax credits legislation so that universities and charities are unable to claim the R&D Expenditure Credit (RDEC), in line with the original intention of the policy.  This will apply to expenditure from 1 August 2015.

Sector Budget Commentary

Charity Finance Group’s initial take (with a fuller briefing to follow) is ‘Welfare and employment dominate the Budget: What does this mean for charities?‘. One comment which caught your editor’s eye, among several:

Targeted Giveaways to charities is becoming a bit of a worrying trend. We are concerned that by targeting individual charities risks categorising the sector into worthy and less worthy organisations.

A comment on another third sector news site points out that Ludlow Museum, a rather different charity from the others in the “giveaway” list, is “in the constituency of one Philip Dunne MP, a minister of state for the Ministry of Defence”. Coincidence or more like ‘pork-barrel politics’?

Link to Charity Finance Group’s full Summer Budget briefing (pdf, 390KB).

An initial piece from NCVO looks at the welfare changes and living wage: ‘A budget full of implications for the voluntary sector‘.

Budget briefing from Scotland’s SCVO.

Baker Tilly accountants cover the implications of ‘one of the hardest hitting Budgets for the social housing sector in living memory’.

Our CharityBlog has a Storify round-up of “Some #volsec reaction to the Summer ’emergency’ Budget“. (Added pm, 9/7/15)

Sector Press

Civil Society News coverage: