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2018 Budget analysis for voluntary sector

NAVCA has produced a summary of key points to take away for the voluntary sector. NAVCA is MVDA’s national membership body, and the statement below is taken from NAVCA's briefing:

NAVCA Budget briefing

Today’s Autumn Statement marked another uneventful budget with little significant change for the VCSE sector.  As perhaps expected no intentions were set out around future support and funding for VCSE organisations, to statutory sector commissioning, or to how the budget might link with recent pledges made in the Civil Society Strategy and Loneliness Strategy.

Despite these significant shortfalls the budget does hold some relevance to the VCSE sector, and in the sections below, we provide you with an “at a glance guide” to measures outlined in the Autumn Statement which may impact on local infrastructure and the wider VCSE sector. 

The budget includes a “new path for public spending” ahead of the 2019 Spending Review:

Mental Health:  In summer 2018, government pledged funding of £20.5bn to the NHS over the next five years. Within this, funding for mental health services will grow as a share of the NHS’ overall budget, and will see investment of up to £250m by 2023/24. This investment is intended to cover the cost of a suite of mental health crisis services including:

  • A 24/7 crisis helpline for mental health (via NHS 111)
  • Children and young people’s crisis teams across the country;
  • Comprehensive mental health support in every major A&E department and more mental health specialist ambulances;
  • Increased community services such as crisis cafes.
  • Schools-based mental health support teams and specialist crisis teams for young people across the UK.
  • Support for up to 55,000 people with severe mental illness to find and retain employment by expanding access to the Individual Placement Support programme

Local Councils & Social Care: Ahead of the forthcoming Adult Social Care Green Paper, Government has pledged to:

  • Provide an additional £240m in adult social care funding in 2018/19 and a further £240m in 2019/20, with the funding intended to ease winter pressures on the NHS and help people transition from hospital to care setting appropriate for them. 
  • An additional £55 million in the remainder of the 2018/19 financial year for the Disabled Facilities Grant to provide home aids and adaptations for disabled children and adults on low incomes.
  • Make £410m available over the next financial year (2019/20), for both adults’ and children’s social care:  Government outlines that local authorities “should use this funding to ensure that adult social care pressures do not create additional demand on the NHS” and “can also use it to improve their social care offer for older people, people with disabilities and children”.
  • Available funding of £84 million over 5 years earmarked for improvements to children’s’ social care for up to 20 local authorities with high numbers of children in care.


Benefits & Living Standards - Universal Credit and National Living Wage & National Minimum Wage

Universal Credit:  Despite acknowledging problems with its roll-out and administration, the negative impact upon Universal Credit (UC) claimants was ignored, with the Chancellor announcing the Universal Credit is “here to stay”.   Key measures announced around UC:

  • Over the next 5 years the Treasury will allocate £1bn to the Department for Work & Pensions to help ease the transition to UC as full national roll-out takes place in 2019
  • In-work allowances (the amount that claimants can earn before Universal Credit begins to be withdrawn) will be increased by £1,000 a year. This measure equates to £1.7bn annually and is intended to support 2.4 million working families and people with disabilities by £630 per year.
  • Support will also be incorporated for claimants repaying debts with Government reducing the maximum rate at which deductions can be made from Universal Credit from 40% to 30%.

National Living Wage & National Minimum Wage: The government has set a target for the NLW to reach 60% of median earnings by 2020 (subject to sustained economic growth).  Announcements in the budget include:

  • Increasing the NLW by 4.9% from £7.83 to £8.21 from April 2019, which will benefit around 2.4 million workers
  • Accepting recent recommendations by the Low Pay Commission to increase NMW rates from April 2019 as follows:
  • Increasing the rate for 21 to 24 year olds by 4.3% from £7.38 to £7.70 per hour 
  • Increasing the rate for 18 to 20 year olds by 4.2% from £5.90 to £6.15 per hour 
  • increasing the rate for 16 to 17 year olds by 3.6% from £4.20 to £4.35 per hour
  • increasing the rate for apprentices by 5.4% from £3.70 to £3.90 per hour

Affordable Credit and Financial Inclusion:  Measures around social lending and financial inclusion announced in the Budget include:

  • Use of dormant assets funding to promote financial inclusion. This will initially see the deployment of £55 million primarily to address the problem of access to affordable credit.
  • A pledge to supporting the credit unions and support people to increase personal financial resilience by launching a pilot of a new prize-linked saving scheme for credit unions.
  • Plans for government, to work with leading debt charities and the banking industry to explore feasibility, build and design a pilot for a no-interest loans scheme in early 2019 were also set out.

Supporting Business & Enterprise: Measures to support business and enterprise include:

  • Changes to business rate relief to reflect the recent revaluation in rateable value of business premises. With this in mind, the government have promised that retail properties with a rateable value below £51,000 will benefit from a cut of 1/3 in business rates.  This is intended to result in a saving of up to £8,000 for up to 90% of independent businesses. 
  • A total of £675 million earmarked to help rejuvenate and transform high streets. 

Taxation (General): Measures to implement a “fair and sustainable” tax system include:

  • In April 2019, the Personal Allowance will be raised to £12,500 and higher rate threshold to £50,000. 
  • Fuel duty will be frozen for the ninth consecutive yearDuty rates for beer, cider and spirits will be also frozen.
  • From 2020 the government will introduce a Digital Services Tax (DST) to ensure that large multinational tech businesses make a fair contribution to the economy. Under this proposal, the government will introduce a new 2% tax on the revenues of large digital businesses to ensure that the amount of tax they pay is reflective of the value they derive from their UK customers/users. 

Charity Tax: With specific reference to the VCSE sector, the government have announced a suite of measures designed to reduce administrative burdens on charities, which will come into force from April 2019:

  • Increasing the upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000
  • Increasing the individual donation limit under the Gift Aid Small Donations Scheme to £30, which applies to small collections where it is impractical to obtain a Gift Aid declaration 
  • Providing £15m to charities to distribute surplus food and help reduce annual food waster which currently stands at around 250 million meals per year.

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