What does the budget mean for faith-based organisations?

The Chancellor Philip Hammond had to somehow make good this week on Theresa May’s announcement at the Conservative Party conference that austerity is coming to an end. The budget he has come up with – called ‘populist’ by some – is characterised by tax cuts and the biggest spending since the Tories came to power in 2010. Let’s have a closer look at some of the detail that might affect faith-based charities.

One of the biggest announcements, which is worth being aware of if you are working with people on low incomes, is more investment in Universal Credit. A £4.5bn package was announced, including £1bn over five years to help claimants cope with the transition from other benefits to the new system. There will also be a £1000-a-year increase in the amount that claimants can earn before their benefits begin to be taken away – which should mean a boost of £630 for low income families. You can find more detail about the changes at MoneySavingExpert.com. The criticism is that all this doesn’t address wider cuts to welfare or structural issues such as long waiting times – the kind of thing that can leave people relying on food banks.

On a related matter, there was a pledge to provide £15m to charities and other organisations to distribute around 250 million meals’ worth of surplus edible food that is currently wasted. And it was announced that people struggling with debt will be given more ‘breathing space’: those in serious debt will have a longer grace period of 60 days before further interest, charges and enforcement action come in.

If you work in the whole area of housing and homelessness, there could be good news in the announcement that the borrowing cap on local authorities when it comes to house building will be removed, in a measure designed to encourage the construction of more homes.

A major part of the budget was the £84bn boost to health: the NHS will account for 90% of the extra government spending in the years ahead. The NHS budget will rise (as previously announced) by £20.5bn a year in real terms by 2023-24.

FaithAction members often tell us that they are seeing an increase in people experiencing mental health difficulties who are not able to access treatment. So there was welcome news in the pledge to increase funding for mental health services as a share of the overall NHS budget over the next five years. The extra support includes a commitment to ensure access to mental health crisis services in all A&E departments, specialist crisis teams for children and young people, more ‘mental health ambulances’ for people in crisis, and more community services such as crisis cafes and a new 24/7 mental health crisis hotline.

Meanwhile, there will also be an extra £650m in social care funding for local authorities next year. However, this is to include both adults’ and children’s care, as well as money to relieve ‘winter pressures’ in the system – leading some council leaders to complain that the amount was not as generous as it first seemed.

While there was no great raft of measures for charities in general, some of the minor points are worth noting, as they particularly affect small charities. The government has pledged to ‘reduce administrative burdens on charities’ by introducing new measures from April 2019 which should help address the obstacle of irrecoverable VAT.

These measures will include 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). Charities will also be allowed to increase the individual donation limit under the Gift Aid Small Donations Scheme to £20, which applies to small collections where it is impractical to obtain a Gift Aid declaration. However, the issue of dormant assets was not brought up in the budget, despite many charities campaigning for more of these funds to be released for charitable activity. Read more of this analysis in the Charity Times.

So, Is austerity really over?, asks The Guardian. It goes on to quote the Resolution Foundation think tank as saying that the policy is ‘eased but not ended’. The shadow chancellor John McDonnell says that the money set aside for Universal Credit is less than a third of the total amount of social security cuts still to come. Cuts to working age benefits are still to come into force, and there will be a full departmental spending review next year, when government departments could still face real terms budget cuts in the event of a no-deal Brexit. So it looks as though there will be further belt-tightening yet.

About Rodie Garland

Policy Adviser

Rodie is FaithAction’s Policy Advisor. She leads on parts of FaithAction’s programme of work for the Department of Health, Public Health England and NHS England – especially on our Faith and Public Health research and on Friendly Places. She also works on our FaithLab initiative to collect evidence of good and innovative practice from faith groups in addressing social problems.