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Charities: cuts and crisis: central government and local authority cuts mean that voluntary and community sector organisations are facing a funding crisis, with services for young, disabled and older people among the hardest hit.


An estimated 100million [pounds sterling] will be slashed from the budgets of around 2000 charities because of the impact of government cuts on local authority decisions, according to the anti-cuts campaign group False Economy. However, charities are arguably more in demand now than ever, and historically the voluntary sector has saved the state both money and much needed resources.

Clifford Singer from False Economy, which is supported by the TUC, said: 'These cuts go deep into the voluntary and community sectors. These are not just "nice to have" groups but organisations providing vital services for older people trying to maintain independent lives, vulnerable children and abused women.'

One of the charities affected is Age Concern, which will see its funding reduced from 213 000 [pounds sterling] to 31 000 [pounds sterling].

The Citizens Advice Bureau, an institution that is looking at potentially severe cuts, said: 'This isn't the whole picture, we are actually facing a triple whammy at the moment with cuts to legal aid and the end of the Financial Inclusion Fund on top of local authority cuts. Our concern is not just for our bureaux as things get worse and they face closure, but principally for our clients who won't have anywhere to turn.'

Unite national officer for health Rachael Maskell explains: 'Local authorities are front-loading the cuts on charities, as they do not have to pay for the redundancies of their staff, so charities are taking a serious hit. Many services are being cut--like youth services, which will have a devastating impact on communities and young people's future prospects.'

Big Society--bigger cuts?

A spokesperson for the Department for Communities and Local Government (DCLG) acknowledged that some councils did not have their priorities right: 'In their approach to budget setting, the best councils are showing that they understand that a strong, thriving voluntary sector is more important now than ever and could be the key to providing high quality, good value services to their residents. But this is not the case everywhere. Councils that are failing to recognise the importance of the sector are being short-sighted in their approach.'

Whatever happens, the results will naturally have a big effect on local communities countrywide.

Jack Dromey, the shadow communities and local government minister said that the spending cuts would result in 'huge frontloaded cuts and the voluntary sector and community groups up and down the country are paying the price'.

Another area that is bound to be affected is the concept of the 'Big Society', in which voluntary groups and charities are very much at the fore.

TUC general secretary Brendan Barber commented: 'It sounds great, but in practice the Big Society is looking more and more like a big con.'

Facts and figures

A study undertaken by the National Council for Voluntary Organisations (NCVO) found that the UK voluntary and community sectors would lose around 911million [pounds sterling] in public funding each year by 2015, and cumulatively, the sector may lose nearly 3billion [pounds sterling] over the spending review period, which lasts until 2016.

The NCVO study, Counting the cuts, has calculated that the average charity will be expected to lose approximately 8% of their current funding by 2016. Central government currently contributes nearly 12billion [pounds sterling] to charities each year.

The hardest hit areas are Birmingham, with 190 organisations losing out, followed by 174 in London and 140 in Sheffield. Sheffield's total funding cuts amount to just over 8million [pounds sterling].

Responses from freedom of information requests--which make up the bulk of the research findings of both NCVO and False Economy's reports--show that approximately half of all local authorities are making disproportionate cuts to the voluntary and community sectors.

NCVO argues that the evidence demonstrates that while some local authorities are making strategic decisions that will benefit communities in the long term, many are not, which is causing 'real damage to the sector and local communities'.

But NCVO does not claim that the voluntary sector should be exempt from the cuts. Senior policy officer James Allen says: 'NCVO has never argued that our sector can, or indeed should, be immune from the cuts. We recognise and accept the scale of the fiscal challenge that the UK government is facing. However, the scale, speed and implementation of cuts is having a significant impact on our sector.'

The NCVO report continues: 'Some organisations in the sector are able to absorb the impact of reduced spending, but due to low levels of financial resilience across the sector, many cannot.'

The impact of these cuts are as yet unknown, as many local authorities have not finalised where their cuts will be made. Using Northumberland as an example, 19 charities face substantive cuts, most significantly to their adult social care service and the youth carers grant. Some might argue that every cloud has a silver lining, with an increase of 2150 [pounds sterling] in the budget of the local leisure centre. However you look at it, it is still a cut of over 1million [pounds sterling] to their charities allowance.

Peter Kyle, deputy director of ACEVO, the Association of Chief Executives of Voluntary Organisations, complained at the lack of provisions for charities put in place by ministers, citing the extra funding that had been pledged in the public services White Paper, which could cover the money being cut for charities: 'Charities are instead going to the wall because of the cuts and you cannot magic them back into existence again. It's shortsighted and mindless.'

Duty to consult

Following the widespread outcry, the DCLG, headed by Eric Pickles, issued a document providing 'Best Value Statutory Guidance' for local authorities on how to make the cuts, 'setting out clear expectations for councils considering changing funding to local voluntary and community groups and small businesses.'

Pickles says: 'I am not asking councils to do anything that I wouldn't ask of my department or any other.'

He adds: 'This new guidance provides another example of how this government is acting in concrete ways to deliver on its commitment to localism, growth and the Big Society.'

The DCLG guidance states that authorities should consider overall value from an economic, environmental and social value perspective: 'To achieve the right balance--and before deciding how to fulfil their Best Value Duty--authorities are under a duty to consult representatives of a wide range of local persons; this is not optional.'

This is a point agreed strongly upon by James Allen: 'This is something that we've pushed for. We want to encourage local authorities to mitigate the impact of the cuts wherever possible by involving community groups in discussions, so like any other business or organisation, our members will be better placed to plan for the future.'

The DCLG document seems to highlight that authorities should consult with local groups, voluntary organisations, community groups and small businesses, as well as with those who are likely to use services provided by the authority.

However, the main point of the document appears to be that authorities should 'seek to avoid passing on disproportionate reductions to the voluntary and community sector and small businesses as a whole, than they take on themselves'.

Rachael does not believe that cuts to charities are the right option at all. The worry, she says, is that in the long term charities that are being cut now will not be able to continue, and will eventually cease to exist: 'Charities won't be there. They are being seriously cut--they are cutting pay, they are cutting services, and some are closing. In essence they are living the nightmare of more for less.'

Clifford Singer agreed: 'Ministers talk up localism and say services will be better shaped locally, but the huge front-loaded cuts to councils mean that local decision-making simply gives councils the choice of which vulnerable people they should make suffer for an economic crisis they did nothing to cause.'

But the chairman of the Local Government Association, Sir Merrick Cockell, disagrees: 'The severity of cuts to council budgets means savings are having to be made across the board, and unfortunately funding to charities, voluntary organisations and community groups is not exempt.'

So, has the DCLG guidance done enough to assuage the worries of those in the voluntary sector? James is not so sure: 'We are very concerned that the cuts will have long-term impacts, and if not implemented carefully that there will be an unnecessary impact on communities.'

He added: 'Voluntary community organisations tend to work with some of the most marginalised and disadvantaged people in our society and there will be real impacts on those people if they are forced to scale back their activities or, indeed, to close their doors.'

The real test

Wider consultation and discussion would have been welcomed by many on this issue, and even if implemented carefully as James suggests, it is inevitable that the people who would lose most as a result of this policy are the weakest members of society.

Rachael notes: 'We do not believe the cuts produce the right solution to society, but cause huge detriment to service users, many of whom are from the most marginalised communities. We believe the sector should have been seen as a source of growth at this time. For every 1 [pounds sterling] spent on legal aid, 10 [pounds sterling] is saved elsewhere in the economy.'

She continues: 'Investing in the sector is an investment in our economy.' However, there are areas that face no cuts at all, but rather a period of increased investment. For example, Swale in Kent will see its budget rise by 60 000 [pounds sterling], in order to encourage contracting opportunities for third sector organisations.

Chelmsford, along with several other towns singled out to be part of the government's Big Society agenda scheme, will see another result altogether, as the council receives a one-off fund of 100 000 [pounds sterling] to support the voluntary sector locally.

But most areas will not be so lucky, and times ahead are uncertain.

While important questions relating to this issue go unanswered for the time being--especially as the final figure seems to be rising each month--and as new cuts are introduced, James says: 'There is no doubt that the current environment is very tough for our members and the wider sector,' adding cautiously: 'The real test is what will happen next.'

Chloe Harries

Assistant editor
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Author:Harries, Chloe
Publication:Community Practitioner
Geographic Code:4EUUK
Date:Oct 1, 2011
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