The Spending Review: Issues for Churches & Charities

by Kevin Russell

I have identified a number of issues and opportunities for the church and charity sector. There is a lot of detail still to come, but here is my analysis of today's announcements.

Public Sector Reform

The way services are delivered will be reformed by moving provision away from central government. Underlying this is the belief that: 

• changes needed to tackle the UK’s social and economic challenges are too numerous and  complex to be solved by a one size fits all approach from central government
• new and innovative ideas are required to address these challenges. These ideas are most likely to come from service users, community groups and employees
• central government micro-management can stifle the innovation needed to instigate real change

To maintain the momentum for reform, and consult further with public sector staff, citizens and communities on how to deliver better services, the Government will publish a reform White Paper early in the New Year. This will set out further detail on the policies announced above.


Opportunities for churches and charities

The Government believes that it should continue to fund important services. But it does not have to be the default provider. This stifles competition and innovation and crowds out civil society. The reforms create new opportunities for non-state providers, including churches. In line with this, the Spending Review announced: 

• that the Government will pay and tender for more services, on the basis of results. The use of simple tariffs and more innovative payment mechanisms will be explored in new areas including community health services, processing services, prisons and probation and children’s centres. This complements measures already announced in relation to welfare to work, mental health and offender rehabilitation services
• the Government will look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises. This approach will be explored in adult social care, early years, community health services, pathology services, youth services, court and tribunal services, and early interventions for the neediest families

In addition, the Government are committed to:

• giving communities due notice and the right to buy or run public assets and services that might otherwise close or face significant reductions;
• giving parents, teachers or community groups the right to bid to start new schools

Funding

The Government have stated that they will assist new providers by improving access to the resources they need:

• the Government will direct around £470 million over the Spending Review period to support capacity building in the voluntary and community sector, including an endowment fund to assist local voluntary and community organisations. As part of this:
  
  
  • the Government will provide funds to pilot the National Citizen Service. The aim of the NCS is to encourage young people to become engaged and involved in social action within their communities.
  • establish a Transition Fund of £100 million to provide support to voluntary sector organisations delivering frontline services that stand to be affected in the short term by reductions in spending, and are able to demonstrate that the financial impact will affect their ability to deliver services. The fund will be provided for a transition period, enabling these organisations to adapt.
  • The Big Society Bank will bring in private sector funding in addition to receiving all funding available from dormant accounts;
• the Government will undertake a review of ways to increase philanthropic giving. Further details will be announced later this year.

It remains to be seen whether this funding, at an individual level, will be enough to enable cash strapped charities to deliver the services that these reforms are aimed at.

Charity Commission

The Review announced that the budget for the Charity Commission will be reduced from £29m in the current year, to £26m next year and down to £21m by 2014-15. The incoming Chief Executive of the Commission has already speculated on how these cuts could lead to the withdrawal of advice to charities (for which see the previous Legal & Financial bulletin).