UK Spending Review: Points for the social sector

Isabelle de Grave
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Chancellor George Osbourne has announced government spending plans for 2015-2016. Get a digest of the key points for social sector organisations and an overview of who is saying what.

The UK government has announced cuts in welfare, local government, policing, defence and transport, with healthcare, international aid and education in schools avoiding the decrease in expenditure.
 
Political analysts are dubbing the review an attempt “to steal political victory from the jaws of economic defeat.” In George Osbourne’s own words: “Britain is moving out of intensive care and from rescue to recovery”. 
 
But, economic forecasters predict that whichever party wins the next election, Britain’s austerity programme will last at least a decade. Another round of spending cuts are expected in 2016 alongside an increase in one of the main taxes.
 
Highlights: Where are the cuts?
 
Welfare spending:
• A new cap on elements of welfare spending will include housing benefit, tax credits, and disability living allowance
• A seven-day wait before job seekers can claim benefits was introduced
• Savings in welfare to total £4bn
 
Local government and communities:
• A further 10% in cuts to funding for the Department for Communities and Local Government
• Charity Commission fund cut by 6%
 
Frontline viewpoints: Tough times set to continue
 
On the ground the voluntary sector anticipates an increase in demand for services and a decline in statutory support. “This may be viewed as a ‘model of lean government’, said Charity Finance Group-CEO, Caron Bradshaw. “But charities are likely see more beneficiaries on their doorstep with even greater needs at the same time as further reductions in their funding,” he added. 
 
ACEVO chief executive Sir Stephen Bubb said: “The Department for Communities and Local Government must enforce the Best Value Statutory Guidance and ensure that councils do not seek to burden the voluntary sector with disproportionate cuts."
 
Mr. Bubb continued: “The sector must challenge government to give it a greater role in service delivery, and use mechanisms such as the under-used Right to Challenge to make the sector’s case to commissioners.”
 
Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, has encouraged local government to be sensitive about how it finds its savings calling for meaningful discussions between councils and the voluntary sector about how they can support their communities. 
 
Etherington highlighted the dual impact of potential cuts from local councils and knock on effects of  £4bn in welfare savings on charities and voluntary sector organisations: “Falling funding, along with the likelihood for some organisations that welfare changes will see more people seeking their advice and support, mean that many charities will be in a precarious position.
 
Given that charities play a major role in preventing social problems and therefore reducing costs, councils looking to balance their budgets would be well advised to consider the long-term effects before cutting the sector further.”
 
The 6% cut to the Charity Commission has also been seen as a threat to the coalition agreement to ‘support the creation and expansion of charities’. The regulator of over 160,000 charities in England and Wales has seen a 50% real reduction in its budget over the past three spending reviews.
 
Responding to the spending review, the Directory of Social Change director of policy and research, Jay Kennedy said: “Government seems intent on destroying this institution, which is the single most important statutory agency for the majority of charities in this country. The amount being cut is vital for the Commission to function effectively but absolutely miniscule in the grand scheme of public spending – in fact politicians waste the same amounts of money over and over on any number of harebrained projects and programmes that achieve little. They urgently need to think again.”
 
Highlights: Where is the spending?
 
Health:
• NHS budget in England to rise by 0.01% to £110bn
• Rise in capital spending to £4.7bn
• Joint £3bn commissioning plan between NHS and councils for social care.
 
Housing:
• Government will invest more than £3bn in affordable housing, but provided few further details about the investment
• £200m extra for troubled families initiative
• A new social rent formula will see landlords able to increase rents by the consumer price index of inflation (CPI) + 1%, for a period of 10 years, providing landlords with greater certainty over their future finances.
 
International Development:
• International development budget protected, rising by £809m to £11.1bn.
 
Charity research:
• The government will continue to back the Charity Research Support Fund (CSRF) for another year.
 
Frontline viewpoints:  Not all doom and gloom
 
Responding to the implications for the housing sector and a £3bn pooled health and social care budget for integration, David Orr , National Housing Federation chief executive said:
 
“The news that rents will be set to CPI +1% for 10 years is a positive step. This could help housing associations to start planning the construction of more homes and allow them to focus on tackling Britain's desperate housing crisis.
 
But the full implications for the housing sector depend on tomorrow's announcement on the detail of the capital spending for housing.”
 
He continued: “We welcome the government’s commitment of over £3bn for a pooled health and social care budget for integration. While there is huge pressure and demand on our health and care system, pooled funding removes some key barriers to more integrated services that better meet needs and reduce demand on the NHS.”
 
As the government protects the budget for international development, Charity Finance Group-CEO Caron Bradshaw said: “The fact that the commitment to spend 0.7% of GDP on international development has been reaffirmed is a welcome exception.”
 
Sharmila Nebhrajani, chief executive of the Association of Medical Research Charities, many of whose members make use of the Charity Research Support Fund (CSRF) fund has also commended the government’s decision to back the fund, which is worth about £200m a year. The fund supports charities that finance research in universities by covering operational costs such as maintenance, heating and lighting. 
 
"George Osborne has shown himself to be the true partner of patients by investing in science.
 
The public make medical research their number one charitable cause and the government’s commitment to partner their generous donations through the Charity Research Support Fund has added 25p to every charity pound invested in universities."