DSC responds to the government’s Spending Review

At the Autumn 2024 Budget, we learned that the Government is doing a Spending Review in two phases. Spending Reviews are different to the Annual Budget in that they set central government spending for a longer period of time, typically three years.  

The two-phase review is unusual but essentially means that following the General Election, government departments had their budgets re-set for 2024/25 and set for 2025/26, with an overall ‘spending envelope’ set for the remainder of the Parliament. This second part of the review will produce more detailed plans for 2026 onwards. 

The Treasury has opened a portal for submissions until 9 February 2025. That’s just days away, but there’s still time to put your views and evidence in. It’s a fairly easy process involving a short online form and uploading a document.  

DSC has already fed into a joint submission by the Civil Society Group, but we wanted to go further in some areas that we think are particularly important for the charity sector – such as the Charity Commission, Local Government, and the impact of increased Employer National Insurance Contributions (ENICs) which were announced in last year’s Budget. 

You can read more details in the full document (pdf) here (please right-click and select open in new tab), which also includes some key context about the current state of the sector along with many links to supporting evidence.  

Below we’ve summarised our recommendations to the Treasury from our submission. There is further explanation for each recommendation within the full paper. As ever, please feel free to use any of this in your own responses if you haven’t sent in one yet – the more the government hears the same messages from different sources and organisations, the more likely we’ll be heard. 

DSC is calling for the following as part of the Spending Review: 

Charity regulators: 

• Ensure real terms increases to the Charity Commission budget for the rest of the Spending Review period, with additional funding allocated to allow the Commission to enhance and update the register of charities, so that it can take advantage of the latest digital technology, data science and research. Ensure sufficient consequential allocations for the devolved nations to provide real terms increases for OSCR and CCNI. 

Local government:  

• Provide further emergency financial support to stabilise councils currently under Section 114 notices or at risk of issuing them, to prevent further deterioration or collapse of local services, social capital and social safety nets. 
• Put local government finance on a stable footing with a multi-year finance settlement, to give them more stability in budgeting.  
• Provide sufficient budgetary increases for local government to allow them to uplift contracts and grants for VCSE suppliers in line with inflation. 
• Ensure robust mechanisms for local voluntary sector engagement with local government and local health agencies, as part of the government’s devolution plans.

Funding: 

• Allow the National Lottery Community Fund (TNLCF) to implement its new strategy, and commit to not interfering in the management and funding decisions of the lottery distributors. 
• Investigate the rate and amount of asset sales on the Olympic Park and take action to speed this up, to reimburse the lottery distributors more quickly for the lottery revenues that were diverted for the 2012 London Games. 
• Reverse the 2013 amendment to the Companies Act which eliminated the requirement for companies to report charitable donations in their annual reports. 
• Implement a long-term successor scheme to the UK Shared Prosperity Fund (UKSPF), which matches the amount of funding lost from leaving the EU, as was originally promised. 
• Work with the voluntary and community sector and devolved administrations in designing any UKSPF replacement scheme. 
• Engage members of the Community Wealth Fund Alliance (CWFA), local Community Foundations and other local funders to devise the most effective systems and methods for distributing dormant assets funds via a Community Wealth Fund (CWF).  
• Ensure that dormant assets funding distributed by a CWF(s) is accountable to local communities and used for local priorities, not central government policy. 

Taxation 

• Delay the changes to Employer National Insurance Contributions (ENICs), to allow trustee boards time to plan and charities to secure income to pay the extra costs (for example, until the next financial year, or on a phased-in basis). 
• Alter ENICs thresholds further, to reduce the impact, particularly on medium-sized organisations, which are already under huge pressure because of the local government financial crisis. 
• Provide sufficient funding for local governments and Integrated Health Boards to uplift contracts with VCSE suppliers so that the increased employer NI contributions can be covered without reductions in vital services that people depend upon. 

The result of the Spending Review will be announced on 11 June. DSC will be analysing the results, so mark the date in your diaries! 

Click here to see DSC’s full submission. (please right-click and select open in new tab)