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Aiming to Deliver Real-world Improvements – The 2020 Spending Review

02-Dec-2020

 

The Chancellor of the Exchequer Rishi Sunak recently presented his Spending Review to Parliament.

During the course of this year, The Chancellor has been a reasonably familiar figure in the news because of the economic statements he has been delivering on behalf of the Government. The recent Spending Review would probably be the most anticipated announcement to date.

The Spending Review normally sets out how much the Government will spend on public services for the years ahead, and can often explore and set out other areas too. A typical Review would normally set out the Government’s plans for the next three to four years.

This year has been anything but normal.

Because of the economic uncertainty due to Covid-19 and the run up to completion of the UK leaving the European Union, The Chancellor chose to hold a review for the coming year only, with longer-term decisions to be put on hold until the world becomes a more certain place.

The Economy

Unexpected costs because of the pandemic, together with the reduced amounts of tax collections to cover those costs, is expected to leave the UK economy in a poorer condition by the end of the year compared to what it was before the pandemic.

This situation has ultimately had its impact on the voluntary sector, with more than half of charities expecting demand for their services to increase over the next couple of months. But with a majority of charities also expecting their income to fall, the sector is facing very challenging times.

However, within his speech The Chancellor gave some reassurance that the UK will not return to the difficult economic conditions that the country previously had to endure.

Employment

According to The Office for Budget Responsibility (OBR), unemployment will peak by the middle of 2021; to try and prevent this The Chancellor announced a series of packages (worth over £4 Billion) to help people back to work. This included a Restart scheme to support those out of work for 12 months, and a £1.6 Billion Kickstart programme supporting young people into jobs.

Health and Social Care

The health budget will go up by £6 Billion: This is to include an additional £3 Billion to help NHS cope with the pandemic, an extra £500 Million for mental health services, and a further £300 Million of Council grants for social care.

Other announcements of interest for the Charity Sector from The Chancellor’s Spending Review also included:

The UK Shared Prosperity Fund

Part of The Chancellor’s anticipated announcement confirmed the launch of The UK Shared Prosperity Fund (UKSPF), designed to replace money which was previously given by funding from the European Union (EU).

Launching with over £200 Million in 2021, the fund will aim to eventually match money given from the EU’s structural funding programs (equal to £1.5 Billion a year)

This Prosperity Funding will work on activities including:

  • Investment in people and skills tailored to local needs
  • Investment in communities and place. This includes facilities for culture and sport, civic, green and rural infrastructure, as well as assets owned by community, neighbourhood and housing improvements.
  • Help for those in most need – this includes support for specific groups of people who face employment barriers.

The Government’s Levelling Up Fund

The Chancellor also announced a £4 Billion ‘Levelling Up’ fund, which allows local areas to bid for up to £20 Million to directly fund local projects.

Although this looks like it might be aimed at economic development for places that have had challenges or limited spending in recent years, The Government does suggest the fund will include supporting community infrastructure.

Domestic Violence

There is to be an extra £40 Million of support for victims of crime, including domestic abuse. There will also be over £90 Million more for local authorities to provide safe accommodation for victims of domestic abuse and their children.

Charity Commission Funding

Funding for the Charity Commission will be getting an increase of its resources to over £28 Million in the coming year.

Ultimately, the early responses from the charity sector for The Chancellor’s Spending Review were varied, from lukewarm to frustrated.

The sentiment from the Charity Finance Group (CFG) was not dismissive, but again stressed the Government’s lack of recognition for the Charity Sector at a time when community and society have come to depend on charities whose efforts have made a difference. They have published a comprehensive blog on what the spending review means for the sector.

Although the opinion from national training charity Directory of Social Change (DSC) was far from being impressed, it did suggest that further study of what had been announced in The Chancellor’s Spending Review is needed; as much of what has been said may appear optimistic or encouraging in the first instance, but “...May not look so great on closer inspection..”

To read the Spending Review in full, or for more information visit the UK Government website.

MVA continues its efforts to provide guidance and advice during these challenging times for us all. For further help and information visit our designated COVID-19 section .

 


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