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The Benefits of Brexit – what does the Government’s thinking mean for the voluntary and community sector?

With the publication of the 102 page report The Benefits of Brexit in the same week as the extensive Levelling Up white paper and the response to the Kruger Report, the government has given the charity sector a lot to read lately. Our Acting Head of Policy Richard Sagar has already provided some thoughts on levelling up; I’ve drawn the Brexit straw.

So, what’s in The Benefits of Brexit? First, the report goes through what has been achieved so far, before setting out how reform will bring in better regulation. Finally, the report sets out the government’s vision statements for the future of different policy areas.

What struck me as I read was the opportunity that the current situation creates for a deepening of understanding between the government and the charity sector – but also the massive effort that will be required to cultivate that understanding. It’s often said that “the government simply doesn’t understand the charity sector” and that a better understanding of how charities work, what they do and the impact they have would increase the government’s ability to accept charities as professional, a source of expertise, creative and innovative partners. Equally, how many of us in the charity sector can honestly say we understand the linkages between the component parts of the government machinery? Do we know how ideas become policy which then informs spending decisions, and how to bid successfully for that funding?

There are some other areas where we think there could be benefits for charities; as ever, this will depend on a combination of policy makers’ understanding the sector, political will and what the detail looks like.

Procurement: The government has published its response to last year’s consultation on the procurement green paper (more lengthy documents). It says this will enable “the £300 billion spent on public procurement each year to generate social value and unleash opportunities for small businesses, charities and social enterprise to innovate in public service delivery.” The government intends that tender evaluation will switch from Most Economically Advantageous Tender (MEAT) to Most Advantageous Tender (MAT). This is a helpful change and will encourage the inclusion of social value: when determining evaluation criteria, authorities can take a broader view of what can be included.

VAT: Along with Charity Tax Group, we’ve previously called for the Government to introduce a new special charity VAT rate on purchases, to complement existing reduced and zero rates and the social exemptions. This would be the first part of a longer campaign to reduce the amount of irrecoverable VAT for the sector to zero.

UK Shared Prosperity Fund: Part of the levelling up agenda, this is an opportunity to improve on past regeneration programmes which have invested in physical infrastructure but failed to support the social infrastructure to ensure it connects with the people who really need it. We are rapidly approaching the end of funding put in place during our EU membership and there is still a lack of clarity around how and when the SPF will come into full effect. However, we do know that the amount provided (£2.6bn by March 2025) will not match the amount of funding previously provided under the EU. So it will be even more important to make sure that funding is used to maximum effect and creates long-lasting positive change. Some of the SPF is aimed at improving skills and helping people into the labour market but we have learned this funding will not be available until 2024/25. The government has said that flexibility to fund VCSE organisations will be available where people and skills provision is at risk when EU funds end.

State Aid: With new rules on subsidy control and the announcement that the government is now looking at how to reduce red tape, CFG is keeping a close eye on developments. The Subsidy Control Bill is currently making its way through the House of Lords; we are seeking explicit guidance that charity tax reliefs such as Business Rates Relief and Gift Aid are not classed as subsidies.

The government has said that one of the lasting benefits of Brexit is that we can make the most of regulatory freedom. “Better regulations, co-created with businesses” is good news – involving the organisations that will be affected by regulation in the design process gives a much better understanding of potential unforeseen consequences, and can mitigate or remove problems at an early stage. Charities aren’t businesses – but financial leadership in charities puts their operation on a much more business-like footing, and many organisations across the sector have trading companies or are set up as social enterprises and are operating in the commercial space. The sector has significant insight which is valuable in the co-creation of regulations. Alongside other sector infrastructure organisations, we’ll be continuing to make the case with government ministers and officials that charity knowledge and experience enriches the development of regulation.

Let me know what you think.


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