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Charity finance policy

9 June 2017, 09:01

LIVE BLOG: General Election 2017

Follow CFG's analysis of what General Election 2017 means for charities via our Live Blog. You can also keep up to date by following Andrew O'Brien, Anjelica Finnegan, Heather ...

Follow CFG's analysis of what General Election 2017 means for charities via our Live Blog. You can also keep up to date by following Andrew O'Brien, Anjelica Finnegan, Heather McLoughlin and Caron Bradshaw on Twitter. ASF - 11:00 - 15/06/2017 Chief Executive, Caron Bradshaw, has issued the following statement on the appointment of Tracey Crouch MP as Minister for Civil Society:

"We congratulate Tracey Crouch on her new appointment as Minister for Sport and Civil Society. Charities are faced with a number of operational challenges which strain their resources including the apprenticeship levy, irrecoverable VAT, and an ever more complex commissioning environment. We will urge the new minister to work her colleagues across Whitehall as well as civil society to ensure the government has a positive vision for the sector which tackles these challenges and enables charities to be as effective as possible in meeting the needs of their beneficiaries."

ASF - 09:28 - 15/06/2017

Tracey Crouch, MP for Chatham and Aylesford has been confirmed as the new Minister for Sports and Civil Society.

Given that the minister now has responsibility for sports as well as the civil society brief, there are questions around how her time will be split between the two. There are significant challenges facing UK sport, not least the reforms to the Football Association's structure. Earlier this year the FA received a vote of no confidence in Parliament and are in the process of implementing major reforms. If these reforms don't meet the government's expectations Crouch has previously said the government will consider introducing legislation to enforce change. At a time when charities are also facing major operational challenges of their own and we are entering vital Brexit negotiations this will be a demanding brief. CFG is committed to supporting the Minister in her new role, and ensuring that the needs of charities are given appropriate consideration on the government's agenda. ASF - 08:30 - 15/06/2017 *update on Minister for Civil Society appointment* John Glen will not be  the Minister for Civil Society - he has been made Minister for the Arts, Heritage and Tourism. DCMS had confirmed yesterday that he would be taking on the civil society brief but later said that the position was still vacant. The expectation now is that Tracey Crouch, MP for Chatham and Aylesford, will be the Minister for Civil Society. We will of course keep you updated here. ASF - 07:15 - 15/06/2017 Richard Harrington is reported to have been replaced as Parliamentary undersecretary of state for pensions by Guy Opperman, MP for Hexham. But this is yet to be confirmed. Harrington has been moved to Department for Business, Energy and Industrial Strategy. Whoever takes on the role will be the third new pensions minister in two years (the twelfth since 2000). Given the complex challenges facing pensions in the UK we can only hope that this will be the end of the revolving door. The new appointee will inherit a complex brief with a number of big decisions to be made – the future of tax relief on retirement savings, a decision on when the state pension age will rise to 68, and of course, reforming Section 75 employer debt in multi-employer schemes. ASF - 11:15 - 14/06/2017 *NEW MINISTER FOR CIVIL SOCIETY ANNOUNCED* John Glen, MP for Salisbury, has replaced Rob Wilson as Minister for Civil Society. Glen has taken an interest in civil society issues in the past - he took an early interest in the Big Society Bank and, back in 2010 and 2011, raised concerns that small charities would not be able to access the funds and called for safeguards to be put in place when they did to ensure that those charities don't fall into debt. You can find out more about him on his website. A new minister represents an opportunity for the sector to refresh its relationship with government. As we have said throughout the election campaign and in its aftermath, charities should be confident in putting positive solutions to the operational challenges we face. ASF - 17:05 - 13/06/2017 Robert Halfon has been replaced as Skills Minister - with responsibility for the Apprenticeship Levy - by Anne Milton, MP for Guildford. Charities have told me during the election campaign that the Apprenticeship Levy is one of the biggest operational challenges facing charities. The Conservative party, the Labour Party and the Liberal Democrats all committed to the apprenticeship levy in their manifesto and so, as I said at CFG's annual conference, it is unlikely that we will see this policy dropped. However, CFG will continue to work hard to get the changes we need to make the Apprenticeship Levy work for charities. AOB - 12:00 - 13/06/2017 Caron Bradshaw, our Chief Executive, has issued the following statement on the appointment of Mel Stride as the new Financial Secretary to the Treasury covering charity tax issues:

"We congratulate the new Financial Secretary of the Treasury on his new appointment and look forward to working with him. Charities are facing a number of tax pressures including irrecoverable VAT, increasing Insurance Premium Tax and rising business rates as well as unnecessary red tape through the Making Tax Digital changes. We will be urging the new Financial Secretary to make supporting the good work of charities a priority, something for which there is cross-party support. If the government can do this, then we can unlock resources for charities which can go towards helping beneficiaries.”

AOB - 10:42 - 13/06/2017

AUSTERITY IS OVER, MAY TELLS TORIES - THE TIMES

Above is the headline of the Times today, allegedly the message that the Prime Minister gave to Tory MPs yesterday in her analysis of the election and the government's direction in the months ahead. In my last blog before the end of the election campaign, I said that this election may mark the beginning of the end of austerity, given public dissatisfaction and the growing political opposition to the lack of investment in public services. It seems like the hung parliament has sped up that trend. But what does this mean for charities? As this graph from NCVO Civil Society Almanac 2017 indicates, what we have seen is central government spending increase and local government spending decrease. For large charities, which often work directly with central government department, the overall trend has been positive. Spending from central government has passed it £7bn peak in 2009/10 to rise to £7.3bn. A large portion of this is likely to be in those sectors working in the international development sector. For smaller charities, working at a local level, austerity has really bit hard. The fall was dramatic to start with, as cuts to local government were 'front loaded' in the austerity programme - this meant that cuts had to be made right away. By contrast, central government cuts were 'back loaded' to the end of the 2010-2015 Parliament, and unsurprisingly, never happened as reasons or excuses were found for why they should not go ahead. Local government income has fallen £1.2bn since its peak in 2007/08 - before the financial crash - and looks like a slow downward trend. The picture going forward doesn't look any better, with the LGA still predicting a shortfall of £5.8bn by 2020. So when we talk about austerity, we need to be clear about where the brunt of the cuts of fallen and, conversely, who needs to be at the front of the queue for more investment. Arguably for charities, the aim should be for local government and local services to be the first port of call when it comes to more spending. Government should work with councils to ensure that they have the financial resources that they need to deliver services effectively and this would have a positive impact on the sector, particularly small charities - which have seen the biggest falls in government income according to NCVO/Lloyds Bank Foundation research (p.22). Of course other lobbying groups, particularly business, will be pushing for any new spending to come in the form of tax cuts and physical infrastructure. We need to make the case for why social infrastructure needs to be prioritised by the new government. AOB - 08:30 - 13/06/2017 We've got a Charities Tax Minister! Mel Strike, MP for Central Devon, and former whip will be taking over the role of Financial Secretary of the Treasury from Jane Ellison, who lost her seat at the last election. Mel Stride has showed interested in military charities, museums and heritage organisations in the past. But as a former whip, it will be interesting to see how it makes the transition between the Whips Office and government minister. Whips are known for their loyalty and their ability to 'carry out a message', so it may be that Mel because more of a spokesperson for government to the sector. On the other hand, as his first ministerial post, Mel may be wanting to make a mark, and charities are an opportunity to do so as there are plenty of issues that need resolving. We'll be popping a copy of our charity tax plan in the post... AOB - 17:30 - 12/06/2017 The grapevine says that junior ministerial roles are going to be announced later in the week, rather than today. So I'm ending my involvement for today. If you have any questions or queries about CFG's work post-election, you can always drop us a line on policy@cfg.org.uk I'll be speaking tomorrow on Facebook Live with Director of Social Change, with an interesting panel including Carol Mack, CEO, Association of Charitable Foundations and Kathy Evans, CEO, Children England - so that should be a good discussion! AOB - 11:15 - 12/06/2017 Charities need to keep on top  of the Brexit process, but what is really happening here? We've had two developments which could have an impact on the Brexit negotiations and how charities should interact with it. Firstly, it is clear that Parliament is going to have a stronger role in this than it was going to have previously. A government without a majority cannot afford to ignore the wishes of MPs either on its own backbenches or in the other parties. This could led to the creation of a Commission or APPG on Brexit negotiations, which if it could get enough of a following across the floor of the House of Commons, could have a decisive role in the negotiation. This will mean that charities need to not only consider the technical issues around Brexit, but also the political issues, with MPs likely to want to defend their local interests and shape a deal in line with their world view. Secondly, the balance of the Cabinet has tipped into the 'Leave' camp. I don't think that this is as decisive as some journalists claim, after all the days of Cabinet votes on major issues is long gone. But what it does indicate is that Theresa May has to balance both the desire for Remainers to secure access to the single market, with the Leavers who see single market departure as the only form of Brexit that achieves Brexit. At the moment, the fear of the Leavers seems to be in the ascendancy, but charities will need to watch the Cabinet carefully because it looks like Cabinet could be more decisive than the PM when it comes to setting the Brexit agenda. Reaching out across the Cabinet table must be something that all charities are prepared to do, even if it is in departments where they have no traditionally had much contact in the past. With the indecision that is likely to result from competing Cabinet Ministers priorities,  charities have an opportunity to get their views across and potentially adopted. AOB - 05:00 - 12/06/2017 Hi all, we are still here and looking forward to the completion of the Prime Minister's mini reshuffle post-election. At present, we are still waiting for junior appointments including the new Financial Secretary to the Treasury (who is likely to be responsible for charity tax issues such as gift aid) and a new Minister for Civil Society. Given the importance of Brexit and a number of strategic issues highlighted in the recent House of Lords report, the new Civil Society Minister will be coming into office at an important time. The agreement between the DUP and the government is still also to the decided - although the BBC says it is likely to be focused on more funding for Northern Ireland's public services and economic development as well as measures to strengthen the Union. We'll see what form this agreement comes in and what priorities it has over the coming days. Remember to check in regularly here, as we keep charities up to date with the latest developments, what they mean for charities and what steps charities should take in response to them. AOB - 14:50 - 10/06/2017 Two quick updates for charities on today's events. Firstly, the resignation of Theresa May's two more senior aides, Nick Timothy and Fiona Hill is going to lead to some big changes, even if Theresa May manages to stay in office which at the time of writing seems still up for grabs. Nick Timothy was the central policy making advisor and a big fan of things such as the Industrial Strategy, Grammar Schools and focusing on 'ordinary working families'. His departure is going to leave a strategic hole in the government, and the Cabinet is also asking for a stronger role in policy making. Ultimately this is, sorry for being a broken record, a big opportunity for charities. Policy makers in charities should be getting their ideas ready to dash off to government as soon as possible, before a direction is decided upon and the dust settles.  Regardless of what charities do, policy change is likely after such a surprising defeat. Secondly, there is a lot of talk about the DUP and Brexit. The DUP manifesto is clear on wanting a 'clean Brexit' so that the UK can make trade deals around the world. Although they want to avoid a hard border with Ireland, this is also in line with the Conservative position. The DUP Leader, Arlene Foster has made some attacks at 'hard Brexit', but it seems unlikely that this will change the government's position. More interestingly is the Cabinet, which is apparently calling on the PM to water down the Brexit she is offering and make clear that she wants to have a deal with the EU. The Tory Party was in favour Remain in the referendum, and after her defeat, Remainers will feel empowered to call for a softer Brexit. Charities must be wary of a 'soft Brexit' - as I discussed in my blog on the EU's position they will only agree to a trade deal if it has controls on tax policy and State Aid, two areas with the biggest positive opportunities for charities. It is important that the UK government doesn't trade this away in the search for a free trade deal. AOB - 16:25- 09/06/2017 Interesting just to reflect on today's brief statement by the Prime Minister about the election. A quick summary:

• PM is aiming to govern for five years with the Democratic Unionist Party as her support base
• PM wants to guide the UK through the Brexit negotiations
• PM is going to focus on cracking down on Islamic Extremism

It is interesting that the DUP is yet to agree with this deal, so it is too early to say whether this government has legs but there is clearly a message here that the Prime Minister will avoid going to the polls if she can avoid it. For those that are considering whether it is worth engaging with the new government because of fear of another quick election, this is important. It looks like we have to get involved with this government quickly, because it aims to be around for some time. The Prime Minister did promise not to call an early election previously and then did so...but surely she won't do that again? ASF - 12:07 - 09/06/2017 Reports suggest that 72% of 18-24 year olds registered to vote turned out, this is compared to 43% in 2015. This is perhaps one of the most interesting aspects of the general election result - as Caron’s quote says:

“We know that young people are more interested in seeing social change and if politicians want to build bridges with this part of the electorate and meet their expectations, they need to back the charity sector and our work.”

So what could this increase in engagement from young people mean for charities? We know that young people are committed to social justice and are driven to improving the world around them. This is born out in the ONS volunteering data which shows that 51% of 16-24 year olds volunteered for an average of 17 minutes per day over the course of the year. This is the highest rate of volunteering of all age groups both in terms of number of people, and the average time spent doing it. Students are also more likely to volunteer and for longer per day than those in work. The volunteering that the ONS is talking about here is ‘formal volunteering’ – i.e. volunteering done through charities, community groups, social enterprises and community interest companies. It is these organisations that offer young people the opportunity to make a difference to their local communities and internationally. They are likely to respond positively to policies that enable charities to do their work more effectively. Indeed research carried out by ComRes on behalf of CFG and the Institute of Fundraising show that it is the youngest adults in Britain are considerably more likely than their older counterparts to say that government should consult charities and civil society groups when deciding future policies  (41% of 18-24 year olds vs 30% of those aged 65 and above). So essentially if young people are going to vote more regularly then the next government (and indeed all parties) are going to have to consider their interests and expectations. Because the sector is a  driver for social change and the vehicle through which young people and students in particular themselves drive that change, politicians will need to have a coherent plan to ensure the sector can be as effective as possible  as part of their bid to secure the youth vote. Charities need to be confident in putting forward policy solutions that improve our operating environment - read CFG's election briefing for details of what we think these solutions are. AOB - 10:30 - 09/06/2017 Here is a quote from our Chief Executive, Caron Bradshaw, about the election:

“If the recent past has taught us anything it is to expect the unexpected. It is important that all parties act responsibly and try to create a stable government to deal with the significant challenges that lay ahead. None of the parties had a particularly compelling offer which focussed on charities. It is important in the wake of this result that all sides go back to the drawing board to develop a big, bold, positive vision for the country that has the charity sector as a key partner. To charities we say; don’t be paralysed by this result. A hung parliament will create uncertainty, but that is our prompt to step up and provide proposals to government. We know that charities will continue to be asked to meet the needs of our society and we should be bold in putting forward policies that break down the barriers to us being as effective as possible. It is clear that there was a huge turnout of young people in this election. We know that young people are more interested in seeing social change and if politicians want to build bridges with this part of the electorate and meet their expectations, they need to back the charity sector and our work.”

AOB - 9:15 - 09/06/2017 Before the election, I wrote a blog post about what the campaign meant from a charity perspective. One of the themes from that - the 'beginning of the end of austerity' appears to be picking up traction with commentators and observers. Charities have been operating in a depressed public spending environment and this has put huge pressure on the sector. However, with no majority for the Conservative Party and all the other main parties committed to more spending and higher levels of taxation, this could be something that is about to change. This could have important ramifications for charities. Although depending where additional funding goes, it could impact different parts of the sector. For example, a focus on central government programmes is likely to help the biggest charities. A reversal of proposed cuts in local government, would probably benefit the smaller end of the spectrum. Of course, no government has been formed yet, let alone a Budget put together but charities may need to start thinking about how they put forward proposals to government in a 'post-austerity' environment. In short, could it now be the case that there is some money left?   AOB - 9:00 - 09/06/2017 Welcome the Live Blog! We'll be keeping charities up to date with what is happening and what this all might mean for the charity sector. A quick update on some big news for charities. Firstly, we are going to have a new Civil Society Minister responsible for charities (if the post is retained) as the previous incumbent, Rob Wilson has lost his seat. Secondly, we are going to have a new Charities Tax Minister because Jane Ellison, the previous incumbent, lost her seat. This means that two significant governmental roles for charities will be changed, and there is a real opportunity for the sector to reset the relationship with government and encourage a more strategic look at the support that should be offered to the sector.   « Back to all blog posts