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Charity finance policy

Time to get on an election footing

By David Ainsworth, Sector Specialist, CFG

For what seems like the latest of many times, we have seen a dramatic week in our politics. We're almost certain to see our exit from the European Union delayed, and the prime minister has attempted to call an election and been rebuffed by parliament.

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Nonetheless, it now appears an election is inevitable, most likely in November. But what does this mean for charities?

 

Get into election mode

The parliamentary arithmetic makes it inevitable that an election is coming. That means that the Lobbying Act already applies. And it means that purdah is likely to come into force, and delay anything you have ongoing with government.

It also means that manifestos are being prepared, and charities should think about whether it’s possible to influence what appears in them. Although let’s be realistic. Given the short timescales, and the heavy emphasis on Brexit, we’re likely to see briefer-than-usual manifestos with a lot of rehashed policies. The normal window of influence is not likely to be there.

Politically, there are now three plausible scenarios:

  1. Boris Johnson becomes prime minister
  2. Jeremy Corbyn becomes prime minister
  3. There’s a hung parliament

Each of these has radically different outcomes for the charity sector, politically, financially and socially. It’s worth thinking about each in turn.

 

Johnson becomes prime minister

Boris Johnson looks weak right now, but his plan when he came to power always looked a bit like what’s happened: create a position where he became the advocate of no-deal, create a sense that perfidious Europeans and rebel MPs were blocking him, and then go to the country.

He's cleared out the rebels from his party - the most effective opponents of Brexit to date - and he's gone some way to neutralising the Brexit Party. Pollsters currently give the Tories a 70 per cent chance of being the largest party, and a 40 per cent chance of majority government, although those odds are not reliable today, and are anyway likely to fluctuate wildly as time goes by.

Johnson’s Tory party is likely to be politically relatively far to the right, and most likely consumed by Brexit. Our projection is that a no-deal Brexit would be disastrous for the sector, and a hard Brexit would be bad. It will curtail the amount the government can spend, and much of the impact will fall squarely on existing beneficiaries.

Outside of Brexit, there’s likely to be some attempt to end austerity, which is to be welcome, but worryingly, there are a significant number of MPs on the front bench who have been relatively critical of the sector. So the wider environment may not be good.

 

Corbyn becomes prime minister

Pollsters currently reckon there's a 30 per cent chance of Labour being the largest party and about a 10 per cent chance of an overall majority.

Labour, too, are going to have to deal with Brexit, but it’s not likely to be as all-consuming for them, so in this scenario, we could see more progress on the issues charities really care about. If Labour are in a position to execute their manifesto, this is likely to bring radical change for the sector. Taxes will rise. Spending will rise. This ought to push down demand on the sector to fill in gaps.

Will it increase income, too? Maybe. Ideologically, Labour is quite opposed to the outsourcing boom which has driven a significant increase in charity funding, but financially it will increase funding to local authorities - traditionally big commissioners. These two forces will push in opposite directions, and who knows which might win.

Any which way, this is the scenario most likely to bring benefits for the sector.

 

Hung parliament

Projections currently make a hung parliament the most likely outcome of a general election, which is likely to mean more deadlock, Brexit debate, and little progress on the issues charities care about. We could very well end up back where we are now, with the Tories the largest party but devoid of allies, and with no one really able to command a majority. Given the lack of other parties willing to work with Johnson, it may be that a fragile coalition of Lib Dems, SNP and Labour is the only way to power.

In any case, we're likely to see some increased funding, but a much more limited domestic agenda, while the political landscape remains dominated by the continued deadlock over Brexit.

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