Following the changes on VAT, is tax relief on giving next?

The Lady may not have been for turning but this male-dominated government certainly is. On Monday the Treasury executed a U-turn – twice – and scrapped plans to impose VAT on pasties and caravans. So: can we expect one that will do more to help the voluntary sector apart from a new and bigger transition fund – lifting the planned cap on tax relief for giving?

Well, the Guardian reports that David Ruffley, MP for Bury St Edmunds, a Conservative, has said budget plans to cap tax relief for charitable donations were conceived “on the back of an envelope” and claims ministers are now preparing the ground for a rethink to avoid hurting the voluntary sector. Let’s hope he’s well-informed and the campaign to reverse the Budget provision – begun by the National Council for Voluntary Organisations (NCVO) two months ago and endorsed by VCH – is about to win a notable victory.

As we here at VCH know all too well and you do too, charities and voluntary organisations are under threat. A new study of 100 charities – from New Philanthropy Capital and insurance firm Zurich – says two-thirds are cutting frontline services and three quarters are making staff redundant. A third of the sector’s funds come from government and are going down and down, with 60% hit by council spending cuts. One in ten could close within a year.

Dan Corry used to work for Labour ministers. As NPC chief, he now says:

“This is a time of radical change for charities. Not only are they coping with some of the biggest spending cuts in British history, but the landscape is also changing fast. 
As the state pulls back we are seeing a real shift in the way public services are commissioned and delivered. Our survey suggests some charities will be able to gear up to play a bigger role, but we think others will find it tough and will go under. 
It’s vitally important that we understand these changes and act now to ensure that their impact on the voluntary sector and the people they help is positive, not detrimental.”

Nick Hurd, Cabinet Office minister, keeps saying that the government knows it’s “very challenging” out here and up to £600m will be on offer – from Big Society Capital. And he has asked the sector to come up with ideas on how the state can save money or deliver services more efficiently (Whitehall-speak for sacking people). But the point remains: if the sector runs out of cash as quickly as the study suggests it might how on earth can it be expected to do all these things?