What does the Autumn Budget 2021 do for charities?

10th November 2021

Among signs that the economy is slowly improving after the pandemic, but with the potential international impact of COP26 looming large in the background, all eyes were on Rishi Sunak at the end of October to see what measures he might take to help the UK economy in the budget for 2021-2022.

Many in the charity sector may have been looking for measures that would help their organisation, either directly or indirectly – whether by simplifying the processes that charities use, creating tax or other reliefs for charities, or by implementing measures which alleviate the pressure on the services charities provide, for instance by allocating funds to relevant public services.

In fact, the Chancellor’s latest budget contained a number of measures that appear promising for charities, and we take a closer look at these below.

1. Universal Credit, Affordable Homes and the National Living Wage

  • The Government pledged to cut the taper on Universal Credit – the rate at which benefits are reduced for every £1 earned above £515 a month – from £0.63 to £0.55, meaning that many individuals and families on the lowest incomes will be able to keep a greater amount of their benefits. This should ease the demand on charities working to help the 6 million people currently in receipt of Universal Credit in the UK, whether by providing food banks, refuges and homeless shelters or support for the disabled.
  • The Government also pledged to invest £11.5 billion in the Affordable Homes Programme in England over the next five years, which aims to build 180,000 new homes, over half of which would be outside of London. Similarly to the above, this should ease some of the current pressure on charities providing support for individuals and families relying on affordable housing schemes.
  • Changes were also announced for individuals in receipt of the National Minimum Wage. Apprentices will benefit from a raise to their wages of over 10%, and the National Living Wage will increase to £9.50 per hour. This may be a mixed blessing for charities, however, as although it may lower the demands on some charities’ services, charities which are employers will need to account for the increased cost of paying employees on the National Minimum Wage.

2. UK Shared Prosperity Fund and "Levelling Up"

  • The UK Government’s post-Brexit UK Shared Prosperity Fund, which is intended to replace EU “structural funds” and will be launched in April 2022, should help many charities recover some of the income they would previously have received from the EU. The Fund will be worth over £2.6 billion over the next three years, and will include:
    • £500 million to support parents and children;
    • £560 million for youth services, enough to fund up to 300 youth clubs; and
    • £560 million for the “Multiply Project”, which will provide maths coaching.

These pledges will be welcomed by charities providing educational services and support for young people in the UK.

  • The much-anticipated Levelling Up White Paper is also due to be released by the end of 2021, which it is hoped will have positive implications for the third sector. This will focus on improving living standards, increasing opportunity, and repairing the damage done by Covid to public services, prioritising backlogs in hospitals and courts, school catch-ups and jobs. The details of the Levelling Up Plan and the UK Shared Prosperity Fund are to be revealed in the coming months.

3. Boost for the culture sector

  • England’s culture sector will receive £850 million to protect museums, galleries, libraries and local culture. This will enable the renovation, restoration and renewal of over 100 regional museums and libraries.
  • It was also announced that the tax relief for museums and galleries which was due to end in March 2022 is to be extended for another two years, to March 2024. In the period from October 2021 to April 2023 this relief will be doubled. Both of these measures will be helpful for the many charities across the UK providing services in the arts sector.

4. Health and Social Care Levy

  • Although announced prior to the Autumn Budget, it is estimated that the 1.25% increase in National Insurance contributions by employers (the Health and Social Care Levy) will raise an extra £12 billion to fund health and social care across the UK.
  • This is likely to be welcome news for charities working to support those in care, as it should provide much-needed extra funding for the sector and ease pressure on the services those charities provide. Charities who are employers will need to budget for the one-off administrative costs of updating their payroll systems to reflect this change.

5. Recovery loan scheme

  • Another area which may be helpful for some charities is the continuation of the Recovery Loan Scheme, which will now be available until 30 June 2022. This provides certain accredited lenders with a government-backed guarantee of 70% on any losses that may arise in relation to a Recovery Loan.
  • Thanks to the extension, Recovery Loans of up to £2 million will continue to be available to small to medium-sized enterprises (including non-profit organisations) trading in the UK which have been adversely impacted by the COVID-19 pandemic, and which would be viable were it not for the pandemic. The extension will be helpful for the many charities and social enterprises which conduct trading and currently rely on some degree of borrowing to continue their work.

6. Civil and criminal justice

  • An important measure announced for the legal sector was an extra £900 million for the Ministry of Justice in the next year, primarily to tackle the backlog of cases in the courts. Over £475 million is to be allocated to the criminal justice system and over £320 million to increase capacity in the civil, family and tribunal jurisdictions to tackle backlogs and reduce delays.
  • The government has also pledged to provide more funds to increase the thresholds for means-tested legal aid, which will mean many more individuals who were previously unable to afford independent legal advice will now be eligible for support.
  • Both of these measures will be welcomed by charities involved with the legal sector, including those providing pro bono legal advice, campaigning for human rights and providing support to the victims of domestic abuse, exploitation in the workplace or wrongful conviction.

If you have any queries about the topics discussed above, or there are any other issues we can help you with, please do get in touch with Laura Sherratt, Ben Brice or another member of our Charities team.

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