Budget challenges!

Sitting in the ACEVO office listening to the Budget. An average 25% cut to Department Budgets. This will hit hard - and cannot avoid harming frontline services. And this is an average. You can expect DCLG to take a bigger hit. This ,coupled with the announcement of a council tax freeze, will hit many third sector organisations in particular.

The increase in VAT is a hard blow. The increase to 20% will cost us an estimated £150m per year. But worst, it makes the competitive disadvantage we face against councils worse. Councils and other state organisations pay no VAT but when we deliver services we do. So if a school opts out of Local Authority control it will start paying VAT - now at 20%.

And it is estimated that already charities pay some £1.3bn in irrecoverable VAT. That bill will now increase.

Today’s emergency budget demonstrates the enormous scale of the challenge facing third sector organisations. The spending cuts announced will hit frontline services, and our sector will be asked to do more at a time when parts of our cost base are rising. Above all, today makes it all the more important that we continue to engage with the Government on the form that cuts take and on the Spending Review currently underway and to be announced on October 20th

We have known for a while that we have even tougher times ahead as a sector. So in ACEVO our focus in coming months will be on supporting members through cuts. Today we launch Cuts Watch, our new microsite dedicated to providing the latest news, resources and directions to support the third sector in the months ahead.

We also want this to be a space in which members can share their stories of cuts and their solutions, and a resource to support members to defend their services from Local Authority cuts in particular. A number of members have also been in touch with stories of 'back office cuts' translating into cuts to third sector organisations' front-line delivery, or of payment for agreed contracts or grants being delayed without explanation. I am meeting with Eric Pickles MP tomorrow and I will raise this.

ACEVO has started to engage with Ministers on influencing the Spending Review. As a starting point, Ministers are interested in what is currently delivered by quangos that ACEVO members could deliver at lower cost. Many of you have been in touch with suggestions (e.g. on what is currently done by Natural England, the National Treatment Agency, the National Police Improvement Agency as examples), which I will be feeding in to Ministers. I see this as a process of freeing up quangos to work better as third sector bodies. Interestingly British Waterways are in the process of changing from a national agency to a third sector body. An excellent thing!!

Now its off to DWP to see key people like Philippa Stroud and a top official who will remain nameless! Then dinner at the Carlton club with Greg Clark MP!!