Charity sector faces £3bn public funding cut

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Charities are to face cuts reaching almost £3bn over the next five years due to government spending reductions, according to a report.

In the first comprehensive analysis of the coming impact of spending cuts on the public sector, the National Council for Voluntary Organisations (NCVO) has said voluntary organisations will receive £911m less per year by 2015-16.

Published today, Counting the Cuts, reductions in public spending add up to a cumulative loss of £2.8bn over the five years 2011-16.

NCVO based its findings on figures on the government's spending plans produced by the Office for Budget Responsibility to calculate the sum for the impact of the spending cuts on charities.

Freedom of Information research showed that although 45 per cent of local authorities are maintaining funding, with six per cent increasing levels, just under half of all councils are making "disproportionate cuts" to the voluntary and community sector.

NCVO said this indicated a "significant variance" in how different parts of government are implementing cuts.

Karl Wilding, head of policy and research at NCVO, said:

"Many charities are unwilling to speak out for fear they will jeopardise other funding streams, but we currently face the perfect storm of an increase in demand and nearly £3bn public sector cuts - this is a significant cause for concern because it will significantly hamper the ability of charities to support those most in need."

In response to the report, a Cabinet Office spokesperson said the Big Society allows the voluntary sector "many new opportunities to grow".

"Our reforms will allow the voluntary sector to bid for public service contracts worth billions of pounds. Just last week Big Society Capital launched with an expected £600 million to give the sector access to much-needed finance, which will help them expand and bid for these new contracts," he said.

"And we're doing more to support giving and philanthropy including measures in the Budget estimated to be worth £600m over the lifetime of the Parliament. This is just the start."

Shadow Cabinet Office minister Tessa Jowell said: "Soaring speeches on the Big Society will ring hollow when the people responsible for it are being made redundant."

Hannah Terrey, head of policy at the Charities Aid Foundation, said: "The government has announced some laudable initiatives to help charities and further develop our nation's culture of charitable giving, but the reality is that the impact of these will not be felt for years and many charities will have disappeared before they can take advantage of any new opportunities.

"We cannot expect philanthropy to completely fill the gap as many charities delivering vital services are working in areas which have not traditionally attracted significant public donations.

"Government must act quickly on the recommendations made in this report and work to protect the long-term health of the charitable sector and society as a whole."

George McNamara, head of public policy at British Red Cross said: "Many charities are already struggling and being forced to scale back much-needed work in local communities at a time when demand for these services is increasing due to the downturn.

"It is the most vulnerable in society who are bearing the brunt of these cuts.

"Preventative services, which in the long run could save the state money, are being disproportionately cut, potentially leading to higher costs in the future."