What the Autumn Budget means for small charities and the people they support

In the run-up to the Budget, we have been receiving the latest quarter’s monitoring reports from some of the small charities we partner with at the Foundation. These reports consistently feedback on the poverty, destitution and homelessness facing many of the people our charity partners support. And so, we were hoping that Chancellor Rachel Reeves’ first Budget would make commitments to help ease the continuing cost of living crisis facing whole communities, and make progress towards the just and compassionate society we want to see.

Signs of progress

First the good news. There is some action to help those on the lowest incomes. The Budget commits the Government to a further year of the Household Support Fund, which was introduced in 2021 to cover the withdrawal of the extra £20 a week in Universal Credit (UC) given during the pandemic. The Chancellor has also announced a reduction in the maximum rate of repayment of UC from 25% to 15%, which we have long campaigned for alongside the Public Law Project and national anti-poverty charities like the Trussell Trust and the Joseph Rowntree Foundation. It also raises the earnings threshold for Carers Allowance, which follows an excellent campaign by Carers UK and others to ensure carers are not penalised for working part-time as well as fulfilling their caring responsibilities.

The Chancellor has promised an above-inflation increase in funding for the NHS. Some of this will go to mental health services and social care, which will ease the crisis in those areas. This will ease the demand on small local charities, who often support people who aren’t getting the help from public services.

There is also some additional grant funding for local government, which has long been a key funder for small charities and community organisations who deliver key public services for local authorities, but often need to subsidise contracts with additional grant funding. A further £230 million will be given to help local authorities with the steeply rising costs of temporary accommodation for homeless households. There is also an additional £500 million for new social housing and a pledge to reduce the discount for council homes sold under the Right to Buy, so the receipt generated will enable a replacement home to be built.

Challenges and gaps

Less helpfully, the Budget is silent on whether Local Housing Allowance (LHA) for tenants in the private rented sector will be uplifted to keep pace with market rents, and for the moment at least, the Government has clearly decided to retain Two Child Limit and Benefit Cap, which do so much to drive families into poverty. The Chancellor has also said she would continue with the ‘savings’ target the previous Government had set on the basis of a further tightening of the Work Capability Assessment (WCA) that is already denying tens of thousands of Disabled and seriously unwell people the social security benefits they need and are entitled to. 

The £500 million for new social housing in 2025/26 falls short of the level of investment that is needed to address the housing crisis. Councils in England spend more than £1bn on temporary accommodation due to 117,450 households living in short term accommodation. The value of building new homes to boost economic growth has been repeatedly referred to by the Chancellor and Prime Minister in the run-up to the General Election, and since then too. And reports in the media just two weeks ago suggested that at least £1 billion more had been agreed between HM Treasury and the Ministry for Housing, Communities & Local Government.  £500 million only delivers around 5,000 new social homes across the whole of England. 

Finally, the other area that will be of great concern to charities - while many small charities will effectively be exempt from it - is the impact of the 1.2% increase in National Insurance for employers. Some charities who are already struggling to balance their books will be left facing difficult choices about whether to reduce services to those they serve. It strikes us that if the public sector is going to have these additional costs reimbursed by the Exchequer, then the voluntary sector should too.

The importance of influencing

Overall, this will be seen as a mixed budget by many of the charities we work with on the frontline. This Budget puts us on a trajectory taking us back to where the country was in 2019 by 2029. Whatever the financial markets might say, for many of us, that isn’t good enough.

It is really telling that powerful charity-led campaigns have helped to secure additional funding needed to reform Carers Allowance and Universal Credit, and we are proud to have played a small part in supporting those efforts.

We know it will be even harder to secure the more fundamental reforms needed to end poverty and homelessness. That makes it all the more important that funders continue to support charities and grass-roots campaigners who are seeking to influence Government policy and spending decisions in the years ahead. Over the next few months, we will be reflecting on what more we can do as the Foundation to play our part in this agenda and support our charity partners to do so too.