SCVO Briefing: UK Autumn Budget 2026

Summary

It is widely understood that Scotland’s voluntary sector is facing unprecedented challenges. Years of underfunding and poor funding practices, and crises such as the pandemic, and the cost-of-living crisis, have put the voluntary sector under increasing pressure, exacerbating financial and operational challenges.

Costs are climbing, funding falling, and demand for services continues to increase. SCVO’s recent research shows the amount of public money received by third sector organisations froze between 2021 and 2023. This has contributed to 97% of voluntary organisations reporting challenges in the in the Scottish Third Sector Tracker in Spring 2026, an increase of 2% since Autumn 2025. Similarly, Eight out of ten Scottish voluntary organisations report that financial difficulties rank among their most significant challenges.

In the most recent Scottish Third Sector Tracker, participants describe operating within a more complex socio-political environment characterised by greater demand for support, increasing social division, ongoing frustrations with policy implementation and engagement with public bodies, and being asked to fill the gaps left by shrinking public services with fewer resources.

These pressures have been exacerbated by increases to Employers’ National Insurance Contributions (NICs) which among other rising costs continue to constrict growth in the voluntary sector. Among organisations not planning to expand, two-thirds (66%) cited inflation and rising costs as a barrier.

SCVO welcomes that the UK Government has recognised the need to support civil society to make an impact through the Civil Society Covenant.

As stated in the Civil Society Group response, the Autumn Budget provides an early opportunity to put the ambitions of the Covenant into practice and position civil society as an effective delivery partner, connecting national priorities with local communities. This should be underpinned by genuine co-design, recognition of the sector’s expertise, and sustainable funding.

Fair Funding

For over a decade, the Scottish Government has recognised the need for multi-year funding, committing to longer-term funding for the voluntary sector across multiple government strategies, including within several Scottish Budgets and Programmes for Government, and the Economic Strategy.

However, the Scottish Government and local authorities have stated that they are unable to provide multi-year funding because their own funding in future years is unknown.

SCVO welcomed the previous Chancellor of the Exchequer’s plans for a multi-year spending review, of at least three years, in Spring 2025. 

While multi-year funding is necessary to deliver Fair Funding for the voluntary sector, on its own it is not sufficient. Multi-year funding that does not incorporate the other Fair Funding elements—flexible unrestricted funding, timely payments, more accessible application processes, transparent approaches to monitoring and reporting, and inflation-based uplifts—will continue to undermine the sustainability of the voluntary sector.

To support the Scottish voluntary sector in the Autumn Budget the UK Government should:

• Renew its commitment to multi-year Spending Reviews of three years or more and commit to working constructively with the Scottish Government to support multi-year spending plans.
• Use its buying power and public contracts to champion Fair Funding, and promote Fair Work and expanded employment rights practices across all sectors. 

Sustainable funding settlement for Scotland

It is widely understood that Scotland’s voluntary sector is facing unprecedented challenges. Years of underfunding and poor funding practices, and crises such as the pandemic, and the cost-of-living crisis have put the voluntary sector under increasing pressure, exacerbating financial and operational challenges. We remain concerned about the impact of the public spending constraints.

Costs are climbing, funding falling, and demand for services continues to increase. SCVO’s recent research shows the amount of public money provided to third sector organisations froze between 2021 and 2023.  This has contributed to eight out of ten organisations in Scotland reporting that financial difficulties rank among their most significant challenges.

These pressures were exacerbated by the Chancellor’s decision in the Autumn Budget 2024 to increase employers’ National Insurance Contributions (NICs).

The voluntary sector is a significant economic actor, employing around 136,000 people in Scotland - 5% of Scotland’s workforce. The sector delivers vital public services – like social care and youth work, as well as a host of essential services that people and communities across Scotland rely on.

The changes to NICs have cost medium and large voluntary sector employers in Scotland alone at least £78 million per year, plus inflation. Some organisations face additional costs of hundreds of thousands of pounds. Increased NICs have had a disproportionate impact on devolved administrations. 

As the scale of the costs involved for medium and large employers becomes clear, it is imperative that the Chancellor understands the growing evidence of the impact of these additional costs on the voluntary sector, our staff, volunteers, and the essential services and support our sector provides people and communities, all of which are essential building blocks to the economic growth the Chancellor is striving to achieve.

Similarly, cuts to public services impact people across society, especially those on the lowest incomes - further increasing pressure on the voluntary sector which must fill the gaps. These pressures will be exacerbated by any plans to tighten access to social security.

The Government has frequently championed their ambitions of a relationship with civil society built on the principles of recognition, partnership, participation, and transparency. SCVO, like organisations across the voluntary sector, welcomed the intention to work in partnership with the voluntary sector and promises to restore charities to the ‘centre of national life’. To achieve this, it is essential that the Government actively reviews the impact of increased employer NICs.

To support the Scottish voluntary sector in the Autumn Budget the UK Government should:

• Commit to working productively with the Scottish Government as part of the Budget process.
• Ensure grants and contracts cover full costs, including the full costs of employing staff, reimbursing volunteers, and increased costs from changes to employer National Insurance Contributions.
• Recognise the unprecedented challenges impacting voluntary organisations across Scotland by offering a sustainable funding settlement for Scotland.

Approved Mileage Allowance Payment (AMAP)

SCVO and colleagues across the voluntary sector led by the Community Transport Association, warmly welcomed the Government’s decision in May to increase the tax-free Approved Mileage Allowance Payment (AMAP) rate for cars and vans to 55p per mile for the first 10,000 miles. The new AMAP rate better reflects reality of volunteering in 2026 after years of inflation and significant fuel price shocks.

In the Autumn Budget the Chancellor should ensure that charities and community groups have the resources they need to implement the new AMAP rate and ensure volunteers are not left out of pocket as cost-of-living pressures continue.

The AMAP rate is an essential tool for local charities and community groups enabling them to fairly reimburse devoted volunteers who use their own vehicles to deliver lifeline services in every postcode. Services such as transporting older and disabled people to hospital appointments or delivering emergency food parcels to families in poverty. However, many local charities and community groups simply cannot afford to implement the new AMAP rate. Voluntary organisations’ budgets, contracts and grant awards for 2026/27 were finalised before the uplift was announced and therefore agreed on the basis of the previous rate of 45p per mile. Volunteer drivers up and down the country who literally go the extra mile for their neighbours continue to be left out of pocket.

To support the Scottish voluntary sector in the Autumn Budget the UK Government should:

• Ensure all central, devolved and local government contracts and grants cover the full costs of delivery, including reflecting the new AMAP rate of 55p per mile to fully cover the costs of implementation. The Autumn Budget must invest to ensure that there is Fair Funding for the UK’s voluntary sector to protect their vital work.

Conclusion

Scotland’s voluntary sector is an employer, a partner, and a vital social and economic actor central to UK Government’s economic growth ambitions.

The Autumn Budget is an opportunity for the new Prime Minister and his Cabinet to recognise and support the many contributions of voluntary organisations, their staff and their volunteers across Scotland and the UK as a whole.

To make progress, the UK Government must recognise our sector as a significant employer and economic actor, ensure grants and contracts cover the full costs of delivery and employing staff, and deliver transparent Barnett consequentials sufficient to cover the full costs of policy delivery in Scotland.

These actions will support a more sustainable voluntary sector which can support people through the cost-of-living crisis, offer Fair Work, adapt to expanding employment rights, and deliver quality outcomes, for our workforce, our volunteers, and the people and communities we work with.   

SCVO looks forward to the Treasury engaging with the Scottish Government on these issues and Fair Funding more broadly, ahead of the upcoming Autumn Budget.

Additional information

SCVO also support the priorities of the Civil Society Group (CSG), an informal collaboration of organisations representing members and groups from the charity sector and wider civil society across the UK.