Briefing to UK Parliament: Spring Statement

Summary

• 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.
• Eight out of ten Scottish voluntary organisations report that financial difficulties rank among their most significant challenges.
• These pressures will be exacerbated by the Chancellor’s plans to increase employers’ National Insurance Contributions (NICs) in April.
• Any cuts to public services and changes to working-age health-related entitlements will further increase pressure on the voluntary sector and the essential services and support our sector provides.
• The Spring Statement can support the many contributions of the voluntary sector by:
  • Recognising our sector as a significant employer and economic actor.
  • Ensuring grants and contracts cover the full costs of employing staff, including any increased costs relating to changes to employer National Insurance Contributions.
  • Recognising that cuts to public services and planned changes to social security entitlements will further increase pressure on the voluntary sector and the essential services and support our sector provides.
  • Working with the sector to understand these challenges and the impacts on our sector, our staff and volunteers, the people and communities we work with, and on society and the economy more broadly.
  • Ensuring the voluntary sector is fully resourced to support plans to encourage participation in volunteering, and involved in their development.

Briefing

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.

Voluntary sector costs are climbing, funding falling, and demand for services continuing 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 while nearly one in ten of Scotland’s 46,500 voluntary organisations are unsure whether they will still be operating in 12 months’ time.

These pressures will be exacerbated by the Chancellor’s decision in the Autumn Budget 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.

SCVO estimates that these changes will cost medium and large voluntary sector employers in Scotland alone £75 million per year, plus inflation. Some organisations face additional costs of hundreds of thousands of pounds.

As the scale of the costs involved for medium and large voluntary sector employers begins to be understood, it is imperative that the Chancellor engages with 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 who rely on them most - further increasing pressure on the voluntary sector and the essential services and support our sector provides. These pressures will be exacerbated by plans to tighten access to social security for those in receipt of working-age health-related entitlements, many of whom will turn to the sector for support.

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 engages voluntary employers on increased NICs costs, and with  voluntary organisations that have extensive experience of supporting the people and communities who will be affected by changes to working-age health-related entitlements. Working in partnership requires government to recognise the sector’s expertise and be open to evidence highlighting the impact of these changes. As part of this transition it is also essential that the voluntary sector is fully engaged in plans to encourage participation in volunteering and adequately resourced to support those choosing to participate in their ‘right to try’.

The Spring Statement can and should action the Government’s commitments to the sector by recognising and supporting the many contributions of voluntary organisations including:

• Recognising our sector as a significant employer and economic actor.
• Ensuring grants and contracts cover the full costs of employing staff, including any increased costs relating to changes to employer National Insurance Contributions.
• Recognising that cuts to public services and planned changes to social security entitlements will further increase pressure on the voluntary sector and the essential services and support our sector provides.
• Working with the sector to understand these challenges and the impacts on our sector, our staff and volunteers, the people and communities we work with, and on society and the economy more broadly.
• Ensuring the voluntary sector is fully resourced to support plans to encourage participation in volunteering, and involved in their development.

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

 About the voluntary sector in Scotland

The voluntary sector in all its diversity is a powerful force for positive change and a significant part of our economy. From grassroots volunteer-run community groups like village halls and playgroups to major providers of public services in social care and housing, the voluntary sector is present in every aspect of our society and is the glue that holds communities together, with over 46,500 voluntary organisations and over 1 million volunteers. 

Together these organisations employ over 136,000 paid staff. A quarter of charities employ staff, and the average income of these charities is around £900k. However, three-quarters of charities are run entirely by volunteers and have an annual turnover of less than £80k. Many deliver vital services and work with some of Scotland’s most marginalised communities. SCVO’s State of the Sector statistics for 2023 are available online.  To find out more about the voluntary organisations in your constituency visit the Geographical information section (pages 7-11) of SCVO’s State of the sector statistics.