The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Caledonian Exchange, 19A Canning Street, Edinburgh EH3 8EG.
SCVO Briefing: Programme for Government
Summary
Amongst many other valuable contributions to society, Scotland’s voluntary sector plays an essential role in supporting people and communities across Scotland experiencing poverty and inequality and is central to the Scottish Government’s plans to eradicate child poverty and inequality. It must therefore also be central to this Programme for Government.
To support this work and build a sustainable voluntary sector, Fair Funding -a long-term, flexible, sustainable, and accessible approach to voluntary sector funding- is urgently needed.
SCVO welcomes the Scottish Government’s continuing commitment to deliver Fairer Funding for Scotland’s voluntary sector in the 2025/26 Scottish Budget and their calls for the UK Treasury to fully fund increases to employer National Insurance costs (NICs) for organisations delivering public services. On both issues, however, action is needed.
Fair Funding should also recognise and support the 136,000 employees in Scotland’s voluntary sector’s – 5% of Scotland’s workforce - by supporting Fair Work and covering the full costs of employing staff.
To create a sustainable sector which can offer Fair Work and continue to support people and communities across Scotland, the Programme for Government should recognise, resource, and support the voluntary sector, our staff, and our essential services by:
- Aligning the Scottish Government’s “Fairer Funding” principles with SCVO’s definition of Fair Funding.
- Ensuring grants and contracts Scottish Government, their agencies, and other public bodies award support Fair Work and cover the full costs of employing staff, including at least the Real Living Wage, increased NICs costs, and inflation-based uplifts on par with those offered to public sector staff.
Fair Work
The voluntary sector is a significant employer, employing around 136,000 people in Scotland - 5% of Scotland’s workforce. Fair Work for Scotland’s voluntary sector workforce is both an SCVO priority and is central to the Scottish Government’s ambitions to eradicate child poverty.
The voluntary sector workforce includes more women (64.5%), more part-time workers (37%), and more people with a disability (23%) than the public and private sectors. Women and people with a disability are at greater risk of living in poverty. Our workforce makes a huge contribution across Scotland, offering a lifeline to people, families, and communities as the cost-of-living crisis bites. This lifeline shouldn’t need to be extended to voluntary sector staff.
The Scottish Government have recognised the impact of the cost-of-living crisis on public sector staff and took action to provide wage uplifts, particularly for the lowest paid. The Scottish voluntary sector provides similar essential services and support, despite this, action has not been taken to ensure voluntary sector staff can receive pay increases equal to their public sector counterparts. Shockingly, recent research by CCPS reveals a 20% pay gap between NHS support workers and voluntary sector social care support workers who are starting out in their career.
It must be recognised that poor funding and procurement practices undermine voluntary organisations aspirations to offer Fair Work.
To make progress towards eradicating child poverty the Programme for Government should ensure grants and contracts accommodate at least the real Living Wage and offer pay uplifts for voluntary sector staff on par with those offered to the public sector, supporting the sector to be Fair Work employers and the Scottish Government’s ambitions to become a Fair Work Nation by 2025.
Ultimately Fair Funding is central to Fair Work for voluntary sector staff.
Fair Funding
The essential public services delivered by the voluntary sector – like social care and youth work – and the variety of other services and support offered by the voluntary sector across Scotland, are essential to plans to eradicate child poverty and tackle inequality and should be valued as such.
SCVO welcomes the Scottish Government’s continuing commitment to deliver Fairer Funding for Scotland’s voluntary sector, however clarity on the actions that the Scottish Government will take to meet their commitment to Fairer Funding by 2026 is urgently needed.
SCVO continues to call for this approach to be aligned with SCVO’s definition of Fair Funding, much of which was endorsed in the Social Justice and Social Security Committee’s Pre-Budget Scrutiny report 2025/26.
In the Programme for Government the Scottish Government can make progress on the Committees recommendations, by aligning the Scottish Government’s “Fairer Funding” principles with SCVO’s definition of Fair Funding– which was developed through significant research and engagement with Scotland’s voluntary sector. This includes commitments to:
- Longer-term funding of three years or more.
- Flexible, unrestricted core funding, which enables organisations to provide security, plan effectively, and fulfil good governance requirements.
- Sustainable funding that includes inflation-based uplifts and full costs, including core operating cost and accommodates paying staff at least the Real Living Wage and pay uplifts for voluntary sector staff on par with those offered in the public sector.
- Accessible, streamlined, proportionate, and consistent approaches to applications and reporting, timely processing and payments, and partnership between the grant-maker and grant-holder.
- Fiscal transparency to support organisations and the public to understand spending decisions, including transparent delivery goals, timelines, and accountability mechanisms – such as reporting and stakeholder groups - to ensure progress on “Fairer Funding” can be scrutinised by the voluntary sector, scrutiny bodies, and Parliament.
Long term funding should also be provided to local authorities, to allow them to enter into multi-year agreements with voluntary organisations. Between one quarter and one third of voluntary organisations receive funding from local authorities.
Testimonials
| “Planning in the current climate is extremely difficult - funding agreements which cover 3 - 5 years would enable us to plan staffing and resources to meet needs.” Registered Charity “The longer-term funding allows us to give much better value for money, we can plan long term, employ staff on more secure contracts therefore allowing us to utilise staff more efficiently.” Registered Charity “The lack of inflationary increase to our funding is the most unfair aspect of our current arrangements, we effectively suffer a cut in funding year on year.” Registered Charity “Everything we do is dependent on funding, and amounts are often not confirmed until very late in the financial year”. Registered charity “Due to annual funding from Scottish Government, which doesn’t cover our core costs, recruitment is often on short-term contracts or is subject to ongoing funding, of which there is no guarantee”. Voluntary sector intermediary |
National Insurance Contributions (NICs)
As a significant employer, the increases to employers’ National Insurance Contributions (NICs) will have a significant impact on medium and large voluntary sector employers, as SCVO shared with the Chancellor ahead of the Budget.
SCVO estimates that these changes will cost voluntary sector employers in Scotland over £75 million per year, plus inflation. Some organisations face additional costs of hundreds of thousands of pounds.
Our sector continues to face unprecedented challenges. Voluntary sector costs are climbing, funding is 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, falling by £177 million in real terms - a real terms cut of 5%. This has contributed to eight out of ten voluntary 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.
NICs increases are additional costs the voluntary sector simply cannot afford and will impact organisations, their staff and volunteers, and the support and services people and communities rely on.
SCVO continue to urge the Chancellor to change course. We welcome recognition from the First Minister and MSPs across the Scottish Parliament, that the Chancellor’s intention to increase employers’ National Insurance Contributions will have a significant impact on the voluntary sector in Scotland and the First Minister’s call for support for the sector.
If the Chancellor cannot be convinced to change course, the Scottish Government must ensure that their financial commitments to voluntary organisations cover these new costs – and that other public bodies have the funds to do the same.
In the 2025/26 Budget, the Scottish Government can take a Fair Funding approach to these changes by:
- Ensuring grants and contracts Scottish Government, their agencies, and other public bodies award, cover the full costs of employing staff, including at least the Real Living Wage, any increased NICs costs, and inflation-based uplifts on par with those offered to public sector staff.
Case-study
| Turning Point Scotland is a large social care provider working across 18 local authority areas. Supporting between 8,000 and 12,000 people at any one time. We employ 1,200 people, and have an annual turnover of £44 million. We are entirely commissioned to deliver public services on behalf of Local Authorities and Scottish Government. The National Insurance increase will cost us £1.1 million per year; £274,000 in relation to the rise in employer NI contributions, £778,000 associated with the lowering of the NIC threshold. This equates to a 2.7% increase to our payroll costs. Every service that we operate will go into budgetary deficit – none of our services will receive enough money to cover the costs of providing that service. One service we provide is already looking at a £60,000 deficit for next year – with these changes that deficit will become £160,000. Without a radical change, none of our services will be financially viable. Many will face closure in the very near future. If that change does not come from the UK or Scottish Government, we will need to make those changes with our service commissioners– what will be lost? Will we have to reduce the number of staff? Will we have to disinvest in training, development and support? Will we have to cut pay? Every cut will impact on the number of people we can support, the quality of the support we provide, the attraction and retention of our workforce, and the safety and viability of our services. We consider ourselves a financially healthy organisation in terms of both cash and reserves, but without action to address the impact of these changes, we will not survive in our current state. We risk losing many of the services that we deliver, and we know that our sister organisations in the social care sector are facing the same, if not a worse outlook. The impact on Scotland’s social care system and the people who rely on it cannot be overstated. |
Conclusion
Scotland’s voluntary sector is an employer, a partner, and a vital social and economic actor central to delivering on the Scottish Government’s missions to end child poverty, grow the economy, tackle the climate emergency, and improve public services. The Programme for Government (PFG) is an opportunity to recognise and support the sector’s contribution and address the pressures facing the sector.
The PFG can and should take much needed and meaningful steps towards a Fair Funding system that offers long-term, flexible, sustainable, and accessible funding by aligning their Fairer funding principles with SCVO’s definition of Fair Funding and actioning the many recommendations in the Social Justice and Social Security Committee’s Pre-Budget Scrutiny report 2025/26.
Fair Funding can and should accommodate Fair Work and cover the full costs of employing staff. Scottish Government must ensure grants and contracts they, their agencies, and other public bodies award support Fair Work and cover the full costs of employing staff, including at least the Real Living Wage, any increased NICs costs, and inflation-based uplifts on par with those offered to public sector staff.
Additional information
Briefing to MPs: National Insurance Contributions Bill
SCVO Briefing: Scottish Budget 2025/2026
Letter to Scottish MPs - UK Budget: Impact of NI changes on charities in your constituency
SCVO, NCVO, NICVA, and WcVA letter to Rachel Reeves, Chancellor of the Exchequer: Autumn Budget 2024 – employers’ National Insurance contributions
