The Conservative Party manifesto indicates that the deficit clearance is likely to be pushed back by several years (balanced budget by 2025). This is likely to have a less dramatic impact on public spending cuts, affording charities more time to plan and adapt to a potential drop in people’s ability to donate. A planned increase to the National Living Wage may be of benefit in terms of increasing potential supporters means, but on the other hand will increase the overhead of employment for NfP organisations.
Further increases in spending are promised to Health and Education sectors, with a focus on mental health which may benefit related charities. There is also a commitment to reducing homelessness and supporting the integration of asylum seekers into communities, this will likely increase funds available to organisations working in these areas.
There is a perception that if the Conservatives were to remain in power, there should be less policy U-turns and changes to tax legislation which would provide the sense of stability and ability to forward plan which is so important to businesses. Although the level of VAT will be sustained, charities will need to keep an eye on the government’s position regarding the tax relief they currently benefit from. Likewise charities will need to monitor developments in relation to business rates as the current relief available to charities is valued in excess of £1.5bn annually.
Of the potential ‘positive’ impacts of Brexit, one may be the reallocation of funds which currently go to the EU. The indication is that these funds might be diverted to culture, regional development and UK-wide project “funds”, which would hopefully also benefit the work of UK charities.
The proposed new ‘Data Use and Ethics Commission’ is likely to impact charities data collection, but given the previous work of the ICO and GDPR, organisations should already be preparing along these lines anyway. Given the government concerns regarding the risk of extremists’ infiltration of charities, it is of vital importance that charities raise awareness of the positive work that they do with the Commission.
The Labour Party manifesto seems to have the most negative impact on business through proposed corporation tax increases. Along those lines, NfPs are likely to be negatively impacted by the higher rate of tax being imposed on £80K+ pa earners, pushing down donations through reduced disposable income, whilst on the flip-side, perhaps benefitting from the increased attractiveness of Gift Aid tax relief. It is also likely that the stricter international tax standards will increase the burden on both businesses and charities.
The review of business rates, given recent trends, is likely to negatively impact businesses running costs. Whilst charities currently benefit from relief in this area, this is something that cannot be assumed going forwards and warrants keeping a weather eye on. Likewise, if the Brexit deal around accessing the single market leads to maintaining EU rules on VAT and State Aid, this could hamper charities effectiveness.
For charities, which receive £12.4bn in contracts, using “best standards on government contracts” could be beneficial. However, the introduction of “pay ratios” (20:1) for those receiving government contracts may have an impact on pay structures within some charities, although most would be unaffected. Charities would likely find it challenging to comply with the Labour requirement of hiring more apprentices through public contracting, whilst Trade Unions look to benefit from the Labour requirement for those delivering public contracts to recognise trade unions.
The biggest positive for health related NfPs is likely to be increased spending in the NHS, mental health and new National Care Service. The biggest negative impact on charities operating costs is likely to be the introduction of the £10 minimum wage, pushing the cost of an employee on the minimum wage up by around £2260 per year.
The Liberal Democrats manifesto sees them increasing direct taxes to fund public services which will likely affect people’s disposable income, and therefore decrease donations. If reform of the National Insurance system involves higher employer contributions, along with a proposed increased living wage, the cost of charities delivering public services will rise. The cost of doing business is also likely to rise with a strengthening of employee rights. The business rates system should reduce burdens on small firms, but if reviewed, as is likely, could have an impact on charitable reliefs.
The good news is that with a focus on transforming mental health care, an end to the public sector pay freeze, and a dedicated spending plan to further support the NHS, opportunities for businesses and NfPs related to the healthcare sector should improve. With significant investment into education, NfPs and businesses with relating interests will also be set to benefit. There is a commitment to use of social investment to support the development of the NfP/charity sector, but this has previously resulted in mixed outcomes.
The Liberal Democrats are in support of social investment, enabling charities and social enterprises to access the support and resources required to innovate sustainable solutions to their community’s challenges, with a focus on migration and refugees. There is talk of introducing a 5p charge on disposable coffee cups to reduce waste, which may provide charities with funding in a similar way to the plastic bag charge.
Sports and arts based businesses may benefit from the ongoing commitment to funding of those activities from the National Lottery fund. Increasing the borrowing capacity of housing associations to enable the development of council and social housing will also benefit relating businesses and NfP’s.
The introduction of a digital bill of rights to preserve the neutrality of the internet, protecting people’s control and power over their own information and supporting individuals over large corporations is another key component to the manifesto. This also reinforces the general concern surrounding the handling and management of peoples’ data.