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Pre-Budget Report recognises value and importance of third sector

As part of the Pre Budget Report on 24 November, the Chancellor of the Exchequer, Alastair Darling, confirmed the Government’s ongoing commitment to the third sector.

The Pre-Budget Report (PBR) is delivered by the Chancellor to the House of Commons and provides a progress report on what has been achieved so far, gives an update of the state of the economy and public finances, and sets out the direction of Government policy in the run up to the spring Budget.

The report says:

"The third sector has a growing importance to the economy and society and makes a very important contribution to the delivery of public services, and in the current economic context its agile, community-driven approach makes it well placed to respond to new and emerging needs. Through volunteering and its promotion of civic participation, the third sector can help to build trust and cooperation, fostering strong and active local communities and reducing social isolation and exclusion. The Government acknowledges that the sector is facing challenges with rising levels of demand for its services. However, the implementation of the 2007 third sector review policies, as well as a more sustainable funding framework, mean that the sector is in a good position to meet the challenges ahead. The Government will work with third sector to help ensure its continued strength in current economic climate."

The Pre-Budget Report also recognises the importance of Social Enterprise, saying:

"The current economic challenges also offer opportunities for new and sustainable business models. This is a time when social enterprises, with their focus on the creation of social and environmental, as well as financial, value, may come into their own, as they prove increasingly attractive to consumers, investors, and potential entrepreneurs. Support for social enterprise across Government has never been greater (championed by the Office of the Third Sector), aimed at creating an environment in the UK for social enterprises to thrive."

The report also outlined several other measures which will have an impact on the sector, including:

• A temporary reduction in the VAT rate to 15% from 1 December to 1 January 2010. This will directly benefit charities, as they will see a reduction in their operating costs as well as the amount of unrecoverable VAT they face.
• Government will aim to promote responsible lending and borrowing (including through the third sector), to the benefit of individuals, institutions and the economy as a whole.
• An additional £5.85 million in funding to the Charity Money Advice Trust between November 2008 and March 2011 was announced to increase the provision of free telephone debt advice.
• A further £10 million in funding for Citizens Advice Bureaux between November 2008 and March 2010.
• To assist local authorities in further improving take up of tax credits and benefits, the Government is setting up a taskforce of experts from local authorities and the third sector which will report in spring 2009.
• National Offender Management Service (NOMS): five commercially let contracts will be competed by 2010-11 to new NOMS specification standards with bids invited from the public, private and third sectors

Also, social enterprises and other third sector organisations, as any other businesses, will be able to access:

• Small Business Finance Scheme, a new temporary guarantee scheme to enable up to £1 billion of new Government supported lending by banks;
• a £50 million fund to convert businesses' debt into equity or quasi-equity
• a £25 million regional loan transition fund. 

The pre budget report also coincides with the announcement by Kevin Brennan, Minister for the Third Sector at an NCVO summit, that the Office of the Third Sector will be working towards an action plan in response to the impact of the current economic climate on the sector which will be published in the new year.

Full copies of the Pre-Budget Report and Kevin Brennan's statement can be found via the links below.

• Statement by Kevin Brennan at NCVO summit
• Pre-Budget Report [external website]