Counting the cuts report

On 20 October 2010, the government announced the results of its Spending Review which detailed spending for government department budgets over the next five years. We responded to government announcements and asked for your help in gathering data about the scale of the cuts across the sector.

Estimates of the extent of cuts to voluntary and community sector funding from government vary widely. Some published estimates are not we believe reliable and do not give the full picture.

We have produced a detailed analysis of the Government’s projected spending plans for the Spending Review period (2011 – 2015). Using the Government’s own figures, from the Office for Budget Responsibility, we have estimated that the voluntary and community sector is facing nearly £3billion in cuts over the next five years.

Counting the cuts: The impact of spending cuts on the UK voluntary and community sector (PDF 2.8MB) offers our best estimate of where, how, and how much the cuts from Government in public spending already are and will continue to impact our sector.

Many voluntary and community organisations are facing a huge increase in demand for their services as the sector looks to support people through difficult circumstances. The dramatic decreases in public spending mean that many organisations face the very real challenge of having to do more with less, and in some cases nothing.

This report is not intended to be a post mortem exercise on cuts but is NCVO’s contribution to taking the debate forward.  This is a live issue and the impact of cuts is likely to increase throughout the Spending Review period. 

We are not arguing for special treatment but the withdrawal of nearly £3 billion over the period of the spending review is significant cause for concern because it will significantly hamper the ability of organisations to support those most in need. It is essential that lessons are learned quickly to ensure that the sector is equipped to play its full and growing role in society.

Read the report in full Counting the cuts (PDF 2.8MB).

The more we know about the situation the stronger our evidence base will be. If you would like to share experiences of the cuts on your organisation with us you can do so through the voluntarysectorcuts.org.uk website. If you would like to share your story as a case study to use in potential media work please contact our media officer Mandy Murphy.

Key findings

The stats

• The UK voluntary and community sector will lose around £911 million a year in public funding by 2015-16.
• This means voluntary and community sector stands to lose £2.8 billion from Government over the current spending review period running from 2011- 2016.
• These are likely to be conservative estimates based on analysis of the Government’s own figures published by the Office of Budgetary Responsibility. The figures assume that cuts with be made proportionately, they provide us with a solid baseline figure to measure any further cuts against.

The impact

• In reality we already have evidence that cuts are not being made proportionately. Cuts are and will be felt unevenly across the sector, there have been significant differences between parts of government and local authorities in their implementation of cuts. Some parts of the sector will be hit harder.
• There have been significant inconsistencies in the way that different parts of government and local authorities are implementing cuts. Funding from some parts of government is being hit particularly hard – including some central government departments, local authority spending and capital expenditure.  Many local authorities are making long term, strategic decisions in partnership with their local VCS but some are not and this is causing real damage to the sector and local communities.
• Responses to Freedom of Information requests show that half of all Local Authorities are making disproportionate cuts to the voluntary and community sector.
• These figures mask the real impact of cuts as some central government departments may increase their funding for the sector: particularly the NHS and the Department for International Development in line with increased demands on the services that voluntary and community organisations provide.
• Organisations have shared their experiences with us on our new partnership project voluntarysectorcuts.org.uk. The website offers a snapshot of the size and speed cuts affecting the sector. In the six months since the site was launched nearly 500 organisations have reported cuts to the website worth over £76 million.

Read the report in full Counting the cuts: The impact of spending cuts on the UK voluntary and community sector (PDF 2.8MB).
View the Counting the cuts: data appendix (Excel 348 KB) or view on Google spreadsheets.

What is public spending and why is it important?

Public spending is spending allocated by the state, from both central and local government, to pay for projects and activities. Some of this spending is allocated to voluntary and community organisations through grants or through a procurement process to deliver projects or services. 

Nearly eight out of every ten voluntary and community organisations have no financial relationship with the state whatsoever. But for those that do nearly one third of the income they receive from Government each year comes from the delivery of contracts - to support their organisational mission in running projects and services for their beneficiaries. This relationship is not new, charities have delivered public services of some sort since Thomas Coram's Foundling Hospital was given a grant in the 1750s.

The voluntary and community sector plays an essential role in preventative services.  When investment is cut in this area, what appears to be cash savings often have considerable real costs in social and economic terms.  Cuts to preventative services now are storing up considerable challenges for the future. 

The sectors' role delivering public services continues to be misunderstood and, at worst, misrepresented. This has generated a heated debate on the relationship between our sector and the state and has raised the question of whether voluntary and community organisations should even receive public money. Debate of course is no bad thing, but it needs to be an informed debate. That's why we have put together our responses to the seven deadly charity myths to help set the record straight on Karl Wilding's blog. You can also view the myths on Prezi.

How we got to these figures

In a world with perfect real-time information on both government spending and the income of voluntary and community organisations the impact of the cuts across the sector would be easy to immediately to measure.

But there is a lack of refined data from government, with many departments and local authorities currently not holding comprehensive details on current or planned spending on the voluntary and community sector. 

There is also a time lag in gathering data, such as that in NCVO's Almanac, from voluntary and community organisations, as for example Charities’ have 10 months to file their annual Charity Commission who then have to process and digitalise them.  

This means that a number of estimates have to be developed instead to fill in the gaps. Our report explores two methods which we have used to estimate the current picture of the impact of the cuts on the sector.

• Estimating from official forecasts

Government bodies such as the Treasury and the Office for Budget Responsibility as well as independent groups, such as the Institute for Fiscal Studies, produce estimates and forecasts of future spending.  For each part of public spending such as a central government department or a local authority, there are estimates of the proportion of their spending that currently goes on voluntary and community organisations.

By assuming that this proportion of spending will stay the same throughout the period we can make estimates of spending that will act as a baseline to help gauge what is proportionate and in line with planned spending.

• Asking the voluntary and community sector and public sector

A large scale comprehensive and statistically valid survey of voluntary and community organisations' experience of cuts has not taken place. But there have been several smaller-scale surveys and crowdsourcing initiatives, such as the voluntarysectorcuts.org.uk website a collaboration between 25 infrastructure organisations.

The information from Voluntary Sector Cuts website give us real life examples of the kind of impacts that reported cuts have had. In the seven months since the site launched in January 2011 a total of 494 cuts had been reported to the website, with a value of £76.5 million.  Many organisations have also added in details about redundancies that have been made as a result of these cuts and services that have been closed as a result.

Our approach also concentrated on asking local authorities about their plans and budgets. So far we have two main sources for information on local authorities' plans: replies to a letter sent by Chief Executives of the main voluntary and community sector umbrella bodies, and the results of Freedom of Information requests by Compact Voice asking each local authority its budget plans for two financial years and whether they had conformed to Compact principles.

What actually is the sector?

People use a number of interchangeable terms to describe the rich and diverse sector that we work in these range from voluntary sector, to voluntary and community sector, to third sector, to not for profits and charities.