UK charities’ real-terms income will fall by £2.2bn by the end of 2023/24, a think tank warned after Chancellor Jeremy Hunt’s Autumn Statement today.
Pro Bono Economics, which uses financial expertise to empower the voluntary sector, added that charity demand would soar at a time when its resilience was “seriously weakened”.
The charity also urged the government to treat the sector as a “partner”, working closely with it as it reviewed the UK’s economic inactivity.
Hunt’s economic recovery plan included a mixture of tax rises for all and the promise of increased cost-of-living support, plus an inflation-level rise in Universal Credit and other benefits.
Matt Whittaker, chief executive of PBE, said: “With the country now in recession, living standards are set for the biggest hit on record.
“Surging inflation, spiralling borrowing costs and rising unemployment mean household budgets will come under severe strain. As has been the case throughout the cost of living crisis, the demand for charity support will be substantial.”
He said the benefit uprating would not kick in until April, while charity demand was already “rocketing” and would intensity through the winter.
“Given the enormous pressure on public spending and household budgets, charity income will inevitably dip as people have less to give and government funds are stretched,” he said.
“Based on these OBR figures, we estimate charity income will decline by £2.2bn in real terms by the end of 2023/24.”
Whittaker added: “This all comes on the tail of unprecedented upheaval resulting from the pandemic, which has seriously weakened the charity sector’s resilience and ability to cope with increasing pressures from inflation.”
He said the sector needed “strategic investment now and in the long-term” and added: “The sector’s potential as a partner to the government should also not be ignored.
“Given the vital role that charities play in getting people back to work, the government will benefit from close engagement with the sector in its review of economic inactivity.”