Charities ‘could face cuts of up to £5.5bn’

4 March 2012 Last updated at 04:10

The charity sector is facing local and national government funding cuts of between £1bn and £5.5bn in the current financial year, a report suggests.

The leaked report, obtained by the Labour Party, was carried out by an umbrella organisation which said the situation had worsened since it had compiled it last March.

The Cabinet Office said it did not consider the figures to be reliable.

But it said ministers were taking steps to help charities through hard times.

The leaked report was compiled by the Association of Chief Executives of Voluntary Organisations (Acevo), which helped run the £100m transition fund set up by the government to help charities facing financial difficulties.

It found applicants to the fund faced cuts of more than £520m in the current financial year, and estimated that the UK charity sector as a whole faced cuts of between £1bn and £5.5bn.

Another group, the National Council for Voluntary Organisations, said the past year had been an “annus horribilis” for charities facing a triple whammy of increased demand, rising costs and an unprecedented fall in income.

According to the Observer newspaper, charities in the north-west and north-east of England are over-represented in the group of organisations which have appealed for help from the government transition fund.

And it says, quoting the report, in the 20 most deprived local authorities, 450 organisations have lost £142.5m, compared with a £3.6m loss for 22 organisations in the 20 least deprived areas.

Gareth Thomas, the shadow civil society minister, said charities and community groups had taken a huge and completely disproportionate hit in funding, just when demands for their help were rising fast.

“David Cameron’s claim that in his ‘big society’ we’re all in it together was never credible, but this leaked report confirms that ministers were being given independent evidence showing charities were going to be hit very hard by funding cuts, with the poorest and most deprived areas being hit hardest. Yet ministers have failed to act.”

A Cabinet Office spokesman said the report was a “misrepresentation” as most charities received no government money at all.

A spokeswoman said: “Acevo’s report… is only based on applicants to the (Transition) Fund. We recognise this is a difficult time for charities, voluntary organisations and social enterprises and that’s why we set up the Transition Fund to help them manage the transition to a tighter funding environment and take advantage of future opportunities presented by the big society.”

A spokesman for Acevo declined to comment.

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