Cuts 'costing charities £1.3bn'
The voluntary sector is bearing more than its fair share of public spending cuts, according to a new report.
Charities lost more than £1.3 billion in income from Government as spending cuts kicked in, a study found.
The data, drawn from charities' annual accounts, show that income from Government fell by nearly 9% in real terms between 2010/11 and 2011/12, the latest figures available.
The National Council for Voluntary Organisations (NCVO) said this means that the Government cut spending with charities at a faster rate than overall spending cuts. The vast majority of Government income to charities is in return for running public services.
NCVO chief executive Sir Stuart Etherington said: " Given the Government's deficit-reduction priority, it was inevitable that charities would feel the impact of public spending cuts. But these figures show that charities bore more than their fair share of these cuts.
"The Government has set out an ambitious agenda to open up public services, but there is a long way to go before reality matches the ambition. Unfortunately, most charities simply can't compete with the financial muscle of large outsourcing companies. Our members tell us they are at risk of being squeezed out of public service provision as Government contracts grow larger, meaning only big companies can afford to bid.
"The taxpayer could be getting better value for money in public services. Charities can provide high-quality services tailored to local needs, and do so with a human touch. But the Government must take action to ensure charities can compete on fair terms when services are commissioned."
At present, charities report barriers in public service commissioning including overly large contract sizes, a move to payment-by-results contracts which require potential providers to hold very high levels of capital reserves, and overly bureaucratic procurement practices.
Government contracts with charities fell £500 million from £11.6 billion to £11.1 billion in cash terms from 2010/11 to 2011/12. Adjusted for inflation, the real terms fall was nearly £900 million, from £12 billion to £11.1 billion.
Government grants fell £300 million from £2.9 billion to £2.6 billion in cash terms; just over £400 million in real terms, from £3 billion to £2.6 billion.
The biggest drop in income came in the social services sector - a fall of £361 million, down 7%, followed by employment and training, a fall of £233 million, down 23%. In the area of health, where government spending has been protected, there was only a drop of 1%.
The data come from the UK Civil Society Almanac 2014, a source of financial information about the charity sector.
A Cabinet Office spokeswoman said: "We recognise that it is a difficult environment for charities. We have long said that the sector cannot be immune from cuts and we are providing a comprehensive support package to help the sector to adapt to challenging times.
"We have also done a great deal to make it easier for charities and social enterprises to compete for contracts, and help us deliver better public services.
"There are a number of indicators of the sector's health and, as the Almanac reports, both the sector's workforce and charitable donations have grown."