Charities face up to £5.5bn in cuts
The charity sector is facing local and national government funding cuts of up to £5.5bn, a report has warned.
The report was compiled the Association of Chief Executives of Voluntary Organisations (Acevo), an umbrella organisation that has helped to run the £100 million transition fund set up by the Government to aid charities facing financial difficulties.
It found applicants to the fund faced cuts of more than £520 million in the current financial year and estimated the whole UK charity sector faced cuts of between £1 billion at best and £5.5 billion in the worst case scenario.
On average, they face losing 45% of their total income on average, the study found.
Charities in the north-west and north-east of England are over-represented in the group of organisations which have asked for help from the fund. The report claims 450 organisations in the 20 most deprived areas have lost £142.5 million compared with a £3.6 million loss for 22 organisations in the 20 least deprived areas.
But the Government insists the report is misleading as it focuses only on organisations that are applying to the transition fund, which was set up to help groups that will be hit hardest by cuts. Officials said 78% of the sector does not receive any state funding at all.
But shadow charities minister Gareth Thomas said the report was evidence charities were taking a big hit.
He said: "Charities and community groups across the country have taken a huge and completely disproportionate hit in funding just when demands for their help are rising fast. David Cameron's claim that in his Big Society we're all in it together was never credible, but this report confirms that ministers were being given independent evidence showing that charities were going to be hit very hard by funding cuts, with the poorest and most deprived areas being hit hardest."
A Cabinet Office spokesperson said: "ACEVO's report is a misrepresentation as it is only based on applicants to the Fund and not all voluntary organisations. Our analysis shows that some applicants over-stated their expected reductions and therefore we do not consider these figures reliable. While the majority of charities receive no Government money at all, reforms announced in last year's Budget are expected to provide £600million to the sector over the lifetime of this Parliament.
"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."