Charities Predict Deep Impact From New British Budget

The package of spending cuts and tax hikes unveiled by the British government Tuesday will place a severe burden on charities, particularly hitting social services, nonprofit leaders tell Third Sector Online.

Chancellor George Osborne’s proposed budget includes a 25-percent budget cut for most government departments over the next four years and an increase in the value-added tax, or VAT, charged on most goods and services. Raising the VAT from 17.5 to 20 percent will cost nonprofit groups at least $207-million a year in tax payments, according to the Charity Tax Group, Third Sector reports.

The budget cuts are also expected to increase demand for food, housing, and other services as welfare benefits are tightened. Stephen Bubb, head of Acevo, an organization of British nonprofit chief executives, said that “charities will be asked to do more and will have to do so at a time that their cost base is rising due to the VAT rise.”