The Government has announced its new Budget. There was a lot of noise, leaks and last-minute changes, but what we want to know is how it affects the voluntary sector — especially small, local groups like the ones we support here at Compost London.
Here are some key points, for you to take away and use to strengthen any planning you altready have in place.
1. Staff Costs Are Going Up
Wages are rising, and employer National Insurance costs are not changing. This means:
- It costs more to employ staff.
- Grants and contracts are not increasing to match these costs.
- Many groups will find it harder to cover salaries.
This is one of the biggest pressures on charities right now.
2. More People Will Need Help
Removing the two-child benefit cap will help many families — this is a big and positive change.
But other Budget decisions mean many working families will have less money because their tax thresholds are frozen.
That means:
- more people needing advice
- more families needing support
- more demand on community services
Even though you are already stretched, demand is likely to grow.
3. The Government Keeps Changing Things
There have been several financial announcements in a short time. Many details were leaked before the Budget, and other rules will change in the future.
This makes it harder for charities to plan.
You may need to:
- review your finances more often
- pay attention to changes in tax and charity rules
- make decisions sooner than usual
Small Bits of Good News
Some positive steps include:
- More support for children’s social care
- VAT relief (from 2026) on goods donated by businesses
- Scrapping the two-child limit – helping 450,000 children
These changes will help families and give some charities small savings.
More Rules Coming
New tax and charity rules are planned for 2026, including:
- tougher rules on mistakes with charity spending
- changes to inheritance tax exemptions
- limits on salary sacrifice schemes
Trustees and finance leads should keep an eye on this.
Three Things Charities and Groups Must Remember
1. Costs are rising faster than funding
If your funder has not increased your grant or contract, you may already be delivering work at a loss.
Review your budgets and funding agreements.
2. Demand will go up
Even with positive changes, many people will still struggle financially.
Your services may see more people coming for help.
3. Stay alert – things are changing often
Policies, tax rules and funding conditions may change quickly.
Keep talking to networks, funders and other groups so you’re not caught out.
Final Thought
This Budget gives some hope, but it also brings new pressures.
For the voluntary sector, the message is:
Costs are up. Demand is up. Stability is not guaranteed.
If you need any help in carrying out an organisational review or preparing and planning your next fiscal year. Please get in touch and we can explore how we can help.
For further information go to:
NCVO -National Council for Voluntary Organisations
DCS - Directory of Social Change
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