The chancellor’s spending plans were unveiled on Wednesday, with no exemptions for NI hikes
The voluntary sector has warned that UK Government spending plans will place increased pressure on charities across the country, who are already under financial strain.
On Wednesday Chancellor Rachel Reeves unveiled her latest proposals for UK finances in a spring statement.
The announcement included plans to tighten requirements for social security, deep cuts to welfare and public services, increases to defence spending, and other measures.
Calls for exemptions to be implemented to protect some organisations from rising employers National Insurance contributions were also ignored by the UK Government.
Those representing the charities and voluntary organisations expressed their disappointment
Chief executive of the Scottish Council for Voluntary Organisations (SCVO), Anna Fowlie, said: “At a time when many voluntary organisations are facing severe financial difficulties, announcements in the spring statement will increase pressure on the sector.
“Across society, people on the lowest incomes rely the most on public services, including the essential services delivered by charities and community groups. Reducing social security entitlements will increase demand on already stretched services.
“Scotland’s voluntary sector is facing unprecedented challenges. Years of underfunding and poor funding practices, and shocks such as the pandemic, and the cost of living crisis, have taken their toll, increasing demand while exacerbating financial and operational challenges.
“The chancellor added to those pressures in the autumn budget with increases to employer National Insurance Contributions which will cost medium and large voluntary sector employers in Scotland more than £75 million per year. Some organisations face additional costs of hundreds of thousands of pounds. It is disappointing that the chancellor has not acted on the growing evidence of the impact of these additional costs.
“Our sector can’t afford this. Charities already subsidise public services with their own funds - almost one in ten voluntary organisations in Scotland fear they won’t be operating in 12 months’ time, and some are already closing their doors.
“Despite this, the chancellor has done nothing except make the situation worse. If the UK Government is serious about its intention to work in partnership with the voluntary sector, it must do more. It must ensure grants and contracts cover the full costs of employing staff, including off-setting the changes to employer National Insurance Contributions, and recognise changes to social security entitlements will further increase pressure on the voluntary sector. Far from saving money, these measures simply add to the public services bill across the piece.
“It’s essential that the government actively engages with voluntary organisations that have extensive experience of supporting the people and communities who will be affected by social security changes. Experts in sector must also be fully engaged in plans to encourage participation in volunteering and adequately resourced to support those choosing to participate in their ‘right to try’.”
Economy research unit, The Fraser of Allander Institute, claims in the short-term, there is a small amount of additional funding for Holyrood in 2025-26, amounting to £28m.
But in the long-term, the Scottish budget will be as much as £900m worse off by 2029-30.
Those working with charities warned of the huge effect which will be felt by the government’s decisions - with pressure placed on public sector and third sector organisations.
Matt Whittaker, CEO of Pro Bono Economics, said: “The government's commitment to balancing the budget is understandable, but this approach risks devastating consequences for thousands of disabled people. Disability benefits aren’t just numbers on a spreadsheet—they are a lifeline, helping people manage the extra costs of daily life and maintain dignity, independence, and wellbeing.
"Tightening eligibility criteria will push many further into hardship, creating more barriers for those who already struggle to access the support they need. The planned changes to Universal Credit from 2028-29 will make this even worse—linking the health element of UC to PIP will pile more pressure on an already flawed assessment process. Those who don’t qualify for PIP risk losing their health-related UC support entirely, leaving them with no safety net at all. Rather than making it harder to claim, the government should focus on fixing a system that too often fails the very people it is meant to help.
"The shift from welfare to work will only succeed if the right support is in place. Right now, it isn’t. Cutting benefits before ensuring disabled people have real opportunities to work risks leaving thousands in an impossible situation.”
Andy Pitt, head of charities at Rathbones, added: “The government’s plan to save nearly £5 billion through its proposed welfare reforms will undoubtedly place increased pressure on the UK’s charity sector, which our research has shown is already under financial strain.
“The UK charity sector has always been resilient and will no doubt do its best to adapt to the new environment. But given today’s news, and the adverse impact this will have on individual circumstances, this problem, particularly amongst local charities’, is likely to get worse.
“Many charities may need to evolve their approach to ensure they can continue to meet their missions.”
