Wednesday, 30 March 2011

The Budget - Bad for the Poor but Good for Donkeys.

As expected the Chancellor did almost nothing in the budget. The July 2010 budget plotted the course and we all wait to see where it will take us. Already the statistics show that where we will end up is a place where the poorest are much worse off, where the services which the poorest rely on are also much worse off, and the standard of living of the wealthiest is left largely unaffected.

The two great hopes for the poorest are that public services can be provided to the same standard for much less money (hmmm....we’ve heard that before) and that the charitable sector will step in and provide more help. To this end the Chancellor changed Gift Aid and Inheritance Tax rules so that people will be able to reduce their tax bill by giving instead to charity. The inheritance tax change is a straight forward 1 to 1 shift of money from the public purse to the charitable sector.

Sounds good? Well for churches it maybe but for the poorest definitely not. Tax money is much more likely to be spent on the needs of the poorest than money collected by charities in general. As only the wealthiest 2% of estates pay any inheritance tax at the moment, it is the charities preferred by the wealthiest that will benefit – we know these disproportionately relate to arts and education (usually universities and individual public schools).

The government raises around £550Bn a year in taxes; it spends around £350Bn on services which directly help the poorest and most vulnerable (e.g. welfare, health and social services). The charitable sector raises around £10Bn in donations from the public each year but because the charitable sector includes things ranging from medical research, through churches, arts and culture, and on to public schools the proportion of money that goes to the poorest in society is considerably less.

The figures for the proportion of charitable giving going to particular causes are very difficult to get hold of, but it is clear that services to the poor and the vulnerable form less than 10% of donations; not surprisingly animal charities appear to receive more. The majority of expenditure by charities providing services to the poorest in the UK comes in the form of government grants. Last year these totalled £12bn which was more than public donations. This year such grants have been slashed dramatically by hard-hit local authorities.

In short charities providing help to the poor have been devastated by the cuts from the last budget. The charitable giving tax breaks will over a long time benefit the poor a little and the arts, private education and animals more.

It has long been true that should you want UK public sympathy in the form of cash you are better off being a sick donkey than mentally ill – it appears the Chancellor may yet be a man of the people!