Big society ignored in ‘progressive’ budget

The chancellor of the exchequer’s ‘unavoidable’ and ‘progressive’ budget failed to mention how social enterprise could play its part in reducing the country’s deficit.

And despite the ‘big society’ being at the heart of Tory policy, the words ‘big society’ were absent both from George Osborne’s speech and the 112-page budget document itself.

Osborne spelled out his plans to save £85bn in the next four years with radical increases in VAT from 17.5 per cent to 20 per cent, changes to disability and housing benefit and tax breaks for new and small businesses.

He said that cuts in public spending would amount to 77 per cent of the deficit reduction, leaving just 23 per cent to carry the burden of tax increases. This included a reduction of government departmental costs outside of health and international development by around 20 per cent. The result would be a reduction in government borrowing from £149bn to just £20bn in 2016, creating a surplus in the following years.

However, while Osborne said this ‘early determined action’ aimed to protect the most vulnerable in society, he failed to address how social enterprise was being used by the Con-Lib coalition as a way of getting better public services for less cash.

While he sealed the deal for a ‘green investment bank’, investing into new green technologies, the chancellor failed to mention the proposed big society bank and the amount of cash that could be available for it through dormant bank accounts, previously thought to be in the region of £200m.  

The Cabinet Office declined to comment on Osborne’s speech and the treasury report, but said the government had ‘already outlined its commitment’ to the big society agenda and that work on the bank was progressing well, with Co-operative Financial Services working on building the reclaim fund.

Osborne also said that a public spending review would be announced on 20 October 2010 where more details on public spending cuts would be revealed.

Dan Gregory, investment executive at Local Partnerships, a joint venture between the Local Government Association and public private partnerships body Partnerships UK, said the budget didn’t reflect big society.

‘If the big society is to mean anything in practice, and not just as a cover story for cuts, then the big spending departments and local authorities will have to take it seriously. A handful of speeches and initiatives emerging from the Cabinet Office, communities or treasury departments will not make the big society, but we haven't seen any evidence of either in this budget,’ he said.

‘What is clear, however, is that the days of government throwing another fish over the side to social enterprises a couple of times a year have gone.’

Simon Knighton, CEO of the Expert Patients Programme CIC, which helps service users take control of their own health care, said the budget showed big society was a ‘cloak and dagger approach to making us pay for every service on offer to us’.

‘The cuts simply dismiss this evangelical approach and instead make way for the removal of services that should be available to all. Those who cannot afford such costs will simply go without, so we are left with the haves and have-nots, something a big society would be ashamed of.’

However, Peter Holbrook, CEO of the Social Enterprise Coalition, said the budget focused on 'headline actions' to address the immediate issue of the structural deficit and that more specific information would follow.

'The absence of any specific mention of social enterprise is not surprising and we fully expect more information on the shape and size of the Big Society Bank to follow once more detail emerges,' he said.

'The Social Enterprise Coalition has long campaigned for the creation of a wholesale bank to give social enterprises better access to finance and we look forward to supporting the coalition government to implement what will be complex proposals.'

Broken promises

It was a budget that Labour’s acting leader Harriet Harman labelled ‘reckless’, ‘a budget of broken promises’ and one that ‘pulls the rug out from under the economy’.

Stephen Bubb, CEO of charity chiefs’ representative body Acevo, said the budget would affect frontline services and the most vulnerable in society, resulting in the charity and social enterprise sectors having to do more, all with an added cost due to the VAT increase.

‘At a time when the government wants more services to be delivered by third sector organisations and to encourage the growth of a big society, they are being walloped with a big rise in VAT, which puts them at a massive competitive disadvantage when bidding to deliver new services,’ he said.

The VAT increase will undoubtedly see an influx in buying before the changes come into force in January next year.

Edward Finch, partner at Buzzacott chartered accountants, warned that businesses should now bring forward their ‘big ticket expenditure’, such as vehicles and equipment, to avoid the extra costs.

Finch said the public spending squeeze would potentially hit contract dependent organisations, but on a more positive note it could increase incentives to outsource services.

‘As ever, businesses will need to carefully consider involvement in outsourcing for purely cost saving reasons,’ he said. ‘The budget’s freeze on public sector pay and pensions could mean opportunities for the social enterprise sector.’

How will the budget affect you and your social enterprise? Leave your comments below.