It says that the charity sector will benefit from the civil service job cuts: the reduction in bureaucracy and red tape enabling major changes to take place in the way that public services are delivered, with the Government relying more heavily on not-for-profit organisations.

In a review into the efficiency of the public sector by Sir Peter Gershon, released at the same time as the CSR, the Government accepts the urgent need to further improve its funding and contracting relationship with the voluntary and community sector.

Stephen Bubb, chief executive of ACEVO said: “I am delighted that our representation to Peter Gershon has resulted in the Government’s commitment to improving longer-term funding and full-cost recovery for the voluntary sector.

“This success of ACEVO’s Sure Funding campaign highlights that government is listening to the sector’s views more than ever. But we must continue the debate until real results are evident.”

The Citizens Advice Bureau, however, expressed worries about the job cuts saying that they may have a negative knock-on effect on poorer communities. Theresa Perchard, director of policy for the charity, naming the distribution of benefit as an issue. “We are obviously concerned about the effect these job losses will have on the provision of services available to our clients, particularly in terms of benefits and tax credits,” she says.

Overall, the CSR was received favourably although the National Council for Voluntary Organisations (NCVO) said it was looking forward to more information on the level and duration of funding that will be invested in the sector’s capacity and infrastructure.

Other charities pleased with the Chancellor’s plans are those organisations involved with children and international aid, two areas that are both set to receive greater financial commitment.

The promise to create 120,000 new childcare places by 2008, plus a budget of £100 million to be spent on children’s centres has been welcomed by children’s charities such as the national childcare charity Daycare Trust.

The third world is also to benefit from an increase in spending: the government aims to meet EU targets of allocating 0.7% of gross national income to international development by 2013. But aid agencies have asked the Chancellor identify exactly which areas are to receive the money.