The chancellor's 2010 Budget received a cautiously positive response from the sector.

The Government announced in the 2010 Budget Report that following a judgement by the European Court of Justice in January 2009, UK charity tax relief's will be extended to charities and Community Amateur Sports Clubs in the EU and in the European Economic Area countries of Norway and Iceland.

Commenting on the announcement John Low, chief executive of the Charities Aid Foundation said: "These changes recognise that disadvantage doesn't respect borders. It is right that donors are empowered to give tax-effectively where they see the greatest need, regardless of national boundaries.

"Whilst today's announcement should not affect most existing UK charities; in developing the detail of the process, additional bureaucracy and administration must be kept to a minimum.

"Changes, such as new limits on Gift Aid claims, or the introduction of a 'fit and proper persons test', that aim to reduce the burden on HMRC, or to protect against abuse, must be applied rationally, not over-zealously, to avoid a detrimental impact on genuine charitable activities. We will contribute our expertise of cross-border giving to Government as they develop the guidance."

In his Budget, the chancellor also announced the budget deficit had gone down from £178bn to £163bn, and cut growth forecasts.

"The challenge now is to bring down borrowing in a way that does not damage the recovery or frontline services people rely on," he told the House of Commons.

He forecast the economy would grow by between 1% and 1.5% this year and between 3% and 3.5% in 2011. His forecast for the following years is unchanged.

He also unveiled a guarantee to give everyone a basic bank account, giving up to a million more people access to bank accounts over the next five years.

On public spending, the chancellor announced £5 billion in savings, cutting back in a number of areas such as IT projects, legal aid, prisons and cutting residential care by helping more elderly people stay in their own homes.

Spending on frontline services such as the NHS and schools will be protected for two years from 2011.

ACEVO response
The Budget has signalled the Government's intention to work more closely with the third sector on reforming public services to reduce costs and protect front-line quality according to Acevo CEO Stephen Bubb.

Bubb said: "The big offer we have been making to the Chancellor is that the third sector can transform public services, delivering better outcomes for vulnerable people and reducing costs to the Exchequer.

"This Budget is a good start on turning that offer into reality. Now we need to see the Social Investment Bank set up, and a step-change in Government engagement with the third sector on public service delivery."

ACEVO's argument has been that the third sector can play a key role in transforming public services, getting better outcomes for people and reducing the public deficit.

Following ACEVO's meeting with the Chancellor in February and discussions with Treasury, Cabinet Office and DCLG officials, the Budget commits the Government to closer work with the third sector on its flagship Total Place programme for transforming public services.

Bubb noted the Budget also commits the Government to aligning that work with encouraging more 'social investment' into the third sector through social impact bonds and the Social Investment Wholesale Bank.

NCVO response
Though the Budget produced mixed blessings for the voluntary sector according to Stuart Etherington, chief executive of the National Council for Voluntary Organisations.

He said: "We are pleased a commitment has been made on basic bank accounts and that there was support for an international transaction tax, both of which featured in our manifesto.

"The chancellor outlined additional support for vulnerable people such as the elderly. Voluntary organisations play a crucial role in directly supporting vulnerable groups. This is why it is essential that all charities are able to access the financial support packages provided for small businesses so that they can play their full part."

Key Budget successes for Etherington and the sector include:

A commitment on making basic bank accounts available to a million more people

Support for an international transaction tax on banks

A commitment to identify how EU rules can be used to allow UK charities to share/outsource services (eg HR and IT) to other charities without incurring VAT.

An extension of Gift Aid tax relief to some EU countries on donations from UK citizens.

Support for the first social impact bond (SIB) pilots, which would pay charities for delivering social improvements.

Commitment to the Future Jobs Fund, to provide a job or training to all young people aged 18 to 24 who have been out of work for six months.

Extra support for the elderly through increased pension payments and winter fuel allowances

Etherington noted Darling's comments about the role of government working in partnership with "key sectors" were "reassuring".

He added: "The role of modern government is to work with the key sectors to help them compete and prosper. We will not go back to the interventionism of the past. But nor can we return to the hands-off approach of the free-marketeers. It is through partnership, not indifference, that Britain can and will succeed."

Etherington noted that there was less positive news on the Social Investment Wholesale Bank. The Budget repeated that £75m would be made available from dormant bank accounts.

"NCVO accepts this is a step in the right direction but is disappointed the Government stopped short of allowing all unclaimed assets to be used," said Etherington.

It is also concerned about the exact role of the bank and will be seeking clarification on this. NCVO previously called for a £50m start-up fund plus monies from all dormant accounts to be utilised.

The Budget noted that the Gift Aid forum, set up to consider possible reforms and simplifications to Gift Aid, will report in the autumn. "NCVO is also disappointed that no major reform of Gift Aid was ready in time for this Budget," said Etherington.

The Chancellor unveiled a £2.6bn support package for small businesses. "It is imperative that charities are able to access this support and government needs to make this clear to them," added Etherington.

NIVCA response
On balance, a slightly more upbeat message came from NIVCA after a panel of voluntary sector representatives met at NICVA to view the chancellor's Budget speech.

Seamus McAleavey, chief executive of NICVA said: "In general the NICVA budget panel thought the Chancellor's budget was good in the circumstances. We believe if Labour is re-elected this is a budget it will actually run with and it's unlikely to return with an emergency budget after the general election.

"We thought the Chancellor was credible on his borrowing figures, whereas last year we thought them somewhat fanciful. His plans to reduce borrowing sounds credible. He has again indicated what we all know - that there will be significant spending cuts from 2011 on and we have to prepare for those and mitigate the damage they can cause."

King's Fund response
For Professor John Appleby, chief economist at The King's Fund, the Budget offered nothing new. "Today's Budget confirms what we already knew - that despite a small rise next year, NHS spending will be frozen in real terms for the foreseeable future.

"Our analysis has shown that the NHS will face a £21bn productivity gap by 2013/14. Although this could be reduced to £14bn by looking again at assumptions about future spending in some key areas, closing this gap would still require productivity gains of around 3-4 per cent a year. Today's figures showing that NHS productivity fell by 3.3 per cent between 1995-2008, show just how tough a challenge this will be.

"Improving productivity has to be the top priority if the NHS is to maintain quality and avoid having to cut services. Politicians will need to be honest about the scale of the challenge ahead and help the public to understand that some of their services may need to change in order to improve efficiency and maintain quality."

The chancellor also said public pay settlements will be held at a maximum of 1% for the two years from 2011.

Kieran Ryan, managing director of recruitment agency The Synergy Group, said: "I would anticipate that many local councils will now devise contingency plans to gain back the funds they have lost from central government, and it is likely they will invest in the departments which are proven income generators."

The Department for International Development (DFID) announced that it will deliver £150m of savings, as its departmental contribution towards £11bn savings that are being made across Government.

The Government will continue to keep its promises to the world's poorest people.

It remains fully committed to the target of spending 0.7% of Gross National Income on official development assistance by 2013, as outlined in the draft Bill published in January.

The £11bn of savings will contribute to halving net borrowing and will protect frontline priorities. The savings will come following the work of the Operational Efficiency Programme and Putting the Frontline First: Smarter Government.

Green Investment Bank
The chancellor also announced a New Green Investment Bank, controlling £2bn of equity. Half the cost will come from government asset sales, with the rest matched by private investment.

It will focus on green transport and energy, including offshore wind power, with £60m offered to develop ports hosting manufacturers of offshore wind turbines.

Ed Mathew of Transform UK, an alliance of green business investors and charities, said the creation of the fund was a "step in the right direction".

Boost to philanthropy
According to law firm Withers, tucked away in the Budget notes is a development which will give a major boost to philanthropists in the UK.

Withers partner Chris Groves explained: "The Chancellor acted today to bring the UK in line with recent European court rulings on charitable donations. Mr Darling confirmed that all UK tax reliefs will be extended to donations to any charity in the European Union - subject to satisfying various conditions.

"This is very welcome news for philanthropists and will certainly facilitate increased charitable giving throughout the EU. Cross-border philanthropic donations had previously been mired in uncertainty and red tape.

"For UK-based charities, this development cuts both ways. It means that donors from across the EU can give tax-efficiently to UK charities - giving charities access to a much broader range of potential backers. On the flip side, UK charities must now compete with their EU counterparts for funds as there is no longer a tax incentive for UK philanthropists to direct their giving to UK-based charities."

Banking reform
Urban Forum, founder members of the Better Banking campaign, has given a cautious welcome to the proposals in today's Budget statement for banking reform.

Urban Forum Chief Executive, Toby Blume, said he was glad the government had "opened the door" to significant reform of the banking system following the banking crisis and subsequent bailout.

Blume said: "Whilst any moves towards greater financial inclusion are wholly welcomed, the introduction of a new requirement for banks to offer basic bank accounts to all is only a small step towards what is needed.

"Banks have, for some time, been voluntarily committed to providing basic bank accounts and the number of people without one has been falling. Nonetheless, a basic bank account is not (on its own) the solution to financial exclusion, as having a 'basic' account doesn't give people access to the full range of financial services they should benefit from. How the new requirement is monitored and enforced will be critical to whether it actually leads to any real change."

He continued: "The commitment to banks publishing information about how they provide financial services ('disclosure' - one of the four Better Banking proposals) that was announced in the Spring Pre-Budget Report seems to have been strengthened. And whereas previously the government said it would work with the banks on this, it says it is now 'determined to secure greater transparency' and is working with the Financial Services Authority on this.

"There are also encouraging noises on improving affordable credit and access to capital for low income households, with a commitment to consult on ways to get banks to 'make an appropriate contribution to community lenders, through regulatory action or a new community levy'.

"This leaves the door open to a Community Reinvestment Act (regulatory action to encourage investment in community lenders) and the 1% levy that the Better Banking campaign is proposing.

Finally, Toby Blume said: "Despite signs that there may have been an announcement in the Budget, it was announced that a response to the recent consultation on a new Post Office Bank will follow shortly. One can only presume that whatever is planned wasn't signed off in time for the Budget. "

The Conservatives have said that if they win the election they will produce an "emergency Budget" within 50 days of taking office.

The shadow chancellor, George Osborne, said of the budget: "There was nothing in this Budget except political positioning. No credible plan to deal with the debt. No serious plan to boost growth. All the spending decisions have been put off until after the election, and all the big tax rises concealed in the small print."

Also view: Concerns over sector ahead of budget: http://www.charitytimes.com/ct/NCVO_forecast_survey.php

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