insights
Spring statement suggests summer of discontent for social ventures
Spring statement suggests summer of discontent for social ventures
Written by
Kevin Armstrong
Policy Lead
The spring statement this week did nothing to help the worst off in society, in part because it failed to back the people who best know how to help them. While social ventures across the country will continue to step up to support the most vulnerable, without support from Government, the period ahead won’t be easy.
Inflation in 2022 is forecast to average 7.4%, but state benefits and the state pension will only increase by 3.1%. The Chancellor announced an extra £500 million for the Household Support Fund – intended to target ‘support for the most vulnerable’ by covering costs for essentials such as food, clothing and utilities – but if this is split amongst every person living in poverty in the UK, they’ll get less than £35 each to see them through the tough year ahead. It’s utterly inadequate.
If social entrepreneurs are to be there for the many people being affected by the cost-of-living crisis, you would expect the Government to do what it can to ensure that social ventures start-up and scale-up fast. Improving access to finance would be one key way to do this, and helping them to find customers and income streams would be another. This week we’ve seen neither.
On access to finance, the Chancellor pledged to cut and reform taxes on business investment, as well as research and development investment, but these changes aren’t set to come into effect until April 2023 at the earliest. Consultation on these changes this summer could be key, but it will feel cumbersome when change is so obviously needed now.
You might have heard of other financial announcements made by the Chancellor this week, but they do little to benefit social entrepreneurs overall. The Employment Allowance will become £1,000 more generous next month – enabling some social ventures to reduce their National Insurance bills accordingly – but spiralling energy costs will easily outweigh that, even when you factor in the tokenistic temporary 5p per litre reduction in fuel duty. The Chancellor’s sticking with plans to hike Corporation Tax from 19% to 25% in 2023-24, with a 50% relief only available in the interim for eligible retail, hospitality, leisure and green businesses. An increase in the National Insurance threshold will protect more initial earnings – including for self-employed social entrepreneurs starting-up – but this follows a scrapping of the New Enterprise Allowance which still hasn’t been replaced with anything new.
It doesn’t look like the Government wants to improve trading support for social entrepreneurs either. Social ventures will continue to be denied the Government’s Help to Grow support if they employ fewer than five staff, or if they are not registered with Companies House. According to the Telegraph, the Government is also thinking of reducing ‘social value’ weighting in procurement, potentially undoing a welcome reform that it only implemented a year ago.
The Government will be consulting on business tax reforms as well as future plans for dormant assets and other investments this summer. With real household disposable incomes per person forecast to fall at a level not seen since records began in the 1950s, perhaps the public will once again want meaningful policy changes that better serve society. UnLtd will actively campaign within and outside the official consultation channels this summer to fight for the financial and trading support social entrepreneurs deserve, harnessing demand from the public as it builds.
UnLtd and other sector organisations will also be here to champion social entrepreneurs and support them to weather the storm. Register for our Springboard to Selling Online, contact us with queries or opinions you’d like to raise about the spring statement, and follow us to hear about future funding opportunities. Together, we will break down the barriers that still sadly persist after this week’s announcements.