What does the budget mean for social business?

By which, George Osborne indicated on Wednesday that there would be no surprising shift in policy away from the wintry predictions trailed in advance.  And – a sugar tax on fizzy drinks aside – that was what was delivered.  But what does all this mean for organisations seeking to use business to achieve social change, to impact on the communities they serve?

Well, first, we cannot ignore the warnings about the wider economy, and the uncertain climate created by the EU referendum. Whatever your view on Brexit, the impact of any “wobble” in the economy will be felt far and wide. The austerity programme continues, with £3.5bn of further savings planned in the current Parliament. Charities and others have already expressed concerns about the changes in entitlement criteria for Personal Independence Payments, which will impact significantly on those who lose benefit as a result. Our clients on the front line of service provision will be dealing with the direct impact. Other specific results of the further reductions are not known yet, but the general direction of travel for public services and unprotected government departments is clear.

On the specific measures, the changes to Corporation Tax will help businesses. The increase in small business rate relief should help smaller social enterprises and start-ups. Arts organisations will be pleased at the new corporation tax relief from April 2017 for museums and galleries, on the cost of temporary and touring exhibitions

Devolution remains firmly on the agenda, and the devolution of criminal justice powers to Greater Manchester may signal some interesting developments around devolution in this area generally. This will be of interest to all those involved in social enterprise solutions around desistance, and builds on recent government focus (including from David Cameron).

There was some encouragement for community development. Specific initiatives in the small print included regeneration based around rail station sites, with the HCA to work with Network Rail and local authorities to bring land forward for regeneration. The government also wants to explore “options for encouraging private investment in low cost home ownership”, and the establishment of “garden villages”, along with the promise of £60m to support community led housing, including through community land trusts, in “rural and coastal communities”. We have already seen in other support to community initiatives that a relatively small amount of support, at the right moment, can be key in unlocking progress.

And what wasn’t there? There was no announcement about increasing the investment threshold for Social Investment Tax Relief (which we still hope for this year), nor was there any movement on supporting community energy – both of which have been key concerns for clients. No mention was made of any change to mandatory rate business rate relief, which will please charities (for now).

So overall, as you were. Some amendments that will benefit business activity, but no fundamental change in direction. Much will depend on what happens over the coming months, not least in June…

For more information

Please contact David Alcock

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