Natalie Zhivkova, WCVA’s Policy & Insights Manager discusses the challenges facing voluntary organisations that Welsh Government’s draft budget fails to address.
Welsh Government just published its 2025/26 draft ‘Budget for a Brighter Future’. We are relieved to see a more positive budget featuring funding increases instead of cuts, but with strikingly few references to prevention, a big question remains.
Will voluntary organisations receive a fair share and will that be enough to counteract the impact of the cost of living crisis, and the upcoming Employer National Insurance Contributions (NICs) and National Living Wage (NLW) increases?
I HOPE THIS BUDGET FINDS YOU WELL
The lack of portfolio-level detail available on budget publication day is always a challenge. This year, the big difference between the amount of funding Welsh Government was planning to distribute and the much bigger settlement received from UK Government, is making initial scrutiny particularly tricky.
We note a modest £10m increase for Social Justice and much more substantial increases for Health and Social Care, as well as Finance and Local Government. However, we also see a worrying continuation of last year’s shift away from long-term thinking and preventative spending in the budget narrative, despite the considerable expansion of Welsh Government’s overall budget. This has left us wondering which budget elements are designed to ensure the brighter future we are promised.
As we wait for Cabinet Secretaries to devise their spending plans, there is no better time to shine a light on the state of the voluntary sector.
THIS IS HOW THE BUDGET FOUND US
We asked 100 Welsh voluntary organisations how things have changed for them since this time last year. This is what we found out:
- 78% of organisations report increased service demand, 50% have not been able to meet that ‘fully’ or ‘at all’
- 29% have reduced their full-time staff numbers, 56% said they do not have enough volunteers to support their current activities
- 69% of organisations shared they are using charity reserves to sustain their operation, 38% told us if nothing about their financial situation changes, they will have to start considering major steps, including closure, in six months to a year
WHY ARE WE HERE?
Austerity, Brexit, the aftermath of COVID-19, the cost of living crisis, and the climate and nature emergency are part of a growing number of major external factors impacting voluntary organisations. There has not been sufficient political recognition of the detrimental effect this complex web of challenges has had on the voluntary sector over time. This is evident in our survey responses.
Looking back at the past 12 months, organisations reported receiving less public funding (42% of those surveyed), less funding from trusts and foundations (46%) and less donations from the general public and the private sector (36%).
Even more alarmingly, 43% of the voluntary organisations that receive public funding stated that none of the grants or contracts they deliver cover the true cost of the service they provide. 48% reported no contract uplifts in the past year and 61% shared they still have to supplement public contracts with charity income, despite receiving an uplift in 2024.
A (DIS)MISSED OPPORTUNITY
To our deep disappointment, Welsh Government’s draft budget makes no reference to measures aimed at mitigating the impact of increased Employer NICs and NLW on voluntary organisations in Wales. We have been leading an extensive campaign on the issue since the announcement of the increases. Both Plaid Cymru and Welsh Conservatives members highlighted the glaring omission during the budget debate, but their comments received no response from the Cabinet Secretary for Finance and Welsh Language.
We asked organisations an open-ended question about their priorities for Welsh Government’s budget. The two most common items on their wish lists were multi-year core funding for the sector, and public contract and grant uplifts to account for the increase of Employer NICs and NLW. As it stands, the budget guarantees neither.
WCVA released an official statement and we will continue to put pressure on decision-makers to allocate a fair amount of funding for the voluntary sector.
Here’s our response to an extremely disappointing Welsh Government draft budget, we’ll have more on our reaction and what we’ll be advocating for on behalf of the voluntary sector over the coming days pic.twitter.com/mZkLzrGS31
— WCVA | CGGC (@WCVACymru) December 11, 2024
WHAT’S ON THE LINE?
84% of organisations we surveyed told us they are concerned about their ability to afford the rise in Employer NICs, with 50% stating they are ‘very concerned’. 77% expressed concern about affording the new NLW.
To accommodate these substantial increases:
- 50% of organisation are considering using more charity reserves
- 40% are considering not offering pay rises to match inflation
- 34% may reduce the number of full-time staff
- 26% may reduce the number of part-time staff
- 24% are considering reducing service delivery
- 14% are considering service closure
It is clear that many voluntary organisations will not be able to weather this storm without appropriate financial support. In the worst case scenario, can we afford 14% of voluntary sector services closing next year?
DO YOU HAVE SOMETHING TO SHARE?
Help us continue making a strong case for the voluntary sector. Share your thoughts with us at policy@wcva.cymru.