The NCVO have pulled together a summary of the government’s Spring Statement and what it means for the third sector and the communities they support.
Key announcements for charities
The 2025 Spring Statement sets out the government’s updated economic strategy in response to reduced fiscal headroom. While not a full budget, the statement outlines how the government plans to meet its fiscal rules, alongside priorities for reforming public services and reducing the size of the state.
Although some changes are expected to come into effect gradually, others signal more immediate implications for people and the organisations that support them. Several announcements will have a direct impact on charities and the communities they work with.
Welfare and benefits
The Chancellor confirmed a wide-ranging package of welfare reforms, with cuts totalling nearly £5 billion to disability-related benefits by 2030. These include:
- Tighter eligibility criteria for Personal Independence Payments (PIP), with new assessments designed to significantly reduce the number of people who qualify
- Stricter work capability assessments, alongside an increase in checks on savings and other eligibility criteria
- The health element of Universal Credit for new claimants will be cut by 50% and frozen until 2030, rather than increasing with inflation
- Universal Credit standard allowance will increase from £92 per week in 2025/26 to £106 by 2029/30
- £1 billion in employment support, including £400 million for Jobcentres to increase capacity and reduce economic inactivity
While framed as part of a long-term reform plan, these announcements represent the largest package of welfare cuts since 2019, with a strong focus on reducing the welfare bill and tackling fraud.
NHS
The Chancellor confirmed that NHS England will be abolished within two years. Its core delivery and commissioning functions will be absorbed into the Department of Health and Social Care (DHSC).
The government claims this will reduce bureaucracy, enable cost savings, and allow for greater ministerial control.
Regulation
A new approach to regulation was confirmed, with the aim of simplifying the regulatory environment across sectors, including health, care and civil society. Key points include:
- A target to reduce administrative cost by 25%
- A focus on “supporting growth” and tackling “risk aversion” in regulatory bodies
While the plan has largely been framed around business growth, the government has indicated that all regulators, including the Charity Commission and CQC, could be in scope.
Funding for public services
The government confirmed that departmental spending will remain tight for the foreseeable future. Key announcements include:
- Day-to-day departmental spending (RDEL) will grow by just 1.2% in real terms per year from 2025/26 to 2029/30
- 5% cut to administrative budgets across departments by the end of the decade
- £3.25 billion will go into a transformation fund, including:
- Voluntary exit schemes for civil servants
- AI and digital investment
- Probation and foster care system reforms
Impact on the voluntary sector
Welfare reform and increased need
Cuts to disability-related benefits could hit communities hard. Scope warns that 700,000 disabled people risk falling into poverty without PIP. The government’s own analysis suggests 250,000 more people – including 50,000 children – could enter relative poverty.
Charities supporting disabled people, carers and those on low incomes are likely to see increased demand. This comes at a time when we know charities are making difficult decisions to manage the increase to employers National Insurance Contributions from April.
Pressures on partnerships
Many charities work in close partnership with public bodies. Reduced departmental budgets and structural changes, like the abolition of NHS England, could affect grants, contracts and collaborative policy work.
We have seen before how churn can disrupt partnership working and relationships. In moments of significant change and pressure, open communication and collaboration is vital.
Regulation
Voluntary organisations have interactions with various regulators such as Care Quality Commission and the Charity Commission. We support effective and proportionate regulation. It is important that regulators have the resource they need to perform this role effectively.
Next steps
The Spring Statement lays the groundwork for the Spending Review, now expected in June, which will set departmental budgets for the next three years.
A more detailed fiscal and policy package may be announced in the autumn, and some are predicting tax changes and more radical proposals will follow.
We continue to work constructively with government to shape a Civil Society Covenant, alongside ACEVO and other partners.
This aims to improve collaboration between government and charities – ensuring voluntary organisations are recognised as essential partners in delivering services and shaping policy.
More support
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