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What does a Labour government mean for the charity sector?

Posted: 10/07/2024

Historically having a Labour government, with its emphasis on public welfare, has translated into increased funding for charities, particularly those addressing poverty, homelessness, and social inequality. It might therefore be thought that charities working in these sectors will now see an increase in government support; although if there really is ‘no money’ left, it is difficult to see how much can be provided by the government.

As Thangam Debbonaire (formerly Shadow Secretary of State for Culture, Media and Sport) was also one of the few casualties from the election, it remains to be seen whether her statements on the role of the charity sector still carry weight with Lisa Nandy, the incoming secretary of state. It also remains to be seen whether all those aspects of charities and the voluntary sector will stay with the DCMS, or whether some may move to the Cabinet Office, or elsewhere.

Prior to the election, the Labour Party had stated that it wanted to tackle the root cause of the issues which fall to charities to address, and that seems to remain the case. Potentially, after all, the goal of many charities may at some point in the future be to cease to exist or be needed. However, without a significant injection of funding, it is likely that charities will still need to provide services to meet demand.

There are several areas of policy where promises in other areas will inevitably impact on the charity and not-for-profit sector, including the following:


Ending the VAT exemption for private schools has been the most eye-catching policy in the world of education. Labour will not, however, remove the charitable status of private schools, so those independent schools which are charities will still need to maintain their commitment to the public benefit. Clearly, though, the removal of the VAT exemption could have significant financial implications for both schools and parents.

That said, if as promised, there will be an investment in education and vocational training (whether as a result of or despite the VAT on private school fees), this aligns with the goals of many charities working to improve educational outcomes and provide opportunities for young people.

Organisations focusing on early childhood education, after-school programmes, and youth mentorship could benefit from increased funding and policy support.

Child poverty

The manifesto says that the new government will work with charities and others to develop an ‘ambitious strategy to reduce child poverty’; something that is needed, but with little detail provided. Some areas where more detail may appear include around the provision of breakfast clubs in every primary school, and changes to the minimum wage to remove age-banding.  

Health and social care

Labour has pledged to create workforce plans to enable more disabled people to work. This is easy to say, but difficult to achieve. However, it is promising more employment support and access to reasonable adjustments. The government will aim to tackle the ‘Access to Work’ backlog and make sure people can try out a job without fear of an immediate benefit reassessment, which again may provide opportunities for charities.

The creation of a National Care Service is likely to affect charitable care organisations, which will be delivering care at ‘home first’. The introduction of a new set of national standards for care will inevitably put an additional regulatory burden on these organisations.

Environmental charities

The policies on the environment may bode well for those charities in the environmental sector. For example, the policies on green energy should be good news for environmental charities. There is also a promise of policies on tackling water pollution and promoting biodiversity, although further details are lacking. This could mean increased funding opportunities for organisations dedicated to climate change, conservation, and sustainability initiatives, and there might be an increase in partnerships and grants. This could amplify the impact of the sector on critical environmental issues.


Charities and voluntary organisations could play a role in fulfilling Labour’s commitment to building 1.5 million new homes over the next Parliament. This is a much larger number than the number of new homes built recently. The manifesto encourages social housing providers to ‘build capacity’, which, combined with a lack of available funding from government, is likely to mean a push for private sector investment and partnerships with the not-for-profit sector.

International development

The new government says that it aims to rebuild Britain’s reputation on international development with a new approach based on genuine respect and partnership with the ‘Global South’ to support common interests. There is a commitment to restoring development spending at the level of 0.7% of gross national income as soon as fiscal circumstances allow. The government aims to work with the Independent Commission for Aid Impact to apply high standards to the UK’s aid spend, with a view to bringing in robust measures of development effectiveness, transparency, and scrutiny. Opportunities for overseas aid charities to become involved in these initiatives are likely.

Music, art and sport

There are promises to increase access to the arts for young people, introduce consumer protection on ticket reselling, and to require publicly funded national museums and galleries to increase the loans they make from their collections across the country. The new government talks about the ‘soft power’ of the UK’s world-leading cultural institutions, and aims to bring leading creative and cultural institutions together to increase the UK’s international clout. The government also says that it will work with the UK’s diaspora communities to enhance cultural links across the world.

At the moment, there are no details of what this means in practice, but there may be opportunities for charities in these fields to cooperate with each other and with government.

Charity events and charities with event venues

A pledge to introduce ‘Martyn’s Law’ as part of the national security and counter-terrorism strategy will bring additional regulation on public events and venues. This will involve additional costs in terms of governance and regulatory compliance as well as for logistical matters such as event security and planning. 

Charities with sizeable premises which use these to generate income, as well as those that use their premises in the direct service of their beneficiaries, will therefore have a new regulatory framework to grapple with. Charities running large public events will also need to comply with any new regulations. It is unclear whether this will be brought in ahead of the summer recess, so timing and final details remain to be determined.

Co-ops and mutuals

This may be the most interesting development in the charity sector as a whole, as Labour has promised to double the size of the co-operative and mutual sector, which is currently being reviewed by The Law Commission. It is presumed that any growth will tie in with the promised expansion of local renewable energy initiatives, many of which are delivered by community organisations and co-operatives.


The promise to replace the business rates system fails to mention whether the current exemption for charities will continue. There is also no commitment on rates for other forms of not-for-profit organisations such as CICs and community benefit societies.

Safeguarding the right to campaign and the need for independence

Labour has traditionally sought to avoid some of the recent issues of the ‘war on woke’, and has consistently stated that charities should campaign, even if they are being critical of government. This commitment is easy when you are in opposition – it is much harder to say when in power. It also remains to be seen how far charities can remain independent when they are working in partnership with a government, and, for that matter, whether the priorities of the Charity Commission will in fact change, even though it has always been independent of the government of the day. 

Working in partnership

Described as ‘mission-driven government’, this pledge by the new Labour government in its manifesto will resonate with charity leaders, who, after all, run organisations whose charitable purposes take precedence over the institution carrying them out.

A charity trustee’s duty is one of unconflicted loyalty to the charity in carrying out its purposes. This focus, along with Keir Starmer’s ‘Society of Service’ (referenced at the Labour and Civil Society Summit in January this year), suggests a government that wishes to engage with the charity sector constructively and collaboratively. Several members of the Cabinet have direct charity experience, but even with all of that experience and promise, there will no doubt still be points of concern, as well as celebration, for the sector. The overall picture seems to be one of hope for constructive engagement with charities, tempered with caution that manifesto promises are not always fulfilled.

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