Osborne Budget 2010So at long last, the coalition government has revealed just exactly where and how the scathing cuts are going to be delivered. Many observers worried beforehand that the rich would get richer, the poor get poorer and the middle class would foot the bill. So what exactly does the budget mean for the Third Sector, and what does the Third Sector believe the impact will be for the people of Britain?

The Director of Policy from Citizens Advice, Teresa Perchard, responded to the budget by saying that the budget of benefit cuts could leave many vulnerable people worse off.

The reality is that the proposed changes to personal allowances will be of little benefit, for example, to working families on the lowest incomes who live in rented accommodation. Although these families are in work, they are also likely to be in receipt of housing and council tax benefits and since both are means tested, any rise in take-home pay will result in a loss of entitlement to these benefits.

Single people and couples who are working but earning less than £10,000 a year and with no children will gain very little from the increased tax threshold because an increase in their income will lead to a lowering of their housing benefit and council tax benefit. At the same time they will have to bear the rise in VAT.

Many working families with children and earning under £25,000 will also gain little from the change in the threshold, though for those with the lowest incomes, the increases in Child Tax Credit will mitigate for some, though not for all.

However, there are potential positives to come from the budget, it would appear as Tersea Perchard notes that:

We welcome the decision that housing benefit rates will allow disabled people to have an extra bedroom for a carer…We also welcome the measures designed to protect pensioners, and the decision to maintain universal child benefit, even though it is to be frozen, as we recognise the balancing effect of the increase in child tax credit for some families on the lowest incomes.

A quick glance at Third Sector tells us that whilst in many areas there will be widespread austerity, there are areas where the budget may have a positive impact on the sector:

Louise Richards, director of policy and campaigns at the institute, said the increase in capital gains tax from 18 to 28 per cent for higher-rate taxpayers could encourage them to give land, shares and property to charities in order to avoid paying the tax.

Time will tell over the next 12-18 months, exactly how tough the measures taken in the budget will be, but it’s looking like the coalition governmemnt have made a serious commitment to bringing the budget deficit down to a manageable amount. Commentators have said that the budget is a gamble, and that it may potentially damage the economic recovery – time will tell just just how far and wide the negative impacts of the budget will spread.