Spending Review 2025: A Mixed Bag for Charities

The UK government’s 2025 Spending Review, announced by Chancellor Rachel Reeves on 11 June 2025, reveals significant capital commitments but falls short in supporting the charity sector’s day‑to‑day needs. While recipients like the NHS and housing programmes see uplifts, charities and civil society groups are expressing concern over underfunded operational budgets and uncertainty for the future.

Key Wins

• NHS: +3% real‑terms increase in day‑to‑day spending over the next three years
• Housing: £39 bn over 10 years for social housing—welcome news for charities tackling homelessness
• Charity Commission: Budget rising by 27% to £37.9 m in 2026–27—enabling enhanced digital oversight

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Noticeable Gaps

• DCMS (Culture, Media & Sport): 1.4% real‑terms cut over 3 years, potentially weakening support for civil society
• Local Government: Only a modest 1.1% real‑terms rise, forcing many councils to continue tax hikes and cost-cutting
• Overseas Aid (ODA): Remains cut to 0.3% of GNI, well short of the previous 0.7% target
• Welfare Cuts Maintained: No reversal of Spring Statement reductions; charities warn these intensify pressure on vulnerable communities

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Sector Response

Sector bodies, including NCVO and CFG, have described the Spending Review as “falling short of delivering the stability charities need to support communities through tough times”. SCVO warns that the review “offers little for the voluntary sector,” and Scotland’s charity sector faces similar concerns/

Civil Society highlights that while strategic funding is welcome, support for everyday charitable work remains inadequate.

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What Charities Should Do

1. Prepare for funding turbulence: Use scenario planning to brace for welfare-related increases in demand.
2. Foster strategic partnerships: Collaborate with local councils and public services, as these are still promising investment areas.
3. Highlight Commission funding: Show value in regulatory oversight and digital transformation efforts from the Charity Commission boost.
4. Prioritize advocacy: Push for reinstatement of full ODA and welfare protections in the Autumn budget.

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Final Thought

The Spending Review underscores a lingering challenge for charities: while infrastructure and public services receive significant capital, the everyday work of charities continues to be underfunded and overlooked. As sector representative bodies warn, this isn’t just a funding issue—it’s a strategic risk to services, beneficiaries, and long‑term impact.