Analysis of Budget 2013 from The Wheel

The purpose of The Wheel’s analysis of the 2013 budget, announced 5 December 2012, is to examine its impact on the voluntary and community sector and those whom it serves.  This budget is the sixth in the series of austerity budgets introduced following the financial collapse of September 2008.

The headline figure for the reduction in government spending for 2013 is -€1.2bn, or -2.3%, reducing government spending[1] to €51.1bn.  The dominant feature of cuts since 2008 is that they have been highly selective: in the area of our concern, cuts to the voluntary and community sector have averaged a range of -8% to -10% a year.

Social impact of the budget

The impact on people helped by voluntary and community organisations has been well covered in the media, so only key issues will be itemized and analysed in this note.  The principal impact has been in the Department of Social Protection, where the minister has itemized savings of €390m in 2013, or €452m in a full year.  These fall principally in three areas:

  1. Child benefit, reduced for the first three children to €130, with full-year savings of €142m;
  2. Job seeker benefit, reduced to nine and six months depending on contributions, with savings of €82m; and
  3. Reduction in telephone and household benefits, with a saving of €61m.

The other welfare savings are comparatively small financially, but in affecting the back-to-school clothing and footwear allowance, respite care grants (-19%) and back-to-education allowance, they will have a disproportionate effect on people concerned. 

A couple of important points should be made about these changes.  First, it is important to look at their cumulative effect over several budgets in reducing living standards for those on the lowest incomes. 

Second, is the poverty impact of these measures: the poverty line in Ireland[2] is in the order of €208 weekly.  Many welfare benefits in Ireland are close to the poverty line: above in the case of older people, below in the case of unemployed people. Budget 2013 will have the effect of pushing more people below that line.  After the downward trend in poverty in the early 2000s, poverty began to rise again in 2010, and it is probable that this trend will accelerate.

Effects on community and voluntary organisations

The estimates published alongside the budget provide broad headings of spending, but for the full effect of budget changes, it will be necessary to await the publication of the more detailed, revised estimates. 

Our ability to extract precise changes on those budget lines that will most affect voluntary organisations is therefore limited at the time of writing this note, but the specific information we do have from budget documentation itemizes the following changes:

  • Reduction in funding for youth organisations and projects between -5% and -10% according to programme, down -€5.4m in 2013 and -€3m in 2014.
  • The Local and Community Development Programme, down -€6m in 2013;
  • Reduction for sports organisations and programmes of -€1.3m in 2013 and -€2.3m in 2014.

Although not specified, the youth organisations budget involved is most likely the 2012 Department of Children and Youth Affairs B5 allocation for youth organisations and services.  This is normally divided between national youth organisations (the smaller part) and projects in disadvantaged areas (the larger part).  This allocation was €58.3m in 2012, so we may expect the allocation to fall to €52.9m in 2013 (-9.2%) and €49.9m in 2014 (-5.6%).  Considering the level of youth unemployment in Ireland is now over 30% and at the high end of the European league, reduced support here is difficult to understand.

The Local and Community Development Programme (LCDP) received funding of €54.8m in 2012, so a reduction of €6m would give it a figure of €48.8m in 2013 (-10.9%).  The LCDP is an important benchmark of government investment in and support for local and community development.  The budget for this programme was €84.7m in 2008, so this shows a decline over 2008-2013 of 42%.

In departmental budgets, we have a number of global figures which contain therein significant voluntary sector funding, as follows:

Department of Justice and Equality
Although the department’s budget is up +2.8%, funding for equality and integration measures is down -20%, from €28m to €23m.  Due to a reclassification of spending heads in the department (Secure Ireland, Safe communities), it is uncertain which sub-heads will be affected here, but they are likely to include the new Human Rights and Equality Commission, the National Disability Authority, grants for women’s organisations, equality-proofing, assistance to refugees and asylum seekers and Traveller initiatives.  Even if some of the reduction may be attributable to the falling numbers in direct provision, the -20% signalled is a cause for some alarm.

Department of the Environment, Community and Local Government
Although the department’s budget is flat-lined, the budget for housing is down -15% from €691m to €585m, a significant proportion of which is for housing provided by voluntary and community organisations (34% of housing in 2012).  Even though such a cut is not as direct as one on welfare, the shortening of housing supply will most affect those at the low end of the housing market.

Department of Education and Skills
The Department of Education and Skills sees an overall decline in budget of -0.4%.  Within that, there is a reduction in the budget of the National Education Psychological Service of -2% (€18.7 to €18.4m), an important service for disadvantaged children and their parents.  The FAS budget for training people for employment is down from €247m to €237m, or -4%, which, given the current level of unemployment, is difficult to interpret.

Development aid
The international cooperation budget is down -2.7%, with the funding for ‘poverty and hunger reduction’ down from €514m to €498m, or -3%.  This includes a substantial element for voluntary organisations working abroad.

Transport, Tourism and Sport
There is a reduction in sports and recreation services from €74m to €69m, down -6%, the large part of which is provided by voluntary and community organisations either directly or via the Sports Council.  This is actually a sharper reduction than it appears, for the 2012 budget was €80m, but was apparently underspent by €6m.  Budget heading D3, the lottery fund for sporting bodies, is reduced from €3.6m to zero.

Arts, Heritage and Gaeltacht
The arts, culture and film budget is down -5% from €132m to €125m.  About half of this is the grant to the Arts Council, which is important for voluntary organisations and the community arts, but the relative effect of the change is not known.

Department of Social Protection
The most important figure here is an increase in funding for the Community Employment programme, up from €335m to €351m.  Granted the apprehension caused by the 2012 review, this is a positive outcome and probably the best news for voluntary and community organisations from the budget.  The department envisages significant increases in another scheme used by voluntary organisations, Tús (up from €65m to €96m) and Job Bridge, the national internship scheme (up from €54m to €81m).  There is a marginal increase in the Community Services Programme, €45.4 to €46m.

Health
Extracting funding lines for voluntary organisations out of the health budget is notoriously difficult, but granted that the Health Service Executive is the largest single funder of voluntary and community organisations, it is important to make the attempt.  The main head which benefits voluntary organisations is HSE B5, which shows a fall of -2% from €2.167bn to €2.122bn, but note that this head includes all the private hospitals. 

Funding for the different HSE regions, the other route whereby voluntary organisations may be funded, is down by between -1% and -2%.  Funding reductions in the HSE follow an across-the-board approach, so it is reasonable to presume that this will be the proportion applied to voluntary organisations.  The central national lottery grant in the Department of Health remains static at €3.286m.  There is insufficient detail to make a comment on funding for the new Department of Children and Youth Affairs, but reductions of funding for counselling services of 12% in 2013 and of -5% for Family Resource Centres have already been signalled. 

Summary

The present budget continues the trends that set in at the outbreak of the economic and social crisis.  Voluntary and community organisations continue to suffer disproportionate cuts, which have been in the range of -8% to -10% a year, more in the community field and less in the health field.

The much higher rates of cuts for community funding continue the trend of targeting disadvantaged communities.

The sparse nature of the information contained in the estimates published so far give us only limited details, but they do indicate some of the further reductions that maybe expected.  Those itemised here include reductions in the Local and Community Development Programme (-10.9%); and youth organisations and youth projects in disadvantaged communities (-9.2%), more than three times the overall rate of reduction in government spending overall. An important consideration is that whereas generic reductions in voluntary sector funding affect the poor generally, the reductions in funding for community organisations have a spatial effect and hit disadvantaged communities disproportionately severely.  The much higher rates of cuts for community funding continue the trend of targeting disadvantaged communities.  By definition, these are the communities that suffer most from inequality and here the departmental budget to promote equality and infrastructure is down by -20%, the highest single reduction.

The social impact of the budget, whilst preserving basic welfare rates, has focused on the reduction of children’s benefit, jobseeker and entitlement packages, which, whilst small individually are large in the lives of those affected and taken with earlier cuts have an important cumulative effect.  Granted the closeness of most welfare recipients to the poverty line, the budget will, combined with the reduced funding for voluntary and community organisations working with the most disadvantaged, compound a now well-established cycle of increasing poverty.


[1] Technical note: defined here as ‘gross current expenditure’.

[2] 60% medium income of equivalized disposable income. Central Statistics Office: Survey of income and living conditions.  Dublin, CSO, 2011.


For further information on the content of this submission, please contact Ivan Cooper, Director of Advocacy, The Wheel (Tel 086 8093083) Email: ivan@wheel.ie
 
For further number crunching and analysis, you can also attend The Wheel's free Post-Budget Breakfast Briefing which takes place on 13 December in Dublin. Find out more and register here.