Scotland’s voluntary sector is facing a fresh wave of financial hardship after new UK Government spending plans revealed deep cuts to critical funding streams.
Buried in the Chancellor’s recent spending review were plans to replace the UK Shared Prosperity Fund with a new local growth fund, but with no meaningful increase in funding to match the growing needs of communities across the country.
The changes mean that funding for 2026 to 2029 will remain frozen at the reduced levels set for 2025, following Labour’s previous decision to slash the UK Shared Prosperity Fund by a third in the Autumn Budget.
This latest squeeze has been met with dismay across Scotland’s third sector.
Anna Fowlie, Chief Executive of the Scottish Council for Voluntary Organisations, described the situation as “bitterly disappointing”, warning that many charities and community groups will struggle to keep vital services running.
The reduction in funding comes on top of another significant financial blow.
Labour’s recent hike in employer National Insurance contributions is set to cost Scotland’s voluntary sector an estimated £75 million every year.
SNP MSP Bob Doris has voiced strong concerns, accusing the UK Labour Government of creating serious instability for organisations that millions depend on.
“Scotland’s voluntary sector makes a valuable contribution to our society, providing vital services that help people and communities across the country,” he said.
“But many of these vital organisations are now facing an uncertain future due to decisions taken by the UK Labour Government.”
Mr Doris criticised the Chancellor for trying to quietly extend the cuts through to 2028 and beyond, warning that the cumulative impact of these decisions is placing countless charities under extreme pressure.
“Scotland’s voluntary organisations are already under significant financial pressure, in no small part due to Labour’s reckless decision to hike National Insurance contributions which will cost the sector £75 million,” he added.
“The cracks in the Chancellor’s spending review are already appearing.
“Labour must look again at funding for our voluntary sector and do yet another U-turn on their tax on jobs as a matter of urgency.”
Across Scotland, voluntary organisations deliver crucial support services ranging from food banks and mental health counselling to youth programmes and support for vulnerable families.
Many fear that without urgent action, these services could be scaled back or lost entirely, leaving the most vulnerable in society to suffer the consequences.
As the debate continues, Scotland’s voluntary sector waits anxiously to see whether the UK Government will step back from the brink.
