Spending Review: Cuts could cost charities 'billions'

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The government's spending cuts could cost voluntary organisations billions of pounds, the charities' regulator in England and Wales has warned.

Charity Commission chairwoman Dame Suzi Leather said cutting funding to charities that were providing key public services would be short-sighted.

She told BBC One's Politics Show that it threatened to undermine the prime minister's Big Society project.

The Cabinet Office said charity funding would increase in the long term.

Many of the 160,000 organisations the Charities Commission oversees provide key services for councils and rely on local authorities for funding.

'Pull the rug'

Dame Suzi warned that a cut in the amount of money going to children's services could mean more young people from deprived backgrounds ending up in police stations and the criminal justice system, presenting the taxpayer with an even bigger bill.

She also said poorer areas relied more heavily on the taxpayer and could suffer most.

Dame Suzi feared that up to £5bn could be cut from charities which would hit Mr Cameron's Big Society idea.

She said: "If you cut the charities, you are cutting our ability to help each other, you are cutting what structures our neighbourliness. That is what Big Society is all about, so you are pulling the rug from under that."

Dame Suzi, a Labour Party member, was appointed to the Charity Commission in August 2006.

In a statement to the BBC, the Cabinet Office said it recognised the cuts would be challenging for some voluntary organisations, and it would work quickly to start a £100m short-term fund to help charities with funding shortfalls.

In a No 10 podcast, Mr Cameron said the UK faced a "hard road" but he did not "underestimate how difficult this would be".

The prime minister said drastic action was essential to cut the economic deficit.

He said: "We didn't just do the right thing, we did it the right way. We've gone about these spending cuts in a way that is fair and in a way that promotes economic growth and new jobs."

'Harnessing enthusiasm'

Education Secretary Michael Gove dismissed the £5bn figure as "conjecture" and said councils now had more freedom to decide what to prioritise.

He said some local authorities were cutting funding to the "back office and administration" not funding to voluntary bodies.

He added: "If an organisation is a charity or a voluntary body, almost by definition the spirit that should defuse it is not dependency on the state but the capacity to do more by harnessing the enthusiasm of civil society and the generosity of individuals."

A Cabinet Office spokesman said: "The reforms underpinning the Spending Review represent a significant increase in the opportunities and funding available to the voluntary and community sector (VCS) in the medium and longer term.

"However, to help VCS organisations prepare for these opportunities, the Spending Review makes provision for a £100m Transition Fund to support VCS organisations in the short term."

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