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Small Charity Sector — [Sir Roger Gale in the Chair]
03 March 2026
Lead MP
Iain Duncan Smith
Chingford and Woodford Green
Con
Responding Minister
Stephanie Peacock
Tags
Taxation
Word Count: 13588
Other Contributors: 19
At a Glance
Iain Duncan Smith raised concerns about small charity sector — [sir roger gale in the chair] in Westminster Hall. A government minister responded.
Key Requests to Government:
The Government should listen to charities and see what they can bring forward. They should rise up to serious, lifesaving policy work that does not need degrees or involve people writing new policies on the backs of envelopes. The programmes of these charities have been tried and tested, and they work.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
I am astonished and happy to see that so many Members take the small charity sector seriously, because it is a serious issue. The sector is critical to everything that we do. The Government can do only a certain amount; the two other groups that aid the people and support the natural fabric of society are families and small community groups and charities. Charity leaders think that the sector is in a healthy position; 44% cite cost rises as one of their main challenges, up from 14% four years ago. Demand for charities' services is growing, with 83% recording an increase in demand over the last 12 months. Only one in 10 charity leaders said that they have been able to smoothly meet the rise in demand. Public donations to charity increased to £15.4 billion in 2024, but only half of people say that they donated to charity in the previous 12 months. The downward trend is evident across all age groups, but it is especially pronounced among young people, with a little more than a third of 16 to 24-year-olds saying they donated or sponsored in the past 12 months.
Alex Easton
Ind
North Down
The right hon. Member agrees that the small charity sector, including community and faith-based groups, plays a vital role in reaching the hardest-to-reach communities in North Down and across the United Kingdom. He also agrees that the sector should be commended for its local leadership and for filling gaps in statutory provision.
Andrew Ranger
Lab
Wrexham
Andrew Ranger praised the work of small and medium-sized charities, particularly WeMindTheGap in Wrexham, which works with young people who have fallen through the gaps in the education system. He asked the Government to support such charities in addressing the challenges highlighted in the 'Lost Boys' report.
Angus MacDonald
Lib Dem
Inverness, Skye and West Ross-shire
Angus MacDonald highlighted the significant problem of the UK's mental health sector, which is no longer properly funded by the public sector, and charities cannot fill the gap. He mentioned almost 800,000 kids aged 16 to 24 are not in education or employment, and the situation is becoming a national emergency. He proposed that reviewing the VAT rules for small charities could be a practical and immediate step to relieve financial pressures.
Ayoub Khan
Ind
Birmingham Perry Barr
Ayoub Khan stressed the importance of small charities in his constituency, which form the lifeblood of the area. He gave examples of local charities such as the George Coller Memorial Fund, Faizan Global Relief Foundation UK, and Bethany food bank. He raised concerns about the risk of the Bethany food bank shutting down amid a cost of living crisis due to limited relief on business rates. He asked the Minister to indicate what additional grants the Government can make available to smaller charities.
Brian Leishman
Lab
Alloa and Grangemouth
The charity sector is under immense pressure due to austerity, the pandemic, and the cost of living crisis. Brian highlighted several local charities in his constituency that provide vital services such as support for veterans, early childhood education, and community events. He emphasised the importance of these organisations in fostering community spirit and supporting vulnerable individuals.
Claire Young
Lib Dem
Thornbury and Yate
Claire raised the issue of small charities with excepted charity status being excluded from grants due to the lack of a registered charity number. She pointed out that this exclusion affects around 80% of grants, which is a significant barrier to sustainability for these groups.
Danny Kruger
Reform
East Wiltshire
Danny Kruger highlighted the strategic importance of small charities in public policy and called for a new settlement with the charity sector. He stressed the need for the state to enable and authorise reliance on the charity sector for addressing complex societal issues, such as addiction, re-offending, homelessness, and children in care. He also discussed the importance of trusting communities and supporting philanthropy. Emphasised the importance of the debate and cautioned against building systems that force small charities into a quantitative model, advocating for localised public sector funding to properly trust and support small charities.
Gareth Snell
Lab Co-op
Stoke-on-Trent Central
Gareth Snell congratulated Sir Iain Duncan Smith on securing the debate and mentioned Noreen Oliver's legacy in north Staffordshire. He noted that 396 registered charities in Stoke-on-Trent spend £144.7 million collectively, preventing greater demands on other services. Snell suggested that small charities often face short-term funding cycles and struggle to compete with large charities for large contracts. He proposed that multiple needs assessments could help charities work more effectively together. Suggested the need for a settled model to quantify volunteer hours for small charities to use as a bank against matched funding, highlighting the challenge faced by charities with high social value but low cash flow.
Helen Maguire
Lib Dem
Epsom and Ewell
Helen Maguire briefly intervened, asking if Roz Savage would give way.
Jim Shannon
DUP
Strangford
The charity sector in Northern Ireland is a major employer with 53,620 employees, representing 7% of the total workforce. Some 4.3 million people across the UK have sought charity support in recent years, highlighting the need for charity support nationwide. Jim Shannon raised concerns about the decrease in the number of charities being sustained annually, with many small charities under significant pressure due to cuts to core Government grants. He emphasised the critical role of small charities in providing essential services to vulnerable communities. Jim Shannon acknowledged the importance of volunteers in charities and also highlighted the economic contribution of charities through employment.
Joe Robertson
Con
Isle of Wight East
Joe Robertson highlighted the financial pressures faced by small charities due to rising costs and donations falling, noting that small charities with incomes under £1 million account for 97% of all charity closures in the past decade. He also mentioned that 88% of charitable income goes to just 5% of charities, leaving smaller charities more vulnerable. Robertson emphasized the importance of small and medium-sized charities in their communities and called for the Government to recognise match funding as a core tool for leveraging public funds and to establish mechanisms for small charities to engage in tenders and policy consultations.
John Cooper
Con
Dumfries and Galloway
John Cooper highlighted the ongoing generosity of Scots despite financial constraints, noting £1.2 billion donated in 2023. He pointed out that rural areas like Dumfries and Galloway face challenges of isolation and poverty, with limited public transport and digital access. Cooper praised local charities such as A Listening Ear and Prostate Buddies for their impactful work, and The Usual Place café for its role in helping young people with mental and physical issues. He called for the government to consider the needs of small charities in policy-making.
John Glen
Con
Salisbury
John Glen emphasised the importance of the Centre for Social Justice's work in championing charities and the need to support small local charities through initiatives like community-matched funding challenges. He highlighted the role of Rise:61 in his constituency, which runs various youth programs and is crucial to the community.
Liz Jarvis
Lib Dem
Eastleigh
Liz Jarvis emphasised the essential role of small local charities in community life, providing services for young people, the elderly, and those in crisis. She noted that small charities, despite making up over 80% of registered charities, are struggling due to funding cuts, higher costs, and the lack of exemptions from employer national insurance contributions. Jarvis urged the government to reduce financial burdens on small charities and to explore ways to increase donations through match-funding and better engagement in tenders and grants.
Patrick Hurley
Lab
Southport
Patrick Hurley commended Light for Life and Compassion Acts for their support of homeless individuals and families in need. He proposed unlocking unclaimed gift aid and creating an evidence fund to encourage philanthropic giving and help small charities compete for grants and contracts. He asked the Minister whether the Department views match funding as a practical tool and what steps can be taken to ensure small charities can engage meaningfully in tendering grant applications and consultations.
Peter Bedford
Con
Mid Leicestershire
Peter highlighted the economic challenges faced by the charity sector, including rising costs and unhelpful economic policies. He mentioned the economic value of £20 billion contributed by charities and the potential impact on communities if charities continue to close. He called for a carve-out for the charity sector to protect jobs and sustain local services.
Roz Savage
Lib Dem
South Cotswolds
Roz Savage highlighted the crucial role small charities play in her constituency, noting that 86% of local charities have an income of under £100,000. She praised the volunteer spirit and community engagement of these organisations, while also pointing out that they are in crisis due to rising costs and reduced donations amid the cost of living crisis.
Terry Jermy
Lab
South West Norfolk
Terry Jermy discussed the crucial role of small charities in providing essential services and responding to community needs. He raised concerns about the practical challenge of cash processing for charities in rural areas due to the lack of banking facilities. He requested the Government to consider ways to assist local charities with this issue.
Wera Hobhouse
Lib Dem
Bath
Wera Hobhouse highlighted the challenges faced by small, locally focused charities in Bath, including difficulties in accessing funding and navigating administrative requirements. She noted that regular roundtables were being held to facilitate collaboration and improve the effectiveness of local charities in addressing domestic abuse. Wera Hobhouse questioned the Minister about competition between local and national charities, arguing that local charities often cannot compete with national charities, despite sometimes delivering better services.
Government Response
Stephanie Peacock
Government Response
The Minister acknowledged the financial pressures faced by small charities and highlighted several initiatives, including the civil society covenant, the £11.6 million local covenant partnership fund, and the dormant asset strategy. She addressed issues such as national insurance, VAT, and digital poverty. The Minister also discussed the £440 million funding from dormant assets, tax reliefs for charities, and efforts to grow philanthropy in the UK. She mentioned the Office for the Impact Economy and the importance of volunteers. The Minister also shared examples of small charities in her constituency, emphasizing their impact and the need for support from the Government.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.