Small Charity Sector

Roger Gale Excerpts

Tuesday 3rd March 2026 Westminster Hall

[Sir Iain Duncan Smith]

I will indeed.

[Sir Roger Gale (in the Chair)]

Order. It is obvious that a large number of Members wish to participate in the debate; time is going to be very short. Before we embark on the inevitable round of interventions, which are perfectly permitted, I remind hon. Members who intervene that they are expected to remain for the whole debate.

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[Several hon. Members rose—]

[Sir Roger Gale (in the Chair)]

Order. Could colleagues who wish to speak please remain standing while the Clerk ticks off the names? I do not normally do this from the Chair, but 10 Members have put forward their names in advance; I propose to call them first. In order, on the Opposition Benches they are Peter Bedford, Danny Kruger, John Cooper, Wera Hobhouse, John Glen and Jim Shannon. On the Government Benches they are Brian Leishman, Patrick Hurley and Terry Jermy.

I am going to put a time limit of three minutes on each speech; that should take us—allowing for interventions—to just past quarter past 3. We have to call the Front Benchers at 3.30 pm, so there should be a little wriggle room at the end for anybody who was not on that list and wishes to speak. Otherwise, your card is marked, so intervene. I will also not allow interventions from anybody who arrived after the start of the debate.

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[Helen Maguire (Epsom and Ewell) (LD)]

Will my hon. Friend give way?

[Sir Roger Gale (in the Chair)]

Order. I am terribly sorry; I appreciate that there are conflicting demands on Members, but the hon. Lady must be aware that if a Member comes in late, it is quite straightforward: no intervention.

[Liz Jarvis]

Decades of real-terms funding cuts, a cost of living squeeze on donations, rising operating costs, and the Government’s decision to increase employer national insurance contributions without exempting the charitable sector have piled pressure on organisations that are already struggling.

Small charities account for the overwhelming majority of the sector by number. Micro and small charities are defined as those with incomes under £10,000 and between £10,000 and £100,000 respectively, and they make up over 80% of all registered charities. Charities with incomes under £1 million represent 96% of the entire sector. By contrast, the UK’s largest charities—those with incomes over £10 million—make up less than 1% of the sector by number, yet account for the majority of total income.

Given the vital community work that small charities carry out, it is concerning that the majority of donations are given to bigger rather than smaller charities, which do not have the resources and superior brand recognition of bigger organisations. Small local charities do not have the financial runway and resilience built into their operations to weather storms.

The demand for charitable services is rising sharply, with the proportion of people receiving food, medical or financial support from charities having tripled in five years. However, around 42% of charities spent more than they received, and well over half are now running deficits. More charities are closing, and most of those closures are among organisations with incomes below £1 million. Nearly a third of voluntary organisations now describe themselves as vulnerable or struggling. Many expect to freeze recruitment and make redundancies as a direct consequence of financial pressure.

I urge the Minister to reduce the financial burden faced by small charities. What more can be done to supercharge philanthropy across the UK? How can we unlock billions in unclaimed gift aid and dormant funds and explore match-funding mechanisms, which can significantly increase donations? We should ensure that small and medium-sized charities can engage meaningfully in tenders, grant applications and policy consultations, rather than being crowded out by larger organisations.

Small veterans charities, including Veterans Dementia Support UK in my constituency, are not immune to the challenges facing the sector. The CEO of Veterans Aid has warned that if these specialist organisations disappear, the Government will lose the very partners they depend on to keep veterans from falling into crisis. I hope the Minister will reflect carefully on that.

The fact is that more charities are closing at a time when increasing numbers of people depend on their services. If we continue on this course, we risk losing an essential pillar of the social fabric that holds our communities together. It is absolutely crucial to ensure that small charities are supported in the UK. They are embedded in their local communities and are often their beneficiaries’ only lifeline. The Government must take all necessary steps to ensure they can maximise their impact for the people and communities who depend on them.

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[Danny Kruger]

This is such an important debate. I want to pick up on the suggestion of the hon. Member for Stoke-on-Trent Central (Gareth Snell). Although it is obviously very helpful if small charities, which do not have financial resources or indeed necessarily the right data, can demonstrate their value to the public sector, let us not build systems that force charities into a model that really works only for public sector agencies or large charities. The whole value of these small projects is that they do not have those clear processes, outputs and data, with everything being reduced to unit costs. We have to have a system that actually honours the way that charities work, rather than trying to force them into some kind of proxy of that quantitative model for demonstrating value. Why do we not just localise public sector funding so that small charities can be properly trusted?

[Sir Roger Gale (in the Chair)]

Order. Colleagues will have noticed that I have deliberately allowed the Minister to overrun her time because, given the time, it seemed important that she was able to respond fully to the debate. I now have to remind the Minister that I want the right hon. Gentleman who introduced the debate to have time to wind up properly.

[Stephanie Peacock]

I take that point, Sir Roger, and I heard what the hon. Member for East Wiltshire (Danny Kruger) said.

I will end where the right hon. Member for Chingford and Woodford Green began. He spoke about how the Government, families and community groups can work together, and are best placed, alongside small charities, to support local areas and to tackle challenges. He said that the ones that do the most, we often hear the least about. I think this debate has gone some way to changing that by shining a light on so many brilliant examples of hard working charities across our country. I conclude by acknowledging the huge contribution that small charities make, and I thank them for all their work.