Homeless Link calls for Government rethink on withdrawal of VAT staff hire concession

Homeless Link says DWP’s decision to withdraw VAT concessionary arrangements for supplies of temporary workers by employment businesses from April 2009 will have negative impact on small homelessness charities and their ability to support their clients, particularly in light of the economic downturn.

The Government has agreed to remove a concession that will mean that organisations, including charities, will be charged VAT on the wages of staff they employ through an employment agency, as well as on the employment agency hourly fee, from April 2009.

Jenny Edwards, Chief Executive of Homeless Link, the national umbrella organisation for frontline homelessness charities, said,

“We are very concerned at the decision to remove the VAT concessionary arrangements for the supply of temporary workers next year. Many homelessness organisations rely significantly on temporary staff and, as they are unable to claim back the VAT that will be charged on these wages, they will face what amounts to a real and significant increase in staff costs.

All these organisations provide vital services to homeless and vulnerable people, and face increasing demand during this economic downturn. A recent survey of our members also showed that voluntary income was being affected by the credit crunch and is likely to get worse. The only option, therefore, for many charities is a reduction in the number of front frontline support and development workers, lower salaries and fundamental reductions in training budgets, resulting in lower qualified staff and reduced quality outcomes for the people the sector works with.

The Government has recently committed to working with its partners to end rough sleeping by 2012. We have written to Stephen Timms, MP, Minister of State for Employment and Welfare Reform calling for a rethink on this VAT decision to ensure that small charitable organisations that are making a vital contribution to this goal are not adversely affected.”

ENDS

Notes to editors

1. About Homeless Link

Homeless Link is the national umbrella organisation for frontline homelessness charities. We are inspired by our vision of ending rough sleeping in this country by the time the Olympics come to Britain. Our 450 member charities do the REAL hard work with the 70,000 or so homeless people who access their services every day.

2. To view the letter Homeless Link has sent to Stephen Timms, MP, please visit: http://www.homeless.org.uk/policyandinfo/consultations/vat

3. The Impact of the Credit Crunch: an online survey of Homeless Link members. Visit: http://www.homeless.org.uk/policyandinfo/research/creditcrunch

4. For more information

For a wealth of information on rough sleeping and Homeless Link’s work, please visit www.homeless.org.uk or to arrange an interview with a spokesperson, please contact Gill Perkins, Head of Communications on 020 7960 3025 or 07881 921476 or email gill.perkins@homelesslink.org.uk.