What a Labour government could mean for the charity sector

As the political landscape in the UK shifts, the result of the general election has sparked considerable discussion across various sectors, not least the charity sector. With its traditional history of prioritising social welfare and reducing economic inequality, a Labour-led administration with an overwhelming majority could have significant implications for charities.

Are we going to see increased funding of the charity sector?

Historically, with strong links to the unions, Labour governments have placed an emphasis on social services and public welfare. This commitment has historically translated into increased funding for charities, particularly those addressing poverty, homelessness, and social inequality. It is likely that these organisations would see an increase in government support although much has been touted to only introduce costed policies. Increased public spending on social services could result in more resources being directed towards charities that provide essential services, thereby enhancing their capacity to meet growing demands.

Health and Social Care Charities

Labour's manifesto promises an increased focus on prevention with reform targeted across the National Health Service (NHS) and social care services. This would likely see an increase in funding, which might extend to health-related charities that supplement NHS services, providing them with more opportunities for collaboration and financial support. Labour has also pledged to create workforce plans to enable more disabled people to work and reduce reliance on overseas workers in health and social care and other sectors.

Sarah Woolnough, Chief Executive of The King's Fund, welcomed the “broad ambitions for health and care” but sought more clarity on how Labour were planning on funding those ambitions, she said: “the individual pledges in the manifesto are, at best, only a policy down-payment on achieving those longer-term reforms. In and of themselves, the specific commitments set out by Labour lack some concrete detail and are unlikely to deliver the scale of change the party is promising.”

Environmental Charities

Labour’s stance on environmental issues could bode well for environmental charities despite scaling back their initial £28bn commitment to the green economy in an effort to prove fiscal credibility. With commitments to achieve net-zero carbon emissions and invest in green technologies, environmental charities might find themselves at the forefront of policy implementation. This could mean increased funding opportunities for organisations dedicated to climate change, conservation, and sustainability initiatives. Charities focusing on environmental education, wildlife conservation, and renewable energy could benefit from an increase in government partnerships and grants. If implemented as promised, this support would not only bolster their financial standing but also amplify their impact on critical environmental issues.

However, as the RSPB points out, although the commitment to aligning with the Paris Agreement is a positive step, it could go further, by aligning with the Convention on Biological Diversity’s Global Biodiversity Framework, to address the nature and climate emergency as one.  The RSPB would like to see detail around commitments towards nature-friendly farming, protecting the marine environment, nature-based solutions to mitigate the effects of climate change, or the transition to a nature-based economy.

Education and Youth Charities

Education and youth charities could anticipate positive changes as well. Labour's promise to increase investment in education and vocational training aligns with the goals of many charities working to improve educational outcomes and provide opportunities for young people. Organisations focusing on early childhood education, after-school programs, and youth mentorship could benefit from increased funding and policy support.



Labour has pledged to deliver a more equitable education system. Expanding access to higher education for low income households could indirectly benefit educational charities by potentially reducing the pressure those charities are currently facing.

Whilst the Children’s Charities Coalition – Action for Children, Barnardo’s, NCB, NSPCC, The Children’s Society – acknowledged that the ambition to create a country that will be “better for your children”, they were concerned that the manifesto did not fully address the urgent needs of children, or the scale of the challenge facing young people in the UK.

Furthermore, the Labour party has confirmed its intention to end VAT exemption for private schools. Professor Stephen Gorard, from the School of Education at Durham University, points out that this may negatively impact the smaller not-for-profit private schools more than the traditional private schools such as Eton, saying “many schools in the private sector are much newer, smaller and cheaper, and are day rather than boarding schools. It is these smaller private but not-for-profit schools that could be hardest hit by the removal of tax exemption.”

Investment opportunities and challenges

From an investment perspective, a Labour government’s economic policies could have mixed implications for charities. On one hand, Labour's focus on stability, economic equality and social investment is likely to lead to a more stable economic environment. From the market’s perspective, the attraction of stability is unsurprising. Former PM Truss’s “mini-budget" still looms large in the memory. While capital markets tolerate volatility, they tend not to appreciate uncertainty. A more stable policy climate might benefit long-term investments held by charities. Their emphasis on green technologies and sustainable practices could also open up new investment opportunities in emerging industries aligned with social and environmental goals.



On the other hand, despite Labour’s reassurances to the contrary, the potential for future increases in taxation and changes to financial regulations might present challenges. After all, spending plans need to be covered. Although Chancellor Rachel Reeves made extensive efforts to reassure the City, proposed changes to the regulation of financial markets and investment practices might require charities to adjust their investment strategies to comply with new rules.


A landslide Labour victory was not unexpected. Neither is it particularly uncommon after such a long period of incumbency. One might argue a strong majority will allow PM Starmer to effectively implement his agenda, such is the democratic will of the country. The opposing view is the checks and balances afforded by effective opposition is diluted. Nonetheless, we should remain open to the opportunities that a fresh approach will bring, while being mindful of any changes that might affect investment tax rules or corporate legislation.

Intuitively, the new Labour government feels like it should be good for the charity sector.  In reality, not much may change in the short term, with the environment remaining challenging for charities.  We will keep you updated on key developments, helping you navigate the challenges, so you can deliver on your mission to help others.