Prime Minister David Cameron has today launched a consultation on social investment tax relief and said Big Society Capital and Big Lottery Fund will provide £250m over the next decade to help communities take over local assets.
Speaking at the G8 social impact investing conference this morning, Cameron said Big Society Capital and the Big Lottery Fund are currently developing a £50m Community Assets Fund that will provide a blend of grants and loans to help communities through phases of local ownership from next year.
Cameron added: “Big Society Capital and the Big Lottery Fund are making a long-term commitment to provide £250m over the rest of this decade to help communities with ambitions to own local assets like pubs, shops, community centres and affordable housing.”
Cameron also announced that the London Stock Exchange is supporting the launch of the Social Stock Exchange, an online portal which will showcase publicly-listed social impact business. “The market capitalisation of the first 12 social impact businesses launching on the Social Stock Exchange today is already £500m. The next 13 businesses set to join in October will add another £700m.”
Cameron also launched the Treasury’s consultation on social investment tax relief. The consultation, which is on the Treasury’s website, asks a series of questions including whether a definition of social enterprise for tax purposes should comprise community interest companies, community benefit societies and registered charities or an alternative; if a tax relief allowing investments of 200,000 euros per investee over three years would be successful in generating additional social investment, and if a cap of £1m in investments per investor is the right amount.
Commenting on the consultation, Luke Fletcher, a partner at Bates Wells and Braithwaite said: "HM Treasury have clearly done an enormous amount of thinking already and are asking very good questions. The relief will be for direct investment by individual investors into eligible social enterprises, probably CICs, charities and bencoms (community benefit societies).
"No doubt there will be a lot of debate about how eligible social enterprises are defined, which will probably exercise a few people. I hope we don’t get too hung up on these details, as it is only a definition for the relatively narrow purposes of this particular tax relief.
"The big risk is that efforts to define the boundaries of the relief make it too complicated for individual investors to understand or advisers to recommend. This could happen if the rules around anti-avoidance or State Aid make it difficult to administer or the types of debt instrument which qualify for investment have unusual features that don’t reflect the way in which individual investors actually invest."
The consultation is running till September.
At the event, minister for civil society Nick Hurd also launched a global social entrepreneurs Network. Over £130,000 is being invested in the Global Social Entrepreneurs Network by the UK Cabinet Office and Doug Miller, founder of the European Venture Philanthropy Association (EVPA) and chair of the Asian Venture Philanthropy Network (AVPN).
