Clause 56 - Community investment tax relief
Finance Bill
10:15 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
The clause introduces the community investment tax credit, which is a tax incentive to increase the flow of private investment in disadvantaged communities. The incentive is one of the Government's responses to recommendations by the social investment taskforce, which reported to the Chancellor in October 2000. We are enormously indebted to Ronnie Cohen and others on the taskforce for the work that they have done, which has enabled us to introduce measures in this way. The aim is to increase the supply to communities of development finance, which should act to stimulate enterprise, boost employment and reduce social exclusion. We want to target not only a wide range of businesses but the social enterprises that can play such an important part in providing premises and other facilities to under-invested communities.
Existing community development financial institutions are a vital connection between capital markets and enterprises in disadvantaged areas. They act as intermediaries channelling capital to enterprises that are too small or not sufficiently mainstream to be financed from the usual sources. CDFIs themselves can face difficulties in gaining access to capital: a failure that the community investment tax credit is designed to address. The hon. Gentleman's amendment is designed to probe why we have introduced the measure in the way that we propose, and would bring the legislation into force from 1 April.
For similar reasons to those that I gave the Committee to reject the hon. Gentleman's last amendment, I urge them to reject this one. We have drafted regulations dealing with CDFI accreditation, which have been published by the Small Business Service. Comments on those and supporting administrative processes have been invited, and the use of an appointed day order will give us the opportunity to consider fully any emerging points before the scheme is introduced. Because of the way that the taskforce went about its work, which was rooted in the experience of the venture capital industry that helped us develop the proposal, one of the great strengths of the scheme is that at every stage we have moved with the full support and involvement of the industry and those who are being supported and encouraged in making investment decisions that will benefit them and the wider community.