Clause 56 - Community investment tax relief
Finance Bill
10:15 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
I will come to the hon. Gentleman's specific point in a moment because there are several initiatives in that area, including the Phoenix fund, and I do not want inadvertently to mislead the Committee in terms of where the funds are going. This particular proposal stands on its own merits, irrespective of any identified funds that might be used in such a way. I will get back to the hon. Gentleman on that specific tranche of resource.
We are anxious to ensure that we take into account the representations made by business concerning the accreditation regulations. I do not want us to be inhibited in that by being required—as we would be—to bring the tax credit into immediate effect. We are in the course of discussions with the European Commission on state aid issues before the legislation comes into effect. I want to be confident that we have secured that before bringing the clause into effect, as I was on the previous occasion.
It is important that we have a dialogue with the Commission, not least because in relation to the rest of Europe we have an opportunity to lead the way in the development of disadvantaged areas through partnership with the private sector. I want to ensure that the Commission is on board and supportive, and that our proposals can be emulated elsewhere in the European Union. We are confident of a positive outcome, but the discussions must take place.
The hon. Member for Fareham (Mr. Hoban) raised a point about the specific fund and, although I have a different sum, I think he was referring to the Bridges community development venture fund, which was launched by my right hon. Friend the Chancellor and my right hon. Friend the Secretary of State for Trade and Industry on 14 May. That £40 million fund aims to address market failure in the provision of venture capital to deprived areas. It complements the measure by providing larger amounts of equity capital to businesses with high growth potential suitable for venture capital investment.
The Phoenix fund is a £96 million fund run by the Small Business Service, which invests in organisations working to provide better access to business support and finance in deprived areas. Some of that supports capacity building in the CDFI sector and, again, the CITC will help to capitalise that.
With that assurance, I hope that the Committee will give the clause a fair wind. It is an exciting development, linking the combating of social exclusion with the promotion of enterprise in some of our most disadvantaged areas.