Schedule 16 - Community investment tax rlief
Finance Bill
10:30 am
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
Let me begin by addressing two philosophical points that have been flung up by the contributions of the right hon. Member for Fylde and the hon. Member for Arundel and South Downs. For the second time today, Opposition Members have suggested that we might have gone down the grant road and have asked why we did not. That represents a fundamental misunderstanding of what we, as a Government, are about. Where regeneration is concerned, history teaches us that grants by themselves are not enough. They literally do not do the business. We are about encouraging the flow of private and commercial capital, with the disciplines that that can bring through the community development finance sector, and the enterprise that it can stimulate. We have learnt—successive Governments have tried it—that grants do not have the same effect. That is why we have chosen our route.
In response to the hon. Member for Fareham, I indicated a number of other things that we are doing to assist the growth of the community development finance sector, when appropriate, some of which involve public expenditure. The Phoenix fund involves an element of public expenditure, which is right and proper. If the sector is to grow and mature, however, it must increasingly be able to attract sustainable private investment.
The community investment tax credit offers community development finance institutions the opportunity, but—I now turn to the point made by the right hon. Member for Fylde—it is no use pretending that growing businesses in disadvantaged areas do not need support. The entrepreneurial spirit is written off by all too many folk, yet all right hon. and hon. Members must know that even in the most
disadvantaged and run-down areas, whether urban or rural, people with good ideas, get-up-and-go and drive still find themselves unable to gain access to capital.
Sometimes, however, it is not only a question of finance, which is why we have chosen this route. Businesses in disadvantaged communities that cannot access mainstream finance also need specialist business support. We have decided to use CDFIs because, with the best will in the world, they will be generally much better placed to deliver than individuals. That is the reason for the bar on individuals. To meet the point made by the right hon. Gentleman, individuals will be able to invest through the enterprise investment scheme.