Schedule 11
Finance Bill
10:30 am
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
The amendment probes the schedule’s exclusion of shipbuilding and coal and steel production. As is clearly set out in the text of the Budget, that is necessary to meet European state aid regulations so that we can get approval for the three venture capital schemes and enterprise management incentives. We will thereby be able to continue to enable smaller, higher-risk UK companies to receive vital funding across the full range of industry. They will be able to use the investment management incentives to help recruit and retain staff. The Committee will no doubt remember that last year’s changes to the venture capital scheme were introduced for the same reason. The state aid and notification process is ongoing and, I hasten to add, it is going well. However, it became clear in the course of our negotiations that the additional exclusion in the schedule was necessary to demonstrate the scheme’s compliance with state aid for risk capital guidelines and for EMI.
We believe that, in practice, the exclusion of shipbuilding and coal and steel will have a minimal material impact. Analysis shows that fewer than 10 companies in all three sectors have used the venture capital scheme for the last 14 years, and no coal production companies have ever used the enterprise management incentives scheme. To date, about £1 million has been invested in companies in these sectors across the enterprise investment scheme, venture capital trusts and the corporate venturing scheme. To put it in context, that represents 0.01 per cent. of the funds raised under the tax-based venture capital schemes. Despite evidence of what happens in practice, we were obliged to put this matter on a legal footing by explicitly excluding those trades, and that is the purpose of the schedule. It is important to remember that state aid controls mean that British companies can compete fairly because their European competitors are being prevented from receiving unfair subsidies as well. There is a prize to be gained by successfully achieving state aid notification and approval for our schemes.