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Clause 5

Part of Finance (No. 2) Bill – in a Public Bill Committee at 4:45 pm on 19th October 2010.

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Photo of David Gauke David Gauke The Exchequer Secretary 4:45 pm, 19th October 2010

The overall cost of the EIS is £180 million for 2007-08, and the Exchequer cost of the VCT regime in 2009-10 is £80 million. I hope that that is useful. On the overall position on venture capital funding and the relationship with the Department for Business, Innovation and Skills, BIS produced a Green Paper, “Financing a private sector recovery”, which raised questions about how we can be most effective in supporting venture capital investments, including EIS and VCT. I therefore reassure the Committee that BIS is heavily involved in the discussions, and that the Treasury and HMRC work closely with it.

On the green investment bank, the hon. Member for Nottingham East will not be surprised to hear that the Government will make an announcement in due course, so I do not intend to say anything further on that subject this afternoon. He also asked about the guidance  and I am grateful for the opportunity to clarify my earlier remarks. The guidance was made available to the Committee last night, so he should receive it shortly. If he does not, I would be grateful if he would let me know and I will ensure that that is addressed.

The issue of how tax relief for a group will operate in practice when one company is in difficulty was also raised. As I said earlier, the rules apply only to the company issuing shares, not to other group companies. If the company issuing shares can raise equity capital from existing shareholders or the market—that is to say, new shareholders—the company will qualify for the regime.

The hon. Gentleman asked about the drafting of the European Union guidelines on state aid. All EU guidelines on state aid are time limited. The Government will feed into any review or renewal of those guidelines and we will take into account any changes when and if necessary. If it is necessary to update legislation, we will have to look at that. We do not, however, envisage that it is necessary given the current extension which occurred last year.

I hope that those answers are helpful. We have had a good discussion and useful information has been given to the Committee. I think that the clause will be welcomed by various groups. It is an important area and we want to do what we can to encourage equity investment, particularly at times when credit has not always been easy. I hope that the clause is useful and constructive and will assist our position in that area.