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Budget response: social business leaders call for independent chair for social enterprise review
The review of barriers to finance for social enterprises is a small step in the right direction... We need more support from the Government to encourage private investment into social ventures that can change the way services are delivered to our communities.
Jonathan Jenkins, CEO, The Social Investment Business
A group of leading social economy organisations have welcomed the Government’s commitment to review the finance barriers facing social enterprises.
The organisations, including Social Enterprise UK, the Social Investment Business and Big Issue Invest, are calling for it to be an independently chaired review to ensure it will bring about real change.
The group expressed disappointment that recommendations to Community Investment Tax Relief (CITR) to encourage private investment into trading charities and social enterprises, were considerably watered down. They have been campaigning for the CITR scheme to be extended and reviewed to make it easier for individuals and corporations to invest, especially in those operating in deprived communities.
The professional bodies say it’s unfair that social enterprises (which operate without shareholders) are not entitled to tax relief, but standard businesses are - through the Enterprise Investment Scheme. They assert an equivalent is needed. The groups also claim that a robust review, with an independent chair, has the potential to signal to potential investors the Government’s support for social investment.
Findings from Fightback Britain (2011), the largest survey of social enterprises, reveal that access to finance and cash flow problems are the dominant concern of social enterprise – 44% of respondents claim the availability and affordability of finance to be their greatest barrier. This is markedly different to SMEs who rank the availability of finance as only their sixth greatest obstacle to success after the state of the economy, cashflow, taxation, competition and regulation.
Social Enterprise UK’s CEO, Peter Holbrook, said: ‘The economic situation calls for decisive action to grow social investment. These watered down reforms are a missed opportunity.
‘Fiscal and social policies cannot continue to operate in silos. The Treasury has a duty to consider the needs of social enterprises and trading charities, not least because of the knock on effects of our country’s social problems on the economy, which is why it’s encouraging that there will be a social investment lead in the Exchequer.”
Jonathan Jenkins, CEO of the Social Investment Business, said: ‘Social enterprises can address some of the key challenges of our economic recovery such as tackling youth unemployment. We are encouraged that the Government has recognised the need to support young people to start their own ventures and growing the social investment market will be key to making this happen.
‘However, it’s a shame that government has missed the opportunity for greater progress on CITR, on top of rejecting the sector’s proposed amendments to the financial services bill. The review of barriers to finance for social enterprises is a small step in the right direction. We look forward to working closely with government to ensure that this review really makes a difference.’
Jenkins added: ‘This is a watershed year for the social investment market, with the large injection of capital from Big Society Capital. We need more support from the Government to encourage private investment into social ventures that can change the way services are delivered to our communities.’
The organisations signing up to the joint Budget response were: Big Issue Invest, CAN, Common Capital, London Rebuilding Society, Investing for Good CIC, Social Enterprise UK, Social Stock Exchange, The Social Investment Business.
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