19.03.2014
George Osborne, the Chancellor of the Exchequer, delivered the Government’s 2014 budget, which included some welcomed news concerning support for social enterprises and small and medium sized enterprises (SMEs). The Chancellor’s speech highlighted the stronger-than expected growth in the UK economy, while underlining the need to keep investing in our enterprises to achieve a resilient recovery.
More details on the Social Investment Tax Relief (SITR) were announced, with the rate of relief for SITR being set to 30 per cent, equal to that of other programmes such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs). This is encouraging news for social enterprises, who welcomed the renewed support for the social economy. So starting on 6th April, eligible organisations (charities, community interest companies, and community benefit societies) will be able to raise up to £290,000 of private investment over three years through this scheme. Whilst this is a much welcomed development, the CDFA believes that the benefits of CITR should mirror that of SITR to reach a broader range of community and social oriented organisations.
The government also reaffirmed its efforts to support greater competition in the banking sector. Following the OFT’s recent report on the SME banking market, a decision will be made on whether to open a more detailed investigation on retail baking in Autumn 2014. The government will also consult on whether to make SME credit data available to challenger banks and alternative finance providers in order to broaden SMEs’ ability to access finance. Finally, the recently launched British Business Bank plans to design a wholesale guarantee programme to support SME lending. We will continue to follow these developments as they pertain to the community finance sector and our members.
Furthermore, the Chancellor revealed that the Annual Enterprise Investment Allowance would be doubled to £500,000 until the end of 2015, which should incentivise businesses to bring forward their investment plans. Indeed, the OBR estimates that £1 billion of business investment will be brought forward from 2016 and 2017 to 2014 and 2015.
Supporting the localism agenda, the Chancellor announced that it will support the development of a new Garden City at Ebbsfleet in Kent, through £200m of infrastructure investment. The Garden City movement enables the local community and residents to capture the value of the community assets, such as land.
Whilst we welcome the new developments outlined in the Chancellor’s speech and the government’s plans for 2014, more is needed to enable the growth and development of SMEs in the UK, and the organisations, such as CDFIs, that support them.