Recommendations & Conclusions
7 items
1
Conclusion
Nineteenth Report - Venture Capital
Accepted
Industry and government are aligned in their assessment that venture capital tax reliefs have had a positive impact on UK small businesses. They argue that the EIS, SEIS and VCTs are internationally competitive schemes that attract investors, which in turn has provided billions in financial support to start-ups and growing …
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Industry and government are aligned in their assessment that venture capital tax reliefs have had a positive impact on UK small businesses. They argue that the EIS, SEIS and VCTs are internationally competitive schemes that attract investors, which in turn has provided billions in financial support to start-ups and growing businesses since their inception. It is a consistently held view in our evidence that the removal of these schemes would negatively impact the UK venture capital market, materially limiting the support to entrepreneurs to help establish and grow their businesses. (Paragraph 16) Sunset clauses on venture capital reliefs
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Government response AI summary
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
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HM Treasury
2
Conclusion
Nineteenth Report - Venture Capital
Accepted
The Treasury continues to express the importance of the EIS and VCT schemes and a desire to extend their sunset clauses. The Chancellor has told us he does not see a barrier to doing so. However, despite our raising concerns repeatedly, the Treasury has not provided a clear plan and …
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The Treasury continues to express the importance of the EIS and VCT schemes and a desire to extend their sunset clauses. The Chancellor has told us he does not see a barrier to doing so. However, despite our raising concerns repeatedly, the Treasury has not provided a clear plan and timeframe for this extension. As the April 2025 deadline draws closer, this lack of firm action is damaging given that investment relies on the certainty of such support.
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Government response AI summary
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
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HM Treasury
3
Recommendation
Nineteenth Report - Venture Capital
Accepted
We recommend that HM Treasury extend the EIS and VCT sunset clauses beyond April 2025 at the earliest opportunity. HM Treasury should provide more certainty for founders and investors alike by announcing the length of the extension and a clear timeline for implementing it as soon as possible. (Paragraph 24) …
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We recommend that HM Treasury extend the EIS and VCT sunset clauses beyond April 2025 at the earliest opportunity. HM Treasury should provide more certainty for founders and investors alike by announcing the length of the extension and a clear timeline for implementing it as soon as possible. (Paragraph 24) Diversity in venture capital
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Government response AI summary
The government accepts the recommendation, stating the Chancellor has a firm intention to extend the EIS and VCT sunset clauses beyond April 2025, and will provide further details on the schemes at a future fiscal event to offer certainty.
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HM Treasury
10
Conclusion
Nineteenth Report - Venture Capital
Accepted
The British Business Bank has active funds designed to target specific market failures in venture capital, such as its regional funds. Representatives from the BBB have suggested that diversity-focused funds could theoretically be used in the same way, if there were provision set aside for them. The woeful diversity record …
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The British Business Bank has active funds designed to target specific market failures in venture capital, such as its regional funds. Representatives from the BBB have suggested that diversity-focused funds could theoretically be used in the same way, if there were provision set aside for them. The woeful diversity record of venture capital, which is failing to invest in high potential female and ethnic-minority- owned businesses, makes for a strong case for such intervention.
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Government response AI summary
The government agrees on the importance of promoting diversity in venture capital and highlights ongoing British Business Bank programmes that assess and support diverse fund managers and founders. It also notes DSIT's recent commitment of £12 million for a two-year Digital Growth Grant programme, launched …
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HM Treasury
11
Recommendation
Nineteenth Report - Venture Capital
Accepted
We recommend that the Government and British Business Bank consult on the creation of one or more venture capital funds with the specific purpose of promoting greater diversity in venture capital allocation. (Paragraph 55) Regional inequality in venture capital
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We recommend that the Government and British Business Bank consult on the creation of one or more venture capital funds with the specific purpose of promoting greater diversity in venture capital allocation. (Paragraph 55) Regional inequality in venture capital
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Government response AI summary
The government acknowledges the importance of diversity and highlights existing British Business Bank programs that support diverse founders and fund managers, as well as new DSIT funding for underrepresented entrepreneurs, but does not commit to consulting on creating new dedicated diversity-focused venture capital funds.
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HM Treasury
12
Conclusion
Nineteenth Report - Venture Capital
Accepted
The evidence we have received suggests that venture capital investment is concentrated in London, strongly disproportionately to its share of the UK SME population. This means that throughout most of the UK regions and nations, opportunities for investment in high-growth businesses are more limited than they ought to be. This …
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The evidence we have received suggests that venture capital investment is concentrated in London, strongly disproportionately to its share of the UK SME population. This means that throughout most of the UK regions and nations, opportunities for investment in high-growth businesses are more limited than they ought to be. This may be undercutting the potential for economic growth across the UK regions and nations.
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Government response AI summary
The government agrees that regional businesses should not be disadvantaged and acknowledges the concentration of venture capital in London. It highlights several existing British Business Bank programmes, such as the Regional Angels Programme and regional investment funds, specifically designed to address regional imbalances in access …
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HM Treasury
18
Recommendation
Nineteenth Report - Venture Capital
Accepted
Access to UK domestic capital has been a barrier for British businesses wishing to grow their operations beyond early venture capital funding stages. The US has deeper pools of capital for venture capital investment, and this has often led to UK firms looking overseas for funding. It is imperative that …
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Access to UK domestic capital has been a barrier for British businesses wishing to grow their operations beyond early venture capital funding stages. The US has deeper pools of capital for venture capital investment, and this has often led to UK firms looking overseas for funding. It is imperative that the UK makes best use of its pools of capital to make UK ownership an attractive option for the innovative and dynamic businesses which are the future of a successful UK economy. (Paragraph 87) Venture Capital 29
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Government response AI summary
The government acknowledges the importance of supporting scale-up businesses and details existing initiatives like the British Business Bank and British Patient Capital. It states that current EIS and VCT schemes are kept under review but argues against revising funding limits to target scale-ups, citing risks …
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HM Treasury