|
24 October 2000
The Social Investment Task Force presents its
report: Enterprising Communities: Wealth Beyond Welfare
London, October 24th, 2000. The Social Investment
Task Force today publishes its report to the Chancellor of the Exchequer. The
Taskforce was asked by the Chancellor in April this year to report to him with
proposals for increasing private investment flows into deprived areas.
The Task Force's central conclusion is that
enterprise and wealth creation are vital to building sustainable communities;
and that the potential now exists to transform investment flows in those
communities which have been most deprived of capital and management expertise.
The Task Force has focused in particular on the
role of community development finance. Community Development Financial
Institutions (CDFIs) provide specialist finance and business support to
self-employed individuals and enterprises in under-invested communities. The
Task Force assessed numerous projects in under-invested areas and received
evidence both in the UK and abroad.
The Task Force has made five key recommendations,
which together could create the conditions for a vibrant, entrepreneurial
community development finance sector to emerge:
- A 5% Community Investment Tax
Credit to encourage private investment in
community development. £50 million of tax credit a year would support
£1 billion of investment over 5 years, in both profit-seeking and
not-for-profit enterprises in under-invested communities.
- Community Development
Venture Funds. We suggest a matched funding
partnership between Government on the one hand and the venture capital
industry, entrepreneurs, institutional investors and banks on the other.
Initially, we suggest that £100 million be made available by the
Government on attractive terms in matching funding over the programme's
duration.
- Disclosure of
individual bank lending activities in
under-invested communities. This should if possible be done on a voluntary
basis, but if voluntary disclosure is not made, legislation should require
disclosure.
- Greater latitude and
encouragement for charitable trusts and foundations
to invest in community development initiatives, even where
these include a significant for-profit element.
- Support for Community
Development Financial Institutions, including
Community Development Banks, Community Loan Funds, Micro-loan Funds and
Community Development Venture Funds. This requires action by the Government and
its agencies (such as the Small Business Service), the private sector and the
voluntary sector.
Ronald Cohen, Chairman of the Social Investment
Task Force said, "This report shows how we can reverse the spiral of
under-investment in our poorest communities. It is vital that we provide a
coherent system of investment that will attract funding and support and harness
entrepreneurial skills in these communities.
"The Task Force has carefully considered the
success stories achieved around the world, particularly in the United States
where the problems have been bigger. The key is to stimulate investment,
through incentives, into these communities using specialists. Once business and
banks can see the real opportunities afforded by these areas, jobs, asset
values and consumption will begin to see an upward spiral of investment."
Amongst the recommendations is matching funding for
community development venture funds. "These funds will apply the disciplines
and the added value benefits - guidance, networks, financial advice and
management expertise - of venture investing to businesses in these areas. The
returns are unlikely to be as dramatic as those of mainstream venture capital,
but, with the matched funding and the additional tax incentives, will
nevertheless be attractive. We would hope to attract individuals into the
sector who are already successful in business and in mainstream venture
capital, but who would like to contribute to the community," Cohen added.
The report was presented by the Task Force to the
Chancellor at Community Links, an East London inner city regeneration
organisation which is being entrepreneurial in developing business revenues to
fund its growing activities.
- ENDS -
Notes to Editors
The full
text of the report can be found at www.enterprising-communities.org.uk.
For further information please contact:
Siobhan Loftus, Apax Partners
Tel: 020 7872
6412
Richard King, Treasury Press Office
Tel: 020
7270 1755
Helen Etheridge, Treasury Press Office
Tel: 020
7270 5187
The Social
Investment Taskforce is an initiative led by the UK Social Investment Forum, in
partnership with the New Economics Foundation and the Development Trusts
Association. HM Treasury has an observer role on the
Taskforce.
|
