A broad coalition of organisations from across civil society has written to HM Treasury calling for Government to make a firm commitment to SITR’s future in the upcoming Budget. In its letter, the coalition has also set out the changes required for the social investment sector to thrive and help address social problems in the UK.
All of the signatories responded to a Treasury consultation and, collectively, identified a range of proposals that they believe will significantly improve SITR and enable it to deliver its potential. These include:
- Expanding eligible activities to include the hire of assets on a short-term basis; community energy; and nursing and residential care homes
- Increasing the lifetime limit to £5 million
- Eliminating the age limit of 7 years
- Introducing an SEIS equivalent to SITR
In the letter to HM Treasury, the coalition writes:
“We believe that the Budget on 11 March offers an opportunity to respond to the evidence submitted and to improve the effectiveness of this essential tax relief, which has the potential to unlock much-needed capital for social enterprises and charities in every corner of the UK.”
“The current uncertainty over the future of SITR means that work to develop new funds that will use SITR to channel money to charities and social enterprises has been put on hold. This includes regional funds that would aim to spread the benefits of SITR across the UK.”
Data collected by Big Society Capital shows that at least 76 organisations have used SITR to raise over £14m. They include East Learning CIC, a social enterprise that supports schools and regions across the UK to narrow the disadvantage gap for young people through an online personal development platform.
East Learning Director Angharad Thomas said:
“Our pilot programme was more impactful than we could have hoped for - genuinely transforming school cultures and significantly improving the destinations profile of school leavers. But in order to scale, we needed to invest upfront in our digital product far more than our revenues would allow. As an early stage company, we were considered too risky by institutional debt investors. SITR allowed us to offer those seeking to support our mission an attractive balance of risk and reward.
Thanks to money raised through SITR, in one year we’ve gone from supporting 3,000 young people across England to over 30,000.”
Contacts for Media Inquiries
Big Society Capital: David Dinnage, Communications Director
Email: Ddinnage@bigsocietycapital.com, Mobile: 07775 600582
Notes to Editors
The letter signatories to HM Treasury are:
- Seb Elsworth, CEO, Access: The Foundation for Social Investment
- Alex Sobel MP, Chair, APPG for Social Enterprise
- Luke Fletcher, Partner, Bates Wells
- Cliff Prior, CEO, Big Society Capital
- Emma Bridge, CEO, Community Energy England
- John Mulkerrin, Co-founder, CIC Association
- Dave Boyle, Director, The Community Shares Company
- Lisa Ashford, CEO, Ethex
- Neil Pearson, Partner, Mills & Reeve
- Vidhya Alakeson, CEO, Power to Change
- Karl Wilding, CEO, NCVO
- Daniel Brewer, CEO, Resonance
- Peter Holbrook, CEO, SEUK
- Nick Temple, CEO, Social Investment Business
- Alastair Davis, CEO, Social Investment Scotland
- Tamsin Eastwood, Partner, Stone King
- Mark Norbury, CEO, UnLtd
Background to SITR and the consultation
Social Investment Tax Relief (SITR) was introduced in 2014 in order to increase the flow of capital to organisations that have a mission to address social issues, such as charities, community interest companies, and community benefit societies.
The legislation introducing SITR included a sunset clause that would bring the scheme to an end in April 2021. In anticipation of that deadline, HM Treasury launched a consultation – Call for Evidence on ‘Social Investment Tax Relief’ - from April to July 2019 in order to understand:
- How SITR has been used
- Why utilisation has been low
- How it might be increased
As part of a joint initiative to raise awareness on SITR, Big Society Capital is collecting data on investment deals that have used the incentive in an open-source database. The data gathered so far includes 76 organisations who have used SITR to raise investment.
Big Society Capital's full response to the Call for Evidence on SITR can be found here.
About Big Society Capital
As the UK’s leading social impact investor, our role is to unite capital, expertise and ideas for better lives.
Working with expert partners, we seek to understand people’s needs first. Then, using our knowledge and capital, we collaborate and invest with fund managers who also want to create a better, sustainable future.
They, and the social enterprises and charities they invest in, create the impact. Our role is to bring the most relevant experts from our network to the table, generating ideas and connecting capital to where it’s most needed. With the others who have invested alongside us, we have made over £1.9 billion* of new capital available to help improve lives.
We want to give more people and communities the chance to have an impact on the issues they care about – from affordable homes to vulnerable older people and preventing mental ill health.
In this way, we create opportunities for investors and enterprises to generate systemic social change, not just today but for generations to come.
*As at end December 2019