Co-operatives UK, social impact investor Big Society Capital (BCC), and a cross-party section of MPs are urging the government to keep Social Investment Tax Relief (SITR), which is helping social enterprises, community groups and charities deliver essential services.
The Save SITR campaign, which is has cross-party backing from metro mayors Andy Burnham, Andy Street and Marvin Rees, argues this approach will help the government fulfil its levelling up agenda by ensuring areas worst hit by the pandemic can access funding to deliver community hubs, training for people with learning disabilities and support for the elderly.
The Chancellor of the Exchequer, Rishi Sunak, will announce a decision on SITR’s future in the tomorrow’s budget (3 March).
Isla McCulloch, programme manager – community shares standards, Co‑operatives UK says: “Since it was introduced we have seen at least £7.7m raised through community share offers that have offered SITR to their investors. It’s crucial that this relief continues to be offered as a tangible and impactful policy that directly supports the government’s levelling up agenda and has supported vital community anchors like pubs, hubs, football clubs and more.”
Resarch from Co-operatives UK shows that of those investors influenced by the offer of tax relief, 70% have invested more than £1,000 in community shares overall and 24% have invested more than £10,000. In contrast, 71% of those not influenced by tax relief invested less than £1,000 in total and only 5% invested more than £10,000.
“We’re sleepwalking into the government quietly getting rid of SITR in the budget next week and we can’t let this happen,” warned Melanie Mills, senior director of social sector engagement at BCC.
“Everyone knows there have been some issues with getting SITR up and running, but the government has changed the goalposts a few times. It can take a long time for a tax relief to become understood, embedded and utilised.”
She added: “Thanks to the hard work of Social Enterprise UK, Resonance and the social investment sector, this has changed. We’re seeing real demand from community groups, charities and social enterprises keen to extend the impact they have in their local areas.
“Many of them have been delivering critical services during the pandemic and SITR can help them attract investment that will help them grow and do even more. If the government is serious about levelling up then helping this tax relief to flourish is a proven way of achieving this without a massive commitment.”
SITR was launched in 2014 and can be used by eligible social enterprises and community businesses to raise patient, flexible and more affordable capital for their trading activities. It offers a 30% tax relief on investment, as well as the knowledge that the funding will be having a positive social impact.
To date, more than £15m has been leveraged by 90 social enterprises, with the majority of the recipients being based in isolated communities or areas of deprivation in the Midlands, South West and Scotland.
With the backing of the metro mayors, a letter has been sent to Jesse Norman, the financial secretary to the Treasury, outlining the reasons to keep SITR in place. It has been signed by a cross-party group of backbenchers, including Tracey Crouch, Harriet Baldwin, Andrew Rosindell, Tim Farron, Layla Moran, Wes Streeting, Stephen Timms and Alex Sobel.
Steve Baker, Conservative MP for Wycombe, added his support: “SITR helps communities raise funds to run all kinds of important community businesses … pubs, farms, shops, swimming baths, sports clubs and more. It is important that Rishi Sunak ensures that it is extended in the upcoming budget.”
Andy Burnham, mayor of Greater Manchester, said: “The prime minister has spoken a great deal about the levelling up agenda, but now we need to see action. If one of the first economic responses to coronavirus is to scrap a tax relief that is leveraging in millions of pounds to grow businesses in our poorest communities, then that begs the question about how serious this government truly is about levelling up.”
He added: “Social enterprises play a significant role in communities across Greater Manchester and I want more of them to help build back stronger and faster from this crisis. Getting more investment into our social enterprises is a practical way we can level up the North and all our regions.”
“I hope that the prime minister will show his commitment to levelling up and not let this tax relief disappear just at a time when our communities need it most.”