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AIC challenges George Osborne’s comments on VCTs

The Association of Investment Companies (AIC) has responded to suggestions by George Osborne MP, Chancellor of the Exchequer, that there is a “question mark” over the merits of Venture Capital Trusts (VCTs) and the support the scheme gives to growth businesses.

Ian Sayers (pictured), Director General of AIC, says: “VCTs have a unique track record of investment in hundreds of small businesses and have met their funding needs when banks have not been prepared to support them. In the last 10 years the sector has invested in more than 750 companies which would otherwise have struggled to raise capital.  VCTs have made a significant contribution to UK growth and prosperity.

“We are very concerned that the Chancellor is questioning the merits of the scheme.  It is doubly surprising that VCTs are being compared unfavourably with the Enterprise Investment Scheme as they have similar investment rules and play a complementary role. The key difference is that VCTs pool the funds of ordinary investors who would otherwise not invest in smaller businesses. Their fund structure allows them to spread money across a number of businesses and allows returns from successful investments to be recycled back into companies which need development capital.

“Any suggestion that the scheme should be scrapped is inappropriate in today’s challenging economic environment and risks throwing the baby out with the bathwater.  However, there is value in ensuring the scheme is properly maintained to ensure that there is no scope for loopholes.  We would be pleased to work with the Government to address any concerns it may have in this area but it should not take precipitate action which will undermine its own ambition to stimulate the UK’s enterprise economy.”

The AIC represents 91 VCTs, which manage some 90% of the VCT sector’s GBP2.4 billion of assets.

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