Ian Sayers (pictured), Director General of the Association of Investment Companies (AIC), comments on the UK Government’s new Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) proposals…
The Government has rightly identified small business funding as a political priority and is seeking to broaden the range of companies which VCTs can invest in. It is negotiating with Europe to deliver a framework which will significantly increase VCTs’ investment options and enhance their ability to fund small UK companies.
At the same time, there is only a limited amount of investment to go around, particularly given the withdrawal of the banks from lending to SMEs. The Government therefore wants to ensure that VCTs and EISs are investing in the businesses which they believe most need support. It is also considering new options for very early stage seed investment. These proposals raise some complex questions and we will be carefully considering their implications before making a full response.
Our goals will be to ensure that any changes allow VCTs to deliver the Government’s priorities while also maximising their commercial vitality. The detailed rules should ensure that VCTs can continue to offer an attractive investment proposition for retail investors and allow them to direct capital profitably to businesses which need it. We look forward to working with the Government to secure these critical outcomes.
