Nineteenth Report - Venture Capital

Select Committee
Treasury Committee HC 134 24 July 2023
Report Status Government responded
Conclusions & Recommendations 18 items (8 recs)
Source View on Parliament website
Government Response (AI assessment · 18 of 18 classified)
Accepted 7
Accepted in Part 1
Acknowledged 5
Not Addressed 1
Rejected 4
Government response
Ninth Special Report - Venture Capital: Government Response to the Committee's Nineteenth Report · published 20 Oct 2023
Read the government response ↗ Response on the tracker
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Recommendations & Conclusions

7 results
1 Conclusion Accepted
Venture capital tax reliefs (EIS, SEIS, VCTs) positively impact UK small businesses
Conclusion
Industry and government are aligned in their assessment that venture capital tax reliefs have had a positive impact on UK small businesses. They argue that the EIS, SEIS and VCTs are internationally competitive schemes that attract investors, which in turn … Read more
Government Response Summary
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
HM Treasury
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2 Conclusion Accepted
Para 23
Lack of clear plan for extending EIS and VCT sunset clauses is damaging
Conclusion
The Treasury continues to express the importance of the EIS and VCT schemes and a desire to extend their sunset clauses. The Chancellor has told us he does not see a barrier to doing so. However, despite our raising concerns … Read more
Government Response Summary
The government agrees that EIS and VCT sunset clauses should be extended, and the Chancellor has publicly stated his firm intention to do so beyond April 2025. Further details will be provided at a future fiscal event.
HM Treasury
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3 Recommendation Accepted
Extend EIS and VCT sunset clauses beyond April 2025, announcing length and timeline
Recommendation
We recommend that HM Treasury extend the EIS and VCT sunset clauses beyond April 2025 at the earliest opportunity. HM Treasury should provide more certainty for founders and investors alike by announcing the length of the extension and a clear … Read more
Government Response Summary
The government accepts the recommendation, stating the Chancellor has a firm intention to extend the EIS and VCT sunset clauses beyond April 2025, and will provide further details on the schemes at a future fiscal event to offer certainty.
HM Treasury
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10 Conclusion Accepted
Para 54
Woeful venture capital diversity record presents strong case for specific diversity-focused funds.
Conclusion
The British Business Bank has active funds designed to target specific market failures in venture capital, such as its regional funds. Representatives from the BBB have suggested that diversity-focused funds could theoretically be used in the same way, if there … Read more
Government Response Summary
The government agrees on the importance of promoting diversity in venture capital and highlights ongoing British Business Bank programmes that assess and support diverse fund managers and founders. It also notes DSIT's recent commitment of £12 million for a two-year Digital Growth Grant programme, launched in April 2023, specifically to support underrepresented tech entrepreneurs.
HM Treasury
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11 Recommendation Accepted
Consult on creating venture capital funds specifically promoting greater diversity in allocation.
Recommendation
We recommend that the Government and British Business Bank consult on the creation of one or more venture capital funds with the specific purpose of promoting greater diversity in venture capital allocation. (Paragraph 55) Regional inequality in venture capital Read more
Government Response Summary
The government acknowledges the importance of diversity and highlights existing British Business Bank programs that support diverse founders and fund managers, as well as new DSIT funding for underrepresented entrepreneurs, but does not commit to consulting on creating new dedicated diversity-focused venture capital funds.
HM Treasury
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12 Conclusion Accepted
Para 60
Venture capital investment remains disproportionately concentrated in London, hindering regional growth.
Conclusion
The evidence we have received suggests that venture capital investment is concentrated in London, strongly disproportionately to its share of the UK SME population. This means that throughout most of the UK regions and nations, opportunities for investment in high-growth … Read more
Government Response Summary
The government agrees that regional businesses should not be disadvantaged and acknowledges the concentration of venture capital in London. It highlights several existing British Business Bank programmes, such as the Regional Angels Programme and regional investment funds, specifically designed to address regional imbalances in access to finance. The government also defends the current age limits on EIS and VCT schemes, arguing that extending them would risk displacing investment from smaller, early-stage companies.
HM Treasury
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18 Recommendation Accepted
Enhance domestic capital access to make UK business ownership more attractive.
Recommendation
Access to UK domestic capital has been a barrier for British businesses wishing to grow their operations beyond early venture capital funding stages. The US has deeper pools of capital for venture capital investment, and this has often led to … Read more
Government Response Summary
The government acknowledges the importance of supporting scale-up businesses and details existing initiatives like the British Business Bank and British Patient Capital. It states that current EIS and VCT schemes are kept under review but argues against revising funding limits to target scale-ups, citing risks to policy rationale and value for money.
HM Treasury
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