Baroness Penn
Main Page: Baroness Penn (Conservative - Life peer)
Lord Leigh of Hurley (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I draw your Lordships’ attention to my register of interests, which includes investments in EIS companies.
Baroness Penn (Con)
My Lords, the Enterprise Investment Scheme and Seed Enterprise Investment Scheme are world-leading in their generosity, with more than £2 billion of funds raised across the schemes in 2019-20. They provide a range of reliefs for investment in small and growing companies with a permanent establishment in the UK. The Government keep the schemes under review to ensure that they continue to meet their policy objectives in a fair and effective way.
Lord Leigh of Hurley (Con)
I welcome my noble friend back to the House. The EU state aid rules, in particular the risk finance guidelines, are the reason why these important incentives for small and growing businesses are restricted. For example, they cannot be more than seven years old, there is a sunset clause and there is a cap on SEIS investments. Many restrictions were imposed on business by the EU, so now is the time for us to unwind them—particularly those that will facilitate investment into private companies by private individuals. Will my noble friend agree to facilitate a meeting between me and others interested in this area with Treasury officials to discuss this matter further?
Baroness Penn (Con)
My Lords, the schemes referred to by my noble friend are targeted at new and younger companies where asymmetry of information can make it difficult to attract the investment needed. However, we recognise that there is a scale-up gap in the UK, which is why we have other schemes, such as the British Patient Capital scheme, to support UK companies with high growth potential. I will happily take my noble friend’s request back to the Treasury, which is always looking at what more it can do to support British business.
Baroness Kramer (LD)
My Lords, many companies have been putting pressure on HMRC as part of the revision of regulations to remove the requirement that investors should be identified in applications for advanced assurance that they meet the parameters of tax relief schemes and will be included. Indeed, removing disclosure seems to be an important theme in the simplification that is being asked for. As we look at kleptocracy and much of the abuse of the London laundromat, surely now is not the time for us to be focusing on removing disclosure, particularly the disclosure of who the investors are in companies that will receive especially favourable tax treatment.
Baroness Penn (Con)
My Lords, the Government are committed to ensuring that any state support they deliver is done in a fair and appropriate way. In saying that, we keep all our schemes under review to ensure that they are doing that. We will always do that in a fair way.
Lord Flight (Con)
My Lords, I declare an interest as chairman of the EIS Association. I entirely support the issue raised by my noble friend Lord Leigh. There are two particular restrictions on eligibility that serve no purpose but are there as a result of the EU requiring them. One is the sunset clause, which effectively means that, if it is not changed, EIS will come to an end in 2025. The second is the seven-year rule, which serves no purpose other than adding to legal costs. I echo my noble friend’s request for a meeting to discuss these matters. I just want to make the point that EIS has now raised nearly £30 billion for small companies, and has been thoroughly successful and much better than the systems in other countries.
Baroness Penn (Con)
My noble friend is correct about the success of the EIS scheme in terms of the amount of money raised. It is world-leading in that fact and has managed to do that under its current design. However, as I have said, I will take my noble friend’s request for a meeting back; we are always looking at what more we can do.
Lord Sikka (Lab)
My Lords, the Office of Tax Simplification has stated that the Government give more than 1,100 tax reliefs, most of which have not been quantified by HMRC. The National Audit Office cannot verify them. We have absolutely no idea whether they achieve the assumed economic objectives. When will the Government look into that?
Baroness Penn (Con)
My Lords, the Government are confident that the Enterprise Investment Scheme and Seed Enterprise Investment Scheme we are talking about today are effective schemes that have proven to give much-needed support to many British businesses over many years.
Lord Londesborough (CB)
My Lords, I declare my interest as an EIS investor in start-up companies. Do the Government plan to conduct an impact assessment in relation to EIS and SEIS-invested companies? I ask this question because these companies show a very high failure rate, and we should be clear about the cost-benefit in the long term of granting such tax subsidies.
Baroness Penn (Con)
The Government are always keen to ensure value for money in those tax benefits or subsidies that they give. As my noble friend noted earlier, there is a sunset on these schemes, and I am sure that, as part of any process around that, we want to ensure that their impact is appropriate and value for money for the taxpayer.
Lord Tunnicliffe (Lab)
My Lords, the Government’s Levelling Up White Paper is severely lacking. Both the EIS and the SEIS schemes could be said to highlight entrenched economic disparities across the country. Half of investments go to firm with registered addresses in London. That climbs to two-thirds when including the south-east. Do the Government plan to roll out these schemes into the levelling-up agenda, or will the two approaches continue to be at odds?
Baroness Penn (Con)
My Lords, I am not sure that I agree with the premise of the noble Lord’s question. However, he is right to say that one way to judge whether the levelling-up agenda is having the effect that we would want it to have is having greater take-up of these schemes for companies outside, as well as inside, London.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, this is the latest example of one of the disasters of Brexit. Yesterday, we heard at the European Affairs Committee about Horizon Europe and the problems there. We are about to see the resignation of the First Minister and Deputy First Minister in Northern Ireland. There is disaster after disaster, yet we were promised £350 million a week for the National Health Service. As a Treasury Minister, could she tell us when that is going to come?
Baroness Penn (Con)
My Lords, we have put more than that sum of money into the health service, although I am not sure what that has to do with the Enterprise Investment Scheme. However, I can tell the noble Lord that those have continued to have success since our departure from the EU: £2.7 billion of funds were raised across three schemes last year and investments in VCTs are up 437% this year.