The specifics are unclear but, given that (a) only a tiny proportion of social enterprises make big enough profits for corporation tax to hit hard and (b) an incoming government is unlikely to offer pay social enterprise’s employers’ NI contributions itself, I imagine this means tax breaks for investors putting cash into social enterprises.
Given that, based on figures in the State of Social Enterprise Survey, between 72% and 93% of organisations currently identifying as social enterprises as not set-up to take equity investment, there are challenges involved in targeting tax breaks at potential investors – though I do think the case for more equity investment in social enterprises is a good one.
The Third Sector story suggests the thoughts of Shadow Third Sector Minister, Nick Hurd, are broadly linked to the Social Enterprise Investment Bank – an idea that seems likely to become a social enterprise equivalent of The Compact, a conference pleasing theoretical concept which fascinates umbrella bodies deeply but ultimately operates in a geostationary orbit above the people who are getting on with doing social change.
I’m not discounting the possibility that there are some social enterprises out there who could take on loan finance with a realistic expectation of paying it back but who can’t get that cash from existing sources, but I’d be very surprised if there’s enough of them for either the Lobby or politicians to be able to justify making this project a major priority.
I may be wrong but the repeated calls for the Bank by leading figures in the Lobby seem, so far at least, very short on clear evidence of the need for the Bank – I haven’t actually read any fact-based evidence of need at all beyond the repeated assertion that it’s hard for social enterprises to get loans but I’m more than happy to proved wrong on this.