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Finance (No. 2) Bill

We have had a broad-ranging debate on this set of amendments. In a sense, it sets the scene for a wider range of issues connected with the package of reforms that we propose in clause 91 and schedule 14, which go beyond the five amendments in the group. I shall seek to deal specifically with the five amendments and the points that have been raised during the debate. I turn first to amendments Nos. 6, 7 and 8, which deal essentially with the growth of assets test, as the hon. Member for Fareham (Mr. Hoban) made clear. The amendments seek to remove from the Bill the provisions that are designed to refocus venture capital schemes on those small firms that are most in need of improved access to finance. After all, this is the principal purpose of the policy framework and the principal justification of investing a significant amount of public money in terms of the tax forgone. It may help the Committee if I explain why we have brought forward these proposals that bear on the gross assets test. The amendments, if they are pressed, should be rejected. Venture capital schemes are an important range of interventions contributing to the Government’s wider policy to improve access to finance for small companies with growth ambitions. It is important that we build on the success of the schemes so far. It is important also that we ensure that the support that the schemes provide is effectively targeted to where it is needed most. That is what the provisions in the Bill are designed to do. Refocusing the growth assets test in this way will ensure that investment under these schemes is directed to those companies that most need it and to where there is most clearly a market failure. It is interesting that this purpose is recognised clearly by the industry. Comments after the proposals were published included those from Paul Mumford of Cavendish Fund managers. He said:"““the changes bring things back to the true spirit of venture capital, which means investing in young companies and sticking with them as an investor until they have grown enough to merit further investment from institutional investors.””" Julian Hickman, a partner of Longbow Capital, said:"““the Chancellor seems to be trying to guide venture capital schemes back to their original intended role; the support of small businesses in search of venture capital funding.””" That is precisely the point and the purpose of the package set out in clause 91. The change will ensure that money raised under the schemes does not drift towards lower-risk investment, where it would be less focused on driving growth and more devoted to simply maintaining value—the sort of investments that firms could and should be more capable of sourcing from other places.