Social Enterprise UK writes to the Chancellor as Government takes U-turn on tax relief for community energy companies

The Chief Executive of Social Enterprise UK, Peter Holbrook CBE, has today written to the Chancellor George Osborne, expressing concern at the Government’s decision to exclude social enterprises delivering community energy schemes from qualifying for Social Investment Tax Relief (SITR).

Peter Holbrook CBE, said: “This U-turn comes as an unwelcome surprise for our many members delivering community energy schemes. In the Autumn Statement 2014 it was announced that all community energy generation undertaken by qualifying organisations would be eligible for SITR.

“The decision to change policy this late in the day has serious consequences for social enterprises delivering community energy schemes and their ability to secure investment in the future. The U-turn is baffling when the Government has been so supportive of growing Britain’s social enterprise movement.

“A plural energy market with providers large and small will only be achieved if the Government creates an environment that supports bottom up, grass-roots energy initiatives. There is a growing community energy industry in the UK but other European countries are way ahead. The UK risks being left behind.”

The letter [in full below] asks that the decision be urgently reconsidered. The U-turn came to light during the Finance Bill’s third reading earlier this week. Community energy was added to a list of activities excluded from receiving Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and SITR tax relief.

28 October 2015

Dear Chancellor,

I was very disappointed to learn that the Government intends to exclude social enterprises delivering community energy schemes which benefit from subsidised energy from qualifying for Social Investment Tax Relief (SITR) when SITR is expanded. This is an unwelcome change of policy: the Autumn Statement 2014 announced that all community energy generation undertaken by qualifying organisations would be eligible for SITR with effect from the date of the expansion of SITR. It is the antithesis of a ‘smooth transition’ which was promised by the Financial Secretary.

Given the Conservative Manifesto’s very clear indication that a Conservative Government would ‘give more people the power and support to…start their own social enterprise’, I find the announcement a surprising one and one which is likely to prevent schemes like the Low Carbon Hub’s Eynsham Village Hall in Witney from getting off the ground.

Much time, effort and money by many has gone into setting up businesses on the basis that Social Investment Tax Relief will continue largely unchanged and now many companies and communities face having the rug pulled from under their feet. Business investment relies on certainty and the decision to bring this measure into effect on 30 November will affect a number of schemes across the country.

Hitherto, the Conservative Government has made some positive strides to live up to its claim ‘to be the party of social enterprises’. Community energy organisations have been a success story. They are popular, they empower communities, they tackle fuel poverty, they stimulate local economies, provide jobs and they increase diversity in an all too uncompetitive energy market. The decision is therefore a curious one.

I genuinely hope that the decision to end the Government’s support for these organisations will be urgently reconsidered and that new measures and commitments in the Comprehensive Spending Review provide increased support for people and communities starting their own social enterprises, including community owned energy schemes.

Yours sincerely

Peter Holbrook CBE, Chief Executive, Social Enterprise UK