Getting us through COVID, but what next?
The Chancellor had one focus on his mind yesterday, getting through COVID. Although there was a lot of rhetoric about building back better, levelling up and creating a platform for recovery, this Budget was primarily about providing emergency support for the economy through the coming months and raising revenue to pay for it.
Despite some major tax changes (e.g. a new ‘Super Deduction’ for capital expenditure over the next two years) there was no clear vision for how the UK is going to fundamentally change after COVID.
The opportunity for social enterprises is clear. How do we build back better from coronavirus? By changing the way we do business to build a more inclusive economy. The Budget announcements tell us that the Chancellor and Prime Minister are still in need of solutions. Social enterprises can provide them.
More coronavirus support on the way
The Chancellor’s announcements on extending furlough to September, keeping business rate reliefs to June and £5bn of additional business grants (including £1bn of discretionary grants) as well as an 80% state guaranteed Recovery Loan will be the biggest financial help to the sector.
Social Enterprise UK has been championing the importance of furlough, business grants and loan support repeatedly throughout the crisis, so it is good to see the Chancellor listening to social enterprises and other business groups.
In broad terms, the schemes are generous although there will be challenges for start-ups and sole-trading social enterprises which will still struggle to access support. This is a problem as recovery will depend on new waves of businesses being created in the wake of those that have closed due to COVID.
The Chancellor listened on Social Investment Tax Relief
SEUK, alongside our partners Big Society Capital, Resonance and Co-operatives UK, had asked for the Chancellor to extend the Social Investment Tax Relief which was under threat and due to expire in April 2021. Although the tax relief is only worth a few million pounds a year, it is the only tax relief which is specifically for the social enterprise sector. Moreover, in the wake of COVID, many social enterprises will have to raise new capital to start or adapt their business.
The Chancellor has extended the tax relief to April 2023 but he didn’t take on board our suggestions to expand the tax relief to new categories, although we understand that a dialogue on this is possible. We need to do more to help social enterprises use the scheme, but at least we have some certainty over the next couple of years.
A big thank you must go to the social enterprises, social investors and Parliamentarians who made their voices heard during this campaign. The Chancellor will have heard the enthusiasm from social enterprises to get on with the job of building back better.
Hopefully this is something that we can build on over the months ahead and shows why social enterprises should be at the forefront of our economic recovery plans.
A new £150m Community Ownership Fund
The Chancellor also honoured a 2019 Manifesto promise to create a £150m Community Ownership Fund. This had been proposed by Onward, the Conservative think-tank and is a good opportunity for the sector.
The fund will open in June 2021 and will provide up to £250k of “matched” funding to communities to buy local assets. Making sure the match is as broad as possible (and covers loans/investment) as well as a broad range of assets is important.
We know that social enterprises have a track record of success in operating community assets whether that is leisure centres, theatres, libraries, local shops and pubs. The Government must make sure that the fund is flexible and open to as many forms of social enterprise as possible.
There will need to be support in getting social enterprises and communities in a position to access this funding and we will be working with partners to make this as easy and straightforward as possible.
Social enterprises need to champion themselves for Levelling Up Fund
A lot of attention was given to the £4.8bn Levelling Up Fund which was confirmed yesterday. Cultural investment and regeneration will be open to funding from this pot but there is a heavy focus on transport infrastructure.
Each local authority will be able to make one bid, but interestingly the number of bids will be tied to the number of Members of Parliament in each local authority area. So if a local authority has two MPs, they can make two bids – one for each MP. If they have three, they can make three MPs etc. The endorsement of MPs will be critical to the success of any bids.
This fund is an opportunity to showcase the work of social enterprises to MPs and to encourage them to invest in the sector. If you are a social enterprise which needs investment to regenerate a building, a local community or a cultural institution, get in touch with your MP now and make your pitch. You can find your local MP online.
Community Renewal Fund – getting ready of the UK Shared Prosperity Fund
The Government also announced £220m of investment through the Community Renewal Fund which will be a tide-over until the UK Shared Prosperity Fund is up and running in 2022. The fund will be open to pilots of ways to “pilot imaginative new approaches and programmes that unleash their potential, instil pride”.
The priorities for the fund (and the UKSPF) are:
- Investment in skills
- Investment for local business
- Investment in communities and place
- Supporting people into employment
Social enterprises are well placed to access this investment as they tick many of these boxes. Each place has been assigned a “lead” local authority and there will be capacity funding to come to support bids. Contact your local authority to find out more information.