MPs have voiced their frustration after the government flat out rejected more than a dozen proposals to boost lacklustre investment levels in the UK.
Members of the House of Commons Business, Innovation, Science and Trade Committee issued a list of recommendations to make the UK a more attractive destination for investment, including rejuvenating the London Stock Exchange, expanding venture capital, strengthen angel investor networks and bolstering regional banking.
In response the government accepted 16 recommendations, partially accepted 18 and rejected 13. The committee said the government’s response “falls short of the coordinated reform needed” to get investment levels on a par with international competitors.
Among the proposals rejected are a review to identify a second wave of stock market reforms to boost the London Stock Exchange, changes to share stamp duty and dividend tax relief, steps to grow venture capital assets, and a consolidation of public finance institutions to boost their firepower.
Labour ‘yet to grip the scale of reform needed’
“We simply do not have institutions with enough firepower to match capital to ideas on the scale British firms need, so time after time we’re losing high potential new firms – and high paying new jobs – to American investors,” the committee’s chair, Liam Byrne, said.
“I fear ministers have yet to grip the scale of reform needed. Too often, proposals for the next stage of reform are met with a defence of what is already being done.”
“We cannot build a stronger economy without getting much more of our own capital flowing into the businesses and infrastructure that will kickstart growth.”
The inquiry received 60 written submissions and heard from 37 witnesses. Among them was the Venture Capital Trust Association (VCTA), which warned that the government’s decision to slash income tax relief for venture capital trusts to 20 per cent risked “weakening the flow of capital into the very businesses it wants to support.”
“Restoring upfront VCT income tax relief to 30 per cent would send a clear signal that the government intends to back those who take risks, build companies and create jobs,” Chris Lewis, Chair of the VCTA, said.