The Chancellor’s Autumn Statement will be scrutinised many times over to gauge what the government really thinks about the economy and how it plans to respond to the turbulence ahead. But here we want to give Co-operatives UK members a uniquely co-op perspective on this and related economic policy announcements.
Co-operative ‘altnets’ ready to build ‘gigabit Britain’
First, some good news.
The Chancellor has announced over £1 billion investment in digital infrastructure in the coming years, with an emphasis on fibre broadband connections into millions more premises by 2020. The intention is that public money will at least be matched by private funds. This money will be aimed at fibre broadband providers who are looking to expand. There will also be a new 100 percent business rates relief for new full-fibre infrastructure for a five year period from 1 April 2017.
Members of the Independent Networks Co-operative Association (INCA), a co-op of independent, open, private and community-owned broadband networks - called ‘altnets’ in tech parlance - are set to play a leading role in building ‘gigabit Britain’, having played a significant role in shaping government policy.
INCA’s members have worked together through the co-op to demonstrate their capabilities and produce a set of policy proposals that chime with ministers’ desires to look ahead to new fit for purpose digital infrastructure. The co-op’s latest recommendations on how to get fibre broadband into millions of UK premises has been well received by government.
There is growing recognition that if the Chancellor’s investment in fibre is going to make a difference to millions, the altnets must be able to play their part.
Social Investment Tax Relief: a limited expansion
HM Treasury has at last confirmed the long awaited expansion of Social Investment Tax Relief (SITR). However, the expansion is much less than most had previously expected. Rather than expanding SITR to Enterprise Investment Scheme proportions (£5 million a year, £15 million over three years) it will only be expanded to £1.5 million. To be eligible the social enterprise must be under seven years old and employ no more than 250 people. This will take affect from April 2017.
Of course, this expansion is also a bitter reminder of what was won and lost in our lobbying for community energy over the recent years. HM Treasury’s u-turn 12 months ago, which now prevents community energy schemes from offering the expanded SITR in share offers, made no sense then and makes no sense now. Evidence shows that community energy delivers enormous social impact and has been a key driver of the social investment success story. In Nick Hurd we have an energy minister more supportive of community energy. Perhaps he can be an ally in Whitehall who can help reinstate support for community investment in renewables.
Nothing new for social care
Despite an ever intensifying crisis in the immediate funding of adult social care, Philip Hammond did not announce any new spending in this vital area, and indeed made little mention of social care at all.
For two years Co-operatives UK has been working with experts to identify, support and champion co-operative approaches in care. In that time we’ve learned just how critical and urgent the funding issue has become. While co-operative approaches to care and wellbeing can ultimately create a more efficient and effective system, new models of organisation and delivery will never be enough in and of themselves to save our care system, and anyway a system exhausted of funds is in no position to transform in the ways we all need it to.
The urgent funding crisis in care and its implications for developing co-operative approaches will be central to discussions at our next Care Forum, taking place in Birmingham on 13 December. For more details on our Care Forum contact our policy officer.
Innovative Finance ISA: a new financing opportunity for co-ops
Though not strictly part of the Autumn Statement, we take this opportunity to confirm a new financing opportunity for co-ops in the brand new Innovative Finance ISA, which has just come into legal force.
Following collective efforts from Co-operatives UK and its members, government has confirmed that co-operative and community benefit society debt securities eligible for a new Innovative Finance ISA.
The new ISA will give people a tax break on what they earn from bonds offered on regulated crowdfunding platforms.
In the summer of 2015 HM Treasury consulted explicitly on whether or not to make society debt and equity eligible for the Innovative Finance ISA. We have consistently argued strongly in favour of society debt securities being eligible. HM Treasury had never ruled this in or out, but it did omit any reference to society eligibility in its November 2015 consultation response and then referred only to including 'companies and charities' in its notes on the draft legislation.
Lobbying by Co-operatives UK and a range of co-ops – from retail societies to worker owned businesses – prompted government officials to pause in their final drafting of the Innovative Finance ISA regulations to pay particular attention to society eligibility and set things straight. We are very pleased to have clear assurances that for the purposes of the new ISA the term 'company' can now be interpreted as including co-operative and community benefit societies.
While we don't have a formal indication of a change in policy, we have been given an assurance that subtle changes to cash ISA rules in 2015 allow for an interpretation of 'company' that can be taken to include societies going forward - which is welcome news. Please note though, this is not legal advice, simply an indication of how the law could be read.
Now that the law is in place it is for financial institutions such as banks, building societies and larger credit unions, to explore whether or not developing a co-operative or wider social investment ISA is feasible. There are big opportunities here, but they won't happen overnight.
Co-operatives UK is eager to work with anyone interested in exploring this further. For more details on this contact our policy officer.