Treasury publishes the terms of reference for the Patient Capital Review


The Chancellor has announced the terms of reference for the Patient Capital Review, which is due to report back prior to the Autumn 2017 Budget.

The Patient Capital Review was announced by the Prime Minister in November 2016 and briefly set out the following:

“The review aims to ensure that high growth businesses can access the long-term capital that they need to fund productivity enhancing investment. Alongside identifying barriers to institutional investment in long-term finance, the review will also consider existing tax reliefs aimed at encouraging investment and entrepreneurship to make sure that they are effective, well targeted, and provide value for money.”

It is planned that a substantive consultation document will be published in the spring with the final recommendations presented to the Chancellor ahead of the Autumn Budget 2017.

There will be an industry panel drawn from leading investors and entrepreneurs chaired by Sir Damon Buffini, a businessman and governor of the Wellcome Trust and was formerly head of the private equity company Permira.

The EIS Association have written out to members that following their discussions with HM Treasury it has been confirmed that EIS, SEIS, VCT and Entrepreneur’s Relief are included in the review. More details can be found here.

The terms of reference for the Patient Capital Review have now been published and can be found here.

Objectives of the review

The review will strengthen the UK further as a place for growing innovative firms to obtain the long-term ‘patient’ finance that they need to scale up, building on current best practices.

Scope of the review

The review will consider all aspects of the financial system affecting the provision of long-term finance to growing innovative firms. It will in particular:

• consider the availability of long-term finance for growing innovative firms looking to scale up
• identify the long-term root causes affecting the availability of long-term finance for growing innovative firms, including any barriers that investors may face in providing long-term finance
• review international best practices to inform recommendations for the UK market
• consider the role of market practice and market norms in facilitating investment in long-term finance
• assess what changes in government policy, if any, are needed to support the expansion of long-term capital for growing innovative firms

When considering barriers that investors may face, the review will consider any influence that affects investment in long-term finance to a greater degree than other forms of business investment. This includes the effectiveness of existing support and relevant influences that have a broader impact beyond long-term finance.

The review will complement and draw upon work being done by the regulators to consider how regulation affects investors’ decisions. It will draw on the discussion document that will be led by the FCA around the structure of the UK’s listed markets.

The initiation of the review is recognition of the importance of stimulating business growth and an opportunity to consider whether government policy has the desired effect.


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