The government has rejected a series of recommendations put forward by MPs aimed at bolstering diversity in the venture capital industry.
The Treasury Select Committee had called on the government to introduce sweeping measures after accusing VC firms of focusing their investments too heavily on London and the South East and warning that current diversity statistics were “unacceptable”.
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In its response today, the government said the transparency and consistency of diversity data could be improved but that it disagreed with a range of proposals put forward by MPs, such as making tax reliefs dependent on the provision of diversity statistics.
It has also rejected the suggestion to increase Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) company age and funding limits as a way of reducing regional inequality.
The committee had called on ministers to introduce a ‘comply or explain’ policy over receiving tax reliefs for signing the Women in Finance Charter and the Investing in Women code, but the Treasury said it remains unconvinced about implementing a formal policy to access the schemes.
Harriett Baldwin, who chairs the Treasury committee, said: “We’re pleased that the Treasury shares our concerns regarding the low level of regional, ethnic and gender diversity within the Venture Capital Market. However, despite sharing the opinion it should be a priority, it’s not clear how they plan to address it as they have rejected our recommendations.”
The committee recommended that the EIS and VCT sunset clauses were extended, which the government confirmed would happen, adding that details on the extension beyond 2025 would be provided “at a future fiscal event.”
The committee “urged the Treasury not to delay this announcement, which will provide more certainty for the market”.
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https://www.penews.com/articles/stalemate-over-venture-capital-diversity-drive-as-mps-tussle-with-government-20231020
