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Extending CITR
This consultation document seeks views on the case for, and practicalities of, extending a community investment tax relief scheme to investments in community development finance institutions (CDFIs) personal lending activities.
Responses to the questions outlined in the consultation document should be sent by 26 September 2005 to: CITR consultation, Aleem Wallani, General Insurance, Mutuals and Inclusion Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ, fax: 020 7270 4694, e-mail: aleem.wallani@hm-treasury.x.gsi.gov.uk. The document can be accessed via the Treasury's website, www.hm-treasury.gov.uk/consultations. Paper copies are available from the HM Treasury Correspondence and Enquiry Unit, e-mail: ceu.enquiries@hm-treasury.gov.uk, tel: 020 7270 4558.
In December 2004, the Government published Promoting financial inclusion which set out a range of measures to tackle financial exclusion in three priority areas:
- access to banking;
- access to affordable credit; and
- access to free face-to-face money advice.
As part of promoting access to affordable credit, the Government set out its plans to boost the coverage, capacity and sustainability of 'third' sector lenders, i.e. credit unions and CDFIs. One of the key elements of the Government's measures is a growth fund to provide revenue and capital support to credit unions and CDFIs to encourage further growth and sustainability in the sector. In addition to this, the Government is considering extending a community investment tax relief (CITR) type scheme to investments in CDFIs' personal lending activities.
The Government wants to promote the sustainability of third sector lenders so that they are better able to serve the credit needs of low-income groups. The purpose of the consultation is to gather evidence on whether there is a case for extending a CITR type scheme, and specifically to gauge whether a CITR type scheme would contribute to increased investment in personal lending CDFIs and subsequently to improved sustainability of the sector. The Government is also seeking views on the practical issues that would need to be considered were such a scheme to be developed.
