Thank you, Madam Sims. I'm just capturing that. It's a brilliant question and a deep and complicated question in the U.K.
There is no single social enterprise legal form within the U.K. There are different types of forms that social sector organizations take. Crudely, there is a family. There are charity forms—and some charities trade and some charities don't—and then there are a series of forms such as member-owned societies, so co-ops, and industrial and provident societies.
Ten years ago in the U.K., a new legal form called the community interest company was developed. Essentially it was a response to the idea that a charity form—and charities within the U.K. are not allowed to issue equity—was too restrictive for some organizations that wanted to achieve social impact.
This is a regulated form. There is a community interest company regulator that essentially checks that community interest is being achieved by this form, but essentially the form itself is asset-locked. Typically it has been used, for example, when a public asset has been transferred to an organization—it might be a church hall, for example, or a school hall—and the idea behind it is that it's asset-constrained.
There is a very interesting question within the U.K. at the moment. We're starting to see that many businesses that are trying to achieve social impact are not choosing to take the form of charity, co-op, or community interest company. The reason is that these are all asset-constrained organizations. All of them have limitations on the equity they can release.
Some entrepreneurs are saying that puts too great a burden on them. They feel that they lack access to the same sorts of markets that can help commercial organizations scale and grow. We're starting to see a much more mixed economy within the U.K. Some organizations feel it's important to be able to say that they have certain mission locks and that those mission locks are about their assets essentially being locked. They have constraints, for example, on their profits and their dividends.
Some are saying that it's less important for them to be able to communicate or to be held by those mission locks. Still, they want to achieve social impact. For example, they're looking at things such as writing, within their articles of association, a strong social mission.
I think from a policy-maker's perspective, within the U.K. we feel that all of these areas have pros and cons, and in a way the policy-maker's challenge is to think about how clear the signalling between them is so that people can move from whatever and can set up the right sort of organization for the impact they're trying to have.
Just very quickly on the tax side, the majority of the tax benefits that we've advantaged to this area within the U.K. have actually been about replicating within the social sector the same sorts of tax reliefs that work for purely commercial organizations. For example, our social investment tax relief is modelled on an equity release scheme that applies to small, high-growth potential commercial businesses. It's an equity release scheme so, for example, it doesn't work for our charities that are not allowed to release equity. Therefore, we've made almost exactly the same tax relief but it works on debt.
Part of the reason we did that and modelled it so similarly was the result of design work we did with independent financial advisers who told us that they would find it easiest to talk about this tax relief if it looked very similar to whatever else was out there. In a way, anticipation of public take-up has guided how the coalition government has designed the tax relief at its base.