Less restrictive tax reliefs are needed to encourage social investment in the UK, according to the final report of the Social Investment Task Force.
The taskforce, a panel of business and third sector leaders chaired by venture capitalist Sir Ronald Cohen, has advised the Treasury for 10 years and produced the original proposals for the development of the social investment wholesale bank.
The report says the Government has taken many steps to strengthen social investment, but existing tax reliefs have been less successful than originally hoped.
Investment in CDFIs that attracts Community Interest Tax Relief totalled £58m to March 2009, against a target of £200m. The main reason for the shortfall, the report says, was the "restrictive nature" of the criteria that have to be met to claim the relief.
The report say wider tax relief is needed to encourage trusts and foundations to put capital into social investment.
The taskforce calls for a community reinvestment act to encourage investment in deprived neighbourhoods, and says the current system, in which banks voluntarily declare what investment they are making in deprived neighbourhoods, has been shown to have failed over a decade.
"It is time for legislation to ensure that the pattern of lending and other investment by banks in under-invested communities is disclosed systematically, by borough, ward, type of loan and borrower," the report says.
The taskforce also warns that the £75m of unclaimed assets the Government announced it would invest in the social investment wholesale bank is "insufficient to capitalise a powerful, sustainable organisation" and says that if it were to be successful it would need either more investment or to offer further tax reliefs to attract other investors.