Philip Hammond’s Autumn Budget promises an impressive funding and support programme to boost the UK economy, focusing squarely on backing high-potential scale-up businesses. While there has been a collective positive reaction to the chancellor’s budget, and understandably a palpable sense of relief from many investment providers in our ecosystem, what’s clear is that there’s a huge amount of work to be done.

Less than 24 hours after the chancellor’s visionary budget for small and medium-sized (SME) businesses, the big question is clear: is it really achievable? The simple answer is yes it is, if we join forces and work smartly to deliver stellar outcomes across the length and breadth of the UK’s SME investment ecosystem.

We believe that the majority of the changes that were announced yesterday are designed to reduce investment in lower-risk opportunities, and rightly so incentivise more investment in genuine high-growth companies across all sectors from Brighton to Belfast.

Minutes after the budget was delivered, we were talking to investment providers to gauge their views and opinions. Philip Hare, Founder at Philip Hare Associates said: “The budget is a lot more positive than we thought it might be, and we thought there might be changes made to the tax relief available. He added that it seems clear that the government is supportive of Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) sectors.

Jonothan McColgan, Director at Combined Financial Strategies told us that EIS has “returned to its initial purpose of a tax reward for high-risk investment”.

We’re extremely encouraged by the magnitude of announced government support and the acknowledgement that there needs to be a joined-up, concerted effort to make the UK a natural home for scale-up businesses. The challenge is clearly set to push the UK up the OECD rankings of scale-up countries from its current 13th place.

A huge commitment: £20bn for UK innovative companies

Addressing the UK’s current position, Hammond’s budget speech delivered a huge boost to improve the growth and scale-up outcomes of the UK’s innovative business community. He said: “A new tech business is founded every hour in the UK, I want that to be every half hour.”

In response to the Patient Capital Review (PCR), Hammond announced £20bn of investment into scale-up businesses, with the inclusion of a new fund in the British Business Bank that will be “seeded with £2.5bn of public money”.

We counted 10 different policy announcements addressed specifically to venture capital (VC) providers, with the key aim of supporting fast-growing, successful UK businesses. The British Business Bank takes a lead role with initiatives like the Enterprise Capital Fund programme, unlocking at least £1.5bn in new investment, with a focus on backing first-time and emerging fund managers.

The initial breakdown of the £20bn commitment is as follows:

A new £2.5bn investment fund incubated in the British Business Bank to be floated or sold once it has established a sufficient track record. By co-investing with the private sector, a total of £7.5bn will be released.
£500m of public money through the British Business Bank into a series of private sector funds of funds to encourage new institutional investment in high-growth sectors. Up to two further waves of investment will be launched, facilitating up to £4bn of financing in total.
£1.5bn through the British Business Bank’s existing Enterprise Capital Fund programme.
£1bn of support for overseas investment in UK venture capital through the Department for International Trade.
The launch of a commercial investment programme run by the British Business Bank to develop groups of business ‘angels’ outside of London.
A National Security Strategic Investment Fund to invest in advanced technologies that contribute to national security.
While the figures don’t perfectly match up at this point, it’s encouraging to see the government’s dedication to fast-growing businesses.

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Source: Intelligent Partnership



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