Budget 2017

Yesterday’s Budget announced measures that will help the British Business Bank unlock an additional £13bn of finance to support smaller businesses.

The Chancellor has provided the Bank – of which British Business Investments is the commercial subsidiary – with substantial new resources worth £2.5 billion in financial transactions that will increase its scale by two thirds.

Much of the increase in resourcing is due to the leading role the Bank is being asked to take in implementing an innovative package to increase patient capital in the UK. This derives from the recommendations of HM Treasury’s Patient Capital Review, which received expert support from an industry panel led by Sir Damon Buffini.

Over time, the measures are expected to boost UK productivity through helping firms with the ambition to scale up access the capital they need to achieve the full extent of their growth potential.

The Bank will work to increase Patient Capital by:

• forming a new £2.5bn Patient Capital entity, incubated within the Bank, which will invest commercially into venture and growth capital
• maintaining the Enterprise Capital Funds programme with up to £1bn of commitments of over 10 years
• providing up to £500 million as a cornerstone investor in a small number of private sector-managed funds of funds.

As the bank’s commercial arm, British Business Investments will be implementing the third of these measures. Having taken market soundings, we believe this offers an exciting opportunity to catalyse patient investment into high potential businesses.

A ‘Request for Proposals’ to manage the first phase of these funds (up to £500m) will be issued early next year.

We have also been asked to create and deliver a regional angel investment programme.

The British Business Bank’s Small Business Finance Markets 2017 report highlighted a clear regional imbalance in the supply of equity finance, with investment (by volumes and value) concentrated in London and the South East. The nature of demand also varies across regions, with businesses in London and the South East more likely to be aware of business angels and venture capital as sources of finance.

Increasing angel finance provision in the regions will help a greater number of early-stage businesses get the finance they need to fulfil their growth ambitions.