British Business Bank

Vince Cable Excerpts

Thursday 26th June 2014 Written Statements

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I would like to update the House on the British Business Bank.

The British Business Bank is already achieving significant results as over 30,000 businesses are benefiting from its programmes. Last year, £782 million of new lending and investment in UK small firms was generated by business bank programmes—this is double the level of activity generated by Government finance programmes to small business in 2012-13.

The British Business Bank has also played an important role in promoting a wider range of finance options. A total of 61% of its activity is channelled through smaller investors and lenders, with only 39% of support going through the big four banks. Over the coming years, I expect that this bias away from the big banks will continue.

Examples of the innovative investments over the last year include: £7.8 million committed to the Dawn Capital II venture capital fund; £25 million to the Episode 1 venture capital fund; £30 million committed to Praesidian Capital Europe debt fund; £15 million in BMS finance, £40 million invested through Funding Circle and £20 million in the Sussex Place Ventures capital fund. In all this cases, the British Business Bank’s investments of public money have been made alongside private sector investors, so crowding in new finance for small business in the UK.

In addition to this, the British Business Bank also funds the start-up loans programme, which has lent £70 million to new entrepreneurs in the UK. The bank has increased utilisation of the enterprise finance guarantee to £348 million—up by 21% year on year. This programme helps firms with good cash flow but low levels of collateral to obtain bank finance.

Today I am publishing the new strategic plan for the British Business Bank which sets out our ambitious plans for further increasing the impact of the institution. The full board of the British Business Bank is now in place, as are the majority of the staff and senior management team, operating out of the headquarters in Sheffield as well as, temporarily, the BIS office in London. The next stage will be to complete state aid negotiations with the European Commission later this year. At this point, responsibility for the assets and staff currently of the bank will transfer fully to the new corporate structures we have put in place.

I would also like to inform the House of the publication today of a new business finance guide aimed at making smaller businesses aware of the options for finance available across the market produced by the British Business Bank and the ICAEW. It has been produced in association with trade bodies representing all the major sources of funding—as well as the main business representative bodies. I will be launching the guide in Committee Room 10 at 11.00 today as part of a session on access to finance.

I am making copies of the strategic plan and the new business finance guide available in the Vote Office. The strategic plan for the British Business Bank can be found on gov.uk and the British Business Bank website.