In last week’s Budget, Chancellor Philip Hammond announced that the Government is to publish its “Action Plan” to unlock £20 billion of new investment in UK scale-ups through a new funding injection into the British Business Bank (BBB).

In his speech, the Chancellor promised that the UK would remain on the front line of innovation post Brexit, and the Government would stand ready to replace European Investment Fund (EIF) lending if necessary.

This is possibly because, since the vote to leave the European Union, several venture capital funds have complained that the EIF has withdrawn from committing capital to their funds.

In response, Mr Hammond has promised that the new fund, which will be seeded with £2.5 billion of public money, will allow pension funds to access long-term investments. This will unlock a total of £7.5 billion of investment.

The Chancellor also promised to double how much individuals can invest through the tax-efficient Enterprise Investment Scheme for “knowledge intensive companies, while ensuring it is not used as a shelter for low risk capital preservation schemes”.

The amount that such companies can receive from EIS and Venture Capital Trust investments will also be doubled, which should altogether unlock over £7 billion of growth investment.

The announcement follows the Government’s Patient Capital Review which revealed earlier this year that UK start-ups were experiencing a lack of scale-up funding after they became ineligible for smaller venture capital investments.

The Review also raised concerns that Venture Capital Trusts (VCTs) and the EIS were being used improperly to generate returns from low-risk scheme that were not benefitting the economy.

The move has been welcomed by analysts, with one commenting that measures such as EIS and VCTs have and will continue to ensure billions of pounds of extra investment flows into listed small and medium-sized businesses (SMEs).

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