The British Business Bank said on 7 September it will commit up to £150 million towards a proposed equity fund for scale-ups across the North of England, writing tickets of up to £15 million per company1. Chancellor John Healey announced the allocation the same day. The Bank has not named a fund manager, a close date or investment criteria, and the ticket band sits above the ceiling on its existing Northern Powerhouse Investment Fund II.
That makes four regional or scale-up equity vehicles the Bank now runs in parallel, after the South West Investment Fund passed £157 million deployed in July, each pitched at a different cheque size. A founder in Leeds can read the press notice today and apply to nothing until a manager exists.
Two arguments about state capital point in opposite directions, and this fund lands between them. The New Economics Foundation argued on 17 August that the UK's fiscal accounting measure, Public Sector Net Financial Liabilities, counts state borrowing against the fiscal target and so caps what state vehicles may do. To match Germany's KfW and France's Bpifrance at about 1% of GDP a year, the think tank calculates, the National Wealth Fund would need to invest around £21 billion a year by 2028-292. Read that way, a £150 million northern fund is small by accounting rule rather than by choice.
The Entrepreneurs Network reaches the opposite conclusion from founders themselves. Its July survey, written by Philip Salter, found 65% of founders describing Britain as an easy place to start a business and only 14% describing it as an easy place to scale one, with 82% negative on tax and 74% reporting difficulty accessing investment3. On that reading capital structure is not the binding problem, and another state vehicle changes little. The New Economics Foundation and The Entrepreneurs Network cannot both be right, and the British Business Bank is building this fund before either case has been settled.
