BTC warns of “great British capital failure” as inquiry turns to UK investors
The Business and Trade Committee tomorrow deepens its investigation into what Chair Liam Byrne MP has called “the great British capital failure.”
Meeting details
Despite being one of the world’s innovation leaders, with high IP registrations, globally recognised research centres and a thriving start-up ecosystem, the UK continues to struggle to convert ingenuity into investment at home.
Britain sits atop almost £3 trillion in pension wealth, one of the largest long-term savings pools anywhere on earth. Yet only 18% of that capital is invested in the UK’s real economy. Nest - the workplace pension scheme used by millions - invests less than 2% of its portfolio in UK equities. Meanwhile, the British Business Bank commands only a fraction of the firepower of its German counterpart.
This structural failure leaves the country’s most promising firms facing what has been described to the Committee as a deep and persistent “valley of death” - the dangerous gap between early-stage finance and the scale-up capital needed by ingenious British firms seeking to grow globally.
Today’s hearing — the third evidence session of the Committee’s inquiry into Financing the Real Economy — brings together both long-established financial institutions and new market entrants. The Committee will examine what must change for investors to back the UK with greater confidence and help re-engineer the machinery that links British savings to British growth.
Allica is one of few banks still lending to SMEs, OakNorth has a focus on growth phase businesses with revenues between £1million and £100 million. “Old” bank Natwest last year launched IP-based lending.
Across three panels the Committee will explore what is holding suppliers of capital back from investing the UK; what areas, like pensions, are key for reform; and what innovations in financial products – like vehicles created by Blackrock and Schroders to enable pension fund investing under current regulations - to drive real economy investment.
Liam Byrne MP, Chair of the Business and Trade Committee, said:
“Our country is not short of genius. But we confront what is a great British capital failure - vast resources invested abroad while entrepreneurs at home struggle for backing. We have the savings. What we lack is a modern capital market to deploy that capital on the front line of new national growth. If we want to turn our science into jobs and our innovation into prosperity, we need an investment system that backs Britain.”
The Committee will continue to take evidence from industry, regulators and government as it develops proposals to unlock growth, mobilise long-term capital and strengthen Britain’s economic foundations for the decade ahead.