The British Business Bank launched a new report “Spotlight: The Northern Powerhouse Investment Fund” at the MADE Festival in Sheffield. The report, published to mark the British Business Bank’s two-year anniversary, draws on the Bank’s own research together with other publicly-available data, highlighting the significant opportunities for ambitious, high-growth businesses in the North of England ahead of the Northern Powerhouse Investment Fund (NPIF)’s formal launch in early 2017.
“NPIF is an exceptionally important programme for the Bank. Working collaboratively with the ten LEPs in the North of England, we are bringing together a range of funding sources to help small businesses achieve their growth ambitions, revitalise local economies and create jobs,” British Business Bank CEO Keith Morgan stated. “I am proud to be launching this spotlight report in the month that we mark our second anniversary. It is very encouraging to see the impact our programmes have made in unlocking finance for UK smaller businesses, delivering £4bn of funding through our 90 partners across the country.”
The report details how the British Business Bank’s Northern Powerhouse Investment Fund aims to offer solutions for smaller businesses looking to grow, as well as identifying regional strengths and challenges:
- The Northern Powerhouse area is already home to more than one million private sector businesses.
- The region’s economy generates 19% of UK GDP.
- Long term economic challenges include how to increase productivity from below the national average.
- The Northern Powerhouse accounts for 21% of the UK’s high growth businesses (those that grow their staff by 20% or more per year over three years, having started with over 10 employees) – competitive with any English region outside of London.
- Only 7% of SME equity investments by value went to the North, however, in 2015.
- The economy of the North is bigger than the economies of a number of other European countries including Norway, Poland, Ireland, Finland, Greece, Denmark, Austria and Belgium.
The establishment of the Northern Powerhouse Investment Fund aims to be an important part of the region’s future funding, resulting from the close collaboration between the British Business Bank and the ten Local Enterprise Partnerships in the North West, Yorkshire and the Humber, and the Tees Valley.
“We are committed to building a Northern Powerhouse which helps the great cities and towns of the North pool their strengths to take on the world,” Northern Powerhouse Minister Andrew Percy explained. “Now an extra £500 million will be invested into the Northern Powerhouse to back local businesses with the power and resources they need to achieve their untapped potential.”
The British Business Bank has worked with the Local Enterprise Partnerships, the Department for Business, Energy and Industrial Strategy, and the Department for Communities and Local Government to direct European Regional Development Fund money into the fund. The British Business Bank reported that it is also investing £50m of its own capital in NPIF.
“There are a record number of businesses in the UK, and the Northern Powerhouse is home to more than one million of them,” indicated Small Business Minister Margot James. “The British Business Bank has made a significant impact over the last two years and this report highlights how it has been helping businesses start-up, scale-up and then stay ahead. Next year the bank will support the delivery of the £400m Northern Powerhouse Investment Fund, unlocking the growth potential in the North of England, creating secure jobs and powering local economies as part of our Industrial Strategy.”
The £400 million fund is a central component of the government’s drive to boost long term growth and to narrow the historic North-South funding gap. NPIF will operate alongside a separate fund for the North East Local Enterprise Partnership (LEP), meaning that over £500 million of new investment in smaller businesses will be facilitated within the Northern Powerhouse region. At the same time, NPIF will help nurture the networks and wider ‘ecosystem’ that can continue to support these businesses as they grow.
The publication of the Spotlight report coincides with the two year anniversary of the British Business Bank formally receiving State aid approval, enabling its establishment as an independent institution owned by government. Over the last two years the Bank has contributed to small business growth in the UK by delivering a total of £4bn in lending and investment over the two-year period, generating an additional turnover of £8.5bn in small businesses across the UK. This finance consequently resulted in nearly £3bn of additional gross value-added in the economy, according to the company and has achieved this while delivering a positive return on capital employed to the taxpayer. Over 90% of the bank’s finance is deployed through finance providers other than the Big Four (high street) banks.