Labor to present new plan to support UK small businesses

A Labor government would set up a state-backed group to boost small businesses by linking up institutional investors and venture capital firms, Shadow Chancellor Rachel Reeves will announce on Thursday.

Reeves will say that a “British Tibi”, a reference to the French technology financing plan, could strengthen the commitment between investors and venture capital groups to improve the flow of money to young companies.

The plan is one of several recommendations made in a “start-up review” for Labor by former Treasury Secretary Lord Jim O’Neill, due to be unveiled on Thursday at a business event hosted by Reeves and the party leader. Sir Keir Starmer.

The event, which brought together 350 business leaders, is part of Labor’s attempts to be seen as pro-business despite its long-standing financial ties to the labor movement.

The pivot is part of a broader effort by Starmer to steer the party down a more centrist route followed by former Labor prime minister Tony Blair, who won three general elections a generation ago.

O’Neill, a former chairman of Goldman Sachs Asset Management, is a multi-party comrade who previously served as treasury minister in the Conservative government of David Cameron, where he was responsible for the “Northern Powerhouse” project to boost economic growth in the Northern England. .

He will say British start-ups have “huge potential” to improve the UK’s economic fortunes well beyond London.

The French Tibi scheme was launched in 2020 by President Emmanuel Macron and has since secured more than €18 billion in commitments from institutional investors for French tech companies.

Under O’Neill’s plan, the UK scheme would match institutional investors with a reputable roster of venture capital firms, with the former asked to allocate a small proportion of their funds to the latter.

Kwasi Kwarteng, a former Tory chancellor, proposed a similar idea in July when he was trade secretary, however the proposal met with some resistance from the Treasury.

The report will also recommend that the government give British Business Bank, the state-backed economic development investor, greater independence, the ability to leverage external funding and more focus on fostering the growth of business groups around universities.

He will also propose the introduction of a new annual “dashboard” summarizing each university’s track record in creating “spinouts,” companies based on academic research that would otherwise likely go untapped.

“All the universities [should] offer a variety of options for spin-out founders to choose from, including an option in which the university holds a relatively small equity stake,” he will say.

O’Neill’s review involved a panel that spoke with more than 120 industry leaders in roundtable discussions across the country.

Reeves will hail the report as a “radical plan to make Britain the world’s hub for high-growth start-ups”, telling the event at Canary Wharf: “These are difficult times. But I know that the spirit of enterprise, of creativity, of effort is as present in Great Britain today as ever.

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