In the aftermath of the 2008 financial crisis, bank lending to small and medium-sized enterprises (SMEs) was significantly reduced – the amount of new lending to businesses dropped by 23% between 2009 and 2012. While the alternative finance industry has played a vital role in supporting start-ups and scale-ups struggling to secure finance through traditional bank loans, the upcoming Autumn Statement provides an ideal opportunity for the newly reformed Theresa May Government to proclaim public support towards British businesses.
Earlier this year, the British Parliament’s Business, Energy and Industrial Strategy Committee launched an inquiry into business access to finance. This inquiry was launched with the purpose of uncovering how the business lending market had evolved since the end of the financial crisis, taking into account industry developments and obstacles, and finding out how the Government could consolidate and boost high-growth businesses.
Tabled in Parliament this week, the Committee’s final report showed that access to finance remains one of the main barriers for SMEs with high growth prospects. To rectify this, the report praised and encouraged the improvement of the Enterprise Investment Scheme (EIS):
“We recommend that the Government directs resources towards promoting the SEIS, EIS and VCT schemes. This includes the British Business bank working with HMRC to consider how to improve promotion of the schemes.”
With the Autumn Statement set to be announced on 23 November, Chancellor Philip Hammond should use this opportunity to demonstrate the Government’s commitment to these venture capital schemes. Amid record low interest rates and Britain’s withdrawal from the European Union, it is important that these schemes are used to support and grow Britain’s business community through the sustained injection of investor funds.
Following the Autumn Statement, Access 42 members will be receiving a report summarising the key policy findings. Join Access 42 to reserve your copy.