The Business and Trade Committee has published a landmark report calling for sweeping reforms to Britain’s investment institutions, warning that the Government will not achieve its ambition of delivering the highest growth in the G7 without urgent action.

Advanced Oxford submitted evidence to the inquiry, drawing on our research into investment and innovation finance as it relates to Oxfordshire’s science and technology ecosystem.

The investment paradox

The report identifies what it describes as a deep investment paradox at the heart of the British economy. The UK is home to one of the world’s leading financial centres, pension funds managing £3 trillion in assets, at least £264 billion of undeployed investment capital, and world-class universities that have created more than 1,300 spin-out companies in the last twelve years. Yet an estimated 380,000 businesses that want finance cannot get it.

The Committee concludes that Britain must mobilise an additional £180 to £200 billion of investment every year to match the investment performance of the strongest economies in the G7.

Committee Chair Liam Byrne MP said:

“Britain is not short of money. We are short of institutions capable of putting that money to work. We have £3 trillion in pension assets, £264 billion of undeployed investment capital, £610 billion sitting in cash savings accounts and one of the world’s great financial centres. Yet 380,000 businesses that want finance cannot get it. For too long we have exported our savings and sold our scale-ups and watched other countries capture the rewards. If Britain wants the highest growth rate in the G7, we need the best system in the G7 for turning savings into investment and ideas into world-leading companies.”

Key findings

The report sets out a stark picture of the challenges facing UK businesses seeking investment:

• Britain requires an additional £180 to £200 billion of investment annually to match the strongest-performing G7 economies.
• 380,000 businesses want finance but cannot access it.
• The Alternative Investment Market has lost more than 1,000 companies since 2007.
• Ninety-four per cent of UK scale-ups are acquired before reaching maturity, with around half purchased by overseas buyers.
• At age ten, London-based scale-ups raise only around half the capital secured by comparable firms in San Francisco.
• The UK ranks 17th out of 17 comparable high-income countries for access to entrepreneurial finance.
• SME overdraft provision has fallen by 85 per cent since 2000.

Key recommendations

The Committee’s programme for reform is built around seven priorities: scaling up UK investment funds; putting procurement to work; delivering stability and predictability; rebuilding regional banking; fixing state support for growth; incentivising venture capital and angel investment; and backing entrepreneurial talent everywhere.

Specific recommendations include:

• Doubling the British Business Bank’s Growth Guarantee Scheme immediately, with a pathway to deliver the roughly £4 billion expansion required to match publicly-backed loan guarantee programmes in Germany and the United States.
• Increasing the maximum size of loans guaranteed by the British Business Bank’s Growth Guarantee Scheme from £2 million to £5 million, and making the scheme permanent.
• Tripling the size of the UK’s venture capital industry over the next decade, advancing the British Business Bank’s British Growth Partnership with a UK scheme matching the design and scale of France’s Tibi initiative.
• Expanding the Enterprise Investment Scheme and Seed Enterprise Investment Scheme to increase investment into growing British firms.
• Establishing a case management service for the UK’s 14,300 High Growth Firms, ensuring they receive proactive support from public finance institutions, R&D tax credits and other government programmes throughout their growth journey.
• Creating a single front door for businesses seeking support from Britain’s public finance institutions.
• Restoring the previous 28-day target for processing R&D tax credit claims, widening eligibility and reviewing how the scheme can better support innovative firms seeking to scale.
• Kickstarting the creation of a new regional banking system with regional British Business Bank offices, supported by a radical expansion of Post Office banking hubs.

What this means for Oxfordshire

These findings resonate strongly with the challenges we hear from businesses across Oxfordshire’s innovation ecosystem. Access to patient, long-term capital is one of the most significant barriers facing science and technology businesses seeking to scale. Oxfordshire is home to exceptional research, outstanding spin-out activity, and a growing pipeline of high-potential firms. Ensuring that those businesses can access the finance they need to grow and remain in the UK is essential to realising our collective vision of Oxfordshire as the most dynamic innovation economy in the UK.

We welcome the Committee’s focus on high-growth firms, regional finance infrastructure, and the need for more predictable, co-ordinated public support. We will continue to engage with the policy process and advocate for the conditions that enable Oxfordshire’s businesses to thrive.

Read the full report on the UK Parliament website: https://publications.parliament.uk/pa/cm5902/cmselect/cmbeis/123/report.html