Labour to unveil new plan for supporting UK small business
A Labour 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 finance scheme — could strengthen engagement between investors and venture capital groups to improve the flow of money into young companies.
The plan is one of several recommendations made in a “start-up review” for Labour by former Treasury minister Lord Jim O’Neill, which will be unveiled on Thursday at a business event hosted by Reeves and party leader Sir Keir Starmer.
The event — involving 350 business leaders — is part of Labour’s attempts to be seen as a pro-enterprise party despite its longstanding financial links with the trade union movement.
The pivot is part of a broader effort by Starmer to take the party down a more centrist route followed by former Labour prime minister Tony Blair, who won three general elections a generation ago.
O’Neill, former chair of Goldman Sachs Asset Management, is a cross-party peer who previously served as a Treasury minister in David Cameron’s Conservative government where he was responsible for the “Northern Powerhouse” project to boost economic growth in the north of England.
He will say that British start-ups have “huge potential” to improve the UK’s economic fortunes far beyond London.
The French Tibi scheme was launched in 2020 by President Emmanuel Macron and has since secured over €18bn of commitments from institutional investors for French tech companies.
Under O’Neill’s plan, the UK scheme would match institutional investors with an accredited list of VC firms, with the former asked to allocate a small proportion of their funds to the latter.
Kwasi Kwarteng, former Tory chancellor, proposed a similar idea in July when he was business secretary, however, the proposal ran into some resistance from the Treasury.
The report will also recommend that the government give the British Business Bank, the state-backed economic development investor, greater independence, the ability to leverage external funds and more focus on encouraging the growth of entrepreneurial clusters around universities.
It will also propose the introduction of a new annual “dashboard” summarising each university’s record in creating “spinouts”, businesses based on academic research that would otherwise be likely to go unexploited.
“All universities [should] offer a range of options for spinout founders to choose from, including an option where the university keeps a relatively small stake of equity,” it will say.
The O’Neill review involved a panel that spoke to more than 120 industry leaders at roundtables across the country.
Reeves will hail the report as a “radical plan to make Britain the high-growth, start-up hub of the world”, telling the event in Canary Wharf: “These are challenging times. But I know the spirit of enterprise, of creativity, of endeavour are as present in Britain today as they have ever been.”