Brown's pre-election vision considers boosting public private support for sector

30 June 2009
by
Chrisanthi Giotis

‘All these commitments will come with proper systems of redress if they are not met’

Gordon Brown, prime minister

A lack of growth capital for social enterprises and other small and medium sized businesses is threatening the UK's competitiveness, says the prime minister Gordon Brown in his blueprint for this government, launched yesterday.

Building Britain's Future, which has been billed as a Labour party mini-manifesto ahead of the next election, contains one mention of social enterprise with a promised review to consider whether government intervention could help increase the supply of long-term growth capital for social enterprises and SMEs.

The document states: ‘Over the last decade we have seen providers of development capital moving further away from smaller investments and focusing on larger, leveraged transactions.

‘For example, in 1998 one leading provider invested £908m in 600 companies at an average investment size of £1.5m. By 2007, it was investing £1.5bn in 62 companies with an average investment of £25m.

‘This creates an issue for smaller firms or social enterprises with growth aspirations, especially as conventional bank finance may not match their risk profile and growth aspirations.'

According to the government this puts UK competitiveness on the back foot and the review will consider options for public private capital. This may take the form of previously piloted matched-capital equity funds where the government invests money in equity funds on the proviso that private money is also invested.

Major announcements in Building Britain's Future included £1.5bn for social housing, £150m for a venture capital fund that the government hopes to grow to a £1bn fund, a guarantee of work for people under the age of 25 and the promise of one-to-one tuition for schoolchildren who need it. It also promises access to a cancer specialist within two weeks, free health-checks for those aged 40-74 and patients entitled to hospital treatment within 18 weeks.

Brown said: ‘The severe global downturn has threatened our jobs and homes here in the UK, leaving many of you understandably anxious about the future for you and your children.

‘All these commitments will come with proper systems of redress if they are not met.'