A Government scheme set up to ensure some of the country’s most exciting companies could continue to grow during lockdown gave almost three-quarters of its funding to companies in London and the South.
The Future Fund was established last year to ensure that start-up and scale-up companies whose progress would otherwise have been hit by the coronavirus pandemic were still able to access funding for growth.
The fund - which was seen as key to ensuring that high growth companies were able to contribute to the Ƶ’s economic recovery - was recently wound up, with the British Business Bank revealing that 59% of funding went to companies in London, followed by 14% in the rest of the South.
By contrast the North - which accounts for around 22% of the population of the Ƶ - received 11% of the funding available.
The low funding for companies in the North was at least better than that given to Midlands firms (4%) and the combined devolved nations of Scotland, Wales and Northern Ireland, which received just 3% between them.
The British Business Bank said that the lending figures were “in line with the wider market trends for equity investments” but the huge amount of funding going to firms in London has been questioned in light of the Government’s ‘levelling up’ agenda.
Newcastle Central MP and Shadow Business Minister Chi Onwurah said: “Time and time again the Prime Minister’s warm words on ‘levelling up’ are betrayed by the reality on the ground in the North.
“We need a strong, long term industrial strategy which builds long lasting prosperity across the regions, not ad hoc pots of money held by Whitehall that we have to fight over.”
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Jonathan Walker, policy director of the North East England Chamber of Commerce, added: “We know that many innovative start-ups in our region were unable to .access the main Covid support schemes during the depths of the pandemic and it is great that the British Business Bank was able to fill that gap.
“Support for these types of businesses is going to be vital to start and sustain a vibrant economic recovery. There is work to be done in the region and nationally to bring a larger share of funding to regions such as ours rather than being drawn to areas with more established finance and equity markets.”
The Future Fund was set up for high-growth companies unable to access other coronavirus support schemes, many of them being in the ‘pre-profit’ stage that is often seen in young technology companies. To qualify for loans, companies had to match the funding offered from the Future Fund with investment from third party organisations.
In all, the Future Fund made £1.14bn worth of convertible loans to 1,190 companies. The North East received 31 loans totalling £28m, including companies such as Boiler Plan, Donr and Screenreach.
In the North West, there were 84 loans totalling £61.6m, while 35 Yorkshire and Humber companies secured investment worth a total of £39m.
The British Business Bank also administered the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), offering just over £2bn in loans to 51,181 companies in the North East.
Last week Prime Minister Boris Johnson gave a speech on his levelling up agenda, saying that it was important to tackle regional inequalities so that “everyone everywhere feels the benefits of that recovery and that we build back better across the whole of the Ƶ”.
