News & Analysis

BVCA slams ‘deeply disappointing’ UK budget

British Chancellor Alistair Darling announced plans for a £750m Strategic Investment Fund in today’s budget, which the UK’s private equity and venture capital trade body says is 'reminiscent of the 1970s'.

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British Chancellor Alistair Darling today outlined plans for a £750 million (€837 million; $1.1 billion) “Strategic Investment Fund” to provide financial support to focus on “emerging technologies and regionally important sectors in, for example, advanced manufacturing, digital and biotechnology”.

The fund, which featured in Darling’s budget announcement, was met with derision by the British Private Equity and Venture Capital Association.

Alistair Darling

Simon Walker, the group’s chief executive, expressed concern in a statement issued today that the government was choosing not to involve the venture capital industry in its plans.

“The BVCA is particularly and deeply disappointed by the decision, which looks like a return to the public sector seeking to ‘pick winners’ – but ultimately subsidises losers,” he said

The BVCA had been lobbying the government to initiate a “highly targeted” investment approach in collaboration with the venture capital industry, such as that being planned in Belgium, where the government has committed a €250 million cornerstone investment to a listed venture capital fund. Another example is Ireland, where €500 million of public money has been earmarked for a series of venture funds.

“There is very little detail: it seems to be a kind of amalgam of schemes to boost regional economies,” Tim Hames, BVCA’s head of communications and public affairs, said in an interview. “It is faintly reminiscent of the 1970s.”

The BVCA also hit out at Darling’s increased top rate of income tax of 50 percent for those earning more than £150,000 per annum.

“The income tax increases which he has announced effectively end Britain’s competitiveness in taxation and will discourage investors from being located and doing business here,” said Walker.

In March, Peter Mandelson, the UK’s secretary of state for business, lamented the lack of venture capital investment in the UK at the BVCA’s annual dinner. He urged the industry to help the nation “put its money where its mouth is on innovation”.