Chancellor John Healey is unveiling a new £150 million investment fund aimed at helping fast-growing businesses across the North of England scale up and attract further private capital.
The British Business Bank has confirmed it will commit up to £150 million to the proposed Northern scale-up fund, which will target innovative companies seeking larger investments to accelerate their growth.
Businesses are expected to be able to receive investments of between £5 million and £15 million, with university spin-outs and other high-growth firms among those the scheme is designed to support.
£150m Northern scale-up fund
The British Business Bank said the new fund would operate across the North of England and complement its existing Northern Powerhouse Investment Fund II and Regional Angels Programme.
The proposed fund is expected to support companies from Liverpool and Manchester through to Bradford, Leeds, Sheffield, York, Hull and Newcastle.
Priority sectors are expected to reflect areas in which northern regions already have significant strengths, including creative industries, clean energy, space and technology.
The Bank said the fund was intended to address regional gaps in access to equity finance and give ambitious northern businesses a better opportunity to secure the capital needed to expand.
Investments of between £5m and £15m
The scheme is aimed at companies that have moved beyond the earliest stages of development but require substantially larger amounts of capital to grow.
Individual investments are expected to range from £5 million to £15 million.
That makes the fund particularly relevant to university spin-outs and other innovative companies that can struggle to secure sufficient domestic growth capital once they begin scaling rapidly.
The British Business Bank also intends the public commitment to attract additional private-sector investment alongside its own funding.
Healey: growth must be created in more places
Healey is expected to announce the fund during his first major economic speech as Chancellor, setting out the Government's approach to spreading growth more widely across the country.
He will say: “Today I can announce a new £150m allocation from the British Business Bank to lever in more capital behind the most innovative and fast-growing firms in the North of England.”
The Chancellor is also expected to argue that Britain's next period of economic growth must be driven by a wider range of towns and cities rather than being concentrated in a small number of areas.
He is expected to say that the Government wants to remove obstacles preventing local leaders and businesses from attracting investment and increasing productivity.
Money comes from existing British Business Bank allocation
The £150 million should not be interpreted as £150 million of newly announced Treasury spending.
The funding is being allocated through the government-owned British Business Bank from capital already available to it.
The policy is therefore designed to use the Bank's existing resources to create a dedicated northern investment vehicle and, in turn, attract additional private capital.
The British Business Bank is the UK's economic development bank and invests through a range of programmes intended to improve access to finance for smaller and growing businesses.
Part of wider regional growth push
The announcement fits into Prime Minister Andy Burnham's wider attempt to shift economic decision-making away from Westminster and give regional leaders greater influence over investment and growth.
Healey is also expected to announce that the National Wealth Fund has agreed strategic partnerships with South Yorkshire Mayoral Combined Authority, Liverpool City Region Combined Authority, North East Mayoral Strategic Authority and Cardiff Capital Region.
The partnerships are intended to help local authorities develop investment opportunities capable of attracting public and private finance.
The Chancellor's speech comes ahead of his first Budget on 28 October, when the Government will face pressure to demonstrate how its regional growth ambitions fit alongside tight public finances and competing spending demands.
Government targets regional investment gap
The Government has increasingly focused on the difficulty some growing British companies face when trying to raise larger rounds of investment without turning to overseas investors.
Last month, Healey backed a further £100 million phase of the British Business Bank's Investor Pathways Capital Initiative, aimed at expanding access to venture capital outside London.
The new Northern scale-up fund takes that regional approach further by creating a dedicated pool of larger investments specifically for high-growth companies across the North of England.
The British Business Bank said the goal was to ensure innovative northern businesses have the same opportunity to access growth capital as companies elsewhere in the country.