Over the past year, we have broadened and expanded our support for smaller businesses, cementing our place as a key enabler of finance markets in the UK. Our market impact continues to grow, as borne out by strong delivery against our Key Performance Indicators.
The British Business Bank was set up to increase the amount and range of finance available to smaller UK businesses. We believe that businesses that need finance – whether to start up, realise their growth ambitions or simply to maintain their success – should be able to find and access the right finance for their needs.
This applies to businesses right across the UK, and across all sectors of the economy. 2016/17 has seen us launch our first regionally-focused fund, introduce new funds dedicated to scaleups in innovative sectors, and flex our existing interventions to support a broader range of finance types.
Our performance this year reflects the growth in our organisation, with a substantial increase in the stock of finance we enable and continued strong delivery against our other objectives.
Against our four Key Performance Indicators we have delivered:
- An increase of 24% in the total stock of finance provided through our programmes
- Further support for diversity in the market, delivering 94% of our support through non-bank lenders, smaller banks, alternative lenders and equity investors
- A broadening of our offer on information about finance options, helping businesses to become more aware of, consider and explore the choices provided by the market
- A 4% adjusted return on capital, exceeding the target set by government.
The financial statements for British Business Bank plc show an operating profit of £49.8m. However we made a loss after tax for the year of £12.2m. This loss reflects the fact that, although we expect to receive a positive return on our Enterprise Capital Funds, accounting standards require us to recognise up-front provisions on new commitments in this programme. These are not provisions for bad debt and are expected to unwind over future years.
During the year, we broadened the criteria for our ENABLE Funding programme and Enterprise Finance Guarantee to open them up to providers of a much broader range of finance, as well as introducing an expansion capital initiative under our Investment Programme to support the growth of diverse finance products.
Geographically, we have started to tackle the well-documented lack of finance provision – particularly equity finance – in the regions outside London and South East. We launched our first regionally-focused fund this year – the £400m Northern Powerhouse Investment Fund – in partnership with the region’s Local Enterprise Partnerships, and will introduce similar interventions for the Midlands and Cornwall and the Isles of Scilly in 2017/18.
We continue to have a strong relationship with our shareholder, the UK government, being a trusted voice in contributing to its policy formation and a key agent in delivering its agenda. Our evidence base and analysis of the UK finance markets helps us to fulfil these roles, as well as allowing us to flex our programmes to respond to existing and developing gaps in provision.
Our support for new sectors and approaches – such as the space sector, digital technology development hubs and novel startup models – means we are increasingly recognised as a key enabler of innovation in the economy. Crucially, we are continuing to grow our capability to support equity funding. This year, our Enterprise Capital Funds programme, dedicated to early stage venture capital, has built its capacity to close to £1bn and the Autumn Budget 2016 allocated a further £400m to our Venture Capital (VC) Catalyst programme to support later-stage equity.
The Business Finance Guide, which we publish jointly with the Institute of Chartered Accountants in England and Wales (ICAEW) Corporate Finance Faculty and with input from across the finance and business sectors, also underwent a step change this year, moving from a printed only document to an interactive and content-rich online offering. The importance of this impartial and trusted information source on finance options was reflected in the BEIS Select Committee’s Access to Finance Report in October 2016. We will build our information offer to businesses in the coming year.
2016/17 has been a year of expansion and growth for the British Business Bank group and this continues into the new year with the inclusion of the Start Up Loans Company. We now have a genuine capability to deliver support to smaller businesses at all stages.
There have been many suggestions about how our role may change as we enter negotiations to exit the European Union. While it is too early to be certain of what the future holds, I am confident that the Bank is working to build an organisation that can support the country’s smaller businesses, whatever the outcome. On the back of our established business model and strong reputation in the market, we are working to put in place the capability to respond flexibly to any challenges ahead.