February 3, 2023

A Labor government would set up a state-backed group to boost small businesses by linking institutional investors and venture capital firms, Shadow Chancellor Rachel Reeves will announce Thursday.

Reeves will say a “British Tibi” – a reference to France’s technology finance program – could strengthen engagement between investors and venture capital groups to improve the flow of money to young companies.

The plan is one of several recommendations made in a “start-up review” for Labor by former Chancellor of the Exchequer Lord Jim O’Neill, which will be unveiled on Thursday at a corporate event hosted by Reeves and party leader Sir Keir Starmer.

The event, which was attended by 350 business leaders, is part of Labour’s attempt to be seen as an entrepreneurial party, despite longstanding financial ties to the trade union movement.

The pivot is part of a wider effort by Starmer to take the party down a more centrist path, followed by former Labor Prime Minister Tony Blair, who won three general elections a generation ago.

O’Neill, former chairman of Goldman Sachs Asset Management, is a cross-party and former Chancellor of the Exchequer in David Cameron’s Conservative government, where he was responsible for the “Northern Powerhouse” project to boost economic growth in the north of England . .

He will say UK start-ups have “huge potential” to improve the UK economy well beyond London.

The French Tibi Plan was launched in 2020 by President Emmanuel Macron and has since secured more than €18 billion in commitments from institutional investors for French technology companies.

Under O’Neill’s plan, the UK scheme would match institutional investors with an accredited list of VC firms, asking the former to allocate a small portion of their money to the latter.

Former Tory chancellor Kwasi Kwarteng proposed a similar idea in July when he was company secretary, but the proposal met with some resistance from the Treasury.

The report will also recommend that the government give British Business Bank, the state-backed investor in economic development, more independence, the ability to leverage external funds and a greater focus on boosting the growth of entrepreneurial clusters around universities .

It will also propose the introduction of a new annual “dashboard” that summarizes each university’s achievements in creating “spinouts,” businesses based on academic research that would otherwise likely go untapped.

“All universities [should] offer a range of options for spin-out founders to choose from, including an option where the university retains a relatively small share of equity,” it says.

The O’Neill review involved a panel that spoke with more than 120 industry leaders at roundtables around the country.

Reeves will hail the report as a “radical plan to make Britain the fast-growing start-up center of the world”, at the Canary Wharf event: “These are challenging times. But I know that the spirit of enterprise, creativity and strive to be as present in Britain today as ever before.”

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