Key Takeaways
- • The UK Chancellor Jeremy Hunt announced a £320 million plan to drive innovation and unlock the first tranche of investment from the Mansion House Reforms, with the government stating the package is expected to provide an extra £1,000 a year in pension pots for the average earner who starts saving from 18.
- • £250 million will be committed to two successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative, subject to contract, expected to unlock over £1 billion from pension funds and other sources into UK science and technology companies.
- • A new Growth Fund within the British Business Bank, backed by a permanent capital base of over £7 billion, will give pension schemes access to the UK's most promising businesses, and has been welcomed by eight pension schemes and fund managers.
- • The Chancellor will inject £20 million to foster spin-out companies and provide at least £50 million additional funding for the British Business Bank's Future Fund: Breakthrough programme, following an independent review of university spin-outs.
- • The independent spin-out review, co-led by Irene Tracey and Andrew Williamson, recommends university equity of 10-25% for life sciences spin-outs and 10% or less for less IP-intensive sectors, and the Chancellor has accepted all recommendations.
Summary
Chancellor Jeremy Hunt has announced a £320 million plan to drive innovation and unlock the first tranche of investment from his Mansion House Reforms, according to a GOV.UK press release dated 21 November 2023. The government says the measures are expected to provide an extra £1,000 a year in pension pots for the average earner who starts saving from age 18, by enabling pension funds to invest in high-growth, innovative companies. The announcement precedes the Autumn Statement, where the Chancellor said he would set out his full response to the reforms.
The largest component is £250 million committed to two successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative, subject to contract. The government says this will generate over £1 billion of investment from pension funds and other sources into UK science and technology companies. In parallel, a new Growth Fund will be established within the British Business Bank (BBB), drawing on the BBB's track record and permanent capital base of over £7 billion to give pension schemes access to the UK's most promising businesses. The government said the Growth Fund has been welcomed by eight pension schemes and fund managers as a potentially valuable addition to the market.
The package also builds on the recent BVCA Venture Capital Investment Compact with measures to strengthen the UK venture capital industry, including a new Venture Capital Fellowship scheme modelled on the US Kauffman Fellowship, intended to develop the next generation of investors in VC funds.
On spin-outs, the Chancellor is providing £20 million to support companies created from university research, and at least £50 million in additional funding for the British Business Bank's Future Fund: Breakthrough programme. The government noted that spin-out companies raised £5.3 billion in investment in 2021-22. The announcements were made at University College London (UCL) East alongside university and investor representatives.
The independent review of spin-outs, led by Professor Irene Tracey, Vice-Chancellor of Oxford University, and Dr Andrew Williamson, Managing Partner of Cambridge Innovation Capital, recommends standardised policies intended to speed up spin-out formation. Building on TenU's University Spin-out Investment Terms (USIT) Guide, it recommends 10-25% university equity for life sciences spin-outs and 10% or less for less IP-intensive sectors such as software. The review's co-leads said it followed around eight months of engagement with stakeholders. Industry responses included comments from Michael Moore, CEO of the British Private Equity and Venture Capital Association (BVCA), and Julia Hawkins of LocalGlobe, while university leaders including Anne Lane of UCL Business and Tim Bradshaw of the Russell Group welcomed the recommendations. The government said university research generates around £10 billion a year for the economy.
The largest component is £250 million committed to two successful bidders under the Long-term Investment for Technology and Science (LIFTS) initiative, subject to contract. The government says this will generate over £1 billion of investment from pension funds and other sources into UK science and technology companies. In parallel, a new Growth Fund will be established within the British Business Bank (BBB), drawing on the BBB's track record and permanent capital base of over £7 billion to give pension schemes access to the UK's most promising businesses. The government said the Growth Fund has been welcomed by eight pension schemes and fund managers as a potentially valuable addition to the market.
The package also builds on the recent BVCA Venture Capital Investment Compact with measures to strengthen the UK venture capital industry, including a new Venture Capital Fellowship scheme modelled on the US Kauffman Fellowship, intended to develop the next generation of investors in VC funds.
On spin-outs, the Chancellor is providing £20 million to support companies created from university research, and at least £50 million in additional funding for the British Business Bank's Future Fund: Breakthrough programme. The government noted that spin-out companies raised £5.3 billion in investment in 2021-22. The announcements were made at University College London (UCL) East alongside university and investor representatives.
The independent review of spin-outs, led by Professor Irene Tracey, Vice-Chancellor of Oxford University, and Dr Andrew Williamson, Managing Partner of Cambridge Innovation Capital, recommends standardised policies intended to speed up spin-out formation. Building on TenU's University Spin-out Investment Terms (USIT) Guide, it recommends 10-25% university equity for life sciences spin-outs and 10% or less for less IP-intensive sectors such as software. The review's co-leads said it followed around eight months of engagement with stakeholders. Industry responses included comments from Michael Moore, CEO of the British Private Equity and Venture Capital Association (BVCA), and Julia Hawkins of LocalGlobe, while university leaders including Anne Lane of UCL Business and Tim Bradshaw of the Russell Group welcomed the recommendations. The government said university research generates around £10 billion a year for the economy.
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