To ask the Secretary of State for Employment what plans he has to meet the chairman of the British Venture Capital Association to discuss investment in smaller business; and if he will make a statement.
I met Mr. Lionel Anthony, chairman of the British Venture Capital Association, on 18 January. We had a wide-ranging discussion on ways in which venture capital investment in smaller businesses might be further encouraged, particularly in areas outside the south-east. In addition, I spoke at the BVCA conference in Manchester on 19 February.
Does my hon. Friend agree that the success of the Venture Capital Association and other funds, in producing more resources for smaller firms, is very much to be welcomed? Does he agree that the real anxiety centres on sums much smaller than is commonly invested by venture capital funds? Is he considering introducing, for example, an improved investment fund which would enable sums as small as £25,000 to he found for small firms that wish to expand?
I certainly agree with the first part of what my hon. Friend had to say. Britain's venture capital industry is the most advanced in Europe and has done well. On smaller amounts of finance below that provided by the venture capital industry, I remind my hon. Friend that in the first three years of the business expansion scheme half the firms involved raised amounts of less than £50,000, and nearly two thirds raised less than £100,000. We are always ready to consider further initiatives in this area.
The Minister knows full well, if he talks to the chairman, that there is an equity gap below £250,000, according to some sources, or below £100.000 according to others. However, the fact is that after nine years of this Government there is still a great shortage of investment, particularly outside London and the southeast. Is it not about time that the hon. Gentleman talked to his opposite numbers in the Department of Trade and Industry who have recently shelved a report on innovation centres, because one of the real ways in which small industries and firms can get moving in the high-tech area is if innovation centres are bonded with the ability to provide loans and equity capital? Is it not about time that the Government and those Departments got their act together for small business?
As I have already said, I recognise the problems of raising small amounts of equity capital, but that is what the loan guarantee and the business expansion schemes, and the other schemes that we have introduced, are about. As I have said, we shall go on considering further suggestions that are made.