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Public and private sector must coordinate, says Deloitte

Aug 11
Tags: Deloitte
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Public and private sector must coordinate...

The private and public sectors must coordinate better if the UK’s growth capital gap is to be closed. That is according to the Future of Growth report that has been produced by Deloitte, Innovate Finance and the ScaleUp Institute.

It recommends a National Growth Blueprint to fill the £15bn capital gap to fuel economic prosperity. In order for it to work, existing initiatives need to be expanded and accelerated, evolving where necessary to accommodate the current circumstances.

Industry, investors and the Business Action Council (BAC) have been involved in the research, which aims to set out a way for the UK to recover post-COVID-19. The report looks at ways to generate future prosperity through boosting regional economies, productivity, innovation and internationalism.

The growth capital gap stood at somewhere between £5bn-£10bn a year prior to the COVID-19 pandemic. The crisis has only made the situation worse and the gap has now reached £15bn, showing a big difference between demand and supply for growth capital.

To help tackle the problem, the report has five specific recommendations to address the long-standing, structural problem of a lack of available capital for scaleup companies. They are:

  • Create a National Blueprint for Growth that facilitates a strategic joined-up approach to support and champion economic growth. It should be more consistent and cover all regions and sectors
  • Unlock institutional and corporate funding promptly by changing the legislation and organisation in the existing significant private sector capital, which could make inroads into closing the growth capital gap
  • Build up the British Business Bank (BBB) by increasing its regional presence with empowered decision making. This should be rolled out under a national framework and continue the developments of its products. The Scottish Investment Bank (SIB), Development Bank of Wales and Invest NI need to be onboard with this
  • Expand the remit of Innovate UK and its direct release of innovation capital to the most innovative, early stage and scaling businesses
  • Put a Future Opportunity Fund into action to develop various sectors and impact the investing potential of emerging, socially inclusive markets, including the carbon net-zero economy

Closing the growth funding gap is important to overcome several long-term structural issues that have impacted on scaleup growth. Addressing these could result in a ten to 20 per cent boost in business investment and a doubling of the number of scaleups in the UK.

Richard Kibble, UK head of banking at Deloitte, said: “No one can deny the widespread disruption caused by the COVID-19 pandemic. In the short and medium term, it’s vital that we find new ways to get the economy growing again.

“However, longer term it also represents a unique opportunity to reset some of the fundamental challenges the UK has faced for quite some time – regional levelling up, diversity, carbon emissions, unemployment – to name but a few.

“We believe therefore that COVID-19 should act as a catalyst for change. Now more than ever it is vital that businesses are encouraged to start and scale up to their full potential. After all, it could be a chance to create a positive and lasting legacy from the upheaval of this crisis.”

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