Further supplementary memorandum submitted
by the Department of Trade and Industry on the Pre-Budget Report
QUESTIONS FROM THE TRADE AND INDUSTRY COMMITTEE
What are the measurable effects to date of the
corporate venturing incentive?
Since the Corporate Venturing Scheme (CVS) came into
force in August this year, it has been one of the focus points
of the corporate venturing seminars that have been arranged and
supported by DTI, CBI and NatWest. Three of these seminars have
taken place already and a further six are planned before spring
2001. The CVS is one of the topics for the ICAEW's corporate taxation
conference this year and is to be included in a corporate venturing
seminar being hosted early next year by city law firm Simmons
and Simmons. Whilst it is difficult to measure the effects of
this exposure, it suggests that CVS has a positive role in driving
up interest in corporate venturing.
The minimum period between the making of a corporate
venturing investment and the receipt of a consequent claim for
tax relief is up to two years, and so it is too early to establish
likely take-up from information held by the Inland Revenue. The
Inland Revenue's experience of the similarly targeted scheme for
individuals, the Enterprise Investment Scheme, suggests that there
will be a gradually accelerating take-up over the next year or
so. During this time the DTI and Inland Revenue will continue
to publicise the incentive as part of the broader profile-raising
exercise for corporate venturing being undertaken by DTI and its
partners. Information will be available from an Inland Revenue
booklet, from the SBS Gateway, and from the "How To"
guide to corporate venturing currently being developed by the
DTI and its partners.
What is the latest state of the UK High Technology
Venture Capital Fund, referred to in Cm 4917 (p48) as having been
"launched" in July 2000, indicating the level of the
fund on closure, details of any EIB or other public sector participation,
and the commitments made so far?
The UK High Technology Fund was "launched"
in July, when it received State Aid clearance from the European
Commission. Westport Private Equity, the fund manager, has to
date received £116 million of commitments to the Fund, including
£20 million from Government. Final closing of the fund is
scheduled for February 2001 and the Government is confident that
Westport will achieve, or exceed, the fund target of £215
Under the terms of the UK High Technology Fund
legal agreement, details of those who have invested in the fund
is commercially confidential and investors are entitled to retain
their anonymity. It is not possible, therefore, to say what other
public sector participation there has been. It is becoming clear,
however, that Westport have been successful in attracting private
investors to the Fund who are new to venture capital investment
as well as those new to investing in the high technology sector.
The money raised by the fund will be invested
in predominantly UK early stage, high technology-focused funds.
The fund manager has begun making commitments to invest in such
underlying early stage technology-focused funds. To date, Westport
has made commitments of £72 million to such funds.
The position of Regional Venture Capital Funds,
indicating the timing of notifications to the European Commission,
the latest expected timetable for decision, and in the event of
clearance being given the length of time before the first investment
can be made?
Following the formal notification of the Regional
Venture Capital Fund programme to the European Commission in May
this year, the Commission decided to open an Article 88(2) investigation
procedure on the scheme in October 2000. Whilst this was disappointing
news, the Commission has made it clear that it supports the idea
of the Funds. DTI and SBS officials continue to work with EU officials
to enable the European Commission to clear the Regional Venture
Capital programme in as short a time as possible.
The Commission's decision does not prevent work
on developing the funds from continuing. Indeed, it is advancing
at present with considerable enthusiasm and support from Regional
Sponsors and Fund Managers. The Small Business Service expects
the funds to be ready to make first investments as soon as approval
is received from the Commission.
The details as available of the three New Enterprise
Scholarship pilot schemes, referred to at para 3.75 of Cm 4917.
The Scholarships address the issue of entrepreneurs
from deprived areas being debarred from access to management and
business skills development, which would enhance the chances of
their business ideas succeeding. They also contribute to the broader
agenda of increasing and strengthening management and entrepreneurial
skills in the economy and in areas of deprivation. The Scholarships
will develop individuals' management and entrepreneurial skills
necessary to turn a business idea into reality. The learning will
be drawn from a core syllabus which will be flexible enough to
meet the requirements and preferred styles of individuals and
their individual circumstances.
They were devised following a visit by Stephen
Timms (Financial Secretary to the Treasury) to the US, where he
saw similar schemes operating. DfEE were charged with developing
the Scholarships, with DTI and Treasury input. They were formally
announced in the 1999 Pre-Budget report.
A steering group has been established with representatives
from DTI, DfEE, Treasury, DSS, ES, National Federation of Enterprise
Agencies, The Prince's Trust, the Institute of Management, the
Small Firms Enterprise Development Initiative (SFEDI) Shell LIVEWIRE,
Choreographics (representative of a small firm and with IT expertise)
and SWA Consulting, the national independent evaluators.
There are pilot projects with three Business
Schools (Manchester Metropolitan, Greenwich and Plymouth) and
their local partners (the local enterprise agency and The Prince's
Trust). The pilots operate in parts of Manchester, Greenwich and
part of Cornwall. The intention is that the scheme will be introduced
in England in September 2001, with 200 scholarships and with 400
scholarships in subsequent years.
Please note that the answer on New Enterprise
Scholarships was provided by DfEE who manage the schemes.
5 December 2000