Background to the report

Small and medium-sized enterprises (SMEs) are a major part of the UK economy, accounting for 60% of private sector employment and 52% of private sector turnover. Like any business, SMEs often need external finance and other support to launch and grow. However, SMEs can face challenges when trying to access finance, which can limit their ability to grow.

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In 2014, the government formally launched the British Business Bank (the Bank) to address signs of weakness in the UK SME finance market. The Bank’s mission is “to help drive economic growth by making finance markets work better for smaller businesses – wherever they are in the UK and wherever they are on their business journey – enabling them to prosper and grow”. The Bank provides funding for SMEs indirectly through its delivery partners and aims to stimulate demand for finance by raising awareness among SMEs of their finance options.

Content and scope of the report

This report examines whether the Bank is improving access to finance for SMEs and is well prepared to respond to future challenges. The report structure is as follows:

  • Part One sets out the background and rationale for the creation of the Bank, and examines the Bank’s objectives, performance monitoring and success criteria;
  • Part Two considers the Bank’s performance against its objectives, and the evaluation of its impact; and
  • Part Three looks at the Bank’s governance arrangements, considering its expansion over time, its costs and its preparedness for future challenges.

Report conclusions

The Department for Business, Energy & Industrial Strategy (the Department) set up the Bank as a more coherent approach than past government access to finance interventions. There are positive signs to date, in terms of performance against its metrics and from the Bank’s evaluations showing SMEs are growing as a result. Many of its activities are longer-term interventions − in particular, promoting information to SMEs and greater regional activity − and the benefits of these will require ongoing analysis over time. The Bank’s costs have risen significantly as it has grown; while there is evidence that they are comparable with other organisations overall, there is limited information on the cost-effectiveness of its activities. The Bank will need to develop further its evidence on both performance and costs, and make sure its financial management and governance arrangements are robust, to ensure it demonstrates value for money over time.

Additionally, the environment in which the Bank operates is changing rapidly. The Bank has analysed how it would respond to a downturn, but this could take time and it would only represent part of any government response to help SMEs. The Department and HM Treasury need to ensure that the Bank is able to fulfil its role, and that its activities better align with other government support to business.


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