Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Further supplementary memorandum submitted by the Department of Trade and Industry on the Pre-Budget Report 2000


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 million.

  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

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