The UK’s small businesses are set to gain increased access to financial support following yesterday’s spending review announcement from the government.
Chancellor Rachel Reeves also confirmed that research and development (R&D) is getting a boost, while the defence industry will also see a major funding increase.
There is also additional funding for the UK’s nations and regions, as well as for supporting UK workers to develop their skills.
Business bank boost
A total of £2.5bn in extra funding will be made available for small UK firms through the British Business Bank (BBB), the government said in the full policy paper for the review.
It says it is “transforming the resources and capabilities of the BBB, marking a major step change in financing companies to start and scale in the UK and supporting the Industrial Strategy”.
The additional funding will enable the BBB to make a total of £2.5bn in investment per year, a shift that was enabled by the changes to the government’s fiscal rules implemented as part of last year’s Autumn Budget. The additional funding and “greater flexibilities” being granted to the bank will help it to continue programmes such as Start-Up Loans and the Nations and Regions Investments Fund.
R&D and nuclear
The government is also set to boost R&D spending by to £22.6bn per year by 2029‑30, arguing that “every £1 of government spending delivers £7 of economic benefits in the long term”. This will include £500m for the new R&D Missions Accelerator Programme, while the government will look to attract foreign talent by expanding eligibility for visas used by those in science, including the High Potential Individual visa.
There is also renewed support for the UK’s nuclear sector, with funding confirmed for the Sizewell C plant in Suffolk that the government says will create 10,000 new jobs and power the equivalent of 6 million homes, according to the Guardian. There is also funding for small modular reactors, set to be developed by Rolls Royce.
Regions and skills
Reeves also announced a boost to funding for each of the UK nations’ devolved administrations, with £52bn in funding for Scotland, as well as £20bn for Northern Ireland and £23bn for Wales by the end of 2029.
This includes additional financial transaction funding, as well as support through the work of organisations like the BBB and the National Wealth Fund. The increased spending amounts to “the largest settlement in real terms since devolution in 1998”.
Beyond this, all the UK’s nations and regions will benefit from additional funding for skills and training, the government says, as it committed to record investment in upskilling. Total funding for skills will increase by £1.2bn by 2029, with total employment support funding raised to £3.5bn by that year.
The spending review paper also outlines plans for an ‘AI talent scholarship’, new courses focusing on AI and ‘new AI fellowships’ to develop skills in the growing sector.
'Challenge now is delivery’
Marco Forgione, director general of the Chartered Institute of Export & International Trade, said the review “acknowledges the importance of trade and exports in driving the UK's economic recovery but, with resources tight, it also underlines the challenges ahead”.
“We're encouraged to see the government take up recommendations we and our members have long championed, including better access to finance. As set out in our response to the SME Access to Finance consultation, this is crucial for ensuring MSMEs have the confidence and capital they need to export, invest, and grow.
“The challenge now is delivery. Our members will be watching closely as the government develops its Industrial, Trade and Small Business Strategies to make sure these announcements become real opportunities. We'll continue to press for practical action that helps our exporters compete and thrive.”
‘Missed opportunity’
Reaction from the UK Warehousing Association, meanwhile, was mixed. In a press release following the announcement yesterday, it said that the review was a “missed opportunity” to support the logistics sector.
Clare Bottle, the association’s CEO, said that while renewed investment in the review for “housing, passenger transport, nuclear energy, and science and technology” was welcome, it is “vital that the government also uses its power to enable the supply chains that underpin these sectors”. She added:
“If the government wants to increase the rate of growth, it has to put its money where its mouth is – more planning officers, greater funding and flexibility for training in warehouses, and support for recruitment.”
