84% of Business Bank Funds Skipped London — What It Means for UK Growth

News Desk | July 27, 2025 | Business, International | Follow on Google News

84% of Business Bank Funds Skipped London — What It Means for UK Growth

The Bank’s financial trajectory in 2024/25 signals a significant turnaround and a maturing investment strategy.

The institution reported a statutory profit before tax of £144 million, a notable improvement from a £131 million loss in the prior year. This positive shift was largely driven by an overall positive fair valuation movement in its investments, with £70 million of these movements specifically attributed to Enterprise Capital Funds (ECF) development equity investments. This financial recovery indicates that the BBB is not merely a public spending entity but a financially astute economic development bank.

The substantial increase in its total financial capacity to £25.6 billion and the planned rise in annual investments to £2.5 billion point to a deliberate policy decision to leverage public funds as a powerful tool for national economic stimulus.

This approach generates significant multiplier effects, as evidenced by the expected £8 billion boost in UK economic output from £1.2 billion of public funding and £2.6 billion in guaranteed lending in 2024/25 alone. This demonstrates a model where government spending functions as an investment, actively attracting private capital rather than displacing it.

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The Bank’s five-year adjusted rate of return stands at an impressive 4.2%, significantly exceeding its target of 0.9%. This sustained positive return reinforces the financial prudence and effectiveness of its investment strategies. In-year funded commitments surged by 45% to £1.3 billion, and the overall investment portfolio grew by 19% to £4.681 billion. Furthermore, realized gains reached £83.6 million, representing a 1193% increase. This dramatic rise in realized gains is a direct consequence of the maturing investment portfolio. As the Bank’s patient capital investments, particularly in venture and growth equity, age, they transition from unrealized gains or losses to tangible profits upon successful exit. This trend validates the Bank’s strategy as a “through-the-cycle investor,” emphasizing that short-term market fluctuations should not overshadow the long-term value creation inherent in its approach.

British Business Bank’s Key Performance Indicators (KPIs) 2024/25

Metric Target Actual Achievement

In-year debt commitments £382.5m £385.8m Exceeded
In-year gross deployment outside of London £649.8m £707.1m Exceeded
In-year guarantee commitments £1,825.7m £2,015.5m Exceeded
Start Up Loans issued 9,900 10,577 Exceeded
In-year equity commitments £895.7m £881.8m On Target
Green Growth Guarantee Scheme pilot launched Pilot Launched Achieved
Delivery partners’ net promoter score (NPS) 54 >54 Exceeded
Staff engagement score 79% >79% Exceeded
5-year average adjusted return on capital 0.9% 4.2% Exceeded

Unlocking Regional Potential & Addressing Disparities

A core tenet of the British Business Bank’s strategy is its unwavering commitment to addressing regional economic equality and ensuring that the benefits of growth are shared across all of the UK’s nations and regions. In 2024/25, 84% of the funding supported by the Bank was deployed to businesses located outside London. This consistent pattern of funding distribution is a clear indication of a deliberate and successful policy to rebalance the UK economy, moving away from a London-centric growth model.

The six Nations and Regions Investment Funds, a cornerstone of this strategy, collectively supported £311.6 million of finance to 641 businesses by the end of FY 2024/25. The success of these existing regional funds, coupled with the UK’s modern Industrial Strategy’s commitment of an additional £350 million to establish two new Nations and Regions Investment Funds in the East and South East of England, demonstrates a deepening commitment to place-based industrial strategy. This directly combats social inequality by creating jobs and prosperity in underserved areas, showcasing a proactive government role in regional economic development.

The Regional Angels Programme further exemplifies this commitment, completing 11 transactions totaling £66 million in 2024/25. This included direct investments and crucial support for diverse angel syndicates, such as the first solo GP-female-led Araya Ventures.

The Start Up Loans programme also plays a vital role in addressing imbalances in access to finance. 70% of its loans were provided to businesses outside London and the Southeast, with 39% going to female founders and 21% to entrepreneurs from ethnic minorities. This targeted support for underrepresented groups extends beyond social equity; it constitutes a sophisticated economic strategy. By actively reaching out to and supporting these demographics, the Bank is tapping into previously overlooked pools of entrepreneurial talent, thereby maximizing the UK’s overall economic potential. This implicitly acknowledges that market failures in finance disproportionately affect certain groups, and direct intervention can unlock significant untapped Gross Value Added (GVA) and job creation.

Nations and Regions Investment Funds (NRIF) Impact FY 2024/25

Fund Finance (£m) Investments

Investment Fund for Northern Ireland 30.1 35
Investment Fund for Wales 16.7 64
South West Investment Fund 60.1 150
Investment Fund for Scotland 44.4 50
Northern Powerhouse Investment Fund II 117.1 217
Midlands Engine Investment Fund II 43.2 125
Total 311.6 641

Fueling Innovation: Deep Tech, Life Sciences & The British Growth Partnership

The British Business Bank is strategically positioned at the forefront of fueling innovation within the UK economy. It is recognized as the largest investor in UK venture and venture growth capital funds. This leadership position allows the Bank to direct its commercial equity investments towards the eight growth-driving sectors identified in the modern Industrial Strategy, including advanced manufacturing, clean energy, creative industries, defence, digital technologies, financial services, life sciences, and professional/business services.

The strategic importance of patient capital for deep tech and life sciences is paramount. The Life Sciences Investment Programme (LSIP), a £200 million initiative, is specifically designed to bridge the equity finance gap for innovative UK life sciences companies. Similarly, the Future Fund: Breakthrough program has established the BBB as the UK’s most active late-stage investor in fast-growing life sciences and deep tech companies valued at £30 million and above. These interventions are crucial to ensure that the UK retains its most innovative companies, capturing the full economic benefits of their growth and maintaining global leadership in strategic technologies. The problem of companies commercializing overseas due to a lack of patient capital is a critical market failure that the Bank actively addresses.

A significant development in this area is the British Growth Partnership (BGP). In May 2025, the Financial Conduct Authority (FCA) granted regulatory approval for BBB Investment Services Limited, the Bank’s third-party arm, to provide investment services. This was a crucial regulatory step for the BGP’s launch. The BGP represents a groundbreaking policy innovation aimed at addressing a structural difference in capital allocation: historically, only about 10% of UK venture capital funds originate from pension funds, compared to approximately 70% in the US. This disparity highlights a massive, untapped domestic capital pool.

The BGP’s objective is to catalyze institutional capital, particularly from UK pension funds, into high-growth UK companies. Early commitments from major institutional investors such as Aegon UK, NatWest Cushon, and London CIV (the first Local Government Pension Scheme pool to announce its intent) signal a viable pathway to unlock this capital. The initial BGP fund aims to raise hundreds of millions of pounds, including a commitment from the Bank itself. This initiative extends beyond merely funding companies; it seeks to reform the UK’s financial ecosystem to better serve its own high-growth potential, potentially creating a new blueprint for other nations seeking to mobilize domestic institutional capital for national development.

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