Oral evidence: Entrepreneurship and business, HC 728
Oral evidence, 27 October 2026.
Witnesses
Matt Adey, Michale Moore and Chris Lewis.
Chair
Welcome to this second panel in today’s opening inquiry into entrepreneurship in Britain. Chris Lewis, we are going to kick off with you. Welcome back to the House of Commons. The Global Entrepreneurship Monitor report that was published this morning shows that it is getting harder for entrepreneurs to get the start-up and scale-up capital that they need. Is that your sense? Tell us what is going on and what is going wrong.
Chris Lewis
You are right. There is a continued increase in supply of entrepreneurs, but they need access to capital. We heard it earlier in the previous session. I work in industry. My full-time main job is running a venture capital trust, and we see it every day when trying to match entrepreneurs with capital. There is so much demand and we are limited in the amount of capital that we have. We would like to be able to raise more. The biggest challenge we are currently facing is the unintended consequences of last year’s Budget, where the income tax credit for VCT investment by UK taxpayers was reduced from 30% to 20%. That is having a very significant impact in terms of the reduction of fundraising for this year’s fundraising, which runs from now until the tax year end.
Chair
How significant an impact has that tax change had?
Chris Lewis
When we first spoke to Treasury about the impact of this decision, just after last year’s Budget, we started to model a reduction in fundraising of 20% to 40%. Our current level of budgeting and modelling goes beyond that, so it is having a serious impact. We are perhaps one quarter of the way through the fundraising cycle so far, so it might be early days, but all the indicators, for all the VCTs that are currently open for fundraising, are that it is markedly down on last year. If the rate of fundraising does not improve, we hope that, with this Committee’s help and with Treasury, we will be able to revisit it together, collectively, so the Government can take action before it is too late.
Chair
Can you give us a sense of how many millions less that means flowing into equity investment in start-ups?
Chris Lewis
Let us say that the VCT industry raises £900 million a year, which is what it has done broadly for the last five years. If we go on a 50% reduction, that will have a direct follow-on impact on to the amount of investing that we do. It is already down by half for next year, and the year after, and the year after. Because VCTs are long-term patient capital, we do several rounds of investing. When we have existing companies on our portfolio, you will appreciate that every year, or every two years, subject to milestones, we do another round of investment. The companies that we support need that continued support. Whatever cash we have from fundraising every tax year, we owe it to them to continue supporting them further with advice and capital. By doing that, there is a big imbalance, therefore, in terms of the amount of free capital or free cash that we have to invest in new businesses, which obviously reduces as a result of having reduced the amount of overall funding.
Chair
We could be talking about a half-a-billion-pound impact on early-stage venture investment.
Chris Lewis
You are looking certainly in the hundreds of millions of pounds of reduction, both into follow-on and new portfolio companies. Those new portfolio companies will not exist every year for the next few years. There is a whole—I will not say a generation—cohort of entrepreneurs we will not be able to support quite as well as the ones we have managed to support over the last 30 years.
Sarah Edwards
Matt, the British Business Bank has been quite important in how it is trying to revolutionise the way in which entrepreneurs can get access to finance. Some of that is through the start-up loans and creating wider funds. I was with pension funds last week, talking to them about the fact that they like that they can invest into those funds so that you have the ability to share that finance around. We have heard from the last panel that, in particular, if we take women and ethnic minority businesses, they are still struggling to access finance. I wondered how you are extending that support. Have you revisited whether it is doing what it needs to do? How are you changing tack to make sure that we are getting that money where it needs to go?
Matt Adey
Thank you very much for the question and for the invitation. I will jump in straight to that challenge that you have there. There has been a significant increase in venture capital in the long term in the UK, but it has been very concentrated in male-founded businesses. The venture capital industry is notably male as well. Beyond the building of our investment into venture capital, there are things that we are doing to try to reach those parts of the venture capital world where it does not work. For example, starting last year, we have a £400 million allocation to our investor pathways capital. That is pathways for the investors to get into the venture fund world. We are looking at groups of people who are starting to get into venture capital and to become a venture capitalist, but we are selecting those people who are more diverse than the VC market is now. The first allocation we made was a £90 million allocation this summer, having met and engaged with several emerging venture capital funds. We are happy to say that, for that £90 million, 57% of the people who were involved in those funds, which we are now supporting, are female. That is massively greater than would be in the general area. We are also doing a lot in angel syndicates. We are focusing on getting the angel finance out into the regions with our regional angel programme. We also have some money that we can actually spend, rather than lend, in helping diverse angel syndicates get up and running. That is helping people who do not have the funds and find it difficult to create an angel syndicate.
Sarah Edwards
On that point, every year so far in this Parliament this Committee has toured around the UK to talk to businesses and start to understand what the challenges are in their locale. We heard a lot that, when people are looking for that private finance, capital and VC funds, they would have to come down south to get it. They could not get it in the regions. When you are saying you are setting them up, are they very new? What is the size of them? What is the scope? We know that that is a problem, so it is good that you are addressing it, but what is the reality of that on the ground and how far along are you? That has been quite important to them, to feel that they did not have to come down south just to find money.
Matt Adey
Yes, indeed. It is been known for a long time that a lot of venture capital funds and angel syndicates are London-based. There is good evidence going back several years that investors invest in businesses and start-ups that are near them. They do not want to be too far away. We do not want to be three hours away on the train or on the plane. Getting more offices of venture funds out in the regions is helpful, and that is something we try to do. We have a whole range of nations and regions funds. We have a fund, including some debt, but majority equity, in every nation or region outside of London now.
Sarah Edwards
How large are they?
Matt Adey
They vary in the regions from £100 million to much larger. The northern powerhouse is the biggest one, but that covers the north-west, Yorkshire and Humber, and the north-east. That is £600 million. The smallest ones are at the £100 million end. Through those regional funds and the other finance that gets there, including start-up loans, which was mentioned on the debt side, every year the funds that flow into those regions are generating economic activity with those funds at the rate of £100 million at least in every nation and region. That is significant. It is not going to solve the problem completely, but it is helping.
Sarah Edwards
No, definitely. If I was an entrepreneur, whether I am in the regions or down south, how would I know to engage with these funds? What are the mechanisms of doing that? How do you get that word out, and who do you work with? One thing, for example, that the Committee is quite interested in is the emerging development of devolution and mayoral authorities. A lot of constituencies—around 40%—currently are not covered by one. The obvious thing is to work directly with some of the strategic teams in a mayoral authority. At the moment, that does not cover the whole of the UK. We are keen to understand how it is that an organisation such as the British Business Bank is getting that information disseminated down to entrepreneurs, wherever they might be.
Matt Adey
There is a certain amount of information about this on our website, so people can look if they go out there, but obviously not everyone gets to our website. We have a local growth team. It is a small number, but there are one or two people in each of the nations and regions plugging themselves into those local ecosystems and drawing attention to what we can do. Their job is to connect those clusters.
Sarah Edwards
They connect in with local authorities, chambers and things like that, which are, in theory, the obvious places. You have tried to make sure that they are plugged into it.
Matt Adey
Then you are linking them back into the British Business Bank products and how you can make use of those schemes.
Alison Griffiths
I was really struck by what you were saying. In the era of AI, where I think most of us currently would probably go and ask—pick your own AI tool—for advice, are you getting an increase in people coming to you who have used AI to find you? Maybe there is even the challenge where they are using AI to fill out all the forms. Maybe that is a good thing or maybe that is a bad thing. I would be interested if you could comment on that. I was also really struck by your comment about three hours being a bit too far to travel from London. I started my career as a credit analyst for a global multinational, and so the credit exposure that I was working on was often significantly larger than much of the debt that you would presumably be putting out. It would not have crossed my mind to not go and see an organisation, if I had concerns about it or wanted to understand more, just because it was three hours out of London. You can get from London to Newcastle in three hours on a train. It is really not hard. I am questioning what the mindset is in the London investment community that that seems a bit too hard. Let us start with AI and then you can tell me why I am completely wrong.
Matt Adey
I think that AI will have an impact on that. We are looking at ways that we can use AI in the bank to reach out to people who want to engage with us, and it is early days for that.
Alison Griffiths
Are you seeing an uptick in applications coming in off the back of it?
Matt Adey
In most cases, the applications go into our delivery partners that we put funding to. We invest in venture capital so we see that. On that desire to be close to the businesses they are investing in, there is a little bit of analysis that was done a few years ago. If we look back over 10 years, where is the investor and where is the business that has been invested in? Sixty per cent of the time, the travel time was less than an hour. Eighty per cent of the time, it was less than two hours. You could see that cluster of activity. If you were near, say, Edinburgh in Scotland or Manchester, you could see that being closer. If you are in London, that is further away.
Alison Griffiths
It is accepting the issue and therefore having to respond to the issue.
Matt Adey
Yes, you need that in-person touch before you make a venture capital investment. Some funds are becoming more regional. I am sure many will be looking to open offices in Manchester at the moment, for example.
Chris Bloore
Can I come back on that? That is a remarkable statistic. It takes me longer than two hours to get back to my constituency, where Gymshark was founded. That is probably a bit of a concern. We are never going to achieve growth in every postcode or in our towns and across our country unless something changes on that. Wow. That is a bit of a blow. You probably heard in the previous panel that we are not getting it right on female entrepreneurs and finance for ethnic minority entrepreneurs. You are an all-male panel, as we have this conversation. I know that that is not you guys’ fault, but what are we getting wrong? Why are we apparently not getting the finance to the equally ambitious, talented and driven women and ethnic minority-led businesses in the country to help us avoid that opportunity loss that we seem to be losing. I think £75 billion is what we said in the previous panel. That is pretty terrifying. I could spend that £75 billion if I could.
Michael Moore
This is a really serious problem that vexes our industry specifically. You heard in the last panel that really damning statistic of 2% of funding going into all-female-led investment teams. We have worked with Level 20, which operates across private equity and venture capital, primarily private equity, on tracking where the investment teams are. It is a slightly different bit of the lens, but it goes to a point that was made earlier. If we have a group of white men who are in the main decision-making seats, it is hard to change that culture. The position we have got to in the industry, which is not anything to boast about really, is 27% of investment professionals being women the last time we did the survey, which was at the beginning of 2025. We are due to complete a survey at the beginning of the new calendar year. About half that number would be in the investment committees, which are where all the key decisions are taken. A slightly smaller percentage—15% or so—are in senior investment positions. That is a big challenge. You then step aside from that and look at where there is been a lot of effort. You have already heard about some of the initiatives that the BBB is doing. The Invest in Women Taskforce a couple of years ago set itself the target of not just trying to address some of the cultural points and long-standing legacy issues, which, as we can see, will take a bit more time to fix as people progress through careers, but also saying, “Where is the capital for female-led teams and female founders?” That initiative has led to BGF, BBB and others getting involved. There are efforts being made to address it, but I do not think there is a single fix. It is going to take a lot more. If I might, without cheating, Chair, pull it back slightly, this is in the context of, to add to what Chris said earlier on, somewhere under a billion going into VCTs every year. Last year, there was £8 billion invested by VC in the UK. That is a subset of the overall £25 billion that was invested across the whole country in private equity and VC-backed businesses. There have been year-on-year variations, but that is growing. To pick up one of the themes from the first panel, the entrepreneurship is growing. I was struck by the increase in the monitor figure that was shared today. Also, we can see that in around different parts of the country. As a final cheat, I will link into the previous question about what happens beyond the UK. I work here in London, but I live just south of Edinburgh, so I can relate to the four-hour trip from Berwick on a good day. Culturally, it matters that the BBB and investors are out there. Ms Bance was at an event we had in Birmingham just a couple of weeks ago. Our industry is certainly seeing lots of opportunity beyond London in the nations and regions. We want to encourage more of that. We are really taken by how stakeholders, whether they are parliamentarians or the different councils, the mayors and so on, are really engaging on this. That is very encouraging. Equally, the mindset has to work both ways. Here in London, we have one of the most globally significant financial centres on the planet. It is No.2 in the latest Global Financial Centres Index and consistently there. The push-pull needs to work for us to get people here, as well as going north or south-west from here as appropriate.
Chris Bloore
I agree with much of what you just said, but it is an internal problem that we have. This is not about an external challenge that we are facing about those coming here and leaving. It almost sounds like, from your answer about those who are in the room making the decisions, those people have not caught up with the times. We are missing out on billions of potential revenue from female-led and ethnic minority-led companies, because our internal process as a country and the way in which venture capital is working in this country is not up with the times. What was really interesting, and I would perhaps have expected you to have mentioned, was what the previous panel mentioned about the potential lack of expertise in the types of businesses that these people are setting up and how we are not in a position to fully understand their potential scale-up and profitability. I understand the question about who is coming to this country and money, but this is an internal problem. This is a cultural problem between us.
Michael Moore
Forgive me—I in no way wished to suggest it was anything other than a thing in the UK that we ought to fix.
Chris Bloore
How do we change it?
Michael Moore
We have the largest hub of private capital expertise anywhere in the world outside the United States. We have a great starting point and that is giving us great competitive advantage. I was at an event in Cambridge last week, where there were 500 people trying to stuff themselves into the Guildhall for the new exciting opportunities that are there. I could see around the room that there were a lot of female academics, ethnic minority academics and others who are right at the forefront of all this. We have some cultural challenges that we as an industry need to be really aware of. We need to make sure that we are not putting barriers in the way of people who wish to invest. The Invest in Women Taskforce—I hope I do not misquote that and I will correct it if I get it wrong—identified right at the outset that, if women were provided with the same opportunities in finance as male-led investment teams, we could get another £250 billion into the UK.
Chair
That is now £313 billion.
Chris Bloore
That was part of the Rose review and everything. That was five or six years ago and we still have not made significant progress.
Michael Moore
May I suggest that you cannot do this by fiat or legislation? The pressure—you are exerting it and I respect that fact—on the industry and the decision makers within it has to continue. The opportunities arise all over the country. To pick up the point I nearly missed there, about whether we are missing out on opportunities, there is no question that we are. Whether it is university spin-outs that could then become unicorns and create great wealth for huge parts of the UK or smaller businesses in neighbourhoods that you all represent, we have to do better.
Chris Bloore
Other countries legislate, and we heard an example of it in the previous panel. Canada specifically has legislated to support women and indigenous-led businesses in its country. I take your point, but Canada shows an example of where Government can lead the way and push venture capital along the way.
Michael Moore
I take that point. You are the decision makers on that, not me. The BBB, with its pathway programme and other initiatives, is absolutely directing the capital there. We have to make sure that the demand and the opportunity is understood and then fulfilled.
Antonia Bance
We have had quite a good run around on some of the issues about regional disparities in access to finance, so I want to move on slightly, though this is very important to my region of the west midlands, among others. The Prime Minister has set out a really clear ambition to reindustrialise this country. I would appreciate hearing from the panel in turn about the efforts they are making to ensure that finance reaches the manufacturing and hard tech materials and production businesses that we all hope will start up and scale in this country.
Matt Adey
The nations and regions funds, which I mentioned earlier, are not the typical London-based venture capital type of fund. We are on the second round of the midlands engine investment fund now. That has a debt element to it; it has an equity element to it, but it is focused on the strengths of the regions that those funds are in. It is not doing quite the same as a high-tech VC fund in London. It is active in a way that is suitable for the region it is in. We have those funds in every region. We are trying to get that and looking at what we can do across the industrial strategy sector priorities as well. We are bringing that dimension into our activities as well. The west midlands covers a wide number of those industrial strategy priority sectors.
Antonia Bance
It covers all of them.
Matt Adey
It covers all of them, as you say, but it is not just the high-tech ones. It is the others as well and we are very aware of that.
Antonia Bance
Do you think the British Business Bank is doing enough? You are operationally independent, but the steer could hardly be less strong from the Prime Minister around the need to reindustrialise. Do you feel you have adequately taken that into how you do your operations?
Matt Adey
We have done very significant activity. I am not saying that there is not more that we could do in the future, but we are a British Business Bank. We are not just a London-based VC funder.
Michael Moore
What is wonderful about the UK is the diversity of its economy. You very kindly joined us at the investment forum in Birmingham a couple of weeks ago. The conversations we had over the course of that afternoon had more manufacturing focus and reindustrialising as a theme than perhaps we would get in other parts of the country. If we are to emerge from this really dramatic moment in time, where we have a tech revolution coming at us full steam ahead that is going to give us great opportunities to create these businesses of the future and whole new bits of the economy that we do not even imagine yet, while also disrupting and requiring us to transform the existing businesses, we need to get the capital, entrepreneurs and ideas all in the right place on that. That will be in different forms. For west midlands manufacturing to continue for the next 20 or 30 years, it needs to be able to adopt AI and other technologies. There is no shortage of appetite to be part of that from our industry. In other parts of the country, whether it is the OxCam corridor or wherever else, there may be more of a life sciences focus. Sometimes that is about the services that go with that and sometimes it is about the labs and the pharmaceuticals that may come from it. Personally I am a big supporter of industrial strategies, because it lets us understand how policymakers are thinking and gives really important signals to investors. We can see—it is quite exciting—that reindustrialisation as a way of galvanising people works. My only caveat would be to say that I do not think we should be looking to recreate the 1970s or 1980s industrial economy, because the world has moved on. We should be aiming to retain and develop all the modern industries here in the UK.
Chris Lewis
I am going to take the opportunity to answer that and touch on a number of points we heard earlier. On reindustrialisation and manufacturing, it was good news in the last Budget that the Chancellor increased the investment limits that VCTs can make into heavy manufacturing businesses. That increased the gross assets test by 100%, which means it is easier to keep investing into heavy manufacturing or heavy plant and machinery type businesses. That was a win, so we are pleased with that. In terms of reindustrialisation, there is the arrival of financial services and AI across all the regions. Just last month there were two in Manchester. There was one exit, which was an AI company sold to a Nasdaq company. There was a record series B round for a UK payments business. They all had a Manchester postcode, so that is great. Trying to reach growth in every postcode is a fantastic goal but difficult to achieve on a checklist basis. VCTs have been investing across all the regions of the UK for a long time. In the last maybe five to 10 years, we have seen what used to be a heavy balance towards London and the south-east—maybe 75/25 to the regions—change. A couple of years ago, that reached parity. We are broadly at 50/50, which is a good thing. As part of that, we also reach, as a result, a larger proportion of ethnic minority and female entrepreneurs. There are always some sector imbalances. We do a lot of retail and some fashion brands, so naturally at Pembroke we have more female founders. The latest one is a company called With Nothing Underneath. It is a shirts company. You may know it, but that is one of many. The data of about 2% representation is not something that I see, in the world that I live in, in the day-to-day. We are closer to a third of female representation across the board, whether it is at founder level, at board level of the VCTs or in investment teams. Across all the staff in our business it is more like 50/50. This is something that we have been working on very hard. The key bit for us in terms of making even better progress is what is called the age limit restriction on some of the investments that we can make. Currently, the rules say that, if a business is between seven and 10 years old, it no longer qualifies for the VCT or EIS investment offering. That is a shame because we know that businesses in the regions—we have stats on this—take up to 40% or two years longer to reach maturity for VCT investment. As soon as they get to the seven-year mark, all of a sudden, they are told, “I’m sorry: you don’t meet the rules so we can’t invest in you”, which is a shame.
Dan Aldridge
Interest in entrepreneurship among young people is high, but few make the transition. We know that access to entrepreneurial finance is at its lowest level since 2021. Women are more likely than men to rely on close family funding. We know that this entrepreneurship is heavily dependent on family resources. What are you doing and what can we be doing to make sure that a young person’s financial background is not a barrier to them starting a business?
Matt Adey
The first panel covered some of this in terms of being exposed to that education around entrepreneurship and so on. It helps people get into that start-up place. If we reach out, we can have an impact. Our start-up loans have been mentioned already. Forty per cent of those loans go to females. About 20% of businesses are female run, but our start-up loans are 40% female. It is the same with ethnic minorities; we are getting that in. We are also looking at that from disadvantaged areas.
Dan Aldridge
What is your strategy around young people in terms of engaging with young entrepreneurs?
Matt Adey
You mentioned earlier the way in which information is accessed and the younger people do that, so using AI and finding those opportunities. The old website does not do it for them. You need to engage with them in a different way.
Dan Aldridge
It sounds like there is a bit of work to be done on youth engagement.
Matt Adey
There is definitely some work to be done there. That will be the case for a lot of finance providers. It is not the easiest way to get in.
Michael Moore
Formally, the industry does not run programmes or the like. When you look at the way in which venture capital firms look to find potential businesses in which to invest, they have to be, and are, ever present at or near university campuses. They are engaging with young people there. There are places such as CodeBase in Edinburgh and a lot of similar initiatives around the country where young entrepreneurs are getting help with the earliest forms of funding beyond what their families have helped them with. They will, hopefully, be put in the pipeline. In our jargon, we call it the ticket size. You are writing quite big cheques, so it is not going to be the earliest start-up person there. We are certainly engaged in all the ecosystems and networks around universities and other places where people get involved in entrepreneurialism. In London, famously it is in the east end. There is no lack of appetite on that.
Dan Aldridge
Entrepreneurship exists across all 650 constituencies, and many of us do not have universities. There is a real issue with accessing that. We have a fantastic college, but we know that very little engagement happens with the college. I wonder whether that is part of something that you would be looking at.
Michael Moore
It can be done. I am trying not to break myself into jail here and cause a problem. Typically, our industry will be investing in a later stage than that early-stage entrepreneur. In terms of making sure that we are part of the conversations, whether it is in Bristol, Glasgow or Leeds, we are—
Dan Aldridge
Or a town.
Michael Moore
I live in Melrose in the south of Scotland. We are 50 miles from Edinburgh. I will put my hand up and say that there is not a single venture capitalist anywhere near me in the area for young people. Equally, we are keen, and it is possible, to make the connections through the local cities. That tends to be where the agglomeration is, where the ideas can come together and where that really rich network of entrepreneurs and those with the capital can come together.
Alison Griffiths
I am about to talk about high streets, and I particularly wanted to ask you, Michael Moore, about that. You mentioned Melrose. It was taking me back to the Melrose Cup and the very beautiful high streets of Melrose that I was fortunate enough to visit. You have just described a picture of the types of businesses that you invest in. I am really curious about whether, directly or indirectly, your members are investing in organisations and businesses that would reach the high street, so small businesses and high street businesses.
Michael Moore
It is a different part of investment from where we are at. The private equity part of our industry had, over the years, high-profile investments in chains of high street or retail businesses, but we are not involved at the high street level individually business by business. The British Business Bank, through its debt facilities, is more likely to be in that space.
Chair
Matt, is there anything you want to add to that?
Matt Adey
That is a very helpful answer. There is one thing I would very quickly add to that, and that is the value of community development financial institutions—CDFIs. Many of them are very local. They are a type of investor institution that we are increasingly engaging with to reach those local areas. For example, there is one in north Coventry.
Chair
Let us dig into one of the problems we are quite interested in.
Mr Reynolds
Matt, we know that private investors and funds own a significant amount of the high street properties around the country. Constituents may think that the local authority owns every shop and decides which retailer goes into it. That is not the case across the country. What incentives do you think investors and institutions need to be able to give the flexibility in leases and fit-out costs to allow those micro-SMEs to get into our high streets more?
Matt Adey
I suspect that a lot of that is done more through private equity in terms of buying up those retail outlets. You see that there are some planning issues around that and allocations, but it is not an area that I am particularly familiar with.
Mr Reynolds
Planning issues would not necessarily stop who goes into a retail unit. We know that investors and institutions would probably rather a large multinational in a unit because they can secure a 10-year or longer lease with a smaller rent-free period than a small SME, which does not have the history, the background or all that resource. We do not need planning to change something like that. We need to put resource and incentives in place to encourage institutions and investors to accept those sorts of tenants. What do you think we as politicians or the Government can do to encourage?
Matt Adey
That is probably out of my area of expertise.
Mr Reynolds
Is there anyone who might have some thoughts on that area?
Chris Lewis
I have a thought, but, similarly, it is a bit outside of our main focus. With some experience, the first hurdle for a landlord is the credit risk of the tenant coming in. I do not know whether it is through central Government or the BBB, but there could be some sort of collateral or loan guarantee, or lease guarantee in effect, whereby an authority or a body could back up a first-time tenant looking to open that shop without the credit rating that a big megacorp might have.
Chair
That is useful. We will move on to the Budget question.
Sarah Edwards
As we are very short on time, in one sentence what would you like tomorrow? Make it big and bold, please. Matt, what would you like from the British Business Bank?
Chair
You have already had quite a good weekend, Matt.
Matt Adey
I am glad you said that. It is difficult for me to say more than that in the situation. We will find out tomorrow.
Sarah Edwards
It is a wish list. Think big.
Matt Adey
You have heard about the range of activities that we are doing. We would like to do more of them.
Michael Moore
The BBB is one of the most significant cornerstone investors in any one of the funds that we would have, from early-stage venture capital funds all the way through. We applaud this briefing that happened over the weekend that suggests that there will be a big increase in the facility. That has to be good. We would add two quick things on to the back of that. We would like the Government to continue to focus on pension reform and on the fact that we saw last week the statistics that only 0.85% of the default scheme assets from DC pension schemes are put into unlisted equities, of which we are a large subset. The target set out in the Mansion House compact was, and remains, 5%. They have got to 0.85% after three years. We think it will take an extra 10 years after 2030 at this rate. That goes to the domestic capital funding and domestic entrepreneurs. We need more of that.
Chair
Let us spell this out. The briefing you put out at the end of last week said that, at the current pace, it is going to take us until 2040 before we get the target level of investment in unlisted investments in the UK. It is going much too slowly.
Michael Moore
You can think back to the ambition that the then-Chancellor, Jeremy Hunt, put, along with the City of London corporation mayor, Nick Lyons, and the previous Chancellor, Rachel Reeves, and a later Lord Mayor expanded with the accord to look at infrastructure and real estate. If we look back to that original stuff, for the UK start-ups that should become tomorrow’s scale-ups and the next generation’s great businesses for the UK, 16 times as much international pension capital is funding the UK compared to UK pension capital funds.
Chair
The Mansion House reforms have stalled, have they not?
Michael Moore
I am trying to be generous. We work very closely with them. It is clearly not fast enough. The idea that, instead of it taking five or six years to get to the target, it might take 15 or 20, is obviously not good. We will continue to work with the pensions industry on that.
Chair
What does the Chancellor need to do to speed this up?
Michael Moore
We have seen reform in the sense of the Pension Schemes Act in the last parliamentary Session. That is leading to a lot of consolidation. There is pressure in the conversations that we all have to speed up that consolidation, making sure that there is the expertise available to actually get that investment delivered and that, in terms of people being told about their DC pensions for the future, they can see the diversification of returns they will get from spreading a bit of that into these businesses that are in their own backyards. We think that there is a really strong case for saying that these are UK businesses that could go from Birmingham to be world-beaters, but they will not do it without capital.
Chair
That is an issue we are going to return to.
Chris Lewis
VCTs are genuinely, I believe, in the national interest. They fuel growth in every region with patient capital and advice. One reason they were set up is that they democratise access to the venture capital asset class. It is one of those few access points for UK retail investors into venture capital. It brings in a large amount of private investment.
Chair
We are so short of time. We need you to focus on the thing you want the Chancellor to say.
Chris Lewis
First, on the income tax credit cut from 30% to 20%, put it back to 30% as soon as possible. If not, work with us to keep monitoring the impact and act before it is too late. Secondly, increase and relax the age limit rules that prevent us deploying the money that we are trying to raise.
Michael Moore
If I may be greedy, scale up reinvestment relief that allows founders to put some of the capital they have earned from a start-up back into the next generation of businesses. Then we will be firing on all cylinders.
Chair
Thank you so much to our witnesses. That has been an excellent session. You have really helped us get some excellent evidence on the record.