The funding model for the government's innovation agency Innovate UK, which supports businesses to grow through grants and mentoring, is set to change and it faces being amalgamated with Research UK.
In addition, the government has announced support for challenger banks through a new bank startup unit and extension to the Funding for Lending scheme.
By 2020, £165m of Innovate UK grants will be changed to loans and 'other financial products' by 2019 to 2020. It's done this after looking at 'best practice' in France, Finland and The Netherlands.
The government will also look to integrate Innovate UK into Research UK, to strengthen collaboration between the research base and the commercialisation of discoveries in the business community.
However it added Innovate UK would keep its clear business focus and separate funding stream.
Innovate UK says it's not yet fleshed out how the changes will be realised in practice but its chief executive Iain Grey told BusinessZone the body welcomes the Chancellor's commitment to 'boosting UK business and productivity with his support for our successful Catapult network'.
'As identified in our 5 Point Plan we will be evolving our funding products aimed at new and growing enterprises.Innovate UK will have to focus its work within a new operational funding framework. We are currently developing detailed plans that will reflect the new scale and scope of our operations. We look forward to sharing these plans with our stakeholders when they are more developed,' he said.
The reason behind the extension, the government says, is to 'minimise risks to the economic recovery from the withdrawal of funding support'.
It adds that the Funding for Lending Scheme has contributed to a 'substantial' fall in bank funding costs since its launch in 2012.
This unit will have a dedicated website, and will help new banks through the early days of authorisation.
The government added that HM Treasury has set up a new High Level Advisory Group that will regularly provide the government with views on banking competition.
Speaking of the changes, the Chancellor said: 'While Britain is host to some of the largest and most successful banks on the planet, the government has been consistently clear it wants to see a more vibrant and competitive banking sector with new banks and more innovation, benefiting working people and businesses.
'That is why we've introduced an extensive range of measures to support challenger banks. From putting competition at the heart of the regulatory system to significantly reducing barriers to new banks entering the market, we are making sure that Britain has a level playing field,' he said.
In addition, the government has announced support for challenger banks through a new bank startup unit and extension to the Funding for Lending scheme.
By 2020, £165m of Innovate UK grants will be changed to loans and 'other financial products' by 2019 to 2020. It's done this after looking at 'best practice' in France, Finland and The Netherlands.
The government will also look to integrate Innovate UK into Research UK, to strengthen collaboration between the research base and the commercialisation of discoveries in the business community.
However it added Innovate UK would keep its clear business focus and separate funding stream.
Innovate UK says it's not yet fleshed out how the changes will be realised in practice but its chief executive Iain Grey told BusinessZone the body welcomes the Chancellor's commitment to 'boosting UK business and productivity with his support for our successful Catapult network'.
'As identified in our 5 Point Plan we will be evolving our funding products aimed at new and growing enterprises.Innovate UK will have to focus its work within a new operational funding framework. We are currently developing detailed plans that will reflect the new scale and scope of our operations. We look forward to sharing these plans with our stakeholders when they are more developed,' he said.
Funding for Lending scheme extended
Meanwhile, the government also announced its Funding for Lending scheme will be extended for yet another year. It was due to end in January 2016.The reason behind the extension, the government says, is to 'minimise risks to the economic recovery from the withdrawal of funding support'.
It adds that the Funding for Lending Scheme has contributed to a 'substantial' fall in bank funding costs since its launch in 2012.
New Bank Start-up Unit launches
The government has also announced this week that the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) will launch the New Bank Start-up Unit on 20 January 2016 to help challenger banks set up.This unit will have a dedicated website, and will help new banks through the early days of authorisation.
The government added that HM Treasury has set up a new High Level Advisory Group that will regularly provide the government with views on banking competition.
Speaking of the changes, the Chancellor said: 'While Britain is host to some of the largest and most successful banks on the planet, the government has been consistently clear it wants to see a more vibrant and competitive banking sector with new banks and more innovation, benefiting working people and businesses.
'That is why we've introduced an extensive range of measures to support challenger banks. From putting competition at the heart of the regulatory system to significantly reducing barriers to new banks entering the market, we are making sure that Britain has a level playing field,' he said.
