Fund set to play key role as regional agencies disappear

Sheffield-Based Capital for Enterprise Ltd, a Government-owned fund of funds, could be granted oversight of England's taxpayer-backed venture capital and loan funds, including the £90m Finance Yorkshire programme.

The Department for Business, Innovation and Skills is looking at how to transfer the responsibility of the public stake in the SME finance schemes from the soon-to-be-abolished regional development agencies to central Government control.

A spokeswoman for BIS said: "This is about managing the future oversight of these funds – not actual fund management, which will remain sited in the areas funds have been set up.

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"Capital for Enterprise is working with all RDAs, including Yorkshire Forward, to map the regional landscape of funds, their delivery structures and commitments. It will then develop a transition plan which will provide options about how and when funds are to be managed going forward.

"It will be for ministers to agree these options, which we expect to be submitted by the end of the year. Existing structures of delivery will continue in the meantime."

Finance Yorkshire appointed an acting chief executive and new non-executive director last week.

It is understood the decision was taken to "maintain momentum" while uncertainty continues over how and when the new arrangements are established.

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Both appointments – Alex McWhirter and Simon Hill – are on secondment from Yorkshire Forward, which will pay their wages. They will work with the team at Finance Yorkshire "to achieve an orderly transition into the Government's business support network."

The 90m portfolio fund is backed with 30m from the European Regional Development Fund, 15m from Yorkshire Forward and 45m from the European Investment Bank.

It will provide seedcorn, loan and equity investments to SMEs ranging from 15,000 to 2m.

A Yorkshire Forward official said: "The set-up of the fund will ensure that future returns are recycled for the benefit of SME businesses in the region, providing much-needed finance at a crucial phase in the economic cycle."

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Capital for Enterprise was founded in 2008. It manages a portfolio of taxpayer-supported funds and guarantee schemes, with more than 1.1bn of assets and liabilities under its direct management.

The BIS spokeswoman said: "It will have general oversight, but management of the funds will stay local."