Midlands Engine investment funds delayed six months
A £250 million investment fund promised as part of the Midlands Engine programme is still tied up in paperwork, while its £400m Northern Powerhouse rival is already being distributed to SME companies.
The Midlands Engine Investment Fund was announced by former Chancellor George Osborne in his March 2016 Budget, aimed at boosting the region’s economy and supporting the growth ambitions of its 780,000 smaller businesses.
The fund, a joint agreement between the British Business Bank and 11 Local Enterprise Partnerships (LEPs) in the East & South East and West Midlands, is expected to bring together legacy funding from existing programmes, new funding from the British Business Bank and new European funding.
It was due to come into effect in February or March this year, but delays mean that it won't now be launched until the end of this month. And that will only involve access to 60 per cent of the funds.
In the meantime, the Northern Powerhouse was launched in February providing funds ranging from so-called microfinance of £25,000 to equity finance up to £2m.
A spokesman for the British Business Bank said the fund was made up of four lots. Two, an £80m equity funding pot and £20 million for proof of concept and early stage funds, were going through "another procurement action to make sure the process is as robust as possible".
The other two delayed lots are around £120 million of debt financing and £30 million of small business loans.
After a delay of almost six months, however, the process of distributing the funds should be able to start by the end of this month, although that will only involve 60 per cent of the total.
Johnathan Dudley, managing partner at accountancy firm Crowe Clark Whitehill's Midlands office in Oldbury, said: "I don't know what the problem is but obviously it is disappointing because this sort of funding is desperately needed, particularly for SMEs in the Black Country and the wider West Midlands.
Mr Dudley, who works with small and medium-sized companies in the area and also leads the firm;s Manufacturing Business group, added: "When the equivalent fund for the Northern Powerhouse is already being distributed, it is particularly disappointing."