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Publicly funded small business scheme under review

The government has set up a review to examine whether a publicly backed venture capital fund is needed to help small, high growth firms with their financing.

The proposed scheme would be a modern-day version of the Industrial and Commercial Finance Corporation which was created in the aftermath of the Second World War.

The Corporation eventually became the private equity company, 3i.

The review is one of the first outcomes of the government’s New Industry, New Jobs strategic plan for the recovery of the UK economy.

The plan centres on preparing businesses for the upturn, in particular those enterprises that are high growth and best placed to seize the opportunities of a new, global economy.

As part of its remit, the review will consider if any direct government intervention is needed to make sure that SMEs have sufficient money to take advantage of the recovery.

Lord Mandelson, the Business Secretary, said: “We have taken action to help businesses access short term finance to survive the global downturn, and to build our economic future.

“This review will identify if there is a role for government in facilitating public and private investment to address gaps in the market. Our priority will be to ensure that high-growth businesses, which will be very important for the economy, are able to secure the capital they need.”

The review is due to submit its recommendations in the autumn.