Louis Taylor is caught between two eras. The chief executive of the British Business Bank (BBB) has spent much of his tenure attempting to revive the state-owned lender’s image after a battering from the fraud-hit pandemic loan scheme under the last government, and will soon have to defend its actions at theCovid inquiry.
But until then, he can focus on the BBB’sgleefully landed fresh £10bn mandate linked tothe centrepiece industrial strategy Labour hopes will boost a flagging economyas it nears the end of its first year in power.
As part ofRachel Reeves’s spending review, Taylor pitched to beef up its operations through investment plans aimed at growing startups and British businesses.
“There was a menu of options that we gave to ministers,” Taylor said. “They ordered pretty much the whole menu.”
With its funding capacity increased to £25.6bn from about £15.6bn, Taylor’s team has a souped-up range of investment schemes, mainly aimed at eight key sectors that ministers believe have the highest potential to drive economic growth over the next decade: advanced manufacturing, the creative industries, life sciences, clean energy, defence, digital and tech firms including artificial intelligence, financial and professional services.
The BBB will now expand regional investment programmes aimed at finding promising businesses outside London, hunt for specialist fund managers to deploy its cash, and launch a turbo-charged direct investment programme that will see it take stakes of up to £60m in individual companies.
That could mean taking stakes in suppliers ofsmall modular nuclear reactors, or life sciences startups working on preventive cancer treatments, Taylor said. But the aim is not to compete with private investors, but instead to act as a magnet to draw attention and “crowd-in” cash to underserved businesses.
But other motivations are at play. Direct equity investments could help “anchor future superstar firms in the UK”, according to industrial strategy documents, at a time when more firms are being snapped up by foreign rivals or shifting their listings or headquarters to the US.
“If there’s no UK money in these companies, they tend to gravitate to where their capital came from, and the UK economy loses those companies at the point where they become economically interesting,” Taylor said.
“And so what we’re trying to do is to crowd in UK institutional money as a counterbalance to overseas money … to make sure they stay and grow and thrive in the UK.”
This will mean taking a gamble with taxpayer cash. Taylor says some investments could deliver returns of up to 6% above government borrowing costs, but expects many companies it invests in will ultimately fail.
“There will be quite a large number of companies that don’t make it. But for the money that we lose, we hope to make more from those that really succeed,” he said.
And with the government increasingly pushing the City and regulators to take more risk, this does appear in step with Labour’s current strategy.
But ministers would be wise to call for careful scrutiny given the scars on the organisation, headquartered in Sheffield, from pandemic-era problems.
That includes the £47bn government-guaranteed bounce-back loans scheme, which saved small businesses across the country but alsobecame synonymous with fraud and mismanagement of taxpayer cash.
It also faced fire for allowing now-disgraced lender Greensill Capital into its Covid loan programmes, through which it breached lending caps and handed £400mto embattled metals tycoon Sanjeev Gupta.
This week, the public accounts committee accused the government of being “dangerously flat-footed” in its approach to recovering nearly £2bn in estimated taxpayer losses from the Covid bounce-back loan scheme.
The BBB also managed the former prime minister Rishi Sunak’s Future Fund, which supported startups –including companies linked to his wife, Akshata Murty– during the pandemic.
While these issues pre-date Taylor’s arrival at the BBB in June 2022, they continue to loom large, with its programmes due to be scrutinised by the Covid inquiry later this year. Taylor is expected to strongly defend the BBB’s record.
“I don’t think there’s a need for us to resurrect any reputation,” said Taylor, who has acknowledged having to navigate several“bruising endeavours”during his career in public service and earned £356,400 in 2024.
“We’re building on an already strong reputation. And we’re going to jealously guard that reputation.
“Up to 650,000 businesses and up to 3.4 million jobs were saved.
“And to the extent that there was a cost in terms of credit losses and fraud losses, which are all regrettable, those represent, effectively, a business continuity insurance premium for the whole economy during a real crisis.
“We’re very confident that they [the Covid inquiry] will see that there was value for money.”