Chancellor John Healey is set to announce a £150m northern scale-up fund to back university spin-outs and fast-growing start-ups across Liverpool, Manchester, Leeds, Sheffield and Newcastle, with the money drawn from the British Business Bank‘s existing budget. The move forms part of the government’s broader push to use devolution as the engine for economic growth across England’s regions.
Healey is due to set out the plans in a speech at a leading British manufacturing site, framing the fund as an exercise in supply-side economics rather than sentiment. ‘I want to get behind the most innovative and fast-growing firms,’ he is expected to say. ‘This is not sentimentality, it’s supply side economics.’
Healey northern scale-up fund: what the money is for
The £150m is intended to catalyse private investment into northern businesses rather than replace it. Healey is expected to describe backing ‘city regions with real power, supported by a stronger state, creating local industrial strategies and using public investment to unlock private investment, to support our innovation economy, and to create the new jobs their areas need.’
The fund sits within a wider argument the Chancellor is making about what he calls ‘good growth.’ He plans to say: ‘Ask an economist what growth is and you’ll get a number. But ask the country and you’ll get a different answer. A young person getting a new job in a company that’s on the up. A sole trader winning a new contract that pays for a holiday with their kids. A business winning a new export order, giving the community around it a new lease of life.’
Treasury officials said Prime Minister Andy Burnham believes he has set out a ‘clear diagnosis’ of the problems facing the UK, blaming neoliberalism, de-industrialisation and austerity for ‘decades of low growth.’ Healey’s announcement is designed to provide economic backing to Burnham’s devolution drive, which Burnham says will deliver ‘growth in every postcode.’
No10 North and the push for a ‘stronger state’
Healey will also set out how the newly-formed No10 North fits into his economic plans. He says it will operate as part of a ‘dual mission’ with the Treasury to ‘drive growth and productivity.’ The Chancellor will call for ‘a strong, strategic centre wired to enable local leaders and their ambitions,’ arguing that complexity and red tape are obstacles to wealth creation rather than safeguards against it.
The announcement comes roughly a month before Healey is due to deliver his first Budget as Chancellor, with business leaders pressing him to ease employment costs, reform business rates and lower energy bills for firms.
Northern Gritstone: the existing model the fund could build on
The British Business Bank already has a foothold in the northern university spin-out market. According to Growth Platform, the bank has invested £40m in Northern Gritstone to date, a fund launched in July 2021 by the Universities of Leeds, Manchester and Sheffield to commercialise research from those institutions.
Northern Gritstone reached a final close of £312m, anchored by investments from local authority pension funds, according to the Northern Financial Review. The vehicle has already announced investments in 15 companies across advanced materials, health technology and artificial intelligence, with those deals contributing nearly £100m in funding to the region. The new £150m northern scale-up fund represents a fresh injection of capital on top of that existing infrastructure, though Healey’s office has not drawn an explicit link between the two vehicles.
Conservative response: ‘policy-light word salad’
The Conservatives were quick to dismiss the announcement. Shadow chancellor Andrew Griffith said the Chancellor’s speech trail amounted to a ‘policy-light word salad’ and would ‘do little to comfort hard-working families and businesses across the country who are worried about more tax rises or the fact that government borrowing rates are near a 28-year high.’
Griffith also questioned the absence of defence commitments in Healey’s remarks, pointing to what he described as threats from Russia and Iran ‘on our doorstep, as well as threats to the Falkland Islands,’ and noting that the Chancellor ‘seemingly does not want to mention our Armed Forces or how we will reach 3 per cent of GDP on defence.’
The full detail of the Healey northern scale-up fund is expected to be confirmed when the Chancellor delivers his speech at the manufacturing site later today, ahead of the Budget next month.
