Committee publication · Correspondence · 20 January 2026
Letter from Ministers for Investment and for Small Business and Economic Transformation relating to the evidence session on 9 December on financing the real economy, 14 January 2026
From: Business and Trade Committee
Inquiry: Financing the real economy
Summary
Ministers for Investment and Small Business respond to the Business and Trade Committee's December evidence session on financing the real economy, providing detailed data on SME funding gaps, pension reform impacts, retail investment reforms, and the financial capacity of the British Business Bank (£25.6bn) and National Wealth Fund (£27.8bn) over the spending review period.
Key findings
- British Business Bank estimates annual SME debt finance gap at £1.6–£3.5 billion (2023 data), equivalent to 2.7%–5.9% of gross bank lending, affecting 20,000–50,000 businesses; startup gap estimated at £8.2bn annually for 380,000 businesses.
- Pension Schemes Bill will significantly accelerate consolidation of Local Government Pension Scheme and workplace defined contribution schemes, requiring minimum £25bn asset scale for default arrangements.
- Government introducing 'targeted support' regulatory regime—biggest financial advice reform in over a decade—to enable firms to provide investment recommendations to consumer groups ahead of ISA season.
- UK Listing Relief applied only to newly-listed companies; stamp duty relief does not extend to foreign securities due to enforcement complexity. Government continues evaluating stamp taxes to support world-leading markets.
- BBB's total financial capacity increased to £25.6bn (£17.5bn loans/equity, £8.0bn guarantees); NWF has £27.8bn capital (£17.8bn loans/equity, £10.0bn guarantees). Assets classified as financial transactions and do not impact net financial debt measure under PSNFL framework.
Tone
FactualTopics
Key actors
Lord Jason Stockwood, Minister for Investment, Blair McDougall, Minister for Small Business and Economic Transformation, Liam Byrne, Chair of Business and Trade Committee, British Business Bank, Financial Conduct Authority, National Wealth Fund, London Stock Exchange, BP
Notable line
“… business finance is a multi-faceted issue which can lead to misunderstandings when the parties to a conversation have different aspects in mind.”
Key Quotes
“… business finance is a multi-faceted issue which can lead to misunderstandings when the parties to a conversation have different aspects in mind.”
“BBB 's latest internal analysis estimates an annual debt finance gap for SMEs between £1.6 billion and £3.5 billion, based on 2023 data.”
“The Accord is a commitment from 17 of the largest UK pension providers to invest 10% of their default funds in private markets by 2030, with at least half of that in the UK.”
“Targeted support will enable authorised firms to provide more support with investments and pensions, making recommendations that are designed for groups of consumers with similar characteristics and circumstances.”
“The loans and equity assets that the BBB and the NWF invest in via their financial capacity are financial assets.”
Source · parliament.uk record ↗