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UK venture capitalists question government's approach to entrepreneurship

UK venture capitalists are unimpressed by the government's efforts to put the promotion of entrepreneurship at the heart of economic policy. A new survey finds only 25 per cent of private equity investors think the government is 'effectively encouraging' entrepreneurship and only 17 per cent think it is good at promoting a dynamic business environment.

The survey also found some deep-seated concern among VCs about the levels of UK public borrowing, which they feel is undermining their ability to raise new funds. Some 78 per cent of respondents said they thought the public sector deficit was too large and less than half - 43 per cent - said the fundraising climate had been favourable over the last three months.

John Mackie, chief executive of the BVCA, said, 'While we welcome the Chancellor of the Exchequer's emphasis on entrepreneurship in his pre-budget report, we will keep reiterating our concerns that increasing levels of public borrowing should not undermine confidence in the economy or lead to any further increases in interest rates.

'As a result we will continue to call the Chancellor to rule out any further increases in business taxation or any new imposition of regulation on business,' he said.

The government has employed a wide range of initiatives since coming to power in 1997 to boost entrepreneurship. It has addressed supply-side issues such the shortages of capital with tax breaks and its own regionally-targeted funds. And it has aimed at demand-side obstacles such as bureaucratic burdens on small businesses with efforts to cut regulation.

The response from the business community, however, has been mixed. Lobby groups continue to complain about red tape and the tax burden.

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