Northern Powerhouse Investment Fund Interim Evaluation Report

SQW, supported by the Centre for Enterprise and Economic Development Research (CEEDR) at Middlesex University, Belmana and BMG Research, has been commissioned by the British Business Bank (the Bank) to evaluate the Investment Funds across the Northern Powerhouse, Midlands Engine, and Cornwall and Isles of Scilly. This report covers the interim evaluation of the Northern Powerhouse Investment Fund (NPIF) which took place between April 2021 and November 2021. The emphasis in this phase is on net outcomes and impacts, and an overall assessment of performance and value for money. This evaluation report builds on the early assessment of NPIF, which was completed between November 2018 and March 2019.

Key Findings:

• £281m of NPIF finance had been deployed by June 2021, slightly ahead of target. This had supported 913 SMEs across all ten Northern Local Enterprise Partnership areas involved in the programme.
• The evaluation has confirmed the need for a programme of this nature, particularly to address the gap in equity finance in the North and challenges for SMEs in accessing microfinance.
• The programme has delivered finance to SMEs in the North that – for the large majority - would not otherwise have been accessed at all, would have been smaller in scale or taken longer to secure. In doing so, NPIF has helped to tackle the original market failures it was designed to address, increasing the quantum and diversity of finance available in the North.
• Overall levels of SME satisfaction with the programme were high. Wider, non-financial support provided by the locally-based Fund Managers was highly valued by SMEs, alongside finance.
• NPIF has supported SMEs to invest in strengthening the underpinning drivers of productivity, through improvements to skills, efficiency and innovation. It has also supported their survival, resilience and competitiveness.
• NPIF has raised SMEs’ awareness, confidence and ability to secure private finance in future, and has already provided a bridge to follow-on finance for many SMEs as a result.
• These outcomes are leading to quantitative impacts on employment (including high value jobs), turnover, productivity and profitability (and for equity recipients, company valuations) across the majority of firms supported, although impacts on exports are weaker.
• The programme is delivering impacts above and beyond what would have been observed in the absence of NPIF. Robust econometric analysis using a matched control group demonstrates impacts from NPIF funding on employment and turnover. Using these econometric estimates alongside other inputs suggests that, by the end of 2021/22, the net additional GVA generated by NPIF is estimated at £77 million, with a Benefit Cost Ratio of 4.2.