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DTI simply robbing Peter to pay Paul

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The government has hit back at criticism that its proposed £50 million Enterprise Fund will only yield around £6 million for venture capital investment in hi-tech start-up companies. In a report in today's Financial Times, the newspaper said only £6 million would be available for venture capital investment in the hi-tech sector unless spending on an existing small company finance scheme is cut. But a spokesman for the DTI said the figure quoted in the FT was a "little on the low side" and added that it wasn't the government's place to spend taxpayers' money on venture capital investment. Instead, he believed the measures sent out strong signals to the venture capital community affirming the government's position that the UK's future prosperity lies in hi-tech innovation. But a spokesman for the British Venture Capital Association reasserted the view of its chairman, Clive Sherling, who said that any government-backed fund providing between £5 million and £10 million would have "no impact" on the level of investment in the sector. The criticism comes in the wake of the government's Competitiveness White Paper which was unveiled last week by the secretary of state Peter Mandelson. Critics have pointed out that there is no new money available and that DTI has simply juggled its £1.3 billion a year budget to divert funds away from traditional manufacturing towards more hi-tech initiatives. ®

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