The UK Government has said that it may step in with further measures if investment levels in female-founded businesses continue to stagnate, following a report by the Women and Equalities Committee (WEC) that highlighted ongoing barriers to finance for women entrepreneurs.
In its formal response to the Committee’s findings, Ministers said they would not rule out interventions in the future if the level of venture capital investment in female entrepreneurs shows no sign of improvement. The statement follows concerns raised by MPs that only a very small share of venture capital funding currently reaches women-led businesses, despite years of reviews, pledges and policy initiatives.
The WEC report on female entrepreneurship, published in October ahead of the Budget, described access to finance as a central challenge. MPs warned that the situation was deteriorating rather than improving, with progress failing to keep pace with commitments made by government and industry.
While the Committee stopped short of backing mandatory gender quotas on venture capital investment committees at this stage, it argued that measures aimed at improving transparency and creating incentives to change behaviour in the sector should be allowed time to take effect. However, the Government rejected recommendations in both of these areas, citing concerns around complexity and regulatory burden, arguments that were questioned during the inquiry.
MPs also criticised the absence of targeted support for women-led firms in wider economic planning. The Committee said it was “deeply disappointing” that neither the Government’s Industrial Strategy nor its SME Strategy included specific measures for female entrepreneurs.
As part of its recommendations, the WEC called on the Government to produce and publish a comprehensive strategy to advance female entrepreneurship within 12 months. The proposed strategy would aim to unlock untapped economic growth and be overseen by a dedicated Minister and office within the Department for Business and Trade. MPs said this body should have a clear budget, responsibility for delivery, and a remit to improve accountability and transparency through better data collection.
In its response, the Government rejected the idea of appointing a single Minister or creating a standalone strategy. Instead, it argued that responsibility for supporting women-led businesses should sit across government.
“This Government is proud that several Ministers, including the Chancellor, are strong champions for women-led businesses.”
“We believe this collective commitment is stronger than appointing a singular Minister and creating a separate strategy, as women-led businesses should be embedded in everyone’s agenda and their interests should be integrated into mainstream policies rather than being seen as distinct from the wider economy….”
The response said support for women entrepreneurs was central to the Government’s economic plans, pointing to existing programmes and partnerships with industry.
“Backing women and other overlooked entrepreneurs is at the heart of the Government’s economic strategy. Our greatest successes have come from an action-based approach to supporting women-led businesses through collaboration with industry leaders, including through the £635 million funding pot raised by the Invest in Women Taskforce, the largest such fund in the world.”
“We will continue to work across departments, with the British Business Bank, and industry in our mission to unlock the untapped potential of overlooked entrepreneurs. This includes aligning the Industrial Strategy, SME Strategy, and future policies to ensure that women business leaders are fully recognised and supported.”
The Government also highlighted further funding being directed to the Invest in Women Taskforce and to British Business Bank initiatives. These include the Angel Syndicate Programme, which seeks to increase participation by women and other underrepresented groups in angel investing, alongside the £400 million Investor Pathways Capital scheme and a £100 million commitment aimed at female fund managers.
Additional initiatives cited include measures from Innovate UK, such as increased funding for its Women in Innovation Awards, efforts to reduce barriers for female founders accessing grants, and steps to improve diversity within its assessor pool.
The Women and Equalities Committee said it expects to take further evidence on progress in the coming months.
Commenting on the Government’s response, Sarah Owen, Chair of the Women and Equalities Committee and Labour MP, said:
“Measures to address gender inequality in business have failed to shift the dial on investment or growth. It is right that the Government is not ruling out future interventions if the level of venture capital investment in female entrepreneurs shows no sign of improvement.”
“The Committee’s report outlined concerning evidence that female entrepreneurs face significant disadvantages in accessing finance, networks and support due to systemic bias, a lack of diversity among investment decision-makers and entrenched cultural norms.”
“While the Government’s response details some welcome efforts to make progress in key areas, it is disappointing that measures to drive behavioural change in venture capital, such as improved transparency and accountability and the use of tax incentives, have been rejected.”
“As the report recommended, a national, joined-up strategy is needed to drive the systemic change that is required. We will continue to hold the Government to account on its support for female entrepreneurs and progress in unlocking the estimated £250 billion of vital economic growth that equitable support for female entrepreneurs could deliver.”
