Taxpayers face four hundred million pound loss after future fund bailout of start ups

UK taxpayers have suffered a staggering loss of £400 million following the collapse of hundreds of start-ups backed by the government’s pandemic-era Future Fund, an initiative introduced by Rishi Sunak during his tenure as chancellor. Originally launched in May 2020, the Future Fund aimed to inject life into emerging businesses at a time of crisis, yet its impact has left an expensive legacy for the public purse.

The Future Fund invested £1.14 billion across 1,190 companies, some in industries rarely associated with government portfolios, ranging from festival ticket vendors to sex party organisers. Among its beneficiaries were notable names such as event producer Secret Group, ski suit manufacturer Oneskee, and CBD oil maker Oto International. The investment model saw the British Business Bank (BBB), which oversaw the fund, match private investment in fledgling firms with convertible loans ranging from £125,000 to £5 million.

Detailed findings in the Department for Business and Trade’s latest annual report reveal that 334 of the companies receiving aid have since collapsed, eroding the scheme’s value. The fund’s worth dwindled to £609 million as of March, though the BBB clarified it rose to £736 million when incorporating investment income and returns. Nonetheless, this still leaves the taxpayer with a £400 million shortfall since the programme closed to new applications in 2021.

Concerns about the calibre of businesses supported were raised early on, with the BBB’s former chief executive Keith Morgan warning ministers that the fund risked attracting “second-tier” companies unable to secure private backing unaided, making genuine value for money “highly uncertain”. Skepticism grew as it emerged 3.9% of the investments—about 47 firms—were suspected of fraud, representing nearly £80 million at risk.

The Future Fund’s lasting performance remains unclear. The British Business Bank emphasised that due to the size of its investment portfolio and the commercial nature of third-party investors, outcomes may align with broader market trends over time. Despite the scheme’s ambition to protect jobs and innovation during historic economic disruption, taxpayers are now left to bear both the financial and political costs of the government’s calculated gamble.