Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment he has made of the compatibility of the recent loan given to Versarien PLC by Innovate UK with (a) Innovate UK's guidelines (b) the eligibility criteria for businesses to receive funds from Innovate UK and (c) the Government's guidance on Managing public money.

Graphene has the capability to become one of the sectors that will power our economic growth – and Versarien is at a crucial phase in its development as it strives to become one of the UK’s leading players in the production of graphene. Materials such a graphene can also provide a valuable contribution towards the Government’s Net Zero targets and has the potential to contribute significantly to a number of national infrastructure projects. Versarien’s G-SCALE project, which this loan will fund, will allow the firm to carry out later stage R&D to enable it to supply the market with commercial quantities of graphene-enhanced materials.

Similar to many companies, Versarien seeks investment from a number of sources, including private funding. Innovate UK has a good understanding of Versarien’s business and has previously awarded the company several grants to support its development. Innovate’s loan scheme was set up to broaden the range of innovation finance support available to businesses, so they can access funding at all stages of innovation.

In order to be eligible, a business needs to show that it can afford the interest and repayments on the loan and that they cannot obtain finance from other sources such as banks and equity investors for a particular project. It is on this basis the loan was made.

Indeed, this loan was made on Innovate’s usual terms, that is an interest rate of 7.4% per annum with half of the interest deferred until the repayment period commences. Loan repayments will start 45 months after drawdown and be paid over a subsequent period of 36 months.

The loan award was made after Innovate UK’s rigorous process of innovation assessment and credit evaluation – the same level of scrutiny and assessment that accompanies any loan award that Innovate UK makes.

The assessment process for awarding the loan was compatible with the key principles set out in the guidance on Managing Public Money.