Banks will be compelled to publish regular updates on how much they invest in businesses run by women as part of a series of new measures to help female entrepreneurs, in a victory for The Telegraph’s Women Mean Business campaign.
The Treasury on Friday launches its Investing in Women Code, which will force financial institutions that sign up to commit to distributing funding with gender balance in mind.
Lloyds, RBS and UK Finance, the banking trade body, have already committed to the code, which will require annual updates on progress.
The gender funding gap – the difference in capital raised by women when starting a business compared with men – means there are one million fewer women entrepreneurs in the UK than there could be, according to a Treasury-commissioned report published on Friday.
It says that if the gap continues, it will cost the economy £250 billion over the next decade.
Robert Jenrick, the Treasury minister who commissioned Alison Rose, an RBS executive, to carry out the review, said its findings “confirmed my worst fears” and has called on banks to “raise their game”.
“The statistics are shocking,” Mr Jenrick said. “The British economy is clearly not enabling as many women to become entrepreneurs as we should do.”
Mr Jenrick said The Telegraph’s campaign, launched one year ago, had been “instrumental in highlighting this important issue. It has brought together businesswomen from across the UK to raise the profile of the funding gap. It was very helpful to our efforts at the Treasury to help push this issue forward.”
Commenting on the Rose review, Theresa May said its findings showed there was “much further to go” for the UK to make it easier for women to start businesses.
“Alison and her team set out an ambitious path to break this glass ceiling so that we can realise the full potential of female entrepreneurs and boost economic growth,” the Prime Minister said.
“I am committed to real change in this area, starting with our action to encourage more companies to look at the gender split of who they choose to invest in.”
As well as the Investing in Women Code, seven other measures to help female entrepreneurs will be announced by ministers in response to the findings of the Rose review.
They include new banking products that will be designed for female entrepreneurs with childcare costs, offering greater flexibility such as payment holidays.
A new digital hub for entrepreneurs will be created to boost access to information and local businesses mentors will be sent to schools to inspire teenage girls.
Banks and investment funds will also be urged to encourage their high net worth clients to invest in female-run businesses.
While subscribing to the Investing in Women Code will be voluntary, the Treasury has not ruled out toughening its approach if firms do not comply.
A government source said banks that did not sign up and adhere to the code would be publicly named, which would be seen as a penalty in itself.
The source added that the Government would work with the industry to reduce the gender funding gap, but would take a tougher approach if insufficient progress was being made.
Penny Mordaunt, the Women and Equalities Minister, praised The Telegraph’s campaign for “calling out venture capital investors for not funding female start-ups”.
Maria Miller, chairman of the Women and Equalities Committee, said the campaign had “shone an important light on to this cadre of women who are already delivering real value to our economy and has highlighted how many difficult and unnecessary barriers remain that prevent women turning their business dream into a reality”.
She called for the Government to consider adopting an American-style approach, putting in place legislation to ensure there was a level playing field for women.
Mr Jenrick also highlighted that women were “as successful” as men when they did manage to get over the hurdles of raising funds.
Meanwhile, The Telegraph can disclose that there has been progress in the number of women on boards. There are now just three companies in the FTSE 350 index with all-male boards, analysis found.