British tech firms face a “serious risk” over the collapse of the UK arm of Silicon Valley Bank, the chancellor has warned, but said the government was “working at pace” to limit the damage.

Speaking to Sky News’ Sophy Ridge On Sunday programme, Jeremy Hunt said the government and the Bank of England were “absolutely determined” to do everything they could to help support the critical businesses.

He said he had been in talks over the weekend with Prime Minister Rishi Sunak and BoE governor Andrew Bailey to find a solution.

But Labour has argued the government need to offer more than “warm words” to companies affected

Jeremy Hunt wants to get parents back to work – Politics latest

The central bank announced on Friday that Silicon Valley Bank UK was set to enter insolvency, following action taken by its parent company in the US.

It was first reported by Sky News City editor Mark Kleinman

Warning of ‘existential threat’ to UK tech sector after failure of Silicon Valley Bank in the US

Silicon Valley Bank UK trouble won’t affect other British banks, according to finance ministry

NatWest chief gets huge bonus as bank reveals profits surged

While Silicon Valley Bank (SVB) has a limited presence in the UK and does not perform functions critical to the financial system, it has been warned its collapse could have a significant impact on tech start-ups.

Mr Hunt said: “The Bank of England has made it very clear there is no systemic risk to our financial system, so people should be reassured on that basis.

“But there is a serious risk to our technology and life sciences sectors.

“It happens to look after the money of some of our most promising and exciting businesses.

“I want to reassure people, I’ve been in discussions over the weekend until late last night with the prime Minister, the governor of the Bank of England, many other people.

“We are working at pace on a solution we will bring forward very soon plans to make sure people are able to meet their cashflow requirements, pay their staff.

“But obviously what we want to do is to find a longer term solution that minimises or even avoids completely losses to some of our most promising companies.”

He added: “The prime minister and I and the governor of the Bank of England are absolutely determined to do everything we can to protect these very, very important companies.

“We will come forward with a solution that helps those very, very important companies with things like payroll and their cash flow requirements, but we also want to put in place a longer-term solution so that their futures are secure.”

Asked if that could mean stepping in with taxpayers’ money, he said he did not “want to go into what the solution is”.

But Labour’s shadow chancellor Rachel Reeves told Ridge: “I am slightly concerned about the urgency that you heard from the chancellor there because when markets open tomorrow morning, a lot of businesses in the UK are not going to be clear about how they can pay the wages of their staff and whether their deposits with Silicon Valley Bank and their financing arrangements are still in place.

“So, I would urge the government to do more than offer warm words, but come forward with specific plans.”

Tory former chancellor Lord Hammond said: “It’s not going to affect many individuals in the UK because not many people bank with Silicon Valley Bank, but it is going to affect the very important fintech sector in our economy, where there’s a huge concentration around Silicon Valley Bank UK.

“There’s a lot of small early stage businesses that are quite important to this economy, quite important to keeping our financial services sector at the cutting edge, who will be very, very nervous today.

“This is a very important dynamic sector and we don’t want to see it suffer a massive own goal here.”

Dom Hallas of the Coalition for a Digital Economy (COADEC) said: “It is clear this could have a significant impact on the UK’s tech start-up ecosystem.”

SVBUK said it will be put into insolvency from Sunday evening.

It is a subsidiary of Silicon Valley Bank (SVB) and was the first location it opened outside the US.

The insolvency announcement came after SVB was put under US government control on Friday afternoon in the biggest failure of a US bank since the 2008 financial crisis.

The BoE said the company will stop making payments and accepting deposits.

The move will allow depositors to be paid up to £85,000 from the deposit insurance scheme.

Related posts:

Financier claimed to be ‘senior adviser’ to David Cameron, business card handed to Labour shows UK to send 1,000 more ventilators to India as it battles surge in COVID cases Queen says ‘reconciliation’ in Northern Ireland ‘cannot be taken for granted’ The PM cut a diminished figure, surrounded by colleagues and seemingly almost completely alone Golden visa scheme used by Russian oligarchs to live in UK will be closed as soon as this week Government ‘destroying lives’ by ignoring review recommendations on vaginal mesh From fuel prices to energy bills: What to expect from the chancellor’s spring statement Chancellor has far less cash to satisfy expectations he himself has set unsustainably high PM calls Russian attack on railway station ‘unconscionable’ as Germany raises concerns over war crimes Northern Ireland Protocol talks ‘kind of stuck’ as PM heads to Belfast Starmer would work with France to stop people smugglers initiating Channel crossings Strikes will cause ‘disruption and delays’ over Christmas but govt approach is ‘sensible’