Sector given three months to shape social investment wholesale bank

The sector has been given three months to figure out what the government's proposed social investment wholesale bank should look like, it was announced today.

At the launch of a wholesale bank consultation, Office of the Third Sector (OTS) director general Cambell Robb said it was 'good policy work' to find out what the functions of the wholesale bank would be now instead of later.

The wholesale bank would act as an investment house channelling funding into providers of finance to the third sector, like Triodos, Charity Bank or Big Issue Invest.

It was originally proposed during legislation introduced to free money from dormant bank accounts and put it to good use.

That money is yet to be released, but Robb said he would not rule out the possibility of the wholesale bank starting up before the dormant funds become available if other sources of finance were found.

Robb pleaded with people in the sector to respond to the consultation.

He said: 'The potential here is huge in the very long term for the sector and how we do things.'

He also said that he hoped for many responses from the private financial sector.

The consultation includes difficult financial questions such as what the investment bank would do with its money if it could not fund enough initial demand for social investment and how that money might be invested in the short term for liquidity reasons while still retaining its social mission.

The consultation is asking for responses to 18 key questions, including who should own it and what sort of regulation, reporting and accountability should take place.

Robb said he expected significant agreement from those responding to the consultation on what the wholesale bank's role should be around raising capital for social investment.

However, he anticipated discussion around its possible role as a 'champion of social investment' and how far that role might extend - which could include political campaigning.

He also expected discussion around the proposal that the institution could offer advisory services like investment readiness and asset management.

The government has proposed that it be set up as an independent institution separate from Whitehall and that its investments be defined by the nature of the social and environmental outcome and not the legal structure of the organisation it is investing in. This would allow it to invest in as wide a range of institutions as possible.

It also suggests that the bank should seek to report transparently against a triple bottom line of social, environmental and financial value. The consultation would aim to reveal what the principles of this reporting would be and how this could be achieved.

Third sector minister Angela Smith tabled the consultation in parliament this morning. She said: 'There is huge public appetite for social responsibility, especially in areas like finance.'

The consultation document is available at www.cabinetoffice.gov.uk/third_sector