No dogmatic decisions on Big bank is good, say social financiers

A raft of questions remain to be answered about the Big Society Bank say social financiers who attended a meeting with ministers last week – but that’s a good thing.

Key players in the world of social investment were invited to a round table discussion with civil society minister Nick Hurd and David Cameron’s Big Society guru Nat Wei.

All of the sector representatives subsequently spoken to by Social Enterprise say they were happy to hear that no decisions had yet been made on the bank, which is supposed to launch in April next year.

Even the question of whether it will in fact be a bank is open to discussion with Nick Hurd reported by several people as saying the term bank ‘is just a name’.

Nigel Kershaw, CEO of Big Issue Invest, Jonathan Lewis, CEO of The Social Investment Business, Bernie Morgan CEO of the Community Development Finance Association and Rod Schwartz CEO of ClearlySo told Social Enterprise they came away from the meeting convinced that government would listen to the sector in developing the wholesale finance institution, which is supposed to help drive more money towards social financiers, who can then better support civil society organisations.

Both Morgan and Lewis highlighted that there was a lot of work still to be done in creating a clear vision for the bank, with Lewis emphasising that once that vision was defined government should not be too prescriptive as to how it was achieved.

‘We do not want to create a crippled giant – we want this giant to have free use of both its legs so as to have the most transformative impact,’ said Lewis.

Morgan said she would like the bank to have a research and development role installed as part of its remit.

Kershaw said it was ‘totally positive’ that no decisions had been made but highlighted that there were key questions to be answered about how the bank would run and how it would be sustainable. He also said there was ‘a lot of focus’ on ‘social enterprises and financial instruments that provide a government contract-like solution to the crisis’.

‘We shouldn’t forget those social enterprises that live or die in the private market,’ said Kershaw.

Schwartz said he was impressed by the fact the ministers were ‘not dogmatic’ at all in their discussions around the bank. However, he did not think it was right for the bank to try to raise private finance as well as having access to unclaimed assets in bank accounts.

Morgan, by contrast, highlighted that the money available to the institution from the dormant bank accounts, predicted to be £60-£100m when the bank starts, is much less than what had been hoped for and that a significant amount of private investment would need to be raised.

A Cabinet Office spokesperson said that the government did not have projections for how much private investment it is aiming for ‘at this stage’.

Asked if the bank would have a special remit around community empowerment and whether it would be disbanded once the social investment market was more developed – both new ideas brought up by the ministers at the meeting – the spokesperson said: ‘No decisions have yet been taken. We are considering a range of options and will make announcements in due course.’