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Merlin conjures up £200m for Big Society Bank

9 February 2011
banks

The Big Society Bank will get £200m from the UK's big banks

The much-vaunted Project Merlin talks between the government and the UK’s biggest banks have resulted in an extra £200m for the Big Society Bank.

This £200m is to be supplied to the yet to be launched bank over two years and will be in addition to the money banks are supposed to hand over from dormant bank accounts – which is estimated at anywhere between £60m-£100m.

Sir Stephen Bubb, CEO of chief executives’ network Acevo, said the announcement ‘breathes life back’ to the Big Society.

‘This is good news. It breathes life back in to the Big Society project,’ said Bubb.

However on social network website Twitter, Urban Forum CEO Toby Blume criticised the fact that the additional £200m is to be provided on a commercial basis and will earn the banks a return, instead of being provided as a founding grant as with the dormant bank accounts.

‘It’s hardly a grand gesture,’ tweeted Blume.

The £200m is touted by the treasury as part of £1.2bn package to support ‘regional growth and the Big Society’.

However, the £1bn promised for regional growth, even though the money is supposed to be aligned to the objectives of the Regional Growth Fund, will only be used to increase the size of the previously announced Business Growth Fund – an equity fund targeted at businesses with a turnover of £10-100m.

More relevant for the multitude of SMEs in the social enterprise sector is the announcement that Barclays, HSBC, Lloyds, RBS and Santander have agreed to increase the amount of money lent to SMEs by 15 per cent in 2011 up from £66bn in 2010 to £76bn.

Initially the government had hoped to launch the Big Society Bank, then called the Social Investment Wholesaler, with £200m. The amount of money estimated to be available from dormant bank accounts was revised after banks started to hoard cash as a result of the financial crisis.

The Bank Agreement
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