'Big Society Bank’ will be priority, say Tories

The Conservatives today announced their plans for a social investment wholesale bank with leader David Cameron outlining how this would help social enterprises bid for public service contracts.

As with the current government’s plans it would be funded from dormant bank accounts but it would be renamed the Big Society Bank. Its purpose would be narrowed with a stronger focus on providing funds to intermediary bodies ‘with a track record of supporting and growing social enterprises’.

Speaking at the launch of the Conservatives’ Building a Big Society manifesto, Cameron said social enterprises would need this support once the Conservatives opened up public services to private and third sector providers.

He said: ‘The truth is when you’re paying people by results, it can take time to earn a payment – and this can lock many smaller providers out.

‘So here government has a new role to play. We’re going to bring in a new Big Society Bank so that social enterprises have access to the start-up finance they need to bid for government contracts.’

Cameron said the bank would provide ‘hundreds of millions of pounds of new finance’ through attracting private investment too.

Cameron also outlined plans for the Futurebuilders fund, run by the Social Investment Business, which provides finance and grants to third sector organisations looking to bid for government contracts.

He said he planned to transfer the revenue from Futurebuilders into a programme that would train 5,000 full-time, professional community organisers as well as investing in neighbourhood groups and social enterprises in the most disadvantaged areas of Britain.

The Building a Big Society manifesto states that Futurebuilders ‘has served its purpose. Future provision of debt for the sector must come from the market’.

Shadow third sector minister Nick Hurd added that the Big Society Bank ‘is not just about public services’.

He said: ‘We want to try and create the conditions for social enterprises to help mobilise communities and galvanize more social action.’

The Big Society Bank proposals were welcomed by both the Association of Chief Executives of Voluntary Organisations and the National Council for Voluntary Organisations.

But a spokesperson for the Community Development Finance Association expressed concerns that the bank would not have financial inclusion in its remit.

The CDFA spokesperson said: ‘We hope the bank will also have a broader role in delivering financial inclusion. As a wholesale bank it can ensure that money is invested for social purpose around the country, to support struggling small businesses and people on low incomes, as well as social enterprises.’

Hurd said the Conservatives could not decide on how much money would go to the Big Society Bank from dormant accounts until they knew ‘the final volume of funds’.

However, he added: ‘It will be a priority for us and we expect to be more ambitious than a government that has dithered for three years.’

Last week’s Budget stated that the government would set aside £75m to become a minority investor in a social investment wholesale bank. Many in the sector have criticised the amount as being too small to allow the bank to be innovative. However, both Labour and the Tories expect the bank to attract private investment to complement the dormant bank account funds.

To read Cameron’s speech in full click here.