As David Cameron launched his latest defence of his Big Society Programme he cut a distinctly solitary figure standing against a sea of hostility. Yet lost, amidst this debate, is the germ of what can be a very good idea, especially in relation to the Big Society Bank.
This was one of the major developments to come out of the week. With concern mounting about progress, the government sought to add detail with the release of a 63 page strategy document.
The bank, we are told, will be wholesale. It will not make direct investments into front line social enterprises, but will seek to fund services provided by intermediaries. It will be independent and will have freedom to construct its own investment strategies. It will not hand out grants, but will be expected to cover its own costs. It will also benefit from £200million start-up capital from the big banks to complement funds from dormant bank accounts.
We also have more details about the timing. Originally planned to be up and running by April this year, rumours of delay have dogged its development.
The document has moved quickly to calm such fears, promising that ‘aspects of the bank’ will be operational by April, with first funds expected to be released around the middle of this year.
Most of what we’ve seen so far seems reasonably positive and at this stage I’d profess myself mildly in favour of it. For a start we should remember the fact that this is the first such project of its kind. This is a chance for the UK to take a leading global role – and create something that may be mimicked elsewhere.
The independence of the bank is to be welcomed, as is the government’s expressed desire not to distort the market by competing with existing intermediaries.
While some might be frustrated at apparent delays and that details still remain vague in places, I see it as a positive. There is something refreshing about a government that admits, for once, that it does not know everything. So far it appears open to consultation and to learn from those players who are already in place.
Even so, there are still questions that remain unanswered – in particular in relation to the final size of the bank. We’re told it will start with £100million in funds from dormant bank accounts – rising eventually to around £400million. On top of that it will have the £200million from major banks. This will also be ‘at commercial rates’, whatever they mean by that.
In wider investment terms, this seems like pocket change. However, the social enterprise sector is still in its earliest stages of development. Considering around £200million was devoted to social investments in 2010, this new bank will be huge. While this prospect has caused excitement across the social business and enterprise sector, we must be cautious. There is a danger of snuffing out the fire with too big a log. I hope to see the Bank work with the sector that is already there. If it stomps in with the big boots of government, it risks distorting the work that is already underway.
Remember, the social business and enterprise sector was growing long before the Big Society Bank. It’s important that this entity serves to accelerate process already under way. If the bank assumes a dominant position within the sector, risks inflicting more harm than good.
First Published in Third Sector in February 2011.