The Big Society Bank has been in the news again this month. Much of this attention focuses on concern that the government is taking longer than expected to get the bank up and running ready for launch. Original plans aimed to have it ready for April. However, the latest we hear now is a quote from Oliver Letwin saying it would start in the ‘not too far distant future’.
A more intriguing issue, though, comes from the on going Merlin talks between Barclays, HSBC, Lloyds and RBS, aimed at securing concessions over pay, taxes and a lending commitment for small businesses. Part of this agreement could include a collective injection of £1bn into the Big Society Bank.
The principal aim of these talks seems to be an attempt to refresh the sector’s image. The banks hope that by making a number of positive sounding commitments, they can reduce the ill feeling coming their way both from within government and around the country. A pledge to support the social enterprise sector through a high profile capital injection to the flagship Big Society Bank would seem to be an excellent start.
The social enterprise sector may instinctively welcome such a move. However, we have to seriously ask ourselves, would this move provide long lasting benefit to social enterprise – or would it be a simple short term panacea to help everyone feel a little better?
On the one hand it would undoubtedly provide extra funding for the bank, which would be welcomed. However, in the slightly longer term taking these funds now could work to the detriment of the sector.
I would wholeheartedly welcome participation in social enterprise from the banks, but it would be far preferable if they engaged in this sector on their own terms. I would ideally like to see the banks investing in social enterprises as part of their mainstream activities. If that were the case investments would be backed by commercial acumen and free from any political strings.
As it stands the deal does little more than offer the banks a way to feel a little better about themselves without achieving anything tangible. There is a real danger that they may simply view any allocation of funds as representing a penance paid. They have done their bit, they would say, and simply walk away. There would be little planning or oversight to ensure funds were directed in the most effective way.
It is important that the banks engage in the social enterprise sector in a proactive manner – not simply because they believe they should. If they did, they would realise the benefits of engaging in what is one of the most vibrant and upwardly mobile sectors in the economy.
One can understand why there would be immense political will in securing participation from the banks in the Big Society. However, while it might offer everyone a distinctly fuzzy glow it may prove to be an opportunity missed.
First Published in Third Sector in March 2011.