Today the Government has launched a consultation into the
design and functions of a Social Investment Wholesale Bank,
but noting it is not a bank just for the Third Sector or
giving an indication of how it will be financed.
The consultation was announced in the Chancellor’s
2009 budget and will last 12 weeks. It sets out that was
is being launched is not a Third Sector Investment Bank,
some in the sector would want, but a Social Investment Bank
with the "third sector at its heart."
If positive, this consultation could result in a new breed
of financial institution – a bank with the primary
purpose of investing in society, the environment and the
On this vision of the bank, Campbell Robb, director general
at the Office of the Third Sector in the Cabinet Office,
said: "It will be a financial institution which would
work in the interest of society as a whole and harness the
power of finance for the common good."
Originally it was proposed that a Social Investment Wholesale
Bank could be funded predominantly by unclaimed assets lying
in dormant bank accounts, but this is no longer the focus.
The Government did however note it was looking forward to
seeing the banks make progress on releasing these resources
for reinvestment over the coming months.
The Government also noted that today’s consultation
is not about identifying the financial resources but more
about how the bank would work.
Though this brought criticism from Stuart Etherington,
CEO of NCVO. He said: “The Government’s consultation
into the design and functions for a Social Investment Wholesale
Bank is an important step forward.
"However it is also important that discussions start
around how the bank will be financed, to make sure it is
properly capitalised. A properly designed and funded Social
Investment Bank will provide a range of funding options
for existing social investment retailers. This will have
far reaching positive outcomes for community cohesion and
Campbell Robb admitted that from a financial perspective
it could take some time for the Social Investment Bank to
get going, as the market for social investment is fragile
"This could take a long time, it could be five, ten
or even 15 years before we get to a critical mass,"
The consultation will present a range of possible functions
for the bank, such as attracting money from other investors,
and helping raise funds for existing social investors.
It could be designed to be independent of government, regularly
reporting its social, financial and environmental impact,
and working with other investors wherever possible.
Robb said: "The potential functions, but I am not
saying it will do all these things, are: raising capital,
with a range of potential products and investors; a champion
for social investment, such as research, awareness, market
analysis; investing and providing capital to existing and
new social investors through debt, grants, guarantees or
underwriting; market making, by creating platforms and mechanisms
to link buyers and sellers and advisory services."
Angela Smith, minister for the Third Sector, Cabinet Office,
will formally launch the consultation at a launch event
this evening, attended by leaders from the third sector,
the world of social finance and experts from across the
Smith said: “There is a huge public appetite for
social responsibility, especially in areas like finance,
and that’s why I am absolutely delighted to launch
this consultation on the Social Investment ‘Wholesale’
“The launch of this consultation is an exciting step
on the road towards a Social Investment Wholesale Bank.
I look forward to hearing evidence and views on how this
bank would work with and for our third sector to ensure
that charities, voluntary groups, social enterprises, co-operatives
and mutuals grow stronger and are in a better financial
position to lead the way in building Britain’s future.”
Stephen Timms, financial secretary to the Treasury, added
however, that a strong and growing third sector needed a
resilient and sustainable source of finance. "Earlier
this year, we announced a £42.5m economic action plan
to support the third sector through the downturn. But we
also understand the importance of investing in the long-term
future of the sector.
“This consultation represents an important opportunity
to explore the concept of a Social Investment Wholesale
Bank, and the role it could play in developing and adding
value to the social investment market in a sustainable way.
"Such an institution could help deliver the Government's
commitment to supporting fair markets and to building the
financial sustainability in the third sector that will allow
it to grow and thrive.”