The Big Society Bank (BSB) is a bank planned by the UK Government to help finance projects under the banner of the Big Society. Launched by Prime Minister David Cameron in July 2010 the BSB is expected to begin operations in Q3 2011.[1][2] Minister for Cabinet Office Francis Maude claims that the BSB will be instrumental in creating new financial products such as social impact bonds and said that "it will be easier for social enterprises to fund themselves so they have cash flow".[3] Its initial capital is to be provided from money from dormant UK Bank Accounts, and a further £200M from UK banks. The government also plans to encourage some of the £95bn of charitable assets to be invested in the bank.[4]
The Bank’s mission will "be to catalyse the growth of a sustainable social investment market, making it easier for social ventures to access the finance and advice they need – at all stages of their development.".[5] It will be independent from Government and will act as a wholesaler, not investing directly in projects but "will invest in products developed by intermediaries and encourage others to do likewise"[5]
The principle of the Big Society Bank has met with criticism from diverse groups including banks and charities. Giving evidence to the Public Administration Select Committee, Thomas Hughes-Hallett, chief executive of the Marie Curie Cancer Care said: "it is potentially setting up a system to encourage vulnerable charities to borrow money."[6] In January 2011 Banco Santander who have major retail banking interests in the UK, withdrew from Project Merlin negotiations with the Government and is expected not to make any direct payments to the BSB.[7]
The FT suggests that it is "a tiny acorn from which it is far from certain that a giant oak will grow. But there are some very exciting ideas ...which could help society and government tackle issues that have always struggled to obtain funding in the past"[8]
Management Today says that "There’s nothing wrong with the idea, or the model, or even the pot. But this plan still seems to lack some hard-headed commercial nous"[9] [i.e., business understanding or experience].