Chancellor outlines next step for social investment bank

Government commits to setting up Reclaim Fund to hold assets from dormant bank accounts in pre-Budget report. David Ainsworth reports

Whitehall
Whitehall

For a full round-up of how the pre-Budget report affects charities, see our special report.

The Government will finalise a structure for a social investment wholesale bank by the next Budget and will commit up to £75m to the project from money reclaimed from dormant bank accounts, Chancellor Alistair Darling announced in today's pre-Budget report.

A Reclaim Fund will be set up to hold assets from dormant bank accounts under the management of The Co-operative Financial Services, the Chancellor announced.

The CFS will apply to the Financial Services Authority for the green light to establish the fund.

The Reclaim Fund will be set up to return dormant assets to their legitimate owners and transfer the remainder of the money to good causes, including the SIWB.

Most of the money will go to youth services, and £100m, or at least 25 per cent, will go to financial inclusion services. The SIWB will be funded with whatever is left.

The Government promised the bank would act as a lender to support community development finance institutions and credit unions, that it would operate as a wholesaler rather than as a retail supplier of funds, and that it would be independent from government.

Sector figures said they were pleased that the Government had made some commitment to the bank, but more was needed.

"This is a useful first step," said Stuart Etherington, chief executive of the NCVO. "We are pleased that the bank will be set up as a wholesaler and that it will be independent of government."

He said the Government's decision to use money from dormant bank accounts was important, but that other ways of capitalising the bank also needed to be found.

Stephen Bubb, chief executive of Acevo, said the pre-Budget report marked an important step.

"The bank will be key to more third sector organisations having the capacity to deliver services effectively," he said.

Toby Eccles, development director of Social Finance, which helped to develop the proposal for an SIWB, said it was good to see progress, but more detail was needed.

"Several things were encouraging," he said. "Their decision that it would be independent is good news. The announcement of a funding figure was good.

"But we need more information before we understand exactly what this means."

 

 

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