The Government should plough any profits it makes from the sale of troubled bank assets into the development of social finance, according to a former minister
James Plaskitt, once a minister in the Department for Work and Pensions, made the remarks at the launch of an action plan aimed at helping community finance organisations beat the recession.
"It now looks like we may make some profit from selling the assets of the banks we were forced to acquire," he said. "If we do, the first thing we should do is invest it in the social investment sector."
Plaskitt's proposal was backed by former Home Secretary David Blunkett, also attending the meeting. "This is a good idea," Blunkett said. "We preach a good story in the UK about providing microfinance in other countries, but it's important to provide that sort of community finance in our own country."
The action plan, launched by umbrella body the Community Development Finance Association, calls for a £200m long-term investment fund to help community development finance institutions grow because they face unprecedented demand for their services.
It also seeks a community reinvestment act, similar to US legislation that requires banks to channel a portion of their lending into poor neighbourhoods through CDFIs.