'Social investment bank could start with just £40m'

Interim low-cost bank would be viable until unclaimed assets available, says OTS official

A new social investment bank to provide finance for not-for-profit organisations could be set up with as little as £40m, according to the Office of the Third Sector.

Most campaigners for such a bank have argued that it would need £250m or more, relying on unclaimed assets from banks and building societies. But an OTS official told Third Sector that it could be some time before unclaimed assets were available and that a smaller bank could be set up in the meantime.

"If there was an opportunity to get, say, £40m of public funds, you could go ahead," said the official.

"It could act as a wholesaler, supporting existing funds and joining up the market."

The Dormant Bank and Building Society Accounts Act 2008 enables money from accounts that are inactive for 15 years to be transferred to social purposes.

The Government has decided that the first calls on such assets will be youth projects and financial capability - helping people to understand the importance of money. A social investment bank would have third call.

Kevin Brennan, Minister for the Third Sector, confirmed that the Government was exploring the potential for a "social investment wholesaler" in a letter to Stephen Bubb, head of chief executives body Acevo.

The six-page letter said that Acevo's recent wish list of measures to help the sector (20 November, page 1) would require at least £865m on top of the £515m committed to the sector in the 2007 Third Sector Review.

"I would encourage the management of realistic expectations," wrote Brennan. The Government would require "clear evidence" before acting on the call for £500m of emergency cash flow support made by Acevo, he added.

But he said the action plan promised to help charities and voluntary organisations through the recession would include measures to facilitate public service delivery by the third sector.

The Treasury was also looking again at charitable remainder trusts, he said, which would allow people to donate assets to charity but continue to profit from them during their lifetimes. An informal working group on the subject met in October and is due to meet again in January.

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