The money will be supplied by the government from what they are pleased to call "dormant accounts" and four very reluctant high street banks: HSBC, Barclays Capital, Royal Bank of Scotland and Lloyds Bank Group. They are insisting that money should be loaned on commercial terms (i.e. not handed out to anyone who comes up with what looks like a bright idea of social investment). On top of that, there is the problem that the Commission might call using "dormant accounts" state funding and that particular problem has not been cleared yet. Also, people might turn up and claim said accounts.
The combination of the lack of state aid clearance and the banks’ conditions on their support means that Big Society Capital as yet has no money in the bank, Nick O’Donohoe, its chief executive, said.Disadvantaged, in this case, means those who have committed criminal offences.
But it has approved in principle its first investment of £1m through the Big Lottery Fund, which is holding proceeds from the dormant assets until clearances are received from the European Commission and Financial Services Authority.
The investment will go to the Private Equity Foundation to develop social impact bonds to get disadvantaged young people into work.
Social Enterprise gives a warmer welcome to this idea and lists all the Board members but mentions the same problems with the European Commission and the FSA.
Although neither state aid approval from the European Commission or regulatory approval from the FSA has been finalised – both of which are needed before Big Society Capital can get its hands on the money – Minister for the Cabinet Office Francis Maude, who hosted this week’s announcement at 70 Whitehall, said he was confident that both were proceeding without the prospect of a problem.Of course, it is possible that a better education system, more training and a less tax and regulation encumbered economy would be a better idea in the long term. But would that provide quite so many jobs and positions for people who are already in the system?
Sir Ronald Cohen, the renowned venture capital and social investment pioneer, has agreed to serve as the unpaid, interim chair of Big Society Capital Limited until it is fully operational and its board has conducted a search for a more permanent chair.