Wednesday, 15 July 2009

Government takes next step towards launching a Social Investment Wholesale Bank

Today the Government launches a consultation into the design and functions of a Social Investment Wholesale Bank. The consultation was announced in the Chancellor’s 2009 budget and will last 12 weeks.

If positive this consultation could result in a new breed of financial institution – a bank with the primary purpose of investing in society, the environment and the economy. This unique bank would be a world first as it would invest against a triple bottom line of economic growth, social cohesion and sustainable development.

Originally it was proposed that a Social Investment Wholesale Bank could be funded predominantly by unclaimed assets lying in dormant bank accounts. The Government is looking forward to seeing the banks make progress on releasing these resources for reinvestment over the coming months. However, today’s consultation is not about identifying the financial resources but more about how the bank would work.

The consultation will present a range of possible functions for the bank, such as attracting money from other investors, and helping raise funds for existing social investors. It could be designed to be independent of government, regularly reporting its social, financial and environmental impact, and working with other investors wherever possible.

Angela Smith, Minister for the Third Sector, Cabinet Office, will formally launch the consultation at a launch event this evening, attended by leaders from the third sector, the world of social finance and experts from across the finance sector.

Angela Smith, Minister for the Third Sector, Cabinet Office:

“There is a huge public appetite for social responsibility, especially in areas like finance, and that’s why I am absolutely delighted to launch this consultation on the Social Investment ‘Wholesale’ Bank.

“The launch of this consultation is an exciting step on the road towards a Social Investment Wholesale Bank. I look forward to hearing evidence and views on how this bank would work with and for our third sector to ensure that charities, voluntary groups, social enterprises, co-operatives and mutuals grow stronger and are in a better financial position to lead the way in building Britain’s future.”

Stephen Timms, Financial Secretary to the Treasury:

““A strong and growing third sector needs a resilient and sustainable source of finance. Earlier this year, we announced a £42.5m economic action plan to support the third sector through the downturn. But we also understand the importance of investing in the long-term future of the sector.

“This consultation represents an important opportunity to explore the concept of a Social Investment Wholesale Bank, and the role it could play in developing and adding value to the social investment market in a sustainable way. Such an institution could help deliver the Government's commitment to supporting fair markets and to building the financial sustainability in the third sector that will allow it to grow and thrive.”

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