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Maude raps Labour's 'slow progress' on social investment

Finance | Tania Mason | 16 Sep 2009

Francis Maude MP, shadow minister for the Cabinet Office, has criticised the slow progress of the government's plan for a Social Investment Wholesale Bank (SIWB).

Speaking at yesterday's Social Investment Conference organised by Social Finance, Maude (pictured) said the process for setting up the bank was going at a “leisurely pace”.

“I want to see this go ahead swiftly,” Maude told delegates. “The government consultation which is under way is going at a leisurely pace. It should be happening more quickly.”

The deadline for responses to the government’s consultation on a SIWB ends on 7 October.

Size of unclaimed assets 'not as much as hoped'

Maude also warned that the proposed SIWB should not be another government quango.

“It should be completely independent of government,” he said, “and endowed with proceeds from dormant bank accounts.”

Maude said he had been assured by the Bankers Association that a large chunk of the money was ready to use, but he warned that there was not as much as speculated.

It has been mooted that there is £500m in unclaimed assets available.

Further, Maude said the sector as a whole needed to be more independent of government.

“It will be uncomfortable for those in government,” he said.  “But it is an invaluable part of a vibrant and free society, with the freedom to innovate and find new ways of doing things.”

Maude also said it was essential that civil society organisations that delivered public services for the government recovered all their costs and made a return.

Social investment vital to survive recession

Meanwhile, Sir Ronald Cohen, chairman of the Social Investment Task Force and the Commission on Unclaimed Assets, told delegates that social investment was essential if capitalism was to survive the financial crisis.

“If social investment is not developed,” Cohen said, “it could lead to higher tax as the government tries to redistribute wealth to maintain social cohesion.

“Social market entrepreneurship and deep financial expertise is the direction to follow for sustainable and scalable action to tackle social issues.

“If the government puts its might behind it I am certain that social investment will become an asset class.”

For social investment to be successful, he said, a broad base of incentives for capital needed to flow into the sector.

“To connect this nascent sector with the capital market we need to see if we can use the unclaimed assets to attract capital into social activity. We cannot leave market forces to do it,” he warned.

“We need to create a wholesaler of capital to fund the sector. Most organisations are local and struggle to attract capital.”

Tax incentives 

He added that tax incentives were important to develop the market.

“Community Incentive Tax Relief (CITR) must be expanded and its criteria loosened. I’d also like to see more pressure on banks to operate in poorer areas.”

The CITR scheme encourages investment in disadvantaged communities by giving tax relief to investors who back businesses and other enterprises in such areas by investing in accredited Community Development Finance Institutions (CDFIs).

Further, Cohen said that foundations which hold £60bn in charitable endowments could use them as investable assets into a social investment market.

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