Share

Banking sector to profit from £200m Big Society Bank contribution

Banking sector to profit from £200m Big Society Bank contribution
News

Banking sector to profit from £200m Big Society Bank contribution

Finance | Vibeka Mair | 10 Feb 2011

The £200m pledged to the Big Society Bank by the UK's high street banks as part of Project Merlin will be provided on a normal commercial lending basis, meaning the banks will earn a profit on it.

The terms of the pledge are outlined in a document from the Treasury - the relevant part is in paragraph 4.7 on page 5.

Prime Minister David Cameron announced the banks' funding commitment in Parliament yesterday, along with promises to increase their lending from £179bn to £190bn to businesses this year, with almost all of this increase (£10bn) to be made available to small and medium enterprises.

The news has been warmly welcomed by the sector, with NCVO, Acevo, CFDG and Social Investment Business all expressing support.

But Toby Blume, chief executive of community charity Urban Forum, has criticised the banking sector for making a profit on the Big Society Bank money.

Blume argues that the funding is “no grand gesture”, noting that as the funding is over a two-year period on a commercial basis, it is no different to banks' normal lending to the charity and social enterprise sector:

“The £200m is being lent on a commercial basis. So banks will make a profit,” he told Civil Society. “Why is this news? How does it differ to their normal lending to the voluntary sector? It is merely a bolt on their commitment to make finance available to SMEs.”

Blume said if the banks truly “understood the public need”, they would lend on an interest-free basis.

“On their own the figure pledged look quite good,” he said, “but it’s less than 1 per cent of the profit which banks make.”

John Low, chief executive of the Charities Aid Foundation, said more needed to be done to explain how £200m of wholesale finance on a commercial basis would help the voluntary sector:

"“Social investment is set to play an increasingly important role as part of a diverse funding landscape for the voluntary sector, but it is a very new market and it is still being developed," he said. "It is unclear whether the financial needs of many civil society organisations will be met through social investment on purely commercial terms.  It is important not to raise false expectations and present the Big Society Bank as a financial panacea for the charity sector.  Loans must be repaid!”

The £200m funding for the Big Society Bank is in addition to between £300m and £400m of funding expected to be received from dormant accounts.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Macmillan: We did not hijack #icebucketchallenge

21 Aug 2014

Macmillan has hit back against accusations on social media that it has hijacked #icebucketchallenge, saying...

Smart wristbands aim to increase charity giving

20 Aug 2014

A new wristband that will enable people to make faster donations with just a tap of a smartphone, is...

Pallotta plans three-day march in US to scale up Charity Defense Council

19 Aug 2014

Dan Pallotta, the US fundraiser and charity sector activist, is organising a three-day march in the States...

Jersey charity pilots free healthcare programme for the poor

21 Aug 2014

A Jersey charity launched a free and subsidised healthcare programme yesterday for people on low incomes....

Awema charity boss claims he paid back £100,000 and denies dishonesty

21 Aug 2014

A former charity boss accused of fraud said he paid back more than £100,000, and denies any wrongdoing,...

Big Society Network parent charity applies to wind itself up

20 Aug 2014

Society Network Foundation, the charitable parent of Big Society Network, has applied to Companies House...

Macmillan: We did not hijack #icebucketchallenge

21 Aug 2014

Macmillan has hit back against accusations on social media that it has hijacked #icebucketchallenge, saying...

Smart wristbands aim to increase charity giving

20 Aug 2014

A new wristband that will enable people to make faster donations with just a tap of a smartphone, is...

National Trust to develop new website in £2m digital upgrade

15 Aug 2014

The National Trust has budgeted £2m to update its digital services, including a new website and mobile...

Join the discussion

 Twitter button

@CSFinance