The government is working with the Big Lottery Fund on interim arrangements that will enable the Big Society Bank to make investments as soon as money becomes available from dormant accounts in the summer, even though European Commission approval is still being sought for the funds to be used.
The Bank, which is expected to open in quarter three this year, will be funded by dormant bank accounts, estimated to be around £400m but up to £100m in the first year.
However, the government is yet to secure the approvals needed from the European Commission to capitalise an independent Big Society Bank with public money. The approval process could take six months or more.
The new Cabinet Office document Growing the social investment market - a strategy and vision published today states that in the interim the government is working with the Big Lottery Fund on arrangements that will enable investments to be made as soon as dormant accounts money becomes available in the summer.
A Big Lottery Fund spokesperson said:
“We look forward to discussing with Government the precise nature of BIG’s role in using England’s share of dormant accounts funding to support the Big Society Bank. We understand the government will shortly issue the Big Lottery Fund with the formal directions we need to take this work forward.
“The dormant accounts legislation named the Big Lottery Fund as the distributer. As an NDPB it will accountable to parliament.”
Minister for the Cabinet Office Francis Maude and minister for civil society Nick Hurd announced the Bank’s plans as part of its strategy to grow a social investment market at an event hosted by JP Morgan today.
The Bank, which will be a wholesaler and independent of government, will be financed by up to £400m from dormant bank accounts, accessing £100m in its first year, as well as an additional £200m, on a commercial basis, from high-street banks over two years.
The government wants the Bank, which will function in England, to fuel a social investment market, including social ISAs and a social stock exchange.
Francis Maude, minister for the Cabinet Office, said: “The Big Society Bank will massively expand finance for social ventures, creating a new source of finance alongside philanthropy and public service contracts. It’s unthinkable for businesses to grow and thrive without capital finance but this has too often been the reality for charities and social enterprises.”