The creation of the Big Society Bank could be delayed until next year as the government is still trying to secure state aid exemption from the EU, according to Sir Ronald Cohen, independent adviser to the Cabinet Office.
Sir Ronald (pictured) revealed the delay at this morning’s Public Administration Select Committee (PASC) meeting on the subject.
He told MPs that the matter could take “some months before it is completed”, but added that there was an agreement with the Big Lottery Fund to make investments in its place in the meantime.
Chair of the PASC, Bernard Jenkin MP, asked if the situation was frustrating. Sir Ronald said he had gone through the same issue when he set up the social investment company Bridges Ventures. He added: I am confident that we will get state aid exemption for the Big Society Bank from the EU and that, in fact, the EU will turn out to be a big proponent of social investment.”
Investment from the high street
During the meeting, Sir Ronald also addressed the ongoing negotiations between the big four high street banks and the government on the proposed £200m investment in the Big Society Bank, after Conservative MP Charlie Elphicke said a discussion with the Royal Bank of Scotland’s Sandy Crombie had revealed he had reservations.
Sir Ronald said there was more room for agreement between the banks and government and stated that an announcement was expected in the next few weeks.
He added that the £200m investment, which will be on commercial terms, would not be at normal market rates and would not necessarily be a typical loan.
At the meeting, Sir Ronald also said it was projected that the Big Society Bank would be cash-positive in seven years. After Jenkins asked if there would be enough deal-flow, he said he was confident that the supply of money would create demand.
However, Sir Ronald admitted it was a challenge to galvanise local engagement after MPs asked whether smaller charities would find it difficult to engage with the Bank.
Sir Ronald also said the Big Society Bank may have to change its name as it wasn’t a bank.
