The story
In 2000, Labour Chancellor Gordon Brown set up the Social Investment Task Force (SITF) to look at ways to create wealth and promote enterprise to support economic regeneration and community cohesion. The first report of the SITF highlighted the need for "wholesale intermediaries" to provide new sources of capital to help the community finance sector grow.
In 2005, an independent body, the Commission on Unclaimed Assets, was set up to consider how money left unclaimed in dormant bank accounts for over 15 years could be used to benefit society.
In a consultation paper published in July 2006, the Government recommended the establishment of a Social Investment Wholesale Bank.
In March 2007 the Commission published its report "Social Investment Bank – its organisation and role in driving development of the third sector", which provided a blueprint for the institution's funding, goals and governance. The commission's final report concluded that: 'the third sector urgently needs greater investment and professional support and suitable capital should be available for organisations at all stages of development.'
In 2008, the UK Government introduced legislation to enable unclaimed money in dormant bank accounts to be used for youth facilities, financial inclusion and social investment. The Dormant Bank and Building Society Accounts Act 2008 passed with cross-party support. It stated that money from dormant accounts available for spending in England could be used for three specified purposes, one of which was creating a 'Social Investment Wholesaler'.
In July 2009, Office of the Third Sector in the Cabinet Office consulted on the functions and design of this organisation. The idea of a Social Investment Wholesale Bank generated significant interest from across the political spectrum.
In March 2010, the Labour Government's Budget announced up to £75 million from the dormant accounts would be committed to a social investment fund.
On 31 March 2010, David Cameron announced that a Conservative government would set up a "Big Society Bank" funded by unclaimed bank assets as part of a Big Society initiative. A Conservative policy document said the proposed Big Society Bank would not be restricted to lending but would also invest in innovative products such as social impact bonds.
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In July the same year, as Prime Minister, Cameron said: "We will create a Big Society Bank to help finance social enterprises, charities and volunteering groups through intermediaries… using every penny of dormant bank and building society account money allocated to England."
In 2011, the Merlin Agreement between the Government and the major UK high street banks included a commitment for the four largest banks to put £200 million into setting up the Big Society Bank. After consulting with key social sector organisations, Ronald Cohen (BCS's founder chair) and Nick O’Donohoe (BSC's CEO from 2011 to 2015) offered the Government an outline proposal for the Big Society Bank. Caroline Mason was BSC's chief operating officer until 2013. The proposal was accepted by the Cabinet Office subject to certain conditions, including regulatory approvals from both the EU Commission and the Financial Services Authority. An interim "Big Society Investment Fund" was set up under the auspices of the Big Lottery Fund to make investments before the new institution was launched.
In April 2012, Big Society Capital was launched by the Prime Minister at an event hosted by the London Stock Exchange.
In April 2024, the organisation was renamed to Better Society Capital to more accurately articulate its mission.
Reactions
The principle of BSC has met with criticism from diverse groups including banks and charities. Giving evidence to the Public Administration Select Committee, Thomas Hughes-Hallett, chief executive of the Marie Curie Cancer Care charity said: "it is potentially setting up a system to encourage vulnerable charities to borrow money." In January 2011 Banco Santander, who have major retail banking interests in the UK, withdrew from Project Merlin negotiations with the Government and is expected not to make any direct payments to the BSB.
The FT suggested that it was "a tiny acorn from which it is far from certain that a giant oak will grow. But there are some very exciting ideas...which could help society and government tackle issues that have always struggled to obtain funding in the past"
Management Today said that "There's nothing wrong with the idea, or the model, or even the pot. But this plan still seems to lack some hard-headed commercial nous".
A heavier involvement with front line social sector organisations is something that others agree Better Society Capital needs to focus on. Others are equally worried about the direction of the social investment market overall, as they say that a lot of the noise around social investment has been from the perspective of investors rather than front line social organisations. Others point out that social finance will never be applicable to all of the social sector and Big Society Capital was established to make loans and not grants, a type of finance that will not necessarily be suitable for all.
From Wikipedia’s article on Better Society Capital, shared under CC BY-SA 4.0.5