Big Society Bank faces months of delay over EU legislation
The creation of the Big Society Bank, which will act as an engine for the nascent social investment market, could be delayed until next year.
Sir Ronald Cohen, independent adviser to the Cabinet Office on the Big Society Bank announced the delay to MPs at a Public Administration Select Committee (PASC) meeting, explaining that the government is still trying to secure exemption from EU state aid control that aims to ensure government interventions do not harm competitiveness of EU companies.
Sir Ronald says this could take some months but in the meantime the Big Lottery Fund will make investments in its place. He said he had gone through the same issue of gaining state aid exemption when he set up the social investment company Bridges Ventures, and said he was confident that state aid exemption would be granted for the Big Society Bank.
The bank is projected to be cash-positive in seven years. PASC chairman Bernard Jenkins asked if there would be enough deal-flow, and Sir Ronald said he was “confident” that the supply of money would create demand but said the challenge would be to galvanise local engagement with smaller charities.
Sir Ronald also said the Big Society Bank may have to change its name as it wasn’t technically a bank.
During the meeting, Sir Ronald also addressed the ongoing negotiations between the big four high street banks and the government on their proposed £200m investment in the Big Society Bank. He said there was more room for agreement between the banks and government and said an announcement was expected in the next few weeks.