The Social Investment Task Force is established by HM Treasury to assess ways in which the UK could achieve a radical improvement in its capacity to create wealth, economic growth, employment and an improved social fabric in its poorest communities. Sir Ronald Cohen is the chair. It makes a number of recommendations to support increased social investment.
The Independent Commission on Unclaimed Assets is established, with Sir Ronald Cohen as chair. It is set up to consider how unclaimed assets (money sitting untouched for 15 years in dormant bank and building society accounts) could be best used to benefit society.
The Commission’s final report says the social sector is in urgent need of greater investment and professional support. It recommends the creation of an independent ‘Social Investment Bank’, using the capital from dormant bank and building society accounts, to act as a wholesaler of capital. The ‘Bank’ would invest in new and existing social investment finance intermediaries (SIFIs) and ultimately increase the amount of finance available to the social sector.
The Dormant Bank and Building Society Accounts Act is passed, under which money in these accounts can be distributed for the benefit of the community. The Act says that money from dormant accounts available for spending in England must be used for one or more of: provision of services for young people; financial capability and inclusion; or a ‘social investment wholesaler’.
The UK Government commits to using all dormant accounts money available for spending in England to establish a social investment wholesale institution. This ‘Big Society Bank’ will develop and grow a sustainable market for social investment in the UK.
Sir Ronald Cohen, former chair of the Social Investment Task Force and of the Commission on Unclaimed Assets, offers to advise government and develop a proposal for a ‘Big Society Bank’. He agrees to do this with Nick O’Donohoe, formerly Global Head of Research at J.P. Morgan, and head of their social finance unit.
After consultation with key social sector organisations, they submit an outline proposal for a ‘Big Society Bank’ which is endorsed by Ministers subject to four main conditions:
- Further work on organisational design, investment strategy, financial model, and management arrangements;
- Satisfactory conclusion of discussions with the ‘Merlin’ banks about the terms on which they would make a capital injection of £200m;
- Approval from the Financial Services Authority (or successor organisation); and
- State aid approval from the European Commission.
Given the impact of the economic situation on the social sector, there is a strong imperative to use dormant accounts money for social spending as soon as it becomes available (summer 2011). The Big Lottery Fund (the nominated distributor of dormant accounts as set out in the 2008 Act) establishes an interim Investment Committee which makes seven investment commitments prior to the launch of Big Society Capital.
State aid approval for Big Society Capital is secured from the European Commission.
The Financial Services Authority authorises Big Society Capital.
The Investment Committee is wound up and its investment portfolio transferred to Big Society Capital.
Big Society Capital is launched by the Prime Minister on April 4.