Oral Answers to Questions

Oliver Letwin Excerpts

Wednesday 15th June 2011 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

11. What progress he has made on establishing a big society bank.

[The Minister of State, Cabinet Office (Mr Oliver Letwin)]

I am delighted to say that we are making extremely good progress in establishing the big society bank. Sir Ronald Cohen and Nick O’Donohoe, with whom I met recently, have put an outline of the proposals on the website. They are now working with the actuary and the administrators of the dormant accounts. So as not to waste time while we wait for state aid clearance, we have also established a high calibre interim investment committee in the Big Lottery Fund to begin work immediately.

[John Glen]

I thank the Minister for that response. What safeguards will be in place so that when small charities seek to access funds from intermediaries they will be making worthwhile investments and not causing themselves to fall into significant debt?

[Mr Letwin]

My hon. Friend makes an extremely good point. It is tremendously important that the voluntary and charitable sector does not get into a debt spiral, and for that reason the big society bank’s plans involve trying to promote patient capital and risk capital that will allow the voluntary and community sector to expand without becoming over-geared and being put in financial peril.

[Anne Marie Morris]

Does the Minister agree that the big society bank will provide the vital backing required by investors in our social sector organisations, so that they can continue to support local groups dedicated to making communities better places to work and live?

[Mr Letwin]

Yes, I absolutely agree with my hon. Friend. It is extremely important to point out that the purpose of the big society bank, under Sir Ronald Cohen’s direction, is to go beyond the traditional sources of finance and persuade, for example, large charities that have considerable investments to start to reinvest in the voluntary and community sector so that they can get good returns on, for example, social impact bonds.

[Mr Wayne David (Caerphilly) (Lab)]

How long will it take for funds from the big society bank to reach the front line?

[Mr Letwin]

That very much depends, of course, on the state aid process, which, as the hon. Gentleman will know from his own experience, we cannot totally determine. In order not to waste time, however, the investment committee that has been set up within the Big Lottery Fund will begin to disburse funds from dormant accounts as soon as they are made available and released. I hope that that will happen within a few months.

[Lindsay Roy (Glenrothes) (Lab)]

At a recent meeting of the Public Administration Committee, Sir Ronald Cohen said that the big society bank might have to change its name because it is not a bank. Will the Minister enlighten us? If it is not a bank, what is it?

[Mr Letwin]

The hon. Gentleman’s question reminds me of Maynard Keynes’s dictum when asked about the IMF and the World Bank. I think he said that the World Bank was a kind of fund, and the IMF was a kind of bank. There are often these oddities in the naming of things. Shall we just call it the BSB and know what it does, rather than worry about the name?

[Mr Speaker]

We are now better informed.

--- Later in debate ---

[Andrea Leadsom (South Northamptonshire) (Con)]

During 2011, I will be launching a new social enterprise, the Northamptonshire parent infant project. What assurance can my right hon. Friend give me that commissioners will be encouraged to provide medium-term contracts to charities that provide essential support services?

[The Minister of State, Cabinet Office (Mr Oliver Letwin)]

I congratulate my hon. Friend on the fantastic work she is doing with that organisation, which is tackling natal depression and perinatal problems. The central Government compact already provides for multi-year funding whenever that is appropriate. Local compacts are a matter for local decision, but I strongly encourage her county council to offer a multi-year contract, if that is at all possible.

[Diana Johnson (Kingston upon Hull North) (Lab)]

T7. How many mutuals does the Minister expect to support through his Department next year, and will he be making a further statement on the mutual pathfinder?