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| Big Society fund launches with £600m to invest | |
| (39 minutes later) | |
| A new financial institution set up by the UK government to finance charities and community groups has been launched. | A new financial institution set up by the UK government to finance charities and community groups has been launched. |
| Big Society Capital has £600m, of which the majority comes from cash in unused dormant bank accounts. | Big Society Capital has £600m, of which the majority comes from cash in unused dormant bank accounts. |
| The new lender will back social enterprises that prove they can repay an investment through the income they generate. | |
| "This is about supplying capital to help society expand," said Prime Minister David Cameron. | |
| "Just as finance from the City has been essential to help businesses grow and take on the world, so finance from the City is going to be essential to helping tackle our deepest social problems," the prime minister added. | "Just as finance from the City has been essential to help businesses grow and take on the world, so finance from the City is going to be essential to helping tackle our deepest social problems," the prime minister added. |
| Mr Cameron is closely associated with the idea of the Big Society and has previously said it is his "mission" in politics to make it succeed. | Mr Cameron is closely associated with the idea of the Big Society and has previously said it is his "mission" in politics to make it succeed. |
| The concept has been ill-defined but is usually taken to mean charities and volunteers taking on roles in the community now filled by government. | The concept has been ill-defined but is usually taken to mean charities and volunteers taking on roles in the community now filled by government. |
| The new investment fund is independent of the government and 60% of its shares are owned by the Big Society Trust, a private limited company comprised of executives from social, business and government roles. | |
| The rest of its shares are held by Barclays, HSBC, Lloyds Banking Group and the Royal Bank of Scotland. | The rest of its shares are held by Barclays, HSBC, Lloyds Banking Group and the Royal Bank of Scotland. |
| Those banks are the so-called Merlin banks that agreed to meet government conditions on lending, pay and bonuses. | Those banks are the so-called Merlin banks that agreed to meet government conditions on lending, pay and bonuses. |
| Big Society Capital is chaired by venture capitalist Sir Ronald Cohen and headed by Nick O'Donohoe, former head of research at JPMorgan Chase. | Big Society Capital is chaired by venture capitalist Sir Ronald Cohen and headed by Nick O'Donohoe, former head of research at JPMorgan Chase. |
| "What we've done for business entrepreneurs we must now do for social entrepreneurs," Sir Ronald said. | "What we've done for business entrepreneurs we must now do for social entrepreneurs," Sir Ronald said. |
| "We must give them the resources to innovate in the way we resolve social issues." | "We must give them the resources to innovate in the way we resolve social issues." |
| 'Encourage charities' | 'Encourage charities' |
| Of the investment fund's capital, £400m comes from dormant bank accounts. The other £200m is put up by the four banks. | |
| "Big Society Capital is going to encourage charities and social enterprises to prove their business models - and then replicate them," Mr Cameron said. | "Big Society Capital is going to encourage charities and social enterprises to prove their business models - and then replicate them," Mr Cameron said. |
| The project has its roots in the Independent Commission on Unclaimed Assets, with Sir Ronald as its chairman, which was set up in 2005 to consider how money sitting untouched for 15 years in dormant bank and building society accounts could be best used to benefit society. | The project has its roots in the Independent Commission on Unclaimed Assets, with Sir Ronald as its chairman, which was set up in 2005 to consider how money sitting untouched for 15 years in dormant bank and building society accounts could be best used to benefit society. |
| A social investment bank was one of the policy recommendations, and the Dormant Bank and Building Society Accounts Act was passed in 2008. | A social investment bank was one of the policy recommendations, and the Dormant Bank and Building Society Accounts Act was passed in 2008. |
| The Act specifies that the Big Lottery Fund is the holder and distributor of these dormant funds. | The Act specifies that the Big Lottery Fund is the holder and distributor of these dormant funds. |
| Big Society Capital began to take shape last February when Mr Cameron announced plans to use dormant accounts money for social spending. | Big Society Capital began to take shape last February when Mr Cameron announced plans to use dormant accounts money for social spending. |
| In December, the European Commission gave its approval to the bank, saying that it did not violate state aid rules. | In December, the European Commission gave its approval to the bank, saying that it did not violate state aid rules. |
| "The Commission considers that safeguards are required given that the UK has chosen a novel approach with regard to financing the social sector," it said at the time. | "The Commission considers that safeguards are required given that the UK has chosen a novel approach with regard to financing the social sector," it said at the time. |