Policymakers should not expect a new model of social investment to mature in this Parliament, a Cabinet Office adviser told the Public Administration Select Committee this week.

Sir Ronald Cohen, an adviser to the Cabinet Office on the Big Society Bank (BSB), was speaking to the committee as part of an investigation into the Big Society.

Asked by committee chair Bernard Jenkin about the viability of the bank – which will be funded initially using money from dormant savings accounts and UK banks – Cohen said that internal projections estimate it will be “cash positive within seven years”.

The objective of the BSB is not just to distribute funds but “getting [the] social sector going; [it will be] an investment company with balance sheet and mission,” he said.

Cohen told the committee that the bank will build on many years of work on how to connect social entrepreneurs and the social sector – including social enterprises and community organisations – with capital markets.
“These things take a long time to achieve. I don’t think we should expect that Big Society Bank can bring a revolution in the space of five years,” he said. “this is 10- to 20-year project.”

Cohen’s point was supported by Bernie Morgan, chief executive of the Community Development Finance Association (CDFA). CDFA represents community development finance institutions (CDFIs). These organisations lend money to organisations and individuals which struggle to get finance from high street banks – for example, individuals with poor credit ratings.

Morgan said that one of the lessons from supporting these organisations over the last decade was that “it wasn’t as easy as we thought to become sustainable. One of the biggest challenges I had was to try and get messages across that this is going to take longer than we thought.”

The CDFA recently won £30m investment from the Regional Growth Fund, matched by £30m funding from private investors, which will be used to create jobs in areas most affected by the loss of public sector jobs. Morgan said she hopes this funding will enable CFDIs to move to a more sustainable funding model.

Morgan also noted that the “appetite from government [to support CDFIs] seemed to wane a little” under the last administration, but this government is “much more enthusiastic”.

Written by Suzannah Brecknell, CSW