London is the home to a small but growing ‘social finance’ community. It’s an imprecise term, but in general social finance is seen to encompass finance for social causes, finance for public services, finance for social enterprises, and finance for vulnerable communities. That covers a pretty wide scope, ranging from crackpot schemes to move back to a barter economy, all the way to mainstream debates about alternative finance sources for public services.
On Wednesday I attended PopSe!, a ‘popup think-tank’ on social enterprise. The theme of the day was social finance, and in particular, the issues around the UK government’s plans to set up the ‘Big Society Bank’.
That’s a pretty politicised name for a bank, and gives rise to interpretations of it being the thin edge of a wedge the government is promoting to take the slack from its public service pull-back. To be accurate though, the Big Society Bank is not really a bank. It’s more like an investment fund, and it will start with £100 million, to be used for the purpose of providing wholesale finance to other social finance organisations. In other words, it’s supposed to be a financier for social financiers.
In the grand scheme of things, a hundred million pounds is pretty tiny, but a handful of mainstream banks have pledged to put cash in as well. All this raises fears of it becoming a window-dressing operation for banks’ CSR departments, as well as the government. The murky political undertones, and it’s potential to be used as a means to change in the culture of social services, means there’s a fair amount of skepticism about this new ‘social investment bank’.
At Wednesday’s discussion session, participants expressed concern at the lack of specific detail on what the bank’s remit was. It’s supposed to support social financiers, but will that include credit unions and community development finance institutions – CDFIs? Would it really support existing social finance institutions, or would it actually compete with them, as some fear. We wondered who would get employed there – would it be staffed by jaded ex-public sector employees, or ex-investment bankers carrying sad tales of emptiness in the fast-lane, in search of something meaningful?
All these details will be ironed out in due course. What I’m more worried about is the culture of social finance: The problem is that it’s still so bloody un-sexy, bogged down in public sector buzzword speak, phrases like ‘enhanced service delivery’ and ‘outcomes-based commissioning’. There’s little in the way of hard technology and cowboy venture capitalists. Instead, there’s abstract concepts and social metrics designed by people with concerned looks on their faces. It’s self-conscious, and that makes me suspicious to its potential for overhyping itself.
My last question at the meeting remained unanswered: What relevance does the Big Society Bank have to large-scale housing, health and education needs in the country? A one hundred million fund ain’t even going to come close to touching those issues. Social finance needs to be upscaled beyond being an add-on to the small-scale social enterprise sector. It needs to move beyond Bono sunglasses and Apple Macs. It needs serious realism.