The first payments will be made in the next few months. The exact timing and amounts will be decided by the Reclaim Fund once it has assessed the amounts that it has received from the banks and the amounts that are likely to be reclaimed from depositors.
We hear constantly from businesses and social enterprises that high street banks are unwilling to back innovative or new ventures. How will the Government ensure that the big society bank is different and that it assesses applications in such a way that it does not exclude start-ups and innovative organisations in favour of only the established players in the social enterprise and charities sector?
My hon. Friend is absolutely right to draw attention to that issue. The whole point about the big society bank, as I tried to indicate to Jon Trickett a moment or two ago, is that it will be entirely different from a commercial bank. It will be set up precisely to achieve social return as much as commercial return. The other vital point is that it will operate through social lenders and investors already in the marketplace, so it should be able to reach out to the smallest community and voluntary groups and not just be restricted to the large groups that also play an important role.
Is the latest estimate of money to be raised from dormant bank accounts still £400 million, and what progress has been made in securing an additional £200 million from the UK’s largest banks?
Yes, the estimated amount to be raised from dormant accounts remains at £400 million. The Reclaim Fund will now assess the exact amount that it can release in the first year, and the current estimate is somewhere between £60 million and £100 million. Then there are, of course, the negotiations that my right hon. Friend the Minister for the Cabinet Office and Paymaster General is having with the four main lending banks that were party to the Merlin agreement about another £200 million of funding. Altogether, there should be a considerable amount of funding coming through this year and in following years.
“should not expect to achieve commercial returns on all its investments”.
By far the majority of demand for capital is for soft capital and patient capital. Why, after two months of intense talks between the banks and the Treasury, do we still not have an agreement? The banks are saying that they want commercial returns. Will the Minister confirm today that the big society bank will not be about commercial returns for the banks but about genuine support for social and community enterprises?
The right hon. Lady is confusing two levels of lending and investment. There is the question of what the big society bank demands of the investments that it makes, and as I have said, that will be both a social return and a modest financial return, but not the type of commercial return that one might make with a hedge fund or in another such way. Then there is the relationship between the big society bank and the main commercial banks that are party to the Merlin agreement. My right hon. Friend the Minister for the Cabinet Office and Paymaster General is currently discussing the exact terms on which that investment will be made. It will have to be compatible with social objectives and the social returns that the big society bank is intended to make.