Now’s the time for all UK banks to become social investment banks

With the daily stream of news about governments forcing banks to rethink some fundamentals about their role in society, it would seem a good time to revisit the idea of social investment banks. I while back I posted about the moves in the UK to establish such a vehicle which would tap into dormant funds in UK commercial banks to open up a finance channel for social initiatives such as social enterprises. The establishment of Social Finance in the UK, tasked with opening up such a market is a concrete step.

Given that the governments in most western nations now own substantial equity stakes in the major commercial banks, surely it’s time to focus the executive teams on longer-term social responsibilities that now lie well beyond short-term shareholder interests? Research by Triodos Bank which appears to have weathered the recent crisis, shows that survey respondents would certainly welcome and support such a move if only the government were brave enough to direct it.

Paul Graham and Jeffrey Sachs’ Reith Lectures – an interesting mashup of wisdom and intelligence.

I read Paul Graham’s essay entitled “Is it worth being wise?” with interest. In a provocative piece he challenges the conventional definitions and interpretations of wisdom and intelligence and invites debate about the apparent divergence between the two concepts.

Whilst it’s interesting, he misses the point that both are required here and now to solve the major problems we face globally. To illustrate how both are necessary and need to work in concert at the individual and collective level the economist, Jeffrey Sachs’ final BBC Reith Lecture of 2007, “Global Politics in a Complex Age” sets forth an ambitious but achievable basis for enacting shared global goals – what he refers to as the Millenium Promises – around climate change, extreme poverty reduction, non-proliferation of nuclear weapons, protecting biodiversity and halting desertification, manifest in a series of global agreements.

He calls for the public, governments and all in between to embrace the challenge of focusing on these shared goals and using our scientific and technological know-how to solve the problems we’ve created. With lots of excellent historical quotes and plenty of practical ideas for agency, he calls for individuals, social entrepreneurs, business, expert groups (scientists), and governments to forge a new basis of global cooperation through an open source approach to global problem solving, played out locally. Sachs brought to my mind once again, EF Schumacher’s brilliant, Small is Beautiful. In the follow-up questions, there’s some great contributions from John Curtice, Bernard Crick and Pat Kane. Wisdom and intelligence in concert, indeed.

Links:
Paul Graham – Is it worth being wise?
Jeffrey Sachs – Politics in an Age of Complexity
E F Schumacher – Small is Beautiful

On parenting, violence and the need for the genuine progress indicator

More evidence of the need for a Genuine Progress Indicator after another terrible week for children.

My belief in the need for more meaningful measures of progress has been further illustrated this week by the UNICEF report on Children’s Lifestyles and by today’s horrific news of ‘parents’ goading their 2 and 3 year old children to fight and filming themselves laughing and joking whilst the youngest was visibily distressed during this awful event.

On the latter point, I stopped eating my dinner tonight at 8pm after hearing the news on Radio 4. My wife turned the radio off after the final headline about a man raping his 2 year old niece. We both sat in silence. Sarah couldn’t hold back the tears. Having just put our beautiful, happy, daughters to bed we were speechless.

What is going on in this country? Don’t get me started.. Fortunately the wisdom of the young was acknowledged by The Independent in response to the UNICEF report by a teenager:

“The richer we become as a society, the less mature young people need to be. Too many people expect the good things but don’t want to take responsibility.”

As Sarah said, some people view children as commodities, or lifestyle accessories.

Paul Kelbie in The Independent went on to report:

“Unicef said that, compared to Holland and Sweden which came out as top places to be a child, most British children feel unloved and unsupported by a society which regards them more as a burden rather than as a valuable investment. “There is not enough to do for teenagers when they leave school. There’s no jobs and no prospects for most people,” said Ciaran McIntyre.
“Most people don’t want to live like this but they just can’t see a way out. There needs to be more help to give more people the confidence to get out there and prove to themselves they can make a better life.”

Not surprisingly, those at the top of GDP figures, the US and the UK (5th) were at the bottom of the UNICEF table. Why is this? Could be something to do with a particular attitude to violence: one that starts at the top with the perpetual fighting of wars and a lack of support for human and in particular (children’s rights) in order to support the overall growth obsession.

Rant over, I still feel sick.

From the World Bank:

Total GDP 2005
(millions of US dollars)

1 United States 12,455,068
2 Japan 4,505,912
3 Germany 2,781,900
4 China 2,228,862
5 United Kingdom 2,192,553
16 Netherlands 594,755
20 Sweden 354,115

LINKS:

UNICEF: Report Card 7, Child Poverty in Perspective: An Overview of Child Well-being in Rich Countries
BBC News story
Independent
Full GDP list

Towards a social investment bank?

In an interesting episode of In Business on BBC Radio 4 tonight, Sir Ronald Cohen outlined the idea of a social investment bank. Taking the long term view, he described how idle finance (my term) or unclaimed assets could be diverted to tackling market failure on a large scale through investment in deprived communities.

Having been briefed by the Chancellor, as Head of the Social Investment Task Force, Sir Ronald’s report on idle finance led to Ed Miliband’s statement earlier this winter about further stimulating the social enterprise sector. My money’s on social enterprise becoming a central part of government thinking if Gordon Brown assumes the top job later this year. Perhaps even the establishment of an independent Social Investment Bank within the first budget. The Tories have already made noises in this area too and so there’s likely to be cross-party support for the broader idea, but as James Blitz in the FT points out, there may be dividing lines in the debate over voluntarism around the scale of enterprises, with Labour accused by the Tories of favouring larger over smaller, more localised organisations.

Under Blair, big initiatives have been the way, often fizzling out – such as pathetic ‘Big Conversation’ in 2003. I hope that if Brown is elected by the party, that he takes the long view and gives a greater role to localised, small scale social enterprise.