Yet, the venture capitalist was a big winner from the speech as the chancellor unveiled tax breaks for those investing in “social capital”, a relatively new concept that aims to deliver returns to investors while tackling social issues such as homelessness or drug abuse.
Sir Ronald’s pioneering role at the forefront of the movement was praised by Mr Osborne as the chancellor announced the measures. The market, which grew to £200m in 2011-12, could be boosted by £500m over the next five years by the move. Possible investments include social impact bonds, which earn a return only if targets are met and the state saves money.
In a pilot project involving Peterborough jail, investors pay for services to get released offenders back to work. The reoffending rate is now 28 per cent lower than for a similar group elsewhere in the country.
Investors lending to social enterprises, which exist to solve social problems rather than make profit, could also benefit, matching the breaks available to those providing money to start-ups.
Sir Ronald, 67, says he is interested in “policy rather than politics” and credits the coalition with agreeing to implement a plan he first drew up for Labour. “It will be a huge boost,” he told the FT. “It is a transformative step.”
He believes philanthropy alone cannot solve social problems and the rich must demonstrate that their money can reduce inequality, a view formed as a boy.
Sir Ronald and his Jewish family arrived as refugees from Egypt when he was 11 with just a few pounds. He went to Oxford university and then joined McKinsey, the consultants. But a stint at Harvard Business School opened his eyes to the possibility of venture capital and he set up Apax Partners in 1972. It invested in Virgin Radio and Waterstones book shops and created a UK industry.
Bridge Ventures arrived in 2002. While its traditional funds target 15 per cent annual returns, the social funds look for half that.
His wife is the film producer Sharon Harel-Cohen, best known for period drama Gosford Park, and they are worth an estimated £220m. He chairs the Portland Trust, a charity working for Arab-Israeli reconciliation.
Nick O’Donohoe, chief executive of the Big Society Capital, an institution Sir Ronald helped create and chaired, says the tax relief will “level the playing field” between those looking for capital for social purposes and commercial organisations. BSC has £600m from the big banks and money left in dormant accounts. It has lent 140m to 21 organisations since it was set up in April last year.
Mr O’Donohoe said Sir Ronald was “a visionary”.
“He has created a social investment industry as he created the venture capital industry. He has pushed this for 13 years. It took great perseverance. The UK now leads the world.”
Sir Ronald did not hear the chancellor’s announcement. He was chairing a meeting of G8 countries, who have all agreed to develop domestic social investment sectors.
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