Chair of the Philanthropy Review Thomas Hughes-Hallett has criticised the imminent Big Society Bank, saying it is potentially setting up a system to encourage vulnerable charities to borrow money.

Hughes-Hallett, who is chief executive at Marie Curie Cancer Care, was giving evidence on increasing individual giving and philanthropy at a Public Administration Select Committee (PASC) meeting this week.

Hughes-Hallett told the committee that as a charity who had never borrowed money, he was very sceptical about the bank, and said few understood the new terminology, such as social impact bonds, cropping up around it.

A number of committee MPs expressed sympathy with Hughes-Hallett, with Conservative MP Robert Halfon asking if a better model for capitalising civil society would be a giant credit union.

In a recent House of Commons debate, minister for civil society Nick Hurd said the government expects to have some parts of the Big Society Bank open by April 2011, with investments starting in summer 2011.