'I'm not going to back down from what I believe because of a few bad headlines." So said David Cameron today. A few bad headlines? Two thirds of voters told a Times poll that the "big society" is no more than the government's attempt "to put a positive spin on the cuts". Worse, the big society has entered the national bloodstream as a joke. Top Shop and Vodafone demonstrators jump up and down, singing "we are the big society". People set to lose their jobs in cascades from April say dryly: "I'm about to join the big society." People seeing home care cut for an elderly parent, or their library closing, say "it's the big society" with heavy sarcasm. Many a Tory can be heard calling it BS, as they roll their eyes. When a political idea becomes a shared national joke, it is probably beyond saving.

Would any coalition minister dare use the phrase on a genuinely public platform without expecting raspberries and ribaldry? Not that many do appear in front of unselected audiences these days, for fear of encountering those deadly members of the public with unanswerable stories of genuine distress at what the cuts are about to do to them and their families.

Apparently undaunted, Cameron fought back with conviction: "This is my absolute passion." He has Tony Blair's gift for magical thinking, so moved by the passion in his own words that he believes it will be enough to make them come true. "The big society is about giving you the initiative to take control of your life and work with friends, neighbours and colleagues to improve things around you." (Did I hear a snort?)

It's an idea that seems to require bogus figures to shore it up – he repeated that "grants to councils will only go back to 2007 levels. There was a good level of libraries then", suggesting councils are deliberately exaggerating the cuts. Here's the cheat: public spending is returning to the same proportion of GDP as 2006-7 – but he omits to say that GDP has fallen between 6% and 7% during that period, leaving a mighty hole. Or that in order to suit electoral timing, cuts have been accelerated and frontloaded to an average 15.2%, causing needless extra damage.

The blame game gets fiercer by the day. Simon Hughes laid into Liverpool and Manchester again, accusing them of shroud-waving, but with Lib Dem and Tory councils protesting too, there is no hiding the severity. Even Oliver Letwin's Dorset – the Tory council that suffered least – still has to lose 500 jobs and 20 libraries. Does Cameron blame them, too?

Francis Maude today used other big society factoids to attack charities. He claimed three quarters of voluntary organisations take no money from the state: if most manage without, why are some whingeing so loudly about their cuts? The suggestion is that state-dependent charities have grown too idle to raise private donations instead. The National Council for Voluntary Organisations almanac does indeed show 78% of voluntary organisations receive no public funds – but the great majority are tiny, micro groups, many semi-inactive. Larger voluntary organisations are given public funds because they are contracted to do government work: housing associations have taken over much council housing, other provide key social services or welfare to work schemes for the Department for Work and Pensions.

Why is the government now attacking them for running state services? Money paid to charities rose steeply as Labour put out services to contract. The voluntary sector can be more innovative in drug addiction treatment, youth offending or inventing the whole hospice movement. Cameron says he means to hand over more to charities – but does he mean with no money? The dishonesty is breathtaking.

The sector is losing £5bn in the cuts as their contracts end. (Look at the Voluntary Sector Cuts website to see what's going on.) A third are likely to fold, a third have no asset base or reserves. Ministers keep boasting of the puny £100m transitional fund, supposed to tide charities over, but to what? They fail to say the fund was shut in January, already massively oversubscribed.

Today the big society bank was unveiled, with £100m from dormant accounts and £200m lent by big British banks. But unlike the £5bn, this money will have to be paid back, and it lends at commercial rates, making a profit, doubly protected by lending to funding intermediaries, not directly to anyone. The Charities Aid Foundation (CAF) is among many who doubt the voluntary sector can afford to borrow from it.

Those who have already set up social investment vehicles and bonds have found it can't be done except as philanthropy – which this bank certainly isn't. CAF's own Venturesome fund has been going 10 years, but it depends on philanthropists donating money that is then recycled over and over as charities pay it back at very low interest – or else donors get their capital back without interest. The Triodos ethical bank closed its social enterprise fund last year, as not enough enterprises could borrow at anything approaching a commercial rate. Tomorrow's People, a brilliant welfare to work charity founded by Debbie Scott, recently made a Tory baroness, has launched bonds, but "it's been a hard struggle": it has depended entirely on philanthropy, not real investment. The charity hoped the corporate sector would lend for five years without interest, but "they have been very reluctant".

The big society bank is not philanthropic, and the chances are few charities will be able to afford its interest rate. Some social enterprises may, if large groups of public servants set up a business and earn a contract to sell back their services. But those contracts are insecure, with no guarantee they will be renewed next time round. Banks know how many startups fail – and they are not in this out of the goodness of their hearts.

This is a feeble offer, a bank established with a small sum compared with the £5bn charities are losing in cuts. Here is the FT's assessment of its potential for social investment: "Can these new forms of investment and the big society bank possibly plug the gaping holes left by the spending cuts? In the short term, absolutely not." As Keynes said, in the long run we're all dead – and many charities certainly will be. The political question is why Cameron, Maude, George Osborne and the rest think it a good idea to pick a fight with a sector that inspires greater public love and trust than politicians ever could.

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Polly Toynbee responds to readers debating her article: "I agree it's a problem that charities that take the state's shilling risk losing their independence. That's why some charities have been keeping their heads down. ..."