After a long campaign supported by hundreds of charities, voluntary organisations and social enterprises, the Government passed legislation last year that expanded the scope of the dormant assets scheme, which will unlock hundreds of millions of funding for social causes in the coming years.
What are dormant assets?
Dormant assets are funds in bank accounts or other financial assets where the owner is unknown or cannot be traced. Often the owner is deceased and there is no known next of kin, so the asset is just sitting there with no use. The UK government created a scheme over a decade ago to ‘reclaim’ such funds from dormant bank accounts and put them towards social purposes. This allows banks and other financial institutions to transfer the assets to a ‘reclaim fund’ whilst protecting the rights of the owners to be reimbursed should they eventually turn up.
Originally, funds were reclaimed only from bank accounts and directed these towards three areas specified in the original legislation: youth, financial inclusion, and social investment. In the years since, the scheme has provided nearly a billion pounds to social causes whilst safeguarding the rights of the original owners in case they eventually turn up. The new Dormant Assets Act extended eligibility to other types of assets like investments, insurance policies and pensions. It’s estimated that this expansion of the scope of the scheme could potentially unlock a further £880m for social or environmental causes.
What have we campaigned for?
DSC and others have argued that more needs to be done with dormant assets money to genuinely put funds into community control, in a way that enhances local development and limits centralised bureaucracy about what can be funded and how: for example, by endowing local funders so that they can make grants to organisations. Debates about how to best do this are ongoing but much opinion has coalesced into the idea of a Community Wealth Fund (CWF) (or ‘funds’) which would target areas most in need.
When will we see the Community Wealth Fund come alive?
Following a consultation last autumn, the Government recently announced that Community Wealth Funds would become eligible for dormant assets funding in the future. According to the Community Wealth Fund Alliance, which oversees the campaign for the CWF, ‘the next step is to inform the government’s technical consultation on the design of community wealth funds. We expect this consultation to happen over the summer, with a government response by the end of the year.’ So it seems still more consultation awaits us!
It’s taken so many years to get through the technical bits of ‘how do we expand the scheme’, but what comes next could present further challenges to getting consensus politically but also in the sector. Such as: how would this fund or funds operate? One big national fund that communities make bids to doesn’t sound much like community power – in fact it sounds like a replication of the current problem with over-centralisation and the risk that communities won’t be in charge.
But if it is devolved to local areas somehow, how will it be administered? Who will be eligible to administer the funding? How free will they be to design the funds in ways that will work best for their area? When local funders or community anchor organisations have had to bid to administer similar funding in the past, they’ve often been hamstrung by centrally imposed requirements about how the money is spent and what is eligible. And that’s before we even get into questions about who is eligible for funding, how much funding each area gets, what the detailed criteria are etc.
The General Election is looming…
While there does seem to be cross-party support and broad support in the sector for the idea, once we start getting into the details there could be further challenges. We’ll also be having a General Election likely before the end of 2024 and political parties would be wise to include this in their manifestos – but therein also lies some risk. There could be a change of government which could have a bearing on the CWF’s development. In fact, this happened with the first version of the scheme, when the Coalition Government decided to use dormant assets funding to develop the ‘Big Society Bank’ – since renamed ‘Big Society Capital’.
The myriad supporters of the Community Wealth Fund idea will now need to find consensus on how to move forward, and we’ll need to collectively avoid turf-wars and find a consistent message to the politicians about how to make the most of the opportunity to make the Community Wealth Fund (or funds!) successful. DSC will continue to make the case in our communications with parties from across the spectrum.