The government removed an amendment relating to the creation of community wealth funds from the Dormant Assets Bill, but acknowledged the widespread support for the concept.
During the committee stage of the bill in the House of Commons yesterday, the government removed an amendment inserted during the House of Lords stages, which would have meant funding could be used to specifically support social infrastructure.
Instead the government said a consultation on future use of the funds would be the correct way to determine if community wealth funds are suitable.
Labour MPs spoke in favour of creating community wealth funds and said they were disappointed with the government move.
Consultation on future use of funds
A consultation on the future use of dormant assets in England was already a feature of the bill, and the government has said that community wealth funds will form part of this.
Nigel Huddleston, minister for civil society, said: “I acknowledge the support expressed by many in the House for using the English portion of dormant assets funding to support, through community wealth funds, the left-behind communities, which experience high levels of deprivation and low levels of social infrastructure.”
However, he said the government wanted to “protect the integrity of the consultation process, which offers the most appropriate route to make that a reality”.
This consultation on how funds in England are used will be “launched as soon as possible after Royal Assent, will explicitly include community wealth funds as an option to consider for the English portion”.
Huddleston added that including provision for community wealth funds in the bill itself “risks pre-empting a consultation outcome by identifying a different approach for English expenditure before the public, the civil society sector, parliamentarians and industry participants in the scheme are able to utilise the opportunity to have their say”.
In England, funding must be used for youth, financial inclusion and social investment, but devolved nations have more flexibility.
A 12-week consultation on expanding the causes money to which money can go will begin as early as this summer, with community wealth funds “included as a clear option”, Huddleston said.
“Should it be determined that the community wealth funds are the best use of some of the English portion, the bill is already designed to provide the most appropriate avenue to make that a reality.”
Labour ‘disappointed’ and ‘surprised’
Jeff Smith, a Labour MP on the committee, said his party was “disappointed” and made the case for keeping the provisions.
“I am surprised that the government want to remove a measure that empowers communities and surely goes to the heart of the alleged levelling up agenda,” he said.
“There are members on both sides of the committee who represent areas that will benefit from this kind of initiative. The most deprived areas often have the weakest third-sector capacity and infrastructure, which adds to a cycle of disadvantage.
“Community wealth funds aim to halt that cycle. They are aligned with the aims of the levelling up agenda and have the potential to transform communities and lives.”
Another Labour MP, Diana Johnson, argued that the bill was the right place to signal parliament’s support for community wealth funds.
She said: “I do not believe that the minister is correct in claiming that secondary legislation is the most appropriate mechanism for deciding on the distribution.
“We all understand that there is limited opportunity for debate on secondary legislation, and there is, of course, no opportunity to amend it. That means parliament’s role will be limited to rubber-stamping the government’s proposals.”
Johnson also highlighted that the consultation period will delay getting money to where it is needed, but said: “Were the fund to remain written into the bill, the Community Wealth Fund Alliance could start the process of securing match funding and planning to get money into the most left-behind communities as soon as possible after Royal Assent.”