The government will consult the charity sector on how it should spend £2bn of assets currently lying dormant in the investment and insurance sectors, minister Rob Wilson has said.
A report published on Friday by the Independent Commission on Dormant Assets identified that there are significant sums in dormant financial assets in the UK.
The commission produced the figure of £2bn, although Nick O’Donohoe, chair of the commission, admitted that this was a conservative estimate, meaning that the actual figure could be significantly larger.
O’Donohoe said there was “significant dormancy” in UK investment and insurance. He said that the main areas were individual shareholdings, including unclaimed dividends, shares in unit trusts, and insurance products such as mortgage endowments and life insurance.
“Some of the assets we’ve found to be much larger than predicted,” he said. “We’ve tried at all times to be conservative in our estimates.”
Rob Wilson, minister for civil society, has said that legislation is needed to allow the money to be spent, and that he must first provide a formal response and then publish a consultation on how the money is spent. He said he envisaged that it would take about four years before the cash became available.
“I want to carry out a much wider public consultation and allow everyone to feed in their views,” he said.
While government press statements have said the money will “transform the charity sector” Wilson himself has not made any mention of charities, referring instead to “social investment and support of good causes”, although he has said charities will be consulted.
The next step is for the Office for Civil Society to make a formal response to the report, and this is likely to be accompanied by the promised consultation.
Possible change to existing scheme
Wilson also promised to “think creatively” about the existing dormant assets scheme.
In the last decade, government estimated that £500m of funds might be available in bank and building society accounts, which are already transferred to good causes under the Dormant Bank and Building Society Accounts Act 2008. So far it appears that the actual figure is more than twice that amount.
Government has committed that the first £400m raised in England will go to Big Society Capital, but has not indicated what will happen to any more money collected thereafter, so it is likely that the consultation will also consider what will happen to that money.
The Dormant Bank Accounts Act followed from the work of the Commission on Unclaimed Assets, which was launched in 2005. The scheme which followed on launched in 2011, and Big Society Capital, its main beneficiary, launched in 2012.
The new legislation is likely to be more complicated and take longer, because it is more difficult to identify when investment, pension and insurance products become dormant, and because they are not as easily valued as bank accounts.
CFG and NCVO respond
Sector infrastructure bodies have said they want to see government work closely with charities to spend the money.
The Charity Finance Group has said it will establish a formal task force to engage with the whole sector to ensure the money is wisely spent.
“We welcome this announcement that there is potentially up to £2bn to invest in good causes and social change,” a CFG spokeswoman said. “This comes at a critical time for our sector given the challenges that we face.
“It is important that any decision on how these funds are used involves consultation with civil society and social enterprises, which are on the frontline in communities across the country.
“We believe that the best way to achieve a better society is through stronger charities, voluntary organisations and social enterprises. We hope to meet with the minister for civil society soon to discuss our proposals.”
From Charity Finance
NCVO also said it was important that the government was consulting the sector.
“The Dormant Assets Commission has done sterling work,” a spokesman said. “These newly found assets could prove transformational for good causes. We’ll be making the point that we need to make sure these assets are used in the best possible way. This means the government needs to talk to charities about where these new resources can make the biggest difference and create a clear and simple process for distributing them.”