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March 17, 2010

A chance to make a lasting difference

The situation surrounding Scotland’s allocation of the cash from the UK’s Dormant Bank Accounts continues to drift – when will it happen, how much will it be and how will it be spent?  A year ago there was a limited consultation with the sector but since then it’s all gone quiet.  LPL has put forward an idea – rather than establish yet another pot of short term grant funding, why don’t we use this windfall to create a lasting endowment for the sector?

John Swinney
Minister for Finance and Sustainable Growth
Scottish Parliament
EH99 1SP


Dear Mr Swinney

Scotland’s share – Dormant Bank Accounts

The Scottish Government has demonstrated a clear strategic commitment to there being a vibrant and diverse third sector in Scotland and indeed is making significant levels of investment in the sector through the Enterprising Third Sector Action Plan. Many local and national organisations have already benefited from this support and will undoubtedly become more financially sustainable as a result.

We all recognise that the constraints on public expenditure are going to become increasingly difficult to withstand over the next five to ten years and consequently we believe there is an urgent need for some fresh thinking to be applied to the challenge of how our sector is supported and developed in the future. Specifically, and this is wholly consistent with the principles underpinning the Enterprising Third Sector Action Plan, we see the need to transform the dependency relationship that our sector has with grant support and in particular,  grant support from government.

We expect Scotland’s share of the funds that are generated by the Dormant Bank and Building Society Accounts Act to be somewhere in the region of £40m.  The Act provides Scottish Ministers with the discretion to instruct BIG as to what the priorities should be for the distribution of these funds.   On the basis of past experience, it is reasonable to assume that BIG will seek to allocate these funds in the form of grant support across a range of worthy causes.  However, we believe this windfall comes at a time when there is a pressing need for a more imaginative and radical alternative.

We propose that a significant proportion of this windfall – as much as 50% – should be used to create an endowment for the future development and support of Scotland’s third sector.  Furthermore we would like propose that the endowment should take the form of an equity investment in the future of Scotland’s renewable energy capacity. For example, there are currently a number of investment opportunities that have arisen in the development of off shore wind farms.

The long term income stream that such an investment would generate, would provide a significant part of the third sector’s supporting infrastructure with a degree of stability that has never before existed. We estimate that such an endowment would generate a minimum of £50m in income over a twenty year period. Furthermore, if such an endowment were to be owned and managed by a Trust which was independent of government, it would not only ease the burden on the public purse but fundamentally correct some of the imbalances in the current relationship between the third sector and the state.

Local People Leading is a broad coalition of community sector networks working across Scotland. We urge you to give the broad principles underpinning this proposal your active consideration.

Yours sincerely,

Local People Leading – the voice for strong and independent communities