November 28, 2023
Community Wealth Funds for Scotland?
Fifteen years ago, the UK Govt passed the Dormant Bank and Building Society Accounts Act which released millions of pounds for good causes – a scheme administered by the National Lottery Community Fund. Over the years, the scope of that legislation has gradually been extended to include other financial products such as pensions and insurance policies and the latest release of funds could run into hundreds of millions. UK Govt has consulted with the sector in England and Wales where a proposal to establish Community Wealth Funds has been accepted. It would help to know what the plans are for Scotland.
Overview- Dormant Bank Funds
In 2008 the UK government passed the Dormant Bank and Building Society Accounts Act passed. This primary legislation, allowed dormant bank accounts to be used for good causes. Dormant accounts that are left unused for extended periods of time (12- 15 years) are declared inactive or dormant by the banks, eventually if remaining unclaimed the money gets distributed to third sector organisations.
The primary legislation set out the 3 strands – Young people/Financial Inclusion/Social Investment that the dormant bank money should prioritise. It also set out that the National Lottery should be the distributor of the funds and finally that Scotland should receive 8.4% of the total raised. The dormant bank started to distribute funds in 2011.
Since the scheme started money from 35 banks and building societies are now involved in the Dormant Bank fund. Originally predicted to bring in circa £400million, but contributions to date(2021) have exceeded this by 250% of which funds worth £800 million has been distributed into the 3 strands mentioned above.
2022 Extension -Dormant Assets Funds
Following a five year review, the UK government introduced a new Dormant Assets Bill in 2021, which was enacted in 2022. This act was built on the 2008 primary legislation but expanded the Dormant Bank scheme to include the insurance, pensions, investment and wealth management, and securities sectors. This is expected to unlock an additional initial £880 million for the voluntary sector via the expanded scheme. It is expected that further assets will become eligible as they become dormant over time.
If, like the Dormant bank scheme, the dormant assets also exceed this figure by 250% then the monies available will be significant. (UK government 24th Nov 2021)
Between July – Oct 2022, the UK government consulted on the priority strands for the English portion of the Dormant Assets fund. – The UK government set four strands – Young People/Financial Inclusion/Social Investment and Community Wealth Funds.
Secondary legislation was needed to introduce the new 4th Community Wealth Funds strand. The Dormant Assets (Distribution of Money) (England) Order 2023 was approved this month (Nov 23).
In the 2022 Act, ‘community wealth fund’ means a fund which gives long term financial support (whether directly or indirectly) for the provision of local amenities or other social infrastructure.
The Dormant bank accounts funding has so far unlocked £67.2 million for voluntary organisations in Scotland. The bulk of this money has been allocated through the Young Start programme. Between 2012 and 2021, The National Lottery Community Fund has made over 950 Young Start grants, to the value of £47.9 million
Although the 2022 Act extends to England and Wales, Scotland and Northern Ireland, it remains unclear what the Scottish Government or its acting agent (National Lottery) intends to do with the expanded Dormant Assets funds.
Unlike in England, there doesn’t appear to have been any consultation with the wider voluntary sector on what the main strands of the programme should be or indeed if the 4 strands adopted in England will also be adopted in Scotland.
It may well be that the extended dormant assets funding programme continues to prioritise the Young Start programme. There would appear to be very little in the public domain that gives some consideration to the way the funds should be spent in Scotland.
It is vital that we understand what priorities the Scottish Government/National Lottery wish to fund with the dormant assets.