Hannah Jordan,
Regeneration & Renewal,
26 July 2010
Youth and financial inclusion services will have to apply to new Big Society Bank for funding rather than getting it directly as planned by Labour.
Youth and financial inclusion services will no longer be allocated money directly from dormant bank accounts and will instead have to apply for a share of the funding from the new Big Society Bank under coalition government proposals, it has been confirmed.
Under plans set out by the former Labour government, most of the hundreds of millions of pounds of unclaimed assets lying dormant in bank accounts for more than 15 years were to be used to fund youth services and financial inclusion projects, with whatever money was left being channelled into a Social Investment Bank. Social enterprises and voluntary organisations would then have been able to apply for funding from the bank.
However, launching the new coalition Government's version of the bank last week in Liverpool, Prime Minister David Cameron said that "every penny" of dormant cash in English bank accounts will be swept into the new pot, meaning that all sectors will have to apply for funding from the same source.
He said the Big Society Bank would provide new finance for charities, local groups, social enterprises and other non-governmental bodies to help run vital services.
A Cabinet Office spokesman said that the Government had not downgraded the importance of youth services and would be looking to earmark parts of the cash for certain sectors. He said that these "mandates" should be in place by April when the Big Society Bank is scheduled to open.
"It won't be a case of losing out on money, it's just a change in the way it will be provided," the spokesman said. "The Government believes the social investment model is the best way to open up finance in the sector."
Community Development Finance Association chief executive Bernie Morgan said that the coalition's plan was an improved and less fragmented model than that planned by the previous administration. But she added that the coalition should be wary of setting out allocations.
"It is a huge and complex sector, so putting mandates on some parts and not others is not a good way forward," Morgan said. "The bank needs to take a broader view of the whole sector."
The bank would be in a strong position if it were set up with a long-term vision and also used a combination of philanthropic and commercial money, she said.
The British Bankers' Association has estimated that there could be up to £400 million sitting in dormant bank accounts. But a recent report in the Financial Times said that the bank may be forced to open with as little as £60 million due to delays caused by high street banks dragging their heels and because it was taking a long time to try to track down the dormant bank account owners before handing over the cash.
Bank timeline
November 2004: Scarman Trust director Matthew Pike suggests using the estimated £15 billion in dormant bank accounts to help good causes
July 2006: The Commission for Unclaimed Assets, formed to look at ways of spending this cash, calls for a Social Investment Bank (SIB) to help fund the third sector
May 2007: Government says unclaimed assets to be spent on youth services and financial inclusion with the SIB getting any cash that remains
March 2010: David Cameron says a Tory government would set up a Big Society Bank (BSB)
July 2010: Cameron launches the BSB
