Dormant Assets Funding: Community Wealth Funds

Part of the debate – in Westminster Hall at 5:19 pm on 6th December 2022.

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Photo of Barbara Keeley Barbara Keeley Shadow Minister (Cabinet Office), Shadow Minister (Culture, Media and Sport) 5:19 pm, 6th December 2022

It is a pleasure to speak in this debate with you in the Chair, Ms Harris; I think that it is the first time I have done so. I thank Jo Gideon for securing the debate and all the hon. Members who have contributed to it.

The significance of an expansion of the dormant assets fund for our vital civil society organisations cannot be overstated. Currently, charities are being battered financially on every side. Just last week, the Charities Aid Foundation published an analysis of a YouGov survey that showed that more than half of charities are worried about their very survival, because of the rising cost of living. When the same question was asked back in April, the figure was substantially lower, so we know that the problem is intensifying.

The causes of the problem are manifold. On the one hand, the demand for charities’ services is higher than ever, as people grapple with the devastating impacts of falling living standards. On the other hand, charity income is being hit by rising energy costs, the declining value of grants and a hit to donations being caused by the cost of living crisis. The financial reserves of many organisations had already been stripped by the devastating impact of the covid pandemic.

For these reasons, it is critical that further funding is released for charities as quickly as possible. However, funds released to the dormant assets scheme must not be used as a substitute for Government spending. After the financial difficulties of the last 10 years, this scheme is a welcome supplementary fund for budgets that have been stripped back—and not a replacement.

Earlier this year, Labour was pleased to support the Dormant Assets Act 2022 as a delayed expansion of a scheme that a Labour Government put in place through the Dormant Bank and Building Society Accounts Act 2008. The scheme has been immensely successful, both in returning £105 million in dormant assets to owners, which a number of Members have mentioned, and in distributing £745 million to good causes. Our intention was always to broaden the financial products to which the 2008 Act applies; indeed, a review was scheduled for 2011. But here we are, over 10 years later, with the 2022 Act finally in place.

The Government’s expansion of the scheme does not go as far as Labour’s expansion would have gone. We would have liked to see the inclusion of pension assets, unclaimed winnings from gambling and other funds that could have contributed to good causes. In the other place, Labour secured a commitment from the Government to consult on the potential benefits of the expanded scheme being distributed by community wealth funds. On Report, the Government repealed our amendment, which would have allowed the Secretary of State to include community wealth funds as recipients of funding in England. The amendment aimed to empower communities and it had cross-party support, so it was disappointing to see it being rejected. It is right that community wealth funds have been included in the consultation launched this summer, as promised.

Community wealth funds distribute funds to local communities, which in turn decide their own priorities—a matter that Members speaking in this debate have really stressed as being important. These funds are targeted at communities that persistently lose out on grants or that have low levels of civil society infrastructure but high need.

We know that deprived communities do not benefit from the same level of civil society infrastructure as other communities. Research by the all-party parliamentary group for ‘left behind’ neighbourhoods—I congratulate the APPG for the work it has done in this regard—found that there are almost three times fewer registered charities per 100,000 population in such areas than there are across England as a whole, and these communities also receive fewer grants. I understand this because, like my hon. Friend Mrs Hodgson, I have a left-behind neighbourhood in my constituency, which is Little Hulton ward.

Community wealth funds have the potential to boost and empower these communities by enabling them to invest in the facilities and services that would have the most benefit locally. I know that this proposal has strong support from civil society, including an alliance of 400 charities and community groups led by the Local Trust.

We should recognise and celebrate the successes of those organisations that have distributed the Reclaim Fund until now. Big Society Capital, Access, the Youth Futures Foundation and Fair4All Finance have all done a really good job. We want these organisations to be able to continue to carry out their important work. I would welcome an assurance from the Minister that they have nothing to fear in the event of the Government making future changes to how funds should be spent.

Labour supports the need for consultation on the distribution of dormant asset funds in England. We want to ensure that it is carried out both properly and promptly. There has been too much delay already and it is now imperative for charities that the Government act as quickly as possible in publishing their decision on the distribution of dormant assets and move to the next stage of this process.