‘Orphan assets’ should fund charity bank, says commission
Billions of pounds of unclaimed cash could be used to help charities operating in some of Britain’s poorest communities, a government-backed group will say tomorrow.
The Commission on Unclaimed Assets, set up last December with the backing of Gordon Brown, will say that a fund of at least £400m and possibly several billion pounds should be made available for groups working to tackle poverty to buy IT services or financial advice.
The proposals follow six months of consultation by the commission, which is headed by Sir Ronald Cohen, chairman of private equity house Apax Partners. The commission is expected to say further consultation is needed to flesh out the proposals and tackle technical issues.
It has been argued for years by banks that unclaimed – or ‘orphan’ – assets should be reclaimed, though suggestions that the banks should keep the money have proved controversial.
Estimates of the level of unclaimed assets held by the banks vary, but some suggest as much as £16bn lies untouched.
Last December the Treasury backed the idea for a commission to examine how best to use the funds. It said in the budget report that ‘where assets and owners cannot be reunited, it is also right that the assets be reinvested in society, as long as the original owners’ entitlements to reclaim are preserved’.
Evidence that government initiatives were not tackling extreme poverty and a widening gap in wealth persuaded the commission that charities operating in these areas should be the main beneficiaries of the orphan assets.
The plan is based on the Local Initiative Support Corporation in the US, which provides financial advice and funds to community groups and charities.
The commission is understood to believe that the ‘social investment bank’ should have its own governance and be independent of control by ministers. Orphan assets must be unclaimed for at least 15 years before being used, the commission will say. Proposals for banks to channel funds through their own charitable foundations were rejected.