Select Committee on Treasury Written Evidence

Memorandum submitted by the National Council for Voluntary Organisations (NCVO)


  1.1  NCVO is the largest general membership body for charities and voluntary organisations in England. NCVO has sister councils in Wales, Scotland and Northern Ireland. Established in 1919, NCVO gives voice to over 4,900 organisations. Nearly 3,000 of our members are local organisations, and over 3,600 of our members have an income of less than £500,000. NCVO champions voluntary action, our vision is of a society in which people are inspired to make a positive difference to their communities. A vibrant voluntary and community sector deserves a strong voice and the best support. NCVO works to provide that support and voice.

  1.2  NCVO welcomes the opportunity to submit written evidence to the Treasury Committee's inquiry into unclaimed assets within the financial system. NCVO has long called for the transfer of unclaimed assets from financial institutions to reinvestment in society. In our 2005 general election manifesto, Independence, Diversity, Voice, we called for money released from unclaimed assets to be fairly distributed across the whole of the voluntary and community sector and used to support a broad range of activities and causes.


  2.1  The priority remains to reunite these assets with their owners. It is only when this cannot be achieved that they should be reinvested in society. We welcome confirmation in the 2006 Pre-Budget Report that government and the banking industry also see this as their priority and will put a comprehensive reuniting scheme in place. Robust measures should be put in place to ensure that individuals and organisations are always able to reclaim their assets irrespective of how much time has elapsed. This will be particularly important to maintain public trust and confidence in those organisations and vehicles who receive funding from these assets.

  2.2  We welcome the definition of an unclaimed asset set out in the 2005 Pre-Budget Report. This indicated that bank accounts which have had no customer activity for fifteen years will be deemed unclaimed assets. We note that others have called for a wider definition. In order to maintain trust and confidence, we support the definition agreed upon in the short term. However, this definition may benefit from a review once a scheme to reinvest unclaimed assets has been in operation for a reasonable period of time. It may therefore be appropriate to review the definition after a scheme has been in operation for five years.


  3.1  NCVO's main concern is to ensure that resources from unclaimed assets are invested according to principles and methods which maximise the impact that they can have on communities, including through the work of voluntary and community organisations. We therefore believe that the following principles should be upheld in any future transfer of unclaimed assets for investment in society:

    —  Reunification—Robust measures should be put in place to locate owners of unclaimed assets, and to ensure that individuals and organisations are always able to reclaim their assets irrespective of how much time has elapsed. This must be accompanied by appropriate publicity and communication strategies.

    —  Independence—Where these assets remain unclaimed, they should be reinvested in society. However, these funds do not derive from the government, the financial institutions holding the assets or from the third sector. Priorities for funding must therefore be determined independently, in consultation with a range of stakeholders including the voluntary and community sector. Given the public nature of these funds, it may be appropriate for distributors to be accountable to Parliament.

    —  Sustainability—these funds must be designed to achieve long-term change and lasting benefits for communities. Funding should therefore be distributed and designed in ways which promote sustainability.

    —  Responsive—if these funds are to make a genuine difference to communities and to the lives of citizens, they must be responsive to genuine needs and priorities and consider working with those organisations best placed to identify these needs. In particular, measures must be put in place to ensure that this funding responds to actual, rather than perceived, need. This may also help to ensure that funding supports a breadth of causes and organisations.

  3.2  The nature and value of these funds means that they must be distributed with due consideration of other forms of social investment. It is also important to situate these assets within the current funding climate for the voluntary and community sector. We believe that there are a number of key issues to consider in determining mechanisms for distributing unclaimed assets:

    —  Existing market—the estimated value of these funds means they are likely to have a significant impact on the existing market for social and community investment. It will therefore be important to ensure both that these funds do not displace existing and emerging funders and investors, and that distribution is conducted via intermediaries where possible. In particular, those responsible for distributing unclaimed assets should draw on the expertise of those funders who are able to identify local needs and priorities and work with all funders to ensure collaboration, rather than duplication.

    —  Variety of funding tools—These funds should consider the different funding tools needed by different organisations for different activities. For example, there may be a need to consider innovation funding for organisations that wish to expand their existing services or develop an existing idea, or to consider a capacity-building grant to support a VCO to engage users more effectively. Crucially, third sector organisations need access to the full range of funding options, including grants in aid, project funding, contracting and social investment if they are to be able to make a tangible and sustained difference to communities.

    —  Maximising impact—further consideration is needed of how these funds can be maximised and can make a difference for the long-term. This could include adoption of mechanisms that recycle funds, including loan finance, and making significant investments in organisations in the short term to enable them to become financially sustainable in the long term. Those responsible for distributing unclaimed assets should seek to build on existing good practice in this area.

  3.3  Agreement on the mechanisms for distribution must be reached before any discussion can take place on priorities and themes for allocation of this funding. There is a clear need to build full understanding of unclaimed assets as a public good in which everyone has a stake to ensure that a scheme for reinvestment is successful. A number of parties have made suggestions about how these funds could best be utilised, but these deliberations should involve all stakeholders.

  3.4  Therefore, discussion of what unclaimed assets should support must be subject to further and full consultation, including with voluntary and community organisations. This should take a broad range of causes into consideration, to ensure that funds do not simply go the most well known potential beneficiaries.

Mubeen Bhutta

February 2007

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