Dormant Assets Bill [HL]

9. The Community Wealth Fund proposal is informed by the Big Local programme, which is the largest ever national experiment in neighbourhood level devolution and community regeneration. It identified 150 deprived neighbourhoods across the country and gave each area £1.15m in funding. This money has been placed directly in the hands of local residents, giving them the ability to make decisions about how to improve their areas and the quality of life of local people.

10. The Big Local programme began in 2012 and will run until 2026. It is funded by the National Lottery Community Fund. Areas were selected on the basis that they suffered from higher than average levels of deprivation and had previously missed out on their fair share of lottery or other public funding.

11. Outcomes from the programme so far evidence benefits for individuals – including reduced social isolation, increased confidence and aspiration, and greater access to employment opportunities – and broader community change. Resident-led investment has resulted in the creation and growth of local community and voluntary organisations; physical and environmental improvements; new community hubs and services addressing local needs; new confidence in engaging with local political and consultative forums; and improved community cohesion (Big Local as Change Agent, Third Sector Research Centre February, 2020). [4]

12. This approach of placing more power and resources in the hands of communities is supported by recent polling research from Survation, which found that the residents of ‘left behind’ areas have an appetite to engage to improve their neighbourhoods, with 59% saying they want a greater say over how money is being spent locally. [5]

Why is the Fund needed?

13. The most ‘left behind’ neighbourhoods - those that lack social infrastructure as well as being severely deprived - have markedly worse socio-economic outcomes than other equally deprived areas across every metric (employment, educational attainment, health etc). This suggests how important a strong foundation of social infrastructure is to improving outcomes. [6]

14. We know that ‘left behind’ areas miss out on the support and buffer that a strong civil society brings, and on their fair share of funding. Research for the APPGLBN - Communities of trust: why we must invest in the social infrastructure of ‘left behind’ neighbourhoods (December, 2020) - found that there are almost three times fewer registered charities per 100,000 population in ‘left behind’ neighbourhoods than across England as a whole, and just over half that of other equally deprived neighbourhoods. [7]

15. Also, and doubtless partly as a result, because ‘left behind’ neighbourhoods lack individuals and organisations with the knowledge and skills to apply for funding, they are receiving less than half the amount of grant funding received in other equally deprived areas. [8] Where they exist, civil society organisations have been working tirelessly to support residents in ‘left behind’ neighbourhoods, particularly during the pandemic. However, civil society has been fraying in the places which lack civic capacity more generally.

16. The Community Wealth Fund would provide funding direct to ‘left behind’ neighbourhoods, so overcoming the problems surrounding capacity to bid for grants. It would embed resident-led decision-making, helping to build resident capacity and, over time, rebuild some of the local civic institutions that these areas lack. And the support and guidance offered alongside the funding will ensure that endeavours are successful and have the longevity to deliver a legacy within each community.

Funding

17. We are asking the government to commit funding from the Dormant Assets Scheme to create the Community Wealth Fund. This is a proposal, therefore, that would significantly boost the government’s levelling up agenda without placing pressure on public finances.

18. In January 2021 the government estimated that at least £880m could be released from dormant bonds, stocks, securities, shares, insurance and pension funds. Currently, this funding is earmarked for spending on "social and environmental purposes". We believe that this funding should be used to create the Community Wealth Fund in order to have a transformational impact on levelling up the country.

19. As this funding would be foundational, bolstering social infrastructure and rejuvenating civil society in ‘left behind’ neighbourhoods, we believe that it would supplement other government funding schemes, creating a multiplier effect within these communities and helping them to level up faster.

Estimated impact

20. As noted earlier, the Big Local programme, based on the same principles as the Community Wealth Fund, is improving deprived neighbourhoods and the quality of life of residents. We know from our experience that it is increasing civic pride and perceptions of place. In some areas it has been transformational.

21. Based both on our experience and research we are confident that after fifteen years of investment in ‘left behind’ neighbourhoods, the Community Wealth Fund would achieve: population level health improvements; improvements in educational attainment; and increased participation in higher education. We would also expect perceptions of neighbourhoods to have improved significantly and to see a marked increase in the number of places for people to meet, levels of community engagement and degree of economic activity.

A response to the government’s questions about the proposals

22. During Report on the Dormant Assets Bill in the House of Lords, the Minister Lord Parkinson of Whitley Bay, despite making positive comments [9] about the value of the sort of investment the Community Wealth Fund would provide, posed a number of challenges/questions regarding the proposal.

The evidence for community wealth funds is lacking

23. It is not the case that there is a lack of evidence to support the establishment of a Community Wealth Fund. The proposal is based on evidence and learning from previous government and charitable funding initiatives about what works in regenerating the most deprived or ‘left behind’ neighbourhoods.

24. We noted earlier the research by the University of Cambridge and Onward, which both respectively analysed success factors in government local area initiatives from the past forty years. They identified: long-term funding of at least 10 years, community leadership, and support and guidance for communities throughout secured the best outcomes for residents. The factors both these pieces of research identify as key to success are the founding principles of the Community Wealth Fund.

25. As we have outlined, outcomes from the Big Local programme so far evidence benefits for individuals – including reduced social isolation, increased confidence and aspiration, and greater access to employment opportunities – and broader community change. Resident-led investment has resulted in the creation and growth of local community and voluntary organisations; physical and environmental improvements; new community hubs and services addressing local needs; new confidence in engaging with local political and consultative forums; and improved community cohesion. [10]

26. There is in addition a growing body of evidence of the value of community leadership in enabling better outcomes to be achieved [11] and also the importance of community social infrastructure as providing a firm foundation for levelling up the most deprived or ‘left behind’ neighbourhoods. [12]

27. The potential fiscal and economic returns of a Community Wealth Fund in the most ‘left behind’ neighbourhoods have been modelled by Frontier Economics - The impacts of social infrastructure investment: A report for Local Trust (June, 2021). [13]

28. Using only the most robust evidence that indicates a causal link and with conservative assumptions, it estimates that a £1 million Community Wealth Fund investment in social infrastructure in a ‘left behind’ neighbourhood could generate approximately £3.2 million in economic benefits over a ten-year period - £1.2 million in fiscal benefits including tax and benefit savings and £2 million because of improved employment, health and wellbeing outcomes and reduced crime.

29. The research also found convincing evidence that the Community Wealth Fund would achieve other important economic, social and environmental outcomes that could not be monetised but would have a significant impact on improving areas and the quality of life of their residents. These include improved social cohesion, civic engagement and reduced loneliness; better physical environment and air quality and reduced urban temperatures from enhanced green spaces; improved wellbeing levels; and a range of outcomes related to crime, community and housing.

There is a lack of clarity about how a Community Wealth Funds would operate

30. We have undertaken detailed work on how a Community Wealth Fund would operate (and can make these papers available). The design is based on the model that was adopted for Big Local (as part of the Big Local programme 150 communities across the country are collectively spending almost £200m, over 10 to 15 years, to improve their areas and their quality of life).

31. We recognise that the community-powered approach that we propose raises questions about accountability, but we believe that we have addressed these in the design as follows:

· Accountability for funds - the Community Wealth Fund will have a core staff who will support communities receiving its funding to ensure that money is well spent and achieves maximum benefit. It will provide guidance and capacity-building support.

· Locally accountable bodies, well-respected local charities for example, housing associations, will be responsible for receiving, managing and reporting on use of funding on behalf of benefitting communities.

· Community accountability – the core local board or partnership, comprising a majority of local residents, that oversees development and delivery of spending plans will consult widely and conduct community research as it develops its spending plans.

· Assessors appointed nationally will assess each plan before any funding is released to ensure that it has genuine and widespread community support.

· The core partnership will establish a larger consultative forum with any resident entitled to join and play a role. It will regularly publish information about its work, particularly future plans and spending decisions.

· Accountability to the wider public – our proposal is that the Community Wealth Fund would be overseen, like other dormant asset distributors, by the Oversight Trust (subject to their agreement).

· The Oversight Trust would ensure that the Community Wealth Fund has good governance and appropriate financial and other systems in place. It would conduct quinquennial reviews of its work which will be published.

Why we need a Community Wealth Fund written into the legislation?

32. Secondary legislation is not an appropriate mechanism:

It is believed that over time dormant assets are likely to generate many billions of pounds for distribution to ‘good causes’. Therefore, decisions about the causes they are dedicated to are important and should be subject to proper debate in Parliament as opposed to being introduced in secondary legislation. The first causes to benefit in England – social investment, financial capability and projects for young people – were written into the original legislation (Dormant Bank and Building Society Accounts Act 2008).

33. To help guard against government using dormant assets for its own purposes:

The principle has been established that dormant assets should be used for ‘good causes’, charitable and voluntary sector activity that is additional to state provision. There is concern that government may wish to use dormant assets simply to supplement spending on its priorities. It will help to guard against this if a new independent charitable purpose is written into the legislation.

34. To ensure that a measure that already has wide and growing support is implemented:

• Over 460 organisations are part of a growing Alliance advocating for the Community Wealth Fund. This includes over 40 local and combined authorities, most of the major independent charitable funders and all the main sector umbrella bodies including National Council for Voluntary Organisations, Association of Chief Executives of Voluntary Organisations, Social Enterprise UK.

• Polling research we have undertaken demonstrates that the proposal would have support amongst senior leaders in the financial services industry and government has said that their endorsement is key.

• The Community Wealth Fund has been recommended in reports by a number of think tanks and inquiries including reports by Localis, The Centre for Cities, New Local, the No Place Left Behind Commission and the Civil Society Futures Inquiry.

• The proposal received cross-party support in its progress through the Lords and has the support of the APPGLBN.

35. To ensure it is implemented without delay:

A consultation process could take a long time. If the Community Wealth Fund, which already has such broad support, were written into the legislation now, we could start raising the match funding and planning to get money into communities as soon as possible after Royal Assent, when it becomes available.

Further information and reading

36. We have undertaken detailed work on how a Community Wealth Fund could best be implemented and its design. We have also developed proposals for how it might be evaluated through a new evidence centre called the Centre for Community & Neighbourhood Improvement. We have also produced papers which set out in greater detail the evidence base underpinning our approach and demonstrating its benefits. We would be happy to share this material with you should it be helpful to your assessment of a Community Wealth Fund.

December 2021