Hundreds of millions of pounds languishing in dormant bank accounts will be released following an agreement with the banking industry, the Chancellor said.
The money will be set aside for youth services and financial education and exclusion in deprived communities, a narrower remit than some had expected. "Small, locally based financial institutions" will also benefit.
The deal with the banks fixes the definition of an unclaimed asset as an account inactive for 15 years. The banks believe this means "several hundred million pounds" will be classified as dormant.
The new Commission on Unclaimed Assets claimed that the actual figure could be as high as £5bn, but cautioned that efforts to locate the rightful owners could see 60 per cent of the money being handed back to them.
"We will issue a report in June 2006 recommending a framework for channelling those unclaimed funds to deprived communities," said Matthew Pike, secretary to the commission and chief executive of the Scarman Trust. "We want a broad public consultation process so that as many parties as possible can have a proper say about how the money is spent."
The NCVO welcomed the Chancellor's announcement, which fulfils one of its General Election manifesto demands.
Charities Aid Foundation said the banks should be allowed to direct dormant funds through their own charitable activities. "The commission should not be an exclusive way to donate to charities and we would welcome further debate," said Stephen Ainger, chief executive of CAF.
The Chancellor also promised legislation to enable trading companies owned by more than one charity to donate profits to their parent charities through Gift Aid.
- See News, page 3.