Fears for the future of £140m 'community anchors' funding

Concern is growing among third sector leaders that £140m earmarked for community enterprises will be cut because of a row over how it should be distributed.

The Communities and Local Government department is in charge of the funding for so-called 'community anchors' - social enterprises and community organisations working to regenerate local areas. The money remains unallocated nearly three months after the start of the 2008 spending round.

Hazel Blears, Secretary of State for Communities and Local Government, first discussed the fund with community organisations last November and has since been under competing pressures to give the money to local authorities, community support bodies or the Big Lottery Fund.

The Office of the Third Sector has confirmed it will provide £10m. Stakeholders have said CLG discussed giving £130m, but they fear this has been reduced to £80m. CLG denies it has confirmed a precise figure.

"We understand the desire in the sector for this, but we have never announced a launch date or level for this investment," a spokeswoman said. "We have already committed to investing in community anchors and are working closely and productively with the Office of the Third Sector."

Steve Wyler, director of the Development Trusts Association, said any reduction in funds would be a bitter disappointment.

"Demand for this money is massive," he said. "Even £140m is a very small amount, given the scale of the need."

Jonathan Lewis, chief executive of the Adventure Capital Fund, said he was concerned that CLG was under increasing pressure to make a quick decision and might give the money to the Big Lottery Fund, bypassing a tendering process.

"We think the first characteristic that the funder must have is a commercial mindset," Lewis said. "The lottery grants money - it does not create and nurture businesses."

Lewis, who acknowledged that the ACF would be interested in tendering to run the fund, added: "Investing in these organisations is a very specialist function."

The Big Lottery Fund said it had not been in discussion with CLG about the fund, but had "substantial experience" of working with local businesses and social enterprises.

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