Plea for unclaimed assets to go to social investment bank

The Commission on Unclaimed Assets today makes a powerful argument for a large slice of the money in the UK's dormant bank deposits to be used to set up a new social investment bank that will serve not-for-profit organisations.

In a report based on consultation with more than 1,000 third sector bodies, the commission lays out an ambitious manifesto, which warns that the sector is currently "fragmented, under-capitalised and unable to invest in sustainable growth and development".

The report says the bank would need a minimum of £330m to operate effectively - £130m more than was estimated in January. The calculation is based on starting capital of £250m and a subsequent annual income of £20m for at least four years.

The Government-backed commission is chaired by Sir Ronald Cohen, a pioneering venture capitalist and close ally of Gordon Brown. It is thought that the Chancellor considers the bank to be a natural progression from the Social Investment Task Force, of which Cohen is also chair.

Brown must now decide whether to set up the bank, amid speculation that some unclaimed assets could go to the Big Lottery Fund to compensate for cash diverted to the London Olympics.

Estimates of the total value of unclaimed assets vary from £400m to several billion pounds.

The commission's core proposal is that the bank should be insulated from political considerations and act as a wholesaler of capital-providing financial products such as loans, lease financing, equity and quasi-equity. It also suggests widening regulations on Community Investment Tax Relief to encourage private investment in the sector.

"Now people know these assets exist, they're keen that allocation is organised fairly," said Geraldine Peacock, former chair of the Charity Commission and a member of the assets commission. "They don't want a Goliath striding over the sector."

Toby Eccles, programme manager at the commission, said the bank could develop products that are hybrids of grants and loans, which would allow low-risk borrowing.

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