Ministers will use more than £800mn of cash sitting in dormant bank, pension and investment accounts to boost local communities and help vulnerable people in England struggling with the cost of living crisis.
The Department for Culture, Media and Sport said on Tuesday that the Dormant Assets Scheme (DAS) would initially release £76mn tied up in forgotten bank accounts, before unlocking millions of pounds from dormant pension and investment accounts later in the year.
Some £45mn of the initial funding will be awarded as interest-free loans by Fair4All Finance, a non-profit organisation, to 69,000 people contending with the sharp rise in living costs and 15-year high interest rates.
Another £31mn will be disbursed by social investors Access and Big Society Capital to hundreds of charities, with the aim of making buildings owned by social enterprises more environmentally friendly through more efficient energy systems, such as solar panels and new boilers.
Since 2011, the government has used the DAS to release almost £900mn from dormant bank accounts, which has gone towards generating social investment and helping financially vulnerable people.
Dormant assets are defined as accounts that have been left untouched for long periods of time. The DAS attempts to reunite people with their lost funds, but it uses unclaimed money to support social and environmental initiatives.
DCMS said that after the release of the initial £76mn, a further £738mn would be made available from insurance, pensions, investment and wealth management products that have been left unclaimed.
The government will also open the scheme to community wealth funds — pots of money released to deprived areas over a large timeframe, giving local residents the right to decide how the funds are spent.
Sir Ronald Cohen, co-founder of Big Society Capital, which was set up in 2012, said: “Unclaimed assets is public money; it doesn’t belong to the banks or insurers, even though it sits on their balance sheet.”
Civil society minister Stuart Andrew said: “The creation of community wealth funds will give local residents in some of the more deprived areas of the country the power to improve where they live and invest in what’s important to them.”
Reclaim Fund Ltd, the company set up to manage the DAS’s money, aims to sign up pension and insurance groups such as Aviva in the coming months, with investment businesses and wealth managers joining later this year.
Companies voluntarily commit to transferring money from the dormant assets they hold to the Reclaim Fund, which has enough cash to reimburse people who rediscover lost accounts after they have been closed down.
The DAS has to date supported a range of projects including the Greater Manchester Homes Partnership, which has housed 355 homeless people with support from Big Society Capital, and Homebaked, a co-operative bakery and community land trust in Liverpool.