Ministers will use more than £800 million of money sitting in bank accounts, pensions and dormant investments to improve 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 Asset Scheme (DAS) will initially release £76 million tied up in forgotten bank accounts, before unlocking millions of pounds from dormant pension and investment accounts at the end of the year.
Some £45 million of initial funding will be awarded as interest-free loans by Fair4All Finance, a non-profit organisation, to 69,000 people who are battling rising living costs and 15-year high interest rates.
Another £31 million 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 DAS to release almost £900 million from dormant bank accounts, which has resulted in social investment and helping financially vulnerable people.
Dormant assets are defined as accounts that have been left idle for a long period of time. DAS tries to reunite people with lost funds, but uses unclaimed money to support social and environmental initiatives.
DCMS said that after the £76 million launch, £738 million will be available from insurance, pensions, investment and unclaimed wealth management products.
The government will also launch a scheme for community wealth funds – a pot of money released to disadvantaged areas over a large period of time, giving local people the right to decide how the funds are spent.
Sir Ronald Cohen, co-founder of Big Society Capital, which was founded in 2012, said: “Unclaimed assets are public money; not banks or insurance companies, even if they are on the balance sheet.
Civil society minister Stuart Andrew said: “Creating a community wealth fund will give local people in some of the country’s more deprived areas the opportunity to improve their space and invest in things that matter to them.”
Reclaim Fund Ltd, a company set up to manage DAS 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.
The company voluntarily transferred money from the dormant assets it seized to the Reclaim Fund, which has enough money to reimburse people who rediscover lost accounts after closure.
DAS has so far supported a range of projects including the Greater Manchester Homes Partnership, which houses 355 homeless people with support from Big Society Capital, and Homebaked, a cooperative bakery and community land trust in Liverpool.