Unclaimed assets distribution mechanism

An HM Treasury consultation

August 2007

1.  Introduction: About Law Centre (NI)

1.1 Law Centre (NI) is a public interest law non-governmental organisation.  We work to promote social justice and provide specialist legal services to advice organisations and disadvantaged individuals through our advice line and our casework services from our two regional offices in Northern Ireland .  We provide a specialist legal service (advice, representation, training, information and policy comment) in five areas of law: mental health, community care, immigration, social security and employment to almost 500 member agencies.  Members include local Citizen Advice Bureaux, independent advice agencies, local solicitors, trade unions, social services, probation offices, constituency associations of local political parties, libraries and other civic organisations.   

1.2 We broadly welcome the proposals for the distribution of unclaimed assets; however, much will be dependent on the priorities set by the Northern Ireland Assembly for distribution of these funds.  We look forward to further information about the purposes for which these funds may be distributed in Northern Ireland .  We have made some general comments in response and address some of the questions which were posed for consultation.

2.  General Comments

2.1 We welcome the commitment that unclaimed assets are not a substitute for government funding and agree that such assets provide an opportunity for social investment within communities.  While much of the focus of this consultation is on the need for investment in youth services as a priority area for England , in Northern Ireland we would advocate that advice and information services also be seen as a priority area for assistance. 

2.2 Advice and information services in Northern Ireland neeed significant additional funding as these services provide a valuable and vital service for many communities across Northern Ireland .  Investing further in this sector will enable real advances to be made within communities at a grassroots level which will have a positive impact on the further development of a solid and secure infrastructure within Northern Ireland .  Further, advice services male a substantial contribution to anti-poverty strategies and boost local economic activity in disadvantaged areas.  A recent evaluation of benefit take up undertaken by Advice NI showed a financial return of £17 for every pound invested. 

2.3   We welcome the recent endorsement by the Northern Ireland Executive of ‘Partners for Change’.  This strategy sets out how government works with voluntary and community organisations (including many advice and information agencies/organisations) to deliver services to those most in need in society.  Additional funding, as available through the unclaimed assets scheme for the community and voluntary sector as part of this partnership would be invaluable. 

2.4  We note that significant responsibility will be given to devolved administrations, including the Northern Ireland Assembly to determine the priority spending areas for the unclaimed assets.  Given the recent development of ‘Partners for Change’ this will provide a valuable opportunity for the government and the advice and information sector to work together to set these priorities and use this additional funding in a proactive and strategic way.  In particular, the Department for Social Development is about to launch an advice and information strategy in September 2007 and this strategy could be financially underpinned in part by monies from unclaimed assets.

3.  Specific Questions

Q1  Are the principles underpinning the distribution of the available surplus assets the right ones?

3.1  The principles for distribution outlined in the consultation document are welcome.  We note that that these are the principles for England and the devolved administrations of Northern Ireland , Scotland and Wales will determine their own priorities for distribution.  We support the need for distribution to be managed on a devolved basis to ensure that each region is able to prioritise areas requiring additional funding and direct the available surplus assets accordingly.

3.2  We agree with the decision for a fair distribution of assets across all four countries of the United Kingdom and welcome further information regarding how   the funding will be allocated in a fair, accountable and reasonable way. 

3.3 Considerable caution will need to be taken to ensure that the distribution of the available assets is managed efficiently, with as little resources as possible being spent on administration costs.  This is important to avoid negative public opinion if too high a degree of the assets are spent on administration costs rather than meeting the needs of the people and communities who are meant to benefit.   

Q2  Where is the greatest need for finance and funding for third sector organisations that is not currently being met in the market?

3.4  Third sector organisations need adequate access to finance to enable them to continue to carry out their objectives.  The third sector is defined by Government as non-governmental organisations which are value-driven and which principally reinvest their surpluses to further social, environmental or cultural objectives, including voluntary and community organisations, charities, social enterprises, cooperatives and mutuals.[1]

3.5  As a third sector organisation, Law Centre (NI) welcomes the proposals by the Government to invest some of the available assets in the long-term sustainability of the third sector in order to boost ‘social investment’.  Social investment of this kind will enable many third sector organisations to gain much needed additional funding to continue to provide services of significant benefit to the community. 

3.6 The greatest need is for sustained funding.  Short term grants or one off funding for specific projects benefit the sector but limit the scope for strategic investment by third sector organisations.  Investment that allows third sector organisations the freedom to use funding in a more strategic way could enable greater long term financial stability.  This would also reduce the pressure on organisations of continual fund raising. 

Q3 Is there a need for a specialist social investment wholesale institution?

3.7   The idea of a specialist social investment wholesale institution is intriguing, however, we would require further information on the exact remit and functions of such an institution before commenting further.  We welcome further information on this proposal, including its structure, how it will engage with third sector organisations and how its work will be monitored and evaluated.

Q4  Is this the best means of increasing the investment available to sustainable third sector organisations?

3.8  As stated above it is an interesting concept and one that may have merit but further information on the institution would be required in order for more detailed comment on whether such an institution is the best means of increasing the investment available to sustainable third sector organisations.

Q6  Is the proposal to use the Big Lottery Fund as the primary UK-wide distribution vehicle for the available surplus assets the right one, based on the principles for distribution outlined in this document?

3.9  We recognise that the Big Lottery Fund has extensive experience of distributing funding through a range of different programme models and that it has a UK-wide infrastructure already in place to be an effective distributor of the funds.  These are all positive reasons to support the proposal to use the Big Lottery Fund as the primary distribution vehicle.  Further, using an established body will save on initial administration and set up costs and avoid potential delays while systems for distribution are put in place.

3.10  We are concerned, however, by the possible negative impact of the association between the Big Lottery Fund and gambling.  This link may adversely affect some churches and community/voluntary organisations who may feel unable to apply to the Big Lottery Fund for assistance because of this connection.  Care needs to be taken to ensure that there is no indirect discrimination as a result of the choice of distributor for the available surplus assets. 

3.11 We welcome the recognition that unclaimed assets, under the proposals set out in the consultation document, would be managed by the Big Lottery Fund as a separate and distinct funding stream, with its own unique branding and financial management arrangements and that unclaimed assets will not be used to supplement existing Lottery-funded activities.  This clear separation is important and may assist to address the problem raised above.

Q7 What are the different approaches that the Big Lottery Fund could take to the distribution of the available assets to ensure they deliver maximum benefit to communities?  How should BIG best work with other intermediaries and delivery partners to ensure the best outcomes?

3.12    If the Big Lottery Fund was confirmed as the appropriate primary UK-wide distributor for the available surplus assets there would be a number of approaches it could take to ensure maximum benefit to communities.  Most importantly is that the available surplus assets are accessible to communities and that there is a clear promotional and awareness raising strategy put in place within communities to make them aware of the available funds. 

3.13    We welcome the Big Lottery Fund’s commitment to ensuring the distribution of funding is geared towards the achievement of strategic outcomes.  This approach to distribution will ensure that the allocation of funding is informed and targeted to ensure that a positive difference is made as a result. 

3.14    We note the reference to the 2005 Pre Budget Report which announced that there would be an option for small locally-based financial institutions to focus the use of unclaimed assets on youth services and financial capability and inclusion in their local communities.  The intention to allow small institutions, principally small building societies, to use unclaimed assets to benefit the communities to which their members belong is interesting but one that requires further consideration.  This is a model which is unlikely to work in Northern Ireland given we are only aware of one locally based Building Society, however, we are aware that the particular arrangements for Northern Ireland are not subject to consultation at this stage.   

3.15    The allocation of unclaimed surplus assets to small locally based financial institutions would need to be very carefully monitored to ensure fairness and transparency.  As there is limited detail within the consultation document regarding how this option would work in practice we welcome further information about this aspect of the scheme.  The current proposals for the transfer of assets from the Big Lottery Fund to small locally-based financial institutions and then for these institutions to in turn transfer money to an arm’s length charitable body to then distribute assets on to smaller charities at the local level seem unduly complicated.  Even if the Big Lottery Fund is left out of this equation that still raises concerns regarding the lack of accountability or transparency if multiple bodies/organisations are responsible for the transfer of the surplus assets. 

3.16 It is important that the arrangements for distribution are kept as simple as possible.  We would encourage the appointment of only one distributing body rather than one primary body and then multiple other distributing bodies which may lead to confusion and a lack of clarity in the procedure of transferring and distributing funds.  The Big Lottery Fund will need to work closely with other intermediaries and delivery partners on a local and national level to ensure a fair and equitable distribution of surplus assets. 

Q8  Do you agree with the proposals for how legislation will work in relation to the distribution of these assets?

3.17    We generally welcome the proposals for how legislation will work in relation to the distribution of the surplus assets.  There is a clear need for legislation to be enacted to deal with the distribution of these funds.  We note that additional statutory function will need to be given to the Big Lottery Fund, if it is confirmed as the primary distribution body for the surplus assets.  The proposed provisions within the consultation document seem to cover any major areas requiring attention. 

3.18 We support the proposals to distribute unclaimed assets in a way to allow the devolved administrations to determine their own priorities for spending which reflect the needs of communities in each country.  We look forward to participating in further consultations on the setting of priorities by the Northern Ireland Assembly and how these priorities should be addressed in legislation. 

3.19 We note the proposal that Ministers will be given the power to issue directions to the Big Lottery Fund relating to the distribution of assets within the established priority areas for each country.  We welcome further information on the scope and range of these powers and whether public consultation prior to the issuing of directions will be required and confirmed within legislation to ensure that the general public and relevant organisations have the opportunity to impact and influence Ministerial decisions relating to the setting of priority areas and any further directions. 

4.  Conclusion

4.1  Law Centre (NI) welcomes the opportunity to respond to this consultation paper.  We trust you will find our comments helpful.  If there is any further way in which we could contribute to this process we would welcome the opportunity to do so.  

Notes