How much money lies unclaimed in UK bank and building society accounts which no-one has touched for 10 years or more?

How much money lies unclaimed in UK bank and building society accounts which no-one has touched for 10 years or more?

Estimates vary, ranging from £400 million to £2.8 billion, but what is clear is that a sizeable chunk of UK capital has been either forgotten or left behind. What has been unclear — until recently — is quite what should be done with it.

Defined as “dormant”, and yet in many ways living as vibrant a life as ever, this money has up until now been treated as no strings capital, and used by holding companies as convenient free capital.

However, with governmental interest turning to the sleeping fund as a potential source of social benefit, this is set to change, though not as much as one might initially think.

The UK’s Commission on Unclaimed Assets, established in October 2005, published a report this March further detailing its recommendation for the establishment of a Social Investment Bank.

The proposal outlines a scheme to channel £250 million in the first year and a further £20 million a year for a minimum of four years into the “third sector”, thus driving development, and acting as an equity pioneer in the rapidly expanding realm of social organisations.

Curiously, this approach means that the money would continue to finance “high risk” investments, only the incentive would be a maximised social rather than financial return.

This step is significant, and highly contemporary, in a number of ways. Firstly, there is the recognition that in the pursuit of a more integrated and ultimately more stable society, there is a growing need to look beyond both public and private institutions to a third sector, which offers organisations that are at once highly responsive, and committed to social inclusion.

Secondly, there is the move in dealing with this sector from traditional “funds” or “foundations” to looking more at “investment”.

Increasingly the financial sphere is becoming aware that with some 55,000 social enterprises contributing £8.4 billion a year to the economy — disregarding social and environmental benefits and their knock-on cost savings — this area has a very real role to play in the delivery of public services, and the provision of sustainable solutions.

To be mission rather than profit driven need not mean a reliance on philanthropy: rather what is required is simply a more flexible and better aligned source of investment — i.e. investment which equally is mission rather than profit driven. An investment banking organisation will enable far greater total investment in the sector through the recycling of capital.

But thirdly, and perhaps most importantly, is the report’s vision for the development of social investment opportunities and their take-up by the private sector.

According to models, the Social Investment Bank intends in the first five years to channel £247 million of investment into repayable social funds.

However, over the same period, it anticipates attracting three times that much in additional private capital. This is to be achieved through expanding the expertise and financial horizons of the organisations themselves, as well as providing loan guarantees to risk averse investors, and very attractive tax incentives on approved community investments (worth 6.4-8.3 per cent a year de-pending on the tax-rate of the investor).

In combination these factors support the prospect of capital market participants, such as insurance companies and pension funds, coming forward and recognising social investment as a professional asset class.

And from there? Increasingly, a global awareness of the interconnectedness of things is influencing our decisions on all levels: from the food we buy, to what we throw away and where we go on holiday. Turning dormant funds into a Social Investment Bank will facilitate a more congruent approach to investment right across the capital market, and well beyond the confines of charity. It will perhaps be part of a far greater waking up to what our money could be doing while we are busy with other things.