Cameron Raids Dormant U.K. Accounts as Minister Attacks Banks

British Prime Minister David Cameron. Photographer: Ben Stansall/AFP/Getty Images

U.K. Prime Minister David Cameronannounced plans to use “hundreds of millions of pounds” fromdormant bank accounts to fund community projects, while BusinessSecretary Vince Cable said lenders “ripped off” customers.

Cameron said he will press ahead with a proposal set out inthe coalition government’s program to establish a “Big SocietyBank” to finance moves by charitable groups and not-for-profitcompanies to take over jobs currently done by the government.

“These unclaimed assets, alongside the private-sectorinvestment that we will leverage, will mean that the Big SocietyBank will over time make available hundreds of millions ofpounds of new finance to some of the most dynamic socialorganizations in our country,” Cameron said in a speech inLiverpool, northwest England, today.

Cameron said the idea ties in with his plans for a generaloverhaul of the public services, as the government tries tonarrow a record budget deficit. The new Office for BudgetResponsibility forecasts that 490,000 public-sector jobs will belost by April 2015.

“We’ve got to get rid of the centralized bureaucracy thatwastes money and undermines morale,” Cameron said. “In itsplace, we’ve got to give professionals much more freedom andopen up public services to new providers like charities, socialenterprises and private companies so we get more innovation,diversity and responsiveness to public need.”

Existing Legislation

A law passed in 2008 under Gordon Brown’s Labour governmentallows the government to use money from dormant bank andbuilding-society accounts “for social or environmentalpurposes.” An account is dormant if the holder has made notransactions over a period of 15 years.

A senior Labour lawmaker, Tessa Jowell, said in an e-mailedstatement that Cameron’s proposals are “simply a brass-neckedrebranding of programs already put in place.”

The coalition of Conservatives and Liberal Democratselected in May is maintaining pressure on the financial-servicesindustry following the bailout of Royal Bank of Scotland Plc andLloyds Banking Group by Labour.

Parliament’s Treasury Committee announced a probe intobanking to run alongside a government panel looking at thefuture of the industry. Cable has attacked the level of interestcharged by banks, saying lenders in Britain face lesscompetition now and can keep costs higher.

‘Bigger Temptation’

“One of the negative side effects of this crisis is thatour banking system that was already very concentrated, is noweven more concentrated so there’s less competition, less choiceand a bigger temptation for banks to earn margins at the expenseof their customers,” Cable told BBC television’s Panoramaprogram, which will be broadcast this evening.

“When we talk about restructuring the banks, what’s goingto come out of this is a more competitive system where thecustomers are not ripped off,” Cable said.

He went on to attack the culture of bonuses. “Unacceptablebonuses are continuing and that is something we want to try tostop,” he said. “That reflects the lack of moral compass.”