Committee stage in the Lords
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- Before we start, I remind the Committee that if there are Divisions in the Chamber—which there may well be—the Committee will adjourn as the Division Bell sounds and will resume after 10 minutes. Clause 15 [Distribution of dormant account money by Big Lottery Fund]:
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Lord Howard of RisingConservative- Quote
- moved Amendment No. 60:
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Lord NewbyLiberal Democrat- Quote
- We support the thinking behind this amendment. Whether it is as straightforward to introduce into legislation as the noble Lord says, we will wait to hear the Minister’s response. In our view, such an amendment has merit because there is widespread cynicism about the Government’s motives in respect of this money and widespread cynicism about the way in which the Government have appeared at times to use lottery money for their own purposes rather than as additional expenditure. At all stages so far, when the Minister has described the purposes of the expenditure to be incurred under this Bill, he has been at pains to spell out that it will be additional. Of course, if a social investment bank is established, almost by definition that is additional because it is not being undertaken at the moment and there is no suggestion that if the money does not come from this source, it will come from another source from government. However, on the other two heads of expenditure, the Government are already spending a great deal of money on youth policies and on financial inclusion. In theory, it would be possible for the Government to allocate money from this fund that they would otherwise have taken from general expenditure. It is sensible to introduce a safeguard, as proposed by the noble Lord, Lord Howard of Rising. At the very least, I hope that the Minister can give us a categorical assurance that any funds raised and spent via this route will be additional to planned or potential government spending.
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Viscount EcclesConservative- Quote
- Following on what the noble Lord, Lord Newby, said, it could be difficult to introduce a safeguard. I have a lot of sympathy with the amendment and I wish to see some of the things looked for in the amendment happen. If we look through the Government’s end of the telescope, it is very difficult, and, of course, it is the same telescope and is looked at through the same end by the Big Lottery Fund. In its annual report, under “Policy Directions”, it says: “The Big Lottery Fund is a non-departmental public body and therefore operates under Policy Directions issued by its sponsor department, the Department of Culture, Media and Sport. The Policy Directions set out the principles with which the Big Lottery Fund must comply”. A house divided against itself shall surely fall. There we are: the Big Lottery Fund is a part of government and it must comply.
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Lord HigginsConservative- Quote
- There is a basic problem here: the Big Lottery Fund is already suspect in the sense that it is felt that its operation so far has involved dispensing money which should otherwise have been provided from government resources. The money we are talking about in the Bill is not government money in any sense. Therefore, it is difficult to understand the argument that it should be administered by a body which is clearly associated with the Government. I was not fully aware that, as my noble friend said in moving the amendment, the Big Lottery Fund says that increasing the effectiveness of government expenditure is legitimate. The right thing to do in the Bill is to have the proceeds apportioned by a body that is clearly independent and cannot be open to suspicion that it is being used to cover expenditure that would otherwise be covered by the Government. The objectives of the Bill are entirely admirable, but the more one goes into the detail, the more one becomes worried that the way they are put forward in the legislation is not ideal. I hope the Minister will understand our concerns on this point and agree that an amendment that provided for the scheme to be administered in an impartial way would be preferable if the scheme as a whole is to get general approval.
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Lord Davies of OldhamLabour- Quote
- I am grateful to noble Lords who have spoken in this most interesting debate. The issue of additionality, as noble Lords indicated, obtains across lottery funds as well. We had one of these debates in extenso with regard to the Big Lottery Fund at the time. I shall go through the basics of this issue. First, Big has to be separately accountable for this money. It is not government money, as the noble Lord rightly says, but it is not lottery money either. The money actually belongs to those people who can claim it back, and if they cannot claim it back, it is in a fund for defined purposes. It is therefore important that people are assured that the money is spent properly. I am at one with all the noble Lords who have argued the case for additionality. I can guarantee separateness with regard to the accounts and I can guarantee accountability by the openness of what Big does. I can also assert that Big is not an arm of government; it is a distributor of the lottery. I understand the criticisms of the way it undertakes its most enormous task—and it is fairly extensive—but the Government have never claimed, sought to assert or taken any action to suggest that Big is their agent in getting expenditure through. If someone comes along with an individual case in which they say, “This is money we are due to receive from the Government, properly allocated, but we have this concept of how that money can be used to extend what the Government have sought with their expenditure, which is inadequate, and we think that in fact it will improve the delivery of what the Government sought”, that is a case of additionality. After all, individual local people have made that case, not the Government. That is not the Government sequestering any resources in order to supplement what they deliver, but local people making an application. That is a point that has been missing from all representations. Bids to this fund will be made by the communities arguing on their own behalf. They will have to make the case that it is additional because distribution cannot take place on the basis that this fund has anything to do with being an arm of government. It clearly is not, and the Government are emphatic, with regard to the Bill, that they would not countenance such an interpretation. There is the question of whether there may be some services that the Government provide that other people then make a submission for. The noble Lord, Lord Howard, referred to Lancashire County Council, which is indeed a statutory body. It carries out a great deal that the Government impose upon it. It also has areas of great discretion where it carries out its own priorities. It is absolutely clear that the Government do not provide universal support for carers—in fact, Members of the Opposition have been a little prone to pointing that out to us in recent times. If Lancashire identified something in its community as a proper use of lottery money and put its case to the Big Lottery Fund, which agreed that it was additional because there was no question of it being funded by the Government for the foreseeable future, the noble Lord, Lord Howard, would not have a case that this was somehow by definition an illustration of the Big Lottery Fund acting as an agent of government. I emphasise again that we are not talking about lottery funds here but a separate fund, separately accountable, which Big Lottery Fund has to operate entirely separately from its normal operations. The noble Viscount, Lord Eccles, is right: he has considerable expertise in this area and has sustained this argument over a number of Bills on a number of occasions. He is right in saying that it is forlorn to think that one can get a definition of additionality that will stand up in law and be the absolute sure rock on which Big distributed resources under this fund. The noble Lord’s amendment has flaws in it. We recognised the representations that came from the opposition parties several years ago, thick and fast, with regard to the lottery. Our own Members, too, in this place and another place, were very keen that if we could get the concept of additionality in a Bill, it would ease any problems and criticisms. We maintain that it is not possible to do that—and the noble Viscount identified the difficulties. However, we do subscribe to the idea that the fund must be separate and accountable. Within that framework the Government see Big responding to demands from communities. I emphasise again that the initiative is not going to come from government, which has no right to act by regarding Big, either in its lottery operation or even in extenso with regard to this fund, as an agent of government expenditure. It is not. That is why I was emphatic in our last sitting in identifying that the resources that my right honourable friend the Prime Minister identified to be devoted towards the youth service were in the Comprehensive Spending Review for each of the next three years. What will happen with regard to youth services is that local communities will see ways in which they do not have a hope of their project being funded by government and they are able to establish to the fund that they want resources for an additional amenity. I am sure that noble Lords—particularly noble Lords who have been in the other place—who have been involved with communities, were fertile in identifying where there were government gaps in their communities. They often start to raise significant money to fill those gaps—and increasingly, in recent years, they have looked for other resources to give them a hand. Here we are saying that when people come forward with a wish for youth services to be enhanced in their area, this fund can properly be applied to. However, if the application is merely a substitute for what the Government are about to fund, or should fund, the application will not be sustained—because that is not the criteria on which the body will work.
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- Lord HigginsConservative
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- I am slightly worried about the Minister’s overall attitude, given the fact that on the Floor of the House this afternoon he appeared to imply that if the Treasury were acting as a spending department, it would be more generous than other departments.
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- Lord Davies of OldhamLabour
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- I was merely advocating that the department might be more efficient in co-ordination than effective in expenditure.
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- Lord HigginsConservative
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- I understand that. However, as the argument, presumably, is that the Big Lottery Fund would carry out the operation more economically than a separate organisation, does he have any figures to support that? Secondly, the Minister referred to applications from Lancashire, which raises the question of whether the money may be used as a substitute for expenditure that ought to be made by a local council. Perhaps I have misunderstood him on that.
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- Lord Davies of OldhamLabour
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- If the noble Lord will forgive me, I strayed from the fund and from this Bill to respond to the noble Lord, Lord Howard, who introduced an example of Big in relation to lottery distribution. There was no concept that that would obtain in this Bill and the fund—that must be for the judgments of those who operate the fund. However, it will be recognised that there is a difference between the amounts available under this fund and the exercise with which Big is involved in the distribution of lottery funds. On the other point, the Government, in reaching this judgment, canvassed other possibilities. The noble Lord would struggle to identify a body that has the range of operations throughout the United Kingdom which Big represents and that is engaged in an exercise not wholly dissimilar to that which it is expected to carry out for the fund. That is why the choice of Big was obtained.
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- Viscount EcclesConservative
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- On that last point, I would be the very last person to argue in favour of a monopoly for a body other than Big. In fact, in the previous Committee sitting I argued against Big being given a monopoly, which is the basis of my argument. If you take what essentially has been private money and put a large proportion of it in a position where it can be distributed for good causes, it is a mistake to give it all—in the Big scheme as opposed to the small scheme, the alternative scheme—to a monopoly distributor. The argument has been made that Big is well set up for that. But I think that I am right in saying that it assesses its grants of any size in only two offices, one in Birmingham and one in Newcastle. It does not have a whole range of regional offices to assess grant applications. They are centralised in the two big ones. There is a very strong case—I hope that the Minister will deal with it at some stage—for widening the ability of the Secretary of State to select distributors so that no one gets a monopoly. There might be half a dozen distributors. In that way, there would be much more diversity; accountability would be better because the public would be able to look and see who they thought was doing the best job. Competition is quite a good thing for us to espouse. I thought that there was, generally speaking, a consensus within the leading parties that competition was a good thing.
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- Lord Davies of OldhamLabour
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- The noble Viscount will appreciate that the nature of this scheme, as he rightly says, is compiled of private money whose origins lie in private institutions which are making their contribution to setting up this scheme. Of course, the expectation was that there would be a clear distribution mechanism. Whatever imperfections noble Lords opposite might seek to attribute to it, Big meets that requirement.
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- Lord Howard of RisingConservative
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- I thank noble Lords who have spoken in this debate. It has given me enormous pleasure to see that the Minister, in spite of his poor health, has given his normal bravura performance, which must be an example to anyone aspiring to be a Minister. I recognise the difficulty of defining “additionality”, to which the noble Viscount, Lord Eccles, has drawn attention. While these amendments may not be perfect, they are a considerable improvement on what we already have. The basic problem is that Big—or, as the noble Lord, Lord Hamilton, suggested the other day, the “resurrection fund”—is perceived in a quite different manner by the general public from the way in which the Government see it. The general public regard it as a sort of branch of the Government, while the Government regard it as entirely independent. While those two views cannot be reconciled, there is not a great deal more to be said, so I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 15 agreed to. Schedule 3 [Further provision about the functions of the Big Lottery Fund]:
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- Lord Howard of RisingConservative
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- moved Amendment No. 61:
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Lord Shutt of GreetlandLiberal Democrat- Quote
- If I have understood correctly what has been said, I do not warm to the amendment. I am one of those who believe in letting many flowers grow. If we take the view that the Big Lottery Fund will disperse the money, the idea of it having a separate committee appeals greatly to me. There may be circumstances where someone applies to the Big Lottery Fund and fails but then applies to the fund about which we are speaking and succeeds, or vice versa—I hope that that may be the case. If there is a separate committee, with separate ways of thinking about things and giving different opportunities, that may be a good way of going forward. I turn to the costs of giving money away. I declared an interest earlier as a trustee of the Joseph Rowntree Charitable Trust. I think that we are in the area of 12 per cent in terms of expenditure on administration and everything else. If one spends 12 per cent in giving away 88 per cent well and doing a proper and thorough job of it, it is far better than giving away 100 per cent and being clueless about it. I would not be precise about the figures. For example, if one makes a grant, one has to assess it properly. In addition, one has to look afterwards at whether any success has followed the grant, which is important and always costs money. From what I have heard so far—I may be persuaded otherwise later—I do not support that which is being put forward.
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- Lord Davies of OldhamLabour
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- I am grateful to both noble Lords, but rather more grateful to the noble Lord, Lord Shutt, on this occasion because he pointed out the difficulty in establishing an arbitrary cost figure. The measurement that should be expected of the distributor is that it is a proven, accountable and efficient operation. Big has been going for only three years and has had its role transformed in the past 18 months or so. It takes time for a body to bed down. Big has been enjoined to bear down on costs. We are all united in the fact that we want the maximum resources available to the fund to be distributed and not spent on administration. Across its present activities, Big spends about 10 per cent of its income on operating costs. That is not a bad operating figure compared with other funding organisations, although no other body has a similar range. Big has had a difficult two years in bearing down upon costs. That is an important consideration for all of us. Five per cent on expenses, which is the burden of Amendment No. 103, is an arbitrary concept. I do not often ask the noble Lord to add to his contributions, which are always strongly expressed, but perhaps in his summing up he could demonstrate to us another nationwide distributing organisation of the same complexity as Big which would accept a cost limit of 5 per cent, which is what he suggests here. It will, of course, depend on the resources that come in. Obviously operating costs will decline the more resources come in. I therefore resist the concept of an arbitrary costs limit on expenses. Let me reassure the noble Lord, Lord Shutt, that Big organises its work through committees. It could not possibly operate its present range of activities on a single board system. It operates committees for its work and it is inherent in the Bill that this is a separate funding operation which will need a separate distribution process. I give way to the noble Lord.
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- Lord Shutt of GreetlandLiberal Democrat
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- My point is that if there is a separate committee with the responsibility for dispersing these funds, there is a better chance of that committee saying, “Let us look at this application very carefully”, rather than giving it the standard Big Lottery approach that is given in other committees which may have taken place yesterday or the day before.
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- Lord Davies of OldhamLabour
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- I hear what the noble Lord says but we are also drawing on the experience and expertise that Big has developed over the four or so years of its operation. I am trying to think of a private organisation that accepts a straightforward limitation on its administration costs. In fact, if one thinks about it, the more such an organisation gets into difficulty, potentially the more the administration costs will rise. However, under the concept envisaged in the noble Lord’s amendment, it will be stuck with fixed costs, however successful or unsuccessful it is. It is important to bear down on administration costs. There is not the slightest doubt that the costs of the Big Lottery Fund, and indeed all lottery distribution, are borne down on because it is money that is to be distributed. I re-emphasise that it is not government money. Lottery money belongs to those who have contributed to the lottery because they want to win a prize, but they also want to contribute to an organisation that supports good causes. Therefore, of course we want to bear down on costs, but an arbitrary fixed limit, as envisaged in these amendments, scarcely stands up to examination.
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- Viscount EcclesConservative
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- Perhaps the Minister could look at one charity which is very much involved with the young and with deprived and vulnerable people. It distributes about £50 million a year, which is a not inconsiderable sum. I refer to the Gatsby Trust—a charity in which the noble Lord, Lord Sainsbury of Turville, has a direct interest. I have not looked at the accounts for quite a while and so do not want to be held either to the figure of £50 million a year or to the distribution costs, which I think are 4.3 per cent. A little consultation with the noble Lord, Lord Sainsbury, might be helpful in thinking about how to take what at the beginning is a relatively modest amount of money each year and distribute it nationally in the most efficient and effective way.
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- Lord Davies of OldhamLabour
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- I do not have the slightest doubt that my noble friend Lord Sainsbury is associated with a hugely successful venture such as the charity identified by the noble Viscount. I should welcome the opportunity to discuss that success with him and assure noble Lords that I will do so. The noble Viscount, Lord Eccles, indicated that this charity is involved in £50 million but he will recognise that that falls considerably short of the resources that we are anticipating will be distributed from this fund. I shall need to look at that charity, but there is a difference between a fund where it is entirely open to the public’s right to present schemes to it and a charity where the public will be much more concerned about the specific objectives. People will be a good deal less knowledgeable about charitable operations in this country than they will be about this significant fund.
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- Lord Howard of RisingConservative
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- Again I thank noble Lords for speaking in this debate. Before I respond to the Minister—because I would not want to be ungracious and not respond—I point out that there is something called economy of scale, which means the bigger the institution the greater the benefit with smaller overheads. In that context, Big should be allowed about 2 per cent because it will give away so much more than the Gatsby Trust. Comment has been made on my 5 per cent being too stringent a limit, but if you already have a structure as Big is claiming, just because you have greater turnover going through that structure does not mean that you have to increase the overheads. No company in the private sector, if it had a larger turnover, would allow the administration to increase exponentially, because if it did it would go bankrupt. When a structure already exists, more money should flow through to the beneficiaries when more money comes in. You do not have to do a great deal more, in that case, to accommodate a much larger sum going through your organisation. That is a very simple point, which should work in almost any organisation in any sphere. That having been said, I do not suppose that the Minister will make an immediate concession, so I may have to return to this matter later. In the mean time, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 62 not moved.] Schedule 3 agreed to. Clause 16 [Apportionment of dormant account money]: [Amendments Nos. 63 to 65 not moved.]
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- Lord Howard of RisingConservative
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- moved Amendment No. 66:
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- Lord NewbyLiberal Democrat
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- The subject matter of this amendment overlaps with our Amendment No. 69. If I may, it would be expeditious to speak to our amendment at this point. The Bill is very prescriptive in some respects and rather less so than we would like in others. Clause 16(1) is a classic example of this. It simply says that a certain proportion of the money will go to England, a certain proportion to Wales, a certain proportion to Scotland and the rest to Northern Ireland. Very helpfully, it concludes that the total amount distributed must add up to 100 per cent, for which we are extremely grateful to the drafters of the legislation. The basis on which this allocation will be made, and on which the prescribed percentages will be decided upon, is unclear. Is it to be on the basis of the Barnett formula, which is the starting point for much government expenditure? I very much hope that it is not. We have argued, as has the noble Lord, Lord Barnett, that the Barnett formula has had its time and that general government expenditure should be divided between the nations and regions of the UK on the basis of need. Our amendment, in a sense, substitutes “poverty” for “need” but, given that the Bill allows complete leeway as to how the money should be divided between the four constituent parts of the United Kingdom, we need greater clarity on the Government’s intentions. Our proposal is that poverty is a good basic indicator against which the percentages could be determined. We would be grateful if the Minister could explain how this is proposed to be done, or whether, as in many other parts of the Bill, the Government have not yet formed a view.
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- Lord Davies of OldhamLabour
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- I am grateful to Members of the Committee, but I would like some clarification. The noble Lord, Lord Newby, mentioned Amendment No. 69. I am not sure whether I am required to address that now—after all, the burden of his representation very much follows that amendment.
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- Lord NewbyLiberal Democrat
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- It would be the logical place to do that, if the Minister is happy to do so.
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- Lord Davies of OldhamLabour
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- I am grateful, because it avoids repetition. I am always conscious that the tolerance of the Committee must not be stretched and repetition by me is one of the more heinous offences. I was seeking to avoid that. I will certainly address Amendment No. 69 also, because it is closely linked in concept to Amendments Nos. 66 and 68, although it has a different emphasis. We recognise that the motivation for these amendments is a concern to ensure a fair distribution of unclaimed assets across the United Kingdom. The intention of the amendments is to clarify what our approach is to be. We are concerned that apportionment will be on the crude basis of population. That is an important principle that I want to emphasise, because this is a UK-wide scheme. Also, in keeping with the principles of devolution, the devolved Administrations of Scotland, Wales and Northern Ireland are responsible for determining spending priorities that affect the needs of communities in those areas. We have designed the scheme in such a way as to enable spending decisions to be devolved. We expect to use a population-share formula as the means by which the available money is divided. It is of course for those concerned then to make their submissions to the scheme. The Big distributor, when it is dealing with Scotland, Wales and Northern Ireland, will have a separate approach to meeting demands within that framework. I never thought that I would refer to the formula without my noble friend being present, but I have the great joy of saying that the Barnett formula is the agreed and established method by which spending allocations to the devolved Administrations have been determined for some time. In fact, if my noble friend were here, he would tell me that we had just celebrated the formula’s 20th anniversary. Adopting Barnett principles is therefore the appropriate way to apportion money under the Bill. I recognise the dimension produced by the noble Lord, Lord Newby, in his amendment; I hope he will recognise that we are concerned to follow the principles of fairness across the devolved areas of Britain. Despite government expenditure which sometimes begins a process of correcting inequalities, a great deal of deprivation and poverty is still to be found in large concentrations in the devolved countries. We will use the population-share formula as the means by which the money is distributed. As I have indicated, it will be for those who seek access to these resources to make their case to Big, but in the framework under which charities and the lottery fund operate, if a well defined claim is made for effective use of the money in a deprived community, it may have a marginally greater success than claims from other areas where there are more support services and the strength of their claims is, therefore, not as great. That issue will be decided by the committees of Big which make such decisions. Fairness should be underwritten in the Bill and that is the basis on which we propose to operate the scheme.
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Lord SkelmersdaleConservative- Quote
- On reading the Bill, it occurs to me that the Government anticipate making one order, and then that is it. But if you are going to use these prescribed percentages from the point of view of population, as the Minister just said, this will vary over time. One usually gets an idea of the population of a particular part of the United Kingdom from the decennial census, although there are other ways of achieving this. Not only that, but relative poverty, we are told, has been rising over the past two or three years and, as far as the amendment of the noble Lord, Lord Newby, is concerned, this will also change over time in particular areas of the country. So how often does the Minister anticipate laying these orders?
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- Lord Davies of OldhamLabour
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- I have not given great consideration to a laying of orders timetable for the Bill. I have enough to cope with in getting the Bill through the House at the present time. The noble Lord is right—the concept of fairness will require adjustment over time. Populations will change and, as he indicated, levels of deprivation will also change. I do not think there will be any difficulty for the Big distributor to adjust to the changing areas of deprivation for the reason I gave earlier. When schemes are proposed, it will be able to assess their likely beneficial impact on communities and, all things being equal, the same schemes are likely to be of a greater benefit to deprived areas than they are to wealthy ones. That is within the framework of the scheme. On the broad issue of whether we intend to follow the census and make decennial orders in line with population shifts, I hope we will have a more flexible concept within the operation of Big to enable us not to impose such rigidities. However, if it looks as if the distributor has not been taking account of such changes, that will be reflected in the accounts of the scheme. There would not be the slightest doubt about parliamentary and ministerial pressure to ensure that the distributors recognised the anxiety about them keeping up with necessary change. We are involved with considerable consultation with devolved Assemblies before we produce orders. We are in early consultation with the Welsh Assembly in respect of such orders, although we have great experience regarding aspects of Scotland. I assure the noble Lord that we will be involved in full consultation before we can lay any such order.
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- Lord SkelmersdaleConservative
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- I am still confused, I am afraid. This section refers to the activities of the Secretary of State and not to the activities of the fund. I am concerned about the activities of the Secretary of State. Unless he produces a diktat in the form of an order, presumably the division of the fund will not change.
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- Lord Davies of OldhamLabour
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- Not so. There are other means of bringing pressure to bear rather than the proposal favoured by the noble Lord. I noticed the word “diktat”—not a concept that would ever cross my lips so far as a Labour Government are concerned. I also hope he will recognise that failure to distribute fairly will be made abundantly clear to the distributors. It may be that we reach the stage where the Secretary of State says, “This distributor seems to be failing on the most basic of criteria. It has not taken account of significant population changes with regard to the distribution of grants”. The organisation would then be guilty of a range of flaws if it got itself into that position and would lose confidence. It has to be recognised that the principle is according to population. If the noble Lord is saying he would like a 10-year commitment in the Bill to take that population change into account as a result of the census, I cannot promise him that. If he is saying that changes happen more rapidly than that and Big should be aware of them, I say to him that if Big perpetrates a manifest injustice on a large area of population that has developed and is not a beneficiary of any of Big’s activities, that will become abundantly clear.
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Baroness NoakesConservative- Quote
- I am sorry to intervene on this. The Minister keeps talking about Big. This is an activity that is carried out solely by the Secretary of State. He is the one who determines the percentages. Big is just told whether the money is English, Welsh or Scottish and so on and then distributes it onwards. The decision on the split has nothing whatever to do with Big, yet the Minister has spent several minutes trying to explain to us how Big is going to make some adjustments. I am confused about what message the Minister is giving us.
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- Lord Shutt of GreetlandLiberal Democrat
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- I wonder if I might raise another matter that is related to that. I know we have an amendment on this later, but let us look at this social investment wholesaler. There is reference to £250 million. It is clear that that is to come out of English money. It could be very big—in the normal way you use the word “big”—in terms of how much is available in England if that is done. Is the social investment wholesaler therefore to be something that functions only in England, or is this to be taken into account if a large sum of money is to be put into the social investment wholesaler? Will that itself have an effect on the amount of money—that is, will it be diminished—from Scotland, Wales and Northern Ireland?
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- Lord Davies of OldhamLabour
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- In response to the point made by the noble Baroness, I recognise of course that the Secretary of State is the final arbiter. What I sought to emphasise was that the accountability of the operation and the scrutiny of what is going on will be reflected in the scrutiny of big accounts, because it is there that this fund will be subject to analysis. The Secretary of State, if necessary, acts as a result of this analysis—and as far as the Secretary of State is concerned the broad principle is of population distribution and, with regard to the devolved Administrations, the Barnett formula. I do not think that I can go much further on that. As for the points made by noble Lord, Lord Shutt, decisions may have to reflect the increasing success of the scheme in addressing itself to certain problem areas. It may be that an area was able to put up a very effective case and that the concept of a social investor in those terms particularly benefits that area and reaps the rewards. It may be that the judgment on whether any further application put forward is that it is too supplementary to that to justify merit. On the other hand, the case may still obtain and, despite the success of the previous time, people may be able to show that they can build on that effectively to the considerable advantage of their communities. The overall position is that the impact is measured on communities and its success is measured by the accounts and report for which Big will be responsible. The difficulty that I have in responding to noble Lords more precisely is that devolution gives a certain amount of freedom to Scotland, Wales and England to exercise discretion on expenditure in their areas. I cannot go much further than that.
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- Lord NewbyLiberal Democrat
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- I am grateful to the Minister because he has given us a very clear definition of how the Government intend to make the apportionment. The logical thing is to put that in the Bill instead of having the repetitious wording that does not tell you anything. The Government could have a provision in the Bill saying that the money will be apportioned between England, Scotland, Wales and Northern Ireland based on population—end of story, that is all that there is to it. Perhaps they would like to think about that. I am saddened to hear the Minister’s definition of fairness as purely based on population. In my view, that is not a particularly good definition of fairness, nor is it one that the Government have used in justifying levels of expenditure in Northern Ireland, for example, in the past. Finally, one problem with charities operating and people operating for charitable purposes in Scotland and Wales is that, compared to England, few charities are based there—particularly in Wales. It is much harder if you are based in Wales successfully to make a charitable application as a result. The proposal in our amendment would have gone some way to rectifying that balance and I am extremely sorry that the Government do not see the strength of that argument.
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- Lord Davies of OldhamLabour
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- I hear what the noble Lord says about population, but I have indicated that the Government employ the Barnett formula with regard to the broad parameters of allocation. I also emphasise to the Committee, lest fertile minds think, “Here’s the amendment that sits up for Report”, that the Government—all Governments—have resisted putting the Barnett formula into legislation. Of course it has elements of flexibility and the noble Lord, Lord Newby, is right to emphasise to me that if we enshrined population-based distribution in the legislation we would have real difficulties as to its flexibility. We are saying that, of course, for the Secretary of State the principle is backed by the Barnett formula, but the noble Lord is right: we will require greater flexibility than is being suggested by the amendments.
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- Baroness NoakesConservative
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- I think that the Minister told the Committee that the money would be distributed on a population basis. Now he is telling us that he needs flexibility. I am quite confused about what we have been told is government policy towards the apportionment of money under Clause 16.
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- Lord Davies of OldhamLabour
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- It was suggested that population played an important part and, indeed, it does, but I have emphasised also that we do not want that written into the Bill because of the rigidities that that would imply. The noble Lord, Lord Skelmersdale, pressed me on that point, but the Government have a more sophisticated means than just using population in relation to the devolved countries—we operate the Barnett formula. I am merely indicating that the Government seek some degree of flexibility beyond just the precise form of population, important though that is, although I emphasise that the Government have never accepted that the Barnett formula should be enshrined in legislation.
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- Lord Howard of RisingConservative
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- I thank noble Lords who have spoken. My rather modest amendment seemed to spark more of a debate than I had imagined. I thank the Minister for the information that he gave us, which seems to have been an aperitif to wanting rather more than telling us something that people would like to know. I thank the noble Lords, Lord Shutt and Lord Skelmersdale, for raising interesting points. It is a pity that we did not get more response, but I hope that the Minister might put his mind to them and perhaps find an opportunity to consider and do something about them. In the mean time, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
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- Lord Howard of RisingConservative
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- moved Amendment No. 67:
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- Lord NewbyLiberal Democrat
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- The noble Lord, Lord Howard, has raised an interesting point. There is an additional reason in that the objects of expenditure set out in relation to England at least cover the interests of three different Cabinet Ministers, which is why we have three different objects in the Bill. We start off with youth clubs and youth affairs, which we know is a cause very dear to the heart of the Secretary of State for Children, Schools and Families. We move on to financial provision, which we know is a cause very dear to the heart of the Chancellor of the Exchequer and his predecessor. We then move on to the social investment wholesaler, which we know is a cause very dear to the heart of the Secretary of State at the Cabinet Office. We therefore have three strands of expenditure being advocated by three different Cabinet Ministers. Therefore, which Secretary of State is in charge of the whole process matters in terms not just of the issues mentioned by the noble Lord, Lord Howard of Rising, but also of the priorities for expenditure under the scheme. I will therefore be doubly interested in the Minister’s response.
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Lord BachLabour- Quote
- The probing amendments of the noble Lord would prescribe that the lead Secretary of State in respect of the unclaimed assets scheme should be the same Secretary of State who is responsible for overseeing the National Lottery. However, I take the point that this is a probing amendment and that the noble Lord, quite rightly, wants a discussion on this issue. He has been keen enough to read the minutes of the Treasury Select Committee. I shall explain to this Committee our position. The main priority for distribution of funds in England will be youth services. It is the Government’s intention, therefore, that the Department for Children, Schools and Families takes the lead—I choose those words carefully—in issuing directions to Big as the relevant policy department. Big will be accountable ultimately to that Secretary of State for spending unclaimed assets. That will also ensure consistency with the 10-year youth strategy which the DCSF will be responsible for delivering. However, both noble Lords who have spoken in this debate have said that there are other interests within government, as set out in Clause 17. Our spending priorities for unclaimed assets of youth services, financial capability and inclusion, and social investment cut across the policy areas of a number of departments. There is nothing incredibly surprising about that. What is important is that the Government establish who takes the lead and establish, as they will, a working party of civil servants from across the relevant departments. In other words, a cross-cutting approach to the development of spending directions, which represents the interests of key departments, will inform the decision-making of the Secretary of State. Without being bound by it, I say that the departments that clearly have an interest in the priorities identified for distribution of funds include the DCSF, the Cabinet Office as far as it deals with the Office of the Third Sector, the DCLG, the DCMS and the Treasury—the noble Lord was spot on when he named them. It is intended that a working group of officials from those departments will be convened to develop draft spending directions to Big, including the split of assets between priorities, but someone has to make the final decision and that will be the Secretary of State as mentioned. The working group will be able to make firm recommendations only once it is clear how much will be available, although it could do some scenario planning based on certain thresholds. We would expect the terms of reference for that important working group to be confirmed early next year. Of course, the DCMS will have responsibility for ensuring that Big is a fit-for-purpose organisation for distributing lottery money, with the appropriate operating systems in place. We believe that the DCSF will be able to place considerable reliance on that. And of course it will be for each department to satisfy for itself that Big is distributing the funds for which it is responsible in accordance with its direction and, in so doing, is meeting its objectives. The answer to the noble Lord’s question about Northern Ireland is yes. The Secretary of State will take the lead and have the final say on that matter. I thought that the mood of the Committee was that it was very important that the lottery fund and unclaimed assets fund were dealt with separately by the Big Lottery Fund. I hope that there is no criticism, and I do not think that I have heard any, of the decision to make the lead Secretary of State a different one—in this case the Secretary of State in the Department for Children, Schools and Families. I end, I hope not too provocatively, by saying that it is after all one Government.
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- Lord Howard of RisingConservative
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- I thank the Minister for his remarks. I hope only that there will be a clear lead department so that we do not get any more fiascos like that of Northern Rock, when splitting responsibilities between three different organisations caused it to fall straight to the floor and collapse. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 68 and 69 not moved.] Clause 16 agreed to. Clause 17 [Distribution of money for meeting English expenditure]:
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- Lord NewbyLiberal Democrat
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- moved Amendment No. 70:
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- Lord Davies of OldhamLabour
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- I am grateful to the noble Lord, Lord Newby, for his amendments and for the clarity with which he has expressed his support for them. I do not think Amendment No. 70 is necessary. It attempts to clarify that the categories listed in the clause are the only categories for which English dormant account money can be distributed. This is not necessary as that is already the effect of the clause as drafted. We are as one with the noble Lord, Lord Newby, in our objectives and the Bill sustains that position. Amendments Nos. 84 and 85 put community need as a factor in key spending direction powers. The amendments will apply not only to the English spending areas as set out in Clause 17, but also to whatever spending areas are identified by the devolved Administrations. I can reassure the Committee that the powers in Clause 21 for the Secretary of State and for the devolved Administrations to issue orders and directions, in respect of expenditure of unclaimed asset money, already allow for deprivation and degree of need to be prescribed as factors to be taken into account. So the proposed amendments to that effect are not needed. The action envisaged in the Bill can already follow that prescription. I recognise that the noble Lord, Lord Newby, and other Members of the Committee are concerned with ensuring that deprived communities see the benefits of unclaimed assets investment, and the Government have been thinking hard about how to reach these objectives. Distribution is to operate in Scotland, Wales and Northern Ireland along lines defined by the respective Administrations. In England, while the directions and mechanisms of distribution have yet to be developed—hence I cannot avoid giving precise questions in this area somewhat less than precise replies—Big will be required within the policy directions to achieve a fair and equitable distribution of funds across England. Big has a track record over several years of ensuring that all communities benefit from its funding. In relation to dormant account assets, it will be expected to use a variety of methods to achieve a fair regional and local spread of funding. These include making allocations to specific areas, setting indicative regional allocations and using corrective programmes such as Fair Share, which has implicit in it the concept of dealing with elements of deprivation. I am pleased to accord with the objectives of the noble Lord, Lord Newby, which he has expressed in other amendments today, but I hope he will rest assured that the Bill provides for this approach by Big, that the directions to be given already obtain within the Bill and that the devolved Administrations must make their own decisions with regard to their position within these general parameters.
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- Lord NewbyLiberal Democrat
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- I am grateful to the Minister for helping to clarify the Government’s thinking on this. I am interested to hear that the intention is that the expenditure should be distributed on a fair and equitable basis. My slight concern remains that the Government’s definition of “fair and equitable” seems to be based simply on population. That is an understandable definition of “equitable” but does not necessarily go as far as I would wish. However, for today, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
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- Lord Shutt of GreetlandLiberal Democrat
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- moved Amendment No. 71:
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- Lord Davies of OldhamLabour
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- The Government are totally in sympathy with the noble Lord, Lord Shutt, and I hope that I can establish that we are meeting his objectives. When the broad objectives are set out and we identify youth services, we do so in order to make that category of potential recipient clear and precise. After all, it is one of the three central objectives in the Bill. I reiterate that the Government have clearly set out three priorities for the use of dormant account money in England with a clear focus on services for young people. But is that to be interpreted as exclusive? I hope not, because I agree with the noble Lord, Lord Shutt. I reassure the Committee that the wording in the same subsection which refers to expenditure on or connected to facilities and services for young people is intended to give some flexibility—the very flexibility that I think the noble Lord is seeking. In some cases, it would be absurd—and a community would think it absurd—if resources which had been won through a bid to the fund primarily to create youth services had, by necessity, to be exclusively for youth services when others could also benefit. Therefore, we have set out three clear priorities for the broad areas of expenditure but we want exactly the same flexibility identified by the noble Lord. We do not think that the amendment is necessary because there is flexibility in the Bill to take account of the exact points that he made. The problem is that the more specific we are in the Bill, the more prescriptive the directions and the more narrow and rigid the scheme becomes. Therefore, I entirely share the noble Lord’s objective, but we think that it is already covered in the Bill and that the amendment is not necessary.
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- Lord Shutt of GreetlandLiberal Democrat
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- I am grateful for the Minister’s words, but I fail to see why this matter cannot be made clearer in the Bill. I do not want anyone in this National Lottery funding body to say, “Ah well, we have seen the word “must” and the reference to young people, but we have seen your application and you’re going a bit further than that and therefore we’ll have to decline your application”. I want to put a stop to that before it starts. It may well be that if the Minister’s words are as far as we can get, they will have to be stuck on the desk of everyone who looks at these funds in due course. However, in my view, this is a very important matter and we will reflect on whether to have another go at it on another occasion. For the time being, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 72 not moved.]
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- I should advise the Committee that if Amendment No. 73 is agreed to, I shall not be able to call Amendments Nos. 74 or 75 by reason of pre-emption.
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- Baroness NoakesConservative
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- moved Amendment No. 73:
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Lord Hamilton of EpsomConservative- Quote
- I take this opportunity to speak to my amendments and to apologise to the Committee because I did not manage to get to the Second Reading. I am not going to pretend that I was frightfully busy somewhere else; I am a rather late convert to the idea of a social investment bank and only came upon it after Second Reading. On Thursday, the Minister said that these resources, referring to the residual assets from these accounts, represent a once-in-a-generation opportunity which we need to make the most of. I could not agree more with that sentiment. We must try to leave a lasting legacy with the opportunity that we have with these residual assets. One of the great failures of government—I do not blame this Government but successive Governments; it is not a party point—has been not to address the problems of social deprivation. Many of our inner cities are a disgrace to a civilised society. In some of them we see a third generation of unemployed people, rampant drug addiction and many people making money through trafficking drugs. They are the scenes of crime committed by the people who live in these desperately deprived areas. But these people are also victims of crime to a great extent; and they have problems with debt, gambling and homelessness. It is a very sobering statistic that in some of the worst areas of Glasgow, life expectation for males is only 57.
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- Lord NewbyLiberal Democrat
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- These are important amendments. I completely agree with the noble Baroness, Lady Noakes, about the phrase “social investment wholesaler”. I thought that I knew something about this sector, but I do not think that I have ever heard the phrase before. Somewhat bizarrely, the Bill obfuscates what is intended in a situation when the Government have a clear view about what they mean; that is, a social investment bank in the terms set out in Amendment No. 76. Changing imprecise, obscure language could enable, in principle, money to be spent under this heading on a whole raft of support for voluntary sector organisations, which has nothing to do with investment. The argument for changing that in the terms set out by the noble Lord, Lord Hamilton, is strong and unanswerable. In a sense, my next question is even more important. Amendment No. 75 takes us back to our discussion last week on the Government’s priorities. I thought that then the Minister said that the Government had not yet set their priorities between the three headings and that all was up for grabs. Earlier today, however, we were told that the top priority will be youth affairs, which is why the Secretary of State concerned is the Secretary of State for Children, Schools and Families. The burden of the case put forward by the noble Lord, Lord Hamilton, with which I have a great deal of sympathy, is that of the three headings the one most likely to yield the most benefit for the community per pound spent is the third one for the reasons that he gave. By putting £1 in the social investment bank, you very readily generate several multiples of that pound from other sources in ways which simply do not happen under the first heading. The second heading is a pure distribution of funds for another purpose. So the principle of having a priority under this heading in order to make sure that the money generates the maximum possible return is a good one. There is also a simple logic to dormant bank accounts being used to establish a bank. It sounds and feels right and I hope that it will be established. My other concern, which I expressed last week, is that, unlike paragraphs (a) and (b) in Clause 17, which are mandatory, paragraph (c) follows an “or”. This implies that the Government could decide that they were not going to have a social investment bank at all. That would be a big missed opportunity. I do not think that is what the Government mean but it is certainly what the Bill says. Amendment No. 75 would therefore reverse the “or” and almost make the social investment bank the first heading. I am agnostic as to whether £250 million is the right threshold. It is important that the social investment bank be an initial beneficiary of moneys from the scheme because the biggest bulk of money will go across to the reclaim fund in year one. Unless the social investment bank is established at that point, it is highly unlikely that there will be a big enough flow of money to establish it. I am less clear about whether you need £250 million to do it. I know that it has been argued that you need £350 million to establish a social investment bank, but that is a heck of a lot of money, particularly if, as the noble Lord, Lord Hamilton, said, you can lever in many multiples of it in any event. Let me explain my concern with having a high threshold. Suppose that in year one, which I say is the crucial year, £500 million goes into the reclaim fund. If I were sitting in the reclaim fund, I might well want to hold on to at least half of that. I would not know how much of it was going to be reclaimed and, therefore, the amount that I might have available could be a fraction less than half of the total amount that comes across. I am not sure that £250 million is the right amount but the principle of the amendment is sound. I suspect that the Minister will not be able to give us an assurance that, come what may, a social investment bank, in the terms set out in Amendment No. 76, is a guaranteed outcome of the passage of the Bill.
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Baroness PitkeathleyLabour- Quote
- I declare an interest as a member of the Commission on Unclaimed Assets, the main recommendation of which was the setting-up of a social investment bank. In that context, I thank the noble Lords, Lord Hamilton and Lord Newby, for their wonderful commercials for the social investment bank, which I heartily endorse. The commission, so ably chaired by Sir Ronnie Cohen, identified the chronic underfunding and undercapitalisation of what we used to call the voluntary or charitable sector. It is now more readily called the third sector in order to include the social enterprise element and the community interest companies—in other words, the wider, not-for-profit sector. The Government have already made considerable efforts to address this chronic undercapitalisation through initiatives such as the Futurebuilders fund, which provides loans to enable third sector organisations to have sufficient capital to be financially viable. They can then go on to provide services for local authorities and the private sector, thereby earning money which can then be recycled for the benefit of their client groups, principally the disadvantaged people to whom the noble Lord, Lord Hamilton, referred. I again declare an interest as chair of the Futurebuilders Advisory Panel. The third sector needs a boost and this is where the commission felt that investment could readily be given. There are very good examples from the United States and Ireland, where this has been done.
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- Viscount EcclesConservative
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- Can the Minister say whether a study has been carried out by the department into the idea for either a bank or a wholesaler? Is there any intention to do so? No doubt he can describe it to us. In particular, have the Government received any representations from institutions that see themselves as suitable candidates for becoming a social investment wholesaler or bank?
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- Lord HigginsConservative
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- Unfortunately, earlier I had to leave the Committee briefly to explain to another meeting that I was preoccupied here. I apologise if I make points that have already been made and answered. I also have a slight difficulty with the groupings. We are debating amendments to Clause 17 but I understand that Clause 17 has already been debated. I have spent something like 50 years in this place and this does not normally happen. However, perhaps I may turn to the amendment in question. As I understand it, the distribution proposals in Clause 17 have previously been agreed outside this Committee and the Government have adopted them for England, but the proposals for Wales, Scotland and Northern Ireland are devolved. Therefore, this clause and the amendment that we are considering are concerned with the allocation and distribution of English expenditure. I managed to return to the Committee at the point where the introductory words relating to paragraph (c) were being debated. As I read it, the situation is clear. Clause 17(1) states: “A distribution of dormant account money for meeting English expenditure must be”— I repeat, “must be”—for something which meets paragraphs (a), (b) or (c). As I understand it, no discretion whatever is given for that allocation. Effectively, under paragraphs (a) and (b), expenditure is restricted to the needs of young people. This seems to be an extraordinary determination in legislation of how the money should be spent. It does not give sufficient discretion, for example, to spend it on old people. Unless the word “must” is changed to “may”, I do not see how that can be avoided. Paragraph (c) is a further proposal which, as my noble friend in moving this amendment pointed out, relates to “a social investment wholesaler”. That is most extraordinary gobbledygook. When we debated this earlier, there was a long discussion on charities and whether the funds might go directly to charities as a result of the Bill or as a result of the owners of the assets being found and legacies having been determined. Again, the word “charities” does not appear at all. Paragraphs (a) and (b) and, in particular, paragraph (c) remove any discretion for charities which do not meet these criteria to be covered. This is widening it a great deal further than I understood the case to be. I have considerable concerns about the clause as a whole. I certainly agree with my noble friend in her amendment to leave out this weird proposal—I think that “weird” is the only word for it—for inventing a “social investment wholesaler” and then in Clause 17(2) deciding on the meaning of a “social investment wholesaler” and a “third sector organisation” and so on, rather than simply saying “charitable purposes”.
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- Lord Davies of OldhamLabour
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- This has been a full and extensive debate and a challenging one to respond to. I prefer the concept of “novel” with regard to the social investment institution rather than the concept of “weird”. I shall start by trying to establish for the noble Lord that we have made some progress on this concept, which I hope is convincing progress. Of course, much work remains to be done and there are a great number of uncertainties. The noble Lord, Lord Hamilton, alluded to the most obvious one; namely, how much money is available. We have estimates that between £250 million and £350 million may emerge from the banks and the building societies.
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The Deputy Chairman of CommitteesLabour- Quote
- There is a Division in the House and the Committee will adjourn for 10 minutes. [The Sitting was suspended for a Division in the House from 5.53 to 6.06 pm.]
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- Lord Davies of OldhamLabour
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- Oratory is difficult enough without the interruption of a Division, but I will try to recall. I was trying to spell out the limited sums that we expect to be available. I said that we expect between £250 million and £350 million from the banks and up to £150 million from building societies, which will take time to come through. We also expect that the very significant reuniting effort that the banks and building societies are making throughout 2008—to which they are committed, in order that the money should be restored to its proper owners, if it can be—may have a significant effect on those figures. The reclaim fund also must make provision against future successful claims from people who seek to be reunited with their money after 15 years when the money has been transferred. So we are dealing with some uncertainties in this area. The noble Lord, Lord Hamilton, as the nub of his important points, asked me specifically about this, but I am afraid I have to be less than specific in my answer. I have answered one of the points that he emphasised in his amendment; we cannot specify £250 million. At the moment, there is no guarantee that that figure will be available. I congratulate the noble Lord on his amendment. It is broadly on the right lines and he made strenuous efforts to deal with a complex topic. I hope that he thought it was complex, because the Government do and they consider that they have quite a lot of work to do in this area. That is why we are eager to keep the Bill as it stands, which makes proper reference to the possibility that we cannot be specific on the scheme itself. I hope I have been able to explain the interesting comments of the noble Lord, Lord Hamilton, about our own social investment wholesale institutions. These have elicited considerable criticism and the Committee will expect me to respond to that in due course. We are wrestling with the same issues as the noble Lord, Lord Hamilton, and it is obvious that a great number of them remain to be resolved. With his usual acuity, the noble Lord, Lord Newby, emphasised the “or”. We do not know how much money will be available to the priorities. We want to go ahead with the top two priorities but the third concept in the clause is dependent on resources being available. We also have to respond effectively to some of the questions that have been addressed today. I hope I shall be able to demonstrate to the Committee that it is not for the want of trying because the Government have done a great deal of work in this area. At the very least I shall be able to defend our new terminology. The noble Viscount, Lord Eccles, asked whether there had been any study on this issue and whether any representations had been submitted on the role. As the Government said to the Treasury Select Committee on this, we are studying the issue carefully. We have not had many representations but work is ongoing on this matter. We are aware of the valuable work of the Commission on Unclaimed Assets, which is helping us, but I do not think there have been any specific representations along the lines the noble Viscount, Lord Eccles, had hoped to identify. As to the more general issues, we think this priority should remain within the Bill in addition to the primary ones for England. In her opening speech the noble Baroness, Lady Noakes, was emphatic that I should make clear that this is about England—and it is. The devolved Administrations have some decisions to take on this matter but we intend to promote the primary priorities of England as opportunities for young people, financial capability and financial inclusion. However, we can see the potential benefit of the third concept and, if resources permit and we resolve the outstanding issues, we would in due course seek to activate it. We have come to this conclusion not only through government resources but as a result of evidence that we have received from a wide-ranging review on the future role of the third sector. Some doubts were expressed as to whether charities were taking any cognisance of the Bill. Of course they are. They have a very important role to play in supporting the third sector. The wide-ranging review carried out by the Treasury and the Office of the Third Sector, as well as evidence which the Commission on Unclaimed Assets has provided, suggest that the social investment market is underdeveloped and that the Government ought to think about filling a defined gap. That is why we see the merit of this institution, which would invest in the long-term sustainability of the third sector and boost the social investment market, which has some difficulties in this respect. We would want to use a share of the unclaimed assets fund to support the creation of this body. I hear what the noble Baroness says—that she has never heard the word “wholesale” in this context. Governments are rarely accused of being innovative and novel, but here we are putting forward what we believe to be a new concept. Therefore, it is not surprising that we give it a new name. We think that it will fulfil a wholesale role, as I hope to demonstrate in a moment, so it is entirely appropriate that the concept should be included in the title.
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- Lord HigginsConservative
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- I understand that there is a great deal more work to be done and I hope that the debates this afternoon will help in that work. As I understand it, there may be distribution not only of funds, but loans; in which case, the heading may be worth looking at, as it refers only to distribution of English expenditure. The Minister did not pick up the point that I made regarding “must” or “may”. Quite unnecessarily, this clause restricts the use of funds to a specific range of subjects, when there may be more deserving causes. As I have been the MP for Worthing, and it is said that people go there to die and forget what they came for, my priorities may not necessarily be for young people, but specifically to state that the funds must be spent on young people, when there are many other deserving causes, seems unnecessarily restrictive. Finally, in that context, the Minister may make alterations by order in relation to Wales, Scotland and Northern Ireland. There is no order-making power in the clause dealing with England and that may be worthy of consideration—otherwise the Government may live to regret it.
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- Lord Davies of OldhamLabour
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- I am grateful to the noble Lord, Lord Higgins, who was as constructive as ever and we will certainly take his points on board. However, we have consulted upon and extolled the virtues of the two priorities. He will recognise also that we are dealing with money that is certainly not the Government’s, but is private. Therefore, we needed to negotiate desirable outcomes with the organisations concerned. One priority is improving financial literacy, which has a role to play. There has been wide acceptance in our consultation that these are good priorities. The third will be made possible as we develop our work. Of course it is always possible to find good causes right across the board for expenditure. I would not vie with the noble Lord, Lord Higgins, on his ability to produce a list of good causes, but I think that I would come a good second to him. The Government’s objective is to get this scheme off the ground and be able to reassure all those participating in it that the money will be intelligently and usefully deployed. That is why the priorities have been identified.
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- Baroness NoakesConservative
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- The Minister said that he had negotiated these expenditure objectives with those who were passing the money. My understanding is that the British Bankers’ Association has said, in terms, that it has no views whatever on what the money is spent on, and that the decision on the way in which the money is to be spent has come entirely from the Government. I would not like the Minister to leave the Committee with a misunderstanding as to where these objectives have come from. The Bill might refer to financial inclusion but, as far as I am aware, the British Bankers’ Association is completely agnostic as to how the money is to be spent. It regards Part 1 of the Bill as relating to itself and Part 2 as relating entirely to the Government, which is why this is rather more like public money than private money.
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- Lord Davies of OldhamLabour
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- I hear what the noble Baroness says. We had to negotiate the first part with the bank and building societies because they are directly interested in it. It is therefore right that there should be one objective in which they also have interest. The noble Baroness said that they are totally agnostic about the whole package. They do not want to get involved in the appallingly difficult debate which might obtain if we started to discuss a range of other priorities, which the noble Lord, Lord Higgins, has just invited me to do. It has long been established that the Government are greatly concerned about youth services. They are putting a significant amount of money under the Comprehensive Spending Review into youth services but there is no doubt that communities may well identify that this falls short of their pressing needs. It will be for them to make a claim to the Big organisation.
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- Lord HigginsConservative
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- Was Help the Aged, for example, consulted?
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- Lord Davies of OldhamLabour
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- I cannot answer that question directly but we are concerned about the issue of the third sector. That is why we have got the provision in the Bill which potentially will be of benefit to it. I cannot go through an exhaustive list of potential consultees. We recognised that this was a challenging concept and that we had to talk outside government—as we did—but I am not trying to bring alongside the Government’s final decision any institutions which wholeheartedly embrace the Government’s objectives; that is not their role and it is not their job. In producing a Bill of this kind it is for the Government to set objectives which command the assent of the nation, as expressed through their parliamentary representatives and their deliberative Assemblies.
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- Lord NewbyLiberal Democrat
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- I am extremely depressed by the Minister’s response because it implied to me that the likelihood of a social investment bank being established under the Bill is relatively remote. He raised two problems, one of which was that there might not be enough money—therefore completely reversing the priority which the noble Lord, Lord Hamilton, is seeking to place in the Bill—and that the Government have not yet resolved a number of technical issues around the establishment of a social investment bank. He implied within that, perhaps, that this would mean that they could not do it. Given that the Commission on Unclaimed Assets produced a very good report in March which explained, I thought, how they could do it, I am confused as to whether the Government’s view is that major technical obstacles still remain in the way of establishing a social investment bank.
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- Lord Shutt of GreetlandLiberal Democrat
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- I speak as a simple searcher after truth. Let us suppose that, in 2009, £300 million is sent by the various banks to the reclaim fund and the reclaim fund decides, “Well, we had better be careful about this; we will let £200 million go”. Let us say that 15 per cent of that has to go to Scotland, Wales and Northern Ireland. That leaves £170 million. The Minister says that we had better crack on with this young people stuff, the deprivation of financial knowledge and so on. If the social investment bank needs £250 million, how does he believe that that could possibly happen in those circumstances—unless he takes the view, as I did much earlier, that, like the Irish, the banks and building societies got it all wrong? Is that what he is tugging to?
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- Lord Davies of OldhamLabour
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- The £250 million is not my figure but that of the noble Lord, Lord Hamilton, in his proposal. We are aware of the fact that there are uncertainties about the amount of resources available. We know that we are in a position where both youth services and financial inclusion issues can be immediately addressed. We have some technical issues to resolve with the social investment wholesaler. They are not so obstructive as to suggest that the concept is unviable—far from it—but we cannot pretend that we can necessarily get it off the ground at the same time as the two other expenditure areas, for those reasons. I emphasise that it is a concept that we want to see working. The difficulty is—and I am sure the noble Lord, Lord Shutt, will give the Government credit for this—that we have a problem answering questions about the first year, 2009, and even as far as 2010, but we have to make provisions in the Bill that will obtain over a decade or more, particularly when we are talking about the establishment of an institution that will need longevity in order to fulfil its remit. I am merely indicating that at this point there are strong reasons why we have identified two priorities upon which early action can be taken against an unknown sum of money, and we are making provision in the Bill for the third concept to be activated as soon as we have resolved the issues.
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- Lord Hamilton of EpsomConservative
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- The Minister has raised the issue of the estimates. It is worth reiterating what I said earlier: is it really likely that the British Bankers’ Association would produce figures for how much money the banks could produce and then radically undershoot them? That is the Minister’s suggestion, that these are such appalling estimates that they might be dramatically wrong. The banks would look very foolish and come in for an awful lot of criticism if they said, “Our estimate is £250 million to £350 million”, and it came out at £150 million. I do not think that is the way banks work. I think they have a good idea of how much money there is in these unclaimed funds. I understand where the Minister is coming from. He wants to give himself plenty of wiggle-room here, so he said that people may come back and claim on these accounts. Well, hold on. Fifteen years is the shortest time that these accounts have been unclaimed. Some of them go back 50 years or much further. If people have not had the opportunity to lay claim to these accounts for what may be decades, why are they suddenly going to do so because someone transfers them out of the bank to somewhere else? There may be an element of people reclaiming these accounts, but are we talking about more than 5 per cent of the total assets? I very much doubt it. To come back to the question of whether the social investment wholesaler is a bank, I notice that the Minister has completely ignored my point about gearing. Gearing is what this is all about: turning £100 million into a minimum of £300 million—possibly, over a period, into £1 billion. That is the significant thing. When we talk about this wholesaler, is it going to be in a position to gear things up? The advantage of a bank is that it becomes completely independent. It ring-fences the funds so that they go in and there is no way they can come out again. The Government cannot get hold of them in any way. Once the funds have gone in, they are in the bank, and then they can be geared up and become much more. That is significant. The most important thing about the social investment bank is that it will be independent and have the capacity to turn certain sums of money into multiples of that money, which will then be available for these enterprises. The noble Lord asked whether the retail banks, the big four—I cannot remember how many we have got now—would regard this as competition. That is a bit of a scare. I do not think the retail banks are remotely interested in getting involved in investing in social enterprises because they know that they are incredibly risky. They have not done anything about them up until now and I do not think they are going to start. So that is not a serious consideration. However, the independence of this organisation is absolutely critical. Turning to the money, let us suppose the Minister is right and there is not £500 million. You need a critical mass of £250 million which you could phase in over three years. It does not all need to be there on day one because you can get the bank started and going with a much smaller sum, and if additional sums came in over a period that would certainly be an option. Even then, if the Minister is so worried about these figures and thinks that they are so suspect that he cannot trust them, why does he not consider giving a percentage to the social investment bank? It would be a good idea if 50 per cent of the total funds transferred over were to go into the social investment bank. If for some reason everything undershoots and the figures are not what everyone expects them to be, then clearly the agony would be shared by both the good causes that are going to benefit anyway and the social investment bank. There are ways round it. We have to adhere to the principle that we are setting up an independent organisation which can gear up on these funds and make much more out of the money that comes in.
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- Lord Davies of OldhamLabour
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- I am grateful to the noble Lord. I appreciate again how constructive he has been. I shall consider all the points he has made today and discuss them with officials. We shall look at these matters and no doubt we shall have the opportunity to debate them together in the not too distant future.
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- Baroness NoakesConservative
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- This has proved to be a useful, extensive debate on a wide range of issues. It was disappointing for many of us to have confirmation that the Government have precious little intention of setting up a social investment wholesaler or bank, whatever you like to call it, because they are going to try to splurge as much money as possible on the first two objectives specified in the clause. That is a source of great disappointment, particularly because initially there will be a backlog of money flowing out of the dormant accounts of the banks and building societies which will be much larger than that which will come at any later stage on an ongoing basis. A very good use for that would be to provide something which had sustainability, as opposed to a peak of expenditure, which cannot be sustained, for the other kinds of projects that will be financed. My noble friend’s amendments are in two parts. One relates to definitions. We support the better definition that my noble friend proposes, as compared with the “social investment wholesaler” in the Bill with its very limited definition. The Minister claimed that this was novel and that we should congratulate the Government on being novel. In fact, the Minister tends to use “novel” as an excuse for remaining vague. We are trying to put some specificity around this concept and that is why we support the amendments of my noble friend Lord Hamilton. My noble friend also wants to pre-empt a certain amount of money. It is difficult for the reasons the Minister has given to say that a certain amount of money should go in. Nevertheless—I return to my earlier point—it is extremely disappointing that there is no commitment from the Government to put any money whatever into this. The Commission on Unclaimed Assets made a very clear recommendation that it would be a good source. There is no point in continuing our debates today, in part because time is moving on and we do not want to move into a fifth day in Committee. The Minister knows that we will return to this topic at a later stage and I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 74 to 76 not moved.] Clause 17 agreed to. Clause 18 [Distribution of money for meeting Welsh expenditure]:
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- Lord Howard of RisingConservative
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- moved Amendment No. 77:
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- Lord HigginsConservative
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- Why should Welsh Ministers decide what is done with private money?
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- Lord Davies of OldhamLabour
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- Of course, Welsh Ministers might make the decisions with regard to England as well. I have to confess that I am defending this Bill as a Welshman, so if the noble Lord is going to be as aggressive as that, we will have to change our whole structure. However, I understand what he is saying. He is referring to the devolved Administrations, but if the noble Lord is saying that anyone of Welsh descent cannot participate in issues relating to English legislation, I have to say that we will be reaching a new constitutional arrangement. I am sure he is not saying that. As I said, under the devolved model set out in the Bill, it will be for the respective Administrations in Scotland, Wales and Northern Ireland to determine the priorities for distributing the dormant account money that will apply in their countries. However, they will clearly do so within the broad framework of the Bill. That is why these amendments are unnecessary, and I can allay the fears expressed on the other side of the Committee. Clause 15(1) already sets out that Big can distribute money only for expenditure that has a social or environmental purpose. The order-making powers in Clauses 18 to 20 allow the devolved Administrations to restrict the purposes for which, and the persons to whom, Big can distribute dormant account money but they do so within that overall definition. Therefore, I hope that the noble Lord will recognise that his amendment is not necessary.
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- Lord Howard of RisingConservative
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- I thank the Minister. I think that the Bill would be considerably improved by the amendments but, as my noble friend Lady Noakes has already said, time marches on, so I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
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- Lord Howard of RisingConservative
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- moved Amendment No. 78:
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- Lord NewbyLiberal Democrat
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- I support the amendments. It is eminently sensible that there should be some process of consultation in the devolved territories. As the Bill stands, those Administrations can determine how money will be spent across a broad definition of social and environmental matters, with no consultation whatever. At least we know broadly how the money will be spent in England, and we have been able to debate it. That is not the case with the other territories. Therefore, the amendment seems sensible.
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- Lord BachLabour
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- The Bill enables the devolved Administrations to determine their own priorities for distribution to best reflect the needs of communities in their own countries. Those priorities for distribution will be determined by order, subject to scrutiny and approval by the individual devolved Assembly or Parliament. I need to impress on the Committee that the devolved Administrations have all publicly committed themselves to consultation on setting priorities for expenditure. Given the public comments made by all the devolved Administrations, and the scrutiny process that will apply, we do not feel that the amendments are necessary. If I may dare use the expression “in the spirit of devolution”, it is appropriate that we leave it to the relevant Administrations to determine the precise process of consultation, bearing in mind that they have all committed themselves to consultation. I was asked why the Government did not consult on spending priorities. In the 2005 Pre-Budget Report, we stated that the focus of the assets in England should be on youth services that are responsive to the needs of young people and on financial capability and inclusion, and that that represented a worthwhile and effective use of the resources available. Since then, we have held a wide-ranging review of youth services, involving extensive consultation with youth-focused third sector organisations and young people. We have also published long-term strategies aimed at improving financial capability and increasing financial inclusion, both of which have included consultation with non-governmental organisations. The outcome of those reviews, as well as that of the third sector review, which involved the largest-ever consultation with the third sector, will be used as key sources of evidence to ensure that those assets are spent effectively to deliver the biggest impact on the most pressing priorities.
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- Lord Howard of RisingConservative
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- I thank the Minister, and I thank the noble Lord, Lord Newby, for his support. Perhaps the Minister will inform me in writing where reference to the commitments by the devolved Administrations can be found, so that they can be considered and, if necessary, the subject returned to at a later date. In the mean time, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 18 agreed to. Clause 19 [Distribution of money for meeting Scottish expenditure]: [Amendments Nos. 79 and 80 not moved.] Clause 19 agreed to. Clause 20 [Distribution of money for meeting Northern Ireland expenditure]: [Amendments Nos. 81 and 82 not moved.] Clause 20 agreed to. Clause 21 [Directions to Big Lottery Fund]: [Amendments Nos. 83 to 88 not moved.] Clause 21 agreed to. Clause 22 [Power to prohibit distribution in certain cases]: [Amendments Nos. 89 to 91 not moved.] Clause 22 agreed to. Clause 23 [Power to add or remove distributors]: [Amendments Nos. 92 to 94 not moved.] Clause 23 agreed to. Clause 24 agreed to. Clause 25 [Expenses]: [Amendments Nos. 95 and 96 not moved.]
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- Baroness NoakesConservative
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- moved Amendment No. 97:
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- Lord BachLabour
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- The amendments in this group concern the expenses that the Government and the devolved Administrations will inevitably incur in administering and keeping an oversight of the unclaimed assets scheme. I have been asked what those expenditures will be. They clearly will be the administration costs, including overheads, of directions that may be made to Big and of keeping an eye on Big’s effective use of money. Some Members of the Committee asked exactly what Big does in this enterprise. As is established practice, the Government intend to reclaim the expenses that they incur. They do so in respect of National Lottery funds. Clearly, if the Government can do that, it is right that the devolved Administrations are able to do the same in respect of their own areas. It is clearly important—here, I absolutely agree with the noble Baroness—that the costs are minimal and are consistent with effective oversight and administration. We are not sure that the noble Baroness’s model is any better than ours. Given that, under the Bill, the Big Lottery Fund will be accountable to the Secretary of State for the effective use and distribution of dormant account funds drawing on the advice of the devolved Administrations for their distribution outside England, it would seem anomalous for them to need to demonstrate their case to Big. In the way that these things work, it would more properly be for the accounting officer for the relevant department—in this case, the Department for Children, Schools and Families—to assure it that the administrative costs incurred were appropriate as part of its overall duty to make effective use of public funds, and for the accounting officers of the devolved Administrations to do the same in respect of their relevant functions. We contend that the role of the accounting officer is one of the answers to the noble Baroness’s concerns that somehow the Secretary of State will demand expenses that are not valid. On the scale of costs, which I know is one of the noble Baroness’s concerns, I reassure the Committee that while it is not possible to provide a figure at this stage for the likely costs that will be incurred in relation to the running of the unclaimed assets scheme, we certainly do not expect to incur significant costs in maintaining this oversight of the scheme and accountability for Big’s spending. For the administration of the distribution of lottery funds, as the Committee may know, the DCMS charges the National Lottery Distribution Fund approximately £250,000 per year, which is less than 0.02 per cent of what is raised for good causes each year. Our estimate is that the cost in relation to overseeing the scheme we are debating in this Committee should be significantly less than that, due to it being a smaller fund. With regard to spending outside England, as I have already said, the Secretary of State will draw on advice from the devolved Administrations for distribution in Scotland, Wales and Northern Ireland. Although the Secretary of State will have overall oversight, it will be for those Administrations to work with Big in their own countries to ensure that spending is distributed in a manner that meets the targets intended in the direction that each Administration issues to Big and the outcome of the funding programmes that they agree with Big. Therefore, I hope that, even if only to a small extent, the noble Baroness is now happier with our proposals. I repeat that it will be the duty of the accounting officer for the relevant department to ensure that there is no huge expense claim.
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- Baroness NoakesConservative
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- Before I decide what to do with my amendment, would the Minister comment on the issue of paying money in advance of expenditure? That is not normal government accounting practice.
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- Lord BachLabour
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- I can go this far. The Bill follows the same approach as it does to the lottery, whereby payments of costs are made to the consolidated fund. The Secretary of State gets his costs out of money given by Parliament. As to the noble Baroness’s question about the costs that he might incur, the best thing that I can do is to write to her on that subject.
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- Baroness NoakesConservative
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- I thank the Minister for his reply. I shall consider carefully what he has said but, at this stage, I think that his answer substantially answers the points that I have made, and I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendments Nos. 98 to 103 not moved.] Clause 25 agreed to. Clauses 26 and 27 agreed to. Clause 28 [Directions]:
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- Baroness NoakesConservative
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- moved Amendment No. 104:
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- Lord Davies of OldhamLabour
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- I am bound to succumb to the blandishments of the noble Baroness in saying that I agree with her entirely that the Bill should have appropriate levels of transparency on decision-making powers. However, where I disagree with her—I hope not necessitating a further day in Committee—is that I think the Bill already provides adequate transparency. The most significant direction-making power is in Clause 21, whereby any directions given under the clause must be published in Big’s annual report, which must be laid before Parliament and the devolved Assemblies. That is exactly the same approach that obtains with regard to the National Lottery Act 2006 and I do not think that there has been a strong argument that the lottery and its institutions of distribution have been subject to practices that have not been open to scrutiny. This is a much smaller scheme, and a very worthy one indeed, which all the Committee support; but it is a much more minor scheme than the lottery. These provisions already work well in the lottery with regard to accountability to Parliament. Schedule 9, paragraph 3(2), requires Clause 21 directions to be published in Big’s annual report. That will be the point of reference for all who are concerned about distribution of money. Because of that provision, the main direction power is open and transparent. The only other direction-making power is in Clause 5, which merely requests the reclaim fund to comply with one or more of its objects or articles of association. We do not see why we need to lay such a direction before Parliament. Where I am fully in agreement with the noble Baroness is that the operation of this fund must be transparent. That is why the provisions that obtain in the Bill are designed to meet that objective.
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- Lord NewbyLiberal Democrat
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- I did not intervene earlier in this amendment because I was sure that the Minister, even if he did not agree absolutely with its terms, would say something mildly reassuring. What he has just said is quite unacceptable, however. If a direction had been given last week, for example, on the assumption that Big does an annual report based on the calendar year, it could presumably be 15 months before the direction saw the light of day. This seems completely unacceptable. If he does not want to bring the matter to Parliament—and I know that the Government have resisted Parliament having anything to do with this scheme—why can the report not at the very least be placed on the website of the relevant department the day that it is sent to Big, so that people know what is being proposed? These directions are not on minor things; the Bill is so vague on how the directions will actually set out the priorities for Big in terms of apportionment between the three headings and where the money is being spent on youth activities. It is completely unacceptable that there could be a gap of many months before a government direction reached the public domain.
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- Lord Davies of OldhamLabour
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- I accept the constructive point that the noble Lord, Lord Newby, made about how more immediate communication could be effected, and I shall look at the possibilities on giving effect to that.
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- Baroness NoakesConservative
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- The Minister almost redeemed himself with his final offer to look kindly on the points made by the noble Lord, Lord Newby. I invite the Minister to clarify whether Schedule 9, I think he said, relating to the provisions of a National Lottery Act, picks up directions in this Bill. I cannot discover where this Bill requires its directions to be published in anyone’s accounts. The noble Lord, Lord Newby, made the perfectly valid point that in any event the timing of such directions relating to Clause 21 would be inappropriately lacking in timeliness. In relation to Clause 5, we have consistently been told that the reclaim fund will be a private body; yet, here the Government are taking direction powers to interfere in a private body. I cannot think of anything more important than to tell Parliament when the Government have decided to interfere in a private body. I shall not prolong the Committee, but I would say to the Minister that there are some loose ends in this area of transparency of directives. I was mildly encouraged by his response to the noble Lord, Lord Newby, and I hope that the Minister will undertake to clarify for me—
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- Lord Davies of OldhamLabour
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- Perhaps the noble Baroness would allow me to be a little more helpful; I was not referring to a lottery Act, I was referring to paragraph 9(2) of Schedule 3 to this Bill, which requires Clause 21 directions to be published in Big’s annual report. That was the element of accountability that I was seeking to emphasise.
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- Baroness NoakesConservative
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- I am grateful to the noble Lord for that clarification. I can now see what he is referring to. In which case, we come back to the point of the noble Lord, Lord Newby, that it could be 15 or 16 months between the giving of a direction and the publication of the annual report. That is not acceptable in parliamentary terms. However, we will return to this at another stage and I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 28 agreed to. Clauses 29 to 31 agreed to. Bill reported with an amendment. The Committee adjourned at 7.12 pm.
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