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EnactedDormant Bank and Building Society Accounts Act 2008

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Report stage in the Lords

29 Jan 200857 speechesView in Hansard ↗
  • Speaker
    Lord HigginsLord HigginsConservative
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    moved Amendment No. 1:
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    15:28
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  • Speaker
    Baroness NoakesBaroness NoakesConservative
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    My Lords, I briefly associate myself with comments made by my noble friend about the restrictive nature of our consideration of some Bills under the Grand Committee procedure. As my noble friend stated, it restricts our ability to look at structural issues. My noble friend is particularly concerned that the reclaim fund should be involved in the activity of an individual seeking repayment of his or her money. That is not what the Government, banks or building societies appear to intend, so it is difficult to get that into this Bill. I say in support of my noble friend that the incentives for properly effecting repayments, if they are to be handled by the banks, are very weak—in fact, they are non-existent. Once the bank has handed over the dormant account money to the reclaim fund, the bank has no obligation in respect of repayment. We discussed that point in Committee. That would mean that when the banks handle repayments, they have no incentive to minimise them or calculate them correctly. My noble friend’s idea of transferring this responsibility to the reclaim fund has genuine merit in terms of getting the incentive structure right within the Bill. I hope that the Minister will carefully consider it.
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, if I may interpret what the noble Lord, Lord Higgins, means, I think he wants to know how it is going to work. To my simple mind, it seems that, once the bank decides that surplus funds are available and it has made every effort to trace the owners, it then writes a cheque for, say, £5 million and sends it to the reclaim fund saying, “This is in respect of these 10,000 deposit holders”. I assume that they will be listed somewhere, because if someone else turns up and the bank says, “Well, we sent your money on”, the person will say, “I did not deal with the reclaim fund, I dealt with you”. Therefore I should have thought that the bank would go to the reclaim fund and say, “Look, here is the proof. That is the name on the list that corresponds to the cheque that we sent. We would like the money back, please”. If that is not the case, it should be explained to us.
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I am very grateful to the noble Lord, Lord Shutt, because he has explained exactly the Government’s thinking on this; namely that it is the bank’s responsibility and the expectation will be that customers will go to the bank if they have a claim after 15 years and the resources have been transferred. The bank will have the information and will then be able to process the reclaim. I am very grateful to the noble Lord, Lord Shutt, who put these things in a pithy way. I have 25 pages of notes to describe what he has explained in a matter of seconds to the general delight of the House, and I am sure to the total satisfaction of the noble Baroness and the noble Lord. Perhaps there is a bit more in the argument that I need to address, but nevertheless I express my gratitude to the noble Lord, Lord Shutt, for his clarity. I am sorry about the procedural lament. It seems to me that the Committee stage provides the basis for clarifying what the issues are. As we would expect, noble Lords opposite have done an absolutely excellent job in clarifying those issues and identifying the areas that they wish to pursue further. Here we are on Report with those issues having been identified, so I am not sure that we ought to lament the processes by which we are considering the Bill; far from it. They are eminently defensible, and the House generally agrees that the system works well. If the noble Lord thinks that the structure gives the Government an extraordinarily easy ride, let me say from this Dispatch Box that that is not what it feels like. In Committee, over four days, we were subject to very intensive scrutiny and to some very intelligent questions, as we would expect. Here we are on Report dealing with the digested wisdom of those issues and the areas in which there are still matters in dispute. I cannot think of a better way of processing legislation, and the House should take pride in that. I thank the noble Lord, Lord Higgins, for reminding the House that the Bill commands widespread support. It is a benign Bill, which has objectives to which we all subscribe, and therefore, within that framework, the noble Lord is right to seek justification for the way in which the Government have gone about achieving the ends of what—I emphasise—is still a private scheme. We will come to those issues with rather greater sharpness later. Let me make the obvious point that we looked very closely at the arguments made by the noble Lord in Committee. After all, he drew on an illustration from another country that has put such a scheme into practice with considerable success. We are always eager to learn any valuable lessons from others who have trod the path before us. The Swiss account scheme largely related to historic accounts. It will be appreciated that many of the customers dealing with our scheme will still be alive. They may regard the fact that they hold an account as confidential and may object to the information being published. The noble Lord has got to face up to the issues of confidentiality, which I will emphasise in a few moments, and the extent to which the Government ought to tread carefully—or not—regarding those issues. We certainly looked at the points made by the noble Lord in Committee. We have sought to satisfy ourselves as to whether it would be right and appropriate under the terms of the scheme to make available the names of individual account holders whose money is transferred to the scheme after 15 years. We consulted a great deal on the level of publicity that there would be about the scheme and the steps that would be taken to reunite customers with their accounts. It will be appreciated on all sides that the concept of the scheme—even before it comes into legislative existence—has prompted very considerable activity. We welcome all constructive suggestions on how banks and building societies can be more proactive in reuniting customers with their assets. The one thing that unites us on all sides of the House is that the money belongs to someone and that it should be transferred only when that claim cannot be substantiated. Therefore, every reasonable effort should be made to reunite dormant accounts with their proper holders. However, our view remains, as we set out in the consultation in March 2007 and in our response to that consultation subsequently, that a publicly available register of dormant account holders’ names does carry inherent risks. There is the risk of identity theft and fraud. In Committee, the noble Lord, Lord Hamilton—I am sorry he is not in his place today—expressed anxiety about the potential risk of identity theft and fraud if account holders’ names were publicly available. He felt that there would be the risk of the list being exploited, leading to false claims for repayment. We are wary of that risk, and we think that we are right to be so. Consumer protection is an important principle for the Government. We owe it to dormant account holders not to place them at a potential disadvantage compared with customers whose accounts have not been transferred to the fund and whose names would not be made public in this way. We need to be fair to customers of banks and building societies and treat them equitably.
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  • Speaker
    Lord HigginsLord HigginsConservative
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    My Lords, before the noble Lord sits down, will he deal with Amendment No. 9, which says that the reclaim fund shall have the right to ascertain, “the owners of dormant accounts transferred to it”?
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, the noble Lord will appreciate that it will be necessary for the reclaim fund in certain circumstances to require information from the banks or building societies. It is clear that there will be disputed positions in which the reclaim fund will necessarily need verification of the nature of the claim. The period of 15 years triggers the transfer of resources to the reclaim fund; it does not bury the rights of the individual to regain their proper resources after the reclaim fund has obtained them. I cannot emphasise this point enough. To substantiate that their claim is justified, the individual will first go to the bank or building society where the account was held. They will be told that it has gone to the reclaim fund because the account has been dormant for 15 years or more. If the claim has some justification, it will then be necessary for the bank or building society to address the issue to the reclaim fund and for the reclaim fund to reach a judgment. I do not think that we could have a system that was fairer than that, as I explained graphically and at great length to the noble Lord, Lord Shutt.
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  • Speaker
    Lord HigginsLord HigginsConservative
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    My Lords, I am anxious not to delay the House further. I will need to consider carefully the points that the noble Lord made, in particular his reference to a one-stop shop. If one is going to have a one-stop shop, it would seem sensible for that stop to be the reclaim fund rather than any other organisation. The noble Lord did not answer the point that I made at the end in my intervention. As the Bill stands, the reclaim fund seems to be precluded from ascertaining the owners of dormant accounts transferred to it. I do not ask him to respond now, but that is, as I understand it, how the Bill is drafted. I believe that the fund needs to have the authority to do that. I find what is proposed an extraordinarily convoluted way of proceeding. The data are never transferred to the reclaim fund. The noble Lord suggested that, when there is a dispute, the reclaim fund will have to go back to the banks as well, instead of acting as what it is supposed to be—namely, a reclaim fund. However, I do not wish to delay the House further and, although I may want to return to this at Third Reading, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 2 not moved.]
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  • Speaker
    Lord HigginsLord HigginsConservative
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    moved Amendment No. 3:
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  • Speaker
    Lord BachLord BachLabour
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    My Lords, I am grateful to the noble Lord for explaining his amendment so succinctly. The purpose of the amendment is to ensure that charities may reclaim directly from the reclaim fund money that they are owed as a result of charitable legacies. We do not believe that it is appropriate to give charities the right to claim repayment of an account independently of the original executors of the deceased person’s estate. Where an estate has been administered but other assets such as a bank account subsequently come to light, perhaps several years later, we believe that the proper process is for the original executors of the will to take responsibility for collecting and distributing the assets in accordance with the terms of the will. If a customer dies, the right that that customer had to be repaid their money by their bank will pass, under the law of England and Wales, to their personal representatives who are the executors, or to the administrators of the estate if the person has died intestate. Different law and terminology apply in Scotland. The executors or administrators are responsible for claiming the money from the bank and subsequently distributing it to the deceased person’s heirs. The heirs may of course include charities to which a legacy has been bequeathed. We recognise that there have been concerns about whether very old or historic accounts or accounts of deceased account holders can be transferred into the scheme and whether the heirs of the original holders of the account may reclaim the money. In many cases the bank will simply not know whether the customer is still alive. I would like to clear up any confusion. I would like to make it clear that the legal right to repayment of a deceased individual’s account passes directly to the executor of the will. It does not pass directly to third parties, such as the relatives, friends or charities who stand to inherit according to the terms of a will. It is the responsibility of the executor to collect in the assets and to make payments in accordance with the terms of an individual’s will. That is our intention and it should remain the case under the dormant accounts scheme. In other words, existing inheritance law will not be affected. It is not our intention to make changes to existing inheritance legislation in this Bill by, for example, enabling charities to seek repayment of money directly from a bank without proceeding through the usual channel of the original executors or where necessary seeking the appropriate new form of grant or probate. Before closing, I should point out that executors will be able to search for lost accounts using the industry’s new one-stop shop website to which the noble Lord referred. Charities as legitimate heirs should of course receive their legacy income. Personal representatives also will be able to search the website on the owner’s behalf. For those reasons, it would not be right to change inheritance law as a consequence of the Bill. I therefore invite the noble Lord to withdraw his amendment.
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  • Speaker
    Lord HigginsLord HigginsConservative
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    My Lords, I am most grateful to the Minister for that somewhat unexpected answer. This point did not come out at all clearly in the course of the discussions in the Moses Room, where a number of those with far more knowledge about charities than I have seemed to think that charities which thought they had a legacy would be able to search. I am puzzled by what the noble Lord said about their searching the one-stop shop, since presumably the one-stop shop does not actually have the list of names of those for whom the charities may be searching. I will consider carefully what has been said. Those who have a particular interest in this matter may have a response to the Minister’s reply. Meanwhile, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. [Amendment No. 4 had been withdrawn from the Marshalled List.]
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  • Speaker
    Baroness Finlay of LlandaffBaroness Finlay of LlandaffCrossbench
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    moved Amendment No. 4A:
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  • Speaker
    Baroness NoakesBaroness NoakesConservative
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    My Lords, the noble Baroness, Lady Finlay, has made a powerful case on behalf of the Unclaimed Assets Charity Coalition for her amendment. We completely agree that a register with good access arrangements is an essential part of the dormant accounts scheme. We understood a moment ago from the Minister that the voluntary arrangements will be launched tomorrow—only a month late. There are questions about whether those voluntary arrangements will be good enough. We certainly hope that they will be, but the Minister should be aware that there is scepticism amongst the charities about that, based on their experience to date in getting information about accounts. With the Liberal Democrats, we thought long and hard about how to tackle this issue before we came to Report. We chose to table Amendment No. 13, which I shall come to later today. This amendment is designed to keep the parliamentary spotlight focused on dormant account schemes, and it specifically refers to reuniting schemes including those where wills are involved. It is designed to respond to the concerns that the noble Baroness raised. We felt that if the banks dragged their feet it would be possible for the parliamentary spotlight to be put on those unsatisfactory arrangements. The Government, whose powers of persuasion are capable of being very powerful in those situations, would then have a target to go for. It is not always necessary to have reserve powers. If there is a voluntary scheme which is not working, the Government—certainly under pressure from Parliament—could help to make it work better. The noble Baroness’s amendment refers to, “the establishment of a register of dormant accounts”. It is my understanding that the charities want to search for accounts long before they have become dormant. An account does not become dormant under this Bill until at least 15 years has passed, possibly longer. The charities want access to accounts earlier. That is what I understand the banks and building societies are going to deliver. We want to focus on what they are going to deliver, and on ensuring that that works well. I also gulped a bit at the sweeping powers being given to the Secretary of State by the noble Baroness’s arrangement. We often criticise the Government when they seek to take such powers. We are trying to achieve the same things as the noble Baroness but without the heavy hand of an unrestricted power. We believe in giving voluntarism, which underpins this Bill, a chance to work. For those reasons, we cannot support the noble Baroness’s amendment.
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  • Speaker
    Baroness PitkeathleyBaroness PitkeathleyLabour
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    My Lords, the issue to bear in mind here is that of giving a voluntary scheme the chance to work. I again declare an interest as a member of the Commission on Unclaimed Assets. Discussions with banks and building societies showed that they were extremely reluctant at the beginning to come into a scheme—and in some cases even to admit the existence of these assets. That is why it has remained a voluntary scheme. I have two points to make. First, I want to pay credit to the charitable sector for all that it has done in bringing this issue into the public arena. It is entirely through the efforts of some individuals in the charitable sector that we are discussing this Bill at all, or even are aware of the existence of large amounts of unclaimed assets. That is very praiseworthy indeed. Secondly, we should remember how the money is going to be distributed. If, as I hope, some of the money—perhaps quite a large amount—is going to go to the wholesaler, who will distribute that money further? Again, the focus is on making the capacity of the third sector greater than it currently is. We should not assume that if we do not pass this amendment the charitable sector will be forgotten—on the contrary.
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  • Speaker
    Lord BachLord BachLabour
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    My Lords, I echo what my noble friend Lady Pitkeathley said. All of us who support this Bill owe a great deal of thanks to the Unclaimed Assets Charity Coalition and to charities in general for having pushed this point so that it in effect became an election manifesto promise and then found itself going through your Lordships’ House.
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  • Speaker
    Baroness Finlay of LlandaffBaroness Finlay of LlandaffCrossbench
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    My Lords, I am grateful to the Minister for his detailed reply and to noble Lords for their comments. I and others have concerns about sweeping powers. I agree with the noble Baroness, Lady Noakes, that one is always cautious about giving any Minister of any Government more powers than are needed. There is a principle about the voluntary sector working with a voluntary scheme—one hopes that it works well and for the benefit of everyone. I am also grateful to the noble Baroness, Lady Pitkeathley, for her intervention, particularly for her reminder that the charitable sector has not been forgotten. I say to the House that neither will the charitable sector forget: it will be watching this legislation like a hawk. It needs to know that, everyone having worked so hard to get this far, the legislation really will work. I understand the criticisms of my amendment—perhaps the powers were a bit too sweeping—but I emphasise the fact that voluntary schemes cannot have people reneging on them. A huge amount of money is at stake for the charities. It might be a small amount for the banks, but, as the Minister said, it is a large amount for the charities. I will watch with great interest the amendment tabled by the noble Baroness, Lady Noakes. If it helps to solve the problem, it will have done a great service to the charitable sector. We will have that important debate later today. With those reservations and understanding the criticisms, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 2 [Transfer of balances to charities, with proportion to reclaim fund]:
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendment No. 5:
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  • Speaker
    Lord NasebyLord NasebyConservative
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    My Lords, I have been involved in the mutual movement for probably the whole of my adult life, so I think that I understand that movement and its ethos. A person who joins a building society, a friendly society or a credit union does so specifically as against joining a commercial bank. That is because, as they all understand, those bodies that I have just mentioned are mutual, there are no shareholders, and the operational surplus achieved—and all of them achieve it—is shared among the membership. That is very different to a commercial banking arrangement. I fear that the Government have never really full understood that fact. With a dormant building society account, members who opened that account originally made a conscious decision to put their money in a mutual society. They could have gone the other way but they did not. So they and their successors in life, who have somehow or other got lost, would want to see their money being used on the same principles for which it was originally invested and used by the charities set up by that particular building society. That is not a party-political thing at all. Certainly, given the choice between the building societies’ own charities—which all have independent trustees and are geared to what the society is interested in, by way of helping a community or the environment or whatever—and the Big Lottery, I do not believe that a single member of a building society would vote for the Big Lottery. Very few would vote for the lottery as a whole, although that would be a little better. The Big Lottery, like it or not, does not have the image today that people in the mutual world trust. I am sorry to be so blatant, but you have only to look at some of the projects that the Big Lottery has got into and the image that it has. It may be unfair but it is a fact that the image that it portrays is one of being an extension of government, excessively PC and not really understanding the local environment in which the building societies operate. In addition, cost efficiency is a criterion. This is money brought forward from a dormant situation. The existing charities, controlled by the charity commissioners, are very cost effective. While I do not have the detailed figures of the Big Lottery, I suspect that if I went into it I would find that the Big Lottery’s costs are far higher than any of the cost bases for their charities. The building societies are already regulated by the charity commissioners and they have their own auditors. I chaired a friendly society for eight years, which had a charity. At the AGM, probably our most actively discussed area was what our funds were being used for within the charity. I commend the Government for bringing forward this voluntary scheme, but they need to recognise that this minority sector, which it is, has a different outlook and the money would be better used in the existing charitable framework that is there than if it is put into the vast pot of the Big Lottery. That is why I support the noble Lord’s amendment.
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  • Speaker
    Baroness NoakesBaroness NoakesConservative
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    My Lords, as I said in Grand Committee, we are sympathetic to the desire of large building societies to build on their existing charitable foundations, which support the communities in which they operate. These amendments affect only eight building societies, as the noble Lord, Lord Shutt, explained, although because of their relative size within the building society movement they would probably account for the vast majority of the £150 million or so that is estimated to come from dormant building society accounts. I can see that the Government fear losing control over a large tranche of dormant account money, which, if this provision were fully implemented, will escape the clutches of the Big Lottery Fund. We do not see that as a disadvantage, so we will support the Liberal Democrats if the Government do not accept the amendment of the noble Lord, Lord Shutt.
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I am grateful to all noble Lords who have spoken in the debate. The noble Lord, Lord Shutt, has reiterated, with great consistency and with considerable force, the points he made on the Bill at Second Reading and again in Committee. I guess that I am obliged to recognise that I am not making much impression on him with my responses. The noble Lord, Lord Naseby, brings an additional insight into these issues—his long association with the mutualisation movement. I want to address the issues he has brought to the House. The noble Baroness, Lady Noakes, has spoken to the point and with her usual succinctness; she said that she agrees with the noble Lord, Lord Shutt. If these issues are put to the test I think I know the figures that might emerge. Therefore, I shall not deploy my full persuasive talents as I might be wasting them on the desert air with this amendment. Suffice it to say that, if we accept the proposition of the noble Lord, Lord Shutt, we would be obliged to accept that all building societies—and the noble Lord, Lord Naseby, gave voice to the excellence of the mutualisation movement—look alike and that all have a pretty uniform relationship to local communities. The Government’s contention is that that is just not so. We recognise that—as the noble Lord, Lord Shutt, confessed—of the 59 building societies, 51 are small enough, local enough and limited in their ambition enough to play their full part in local areas. We know which local areas would benefit from their work, and rightly so, because they have built themselves up on the basis of the community, as indicated by the noble Lord, Lord Naseby. The other eight are in an altogether different category. To which locality is a building society called Nationwide meant to be local?
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    Many, of course, my Lords, but indefinable numbers would be involved, given the colossal assets of the society, its great reputation for effectiveness and its size. As the noble Baroness indicated, the eight represent a substantial proportion of the resources that are likely to emerge from dormant accounts. It is reasonable therefore for the Government to say that local societies can do an enormous job in their localities and should be encouraged to do so, and that we want to encourage that local activity by such local institutions. It is a different matter altogether with the eight that are truly nationwide—if not all by name; a relationship between location and point of origin has long been departed from because of the sheer size of the operation. The noble Lord, Lord Naseby, has to face up to facts. Of course I enjoyed his exemplar of the best assets and virtues of mutualisation, but anybody would think that no building society had ever demutualised, that there had never been an occasion when people vested with these virtues had ever taken a different view about the role of the building society and its transformation. We have seen that occur; and the noble Lord knows a great deal more about it than I do.
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  • Speaker
    Lord NasebyLord NasebyConservative
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    My Lords, the Minister seeks clarity. Does he not understand that the Coventry Building Society is involved in an area round Coventry? I do not think that there is a branch of the Coventry Building Society in London. I do not think that the Chelsea Building Society has a branch in Coventry. These are primarily local societies. The one example the Minister gave was Nationwide. Nationwide did a marketing exercise. It is the old Co-op movement. If one analyses what happens to its charitable money, one sees that it is all geared to local former Co-op areas. It is time that the Minister recognised the history of that society.
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I accept what the noble Lord says—that the Coventry Building Society has a strong local base and that you will not find a branch of it in London. That might be the case with other big building societies. Is the noble Lord saying that because London does not have a local building society, it has no local communities? I refer not just to London—it may be the case that other significant cities do not have building societies with his mutualisation philosophy. For the Government, the process of mutualisation and the existence of the institutions are not sufficient guarantees of fairness to the people and communities of the United Kingdom. That is why we added an additional mechanism to the one favoured by the noble Lord, Lord Shutt.
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, I am glad that the Minister accepts where I stand. I thank the noble Lord, Lord Naseby, and the noble Baroness, Lady Noakes, for their comments. In an idle moment this morning, I looked at those building society websites that I could find. Without access to the registers, I do not know where the members live; but one way of looking at this is to find where the branches are. I looked at the websites of the Skipton Building Society and the West Bromwich Building Society. Most branches of the Skipton are in Yorkshire and most branches of the West Bromwich are in the West Midlands. Most branches of the Chelsea are in London and most branches of the Leeds Building Society and the Yorkshire Building Society are in Yorkshire. I did accept at the outset that the Nationwide was just that. But as the noble Lord, Lord Naseby, indicated, it was based on the old Co-operative Permanent Building Society, which decided in 1970 to cheer itself up with a new name. I would venture that the reason that it did not demutualise was because of its co-operative roots—it is the only one of the very big societies that did not demutualise, even though the rest of the big eight are far smaller. I would submit that since that wave of demutualisations, the mutuals—I have seen this on the websites—have said, “Look, we have got to be proud about being mutual, we have got to say there is something special about being mutual”. They say that their generosity is special—I refer, for example, to the percentages of profits that they put into charitable foundations and the fact that they bring in independent people to disburse these funds. It was interesting that the Minister said, a few moments ago, that all building societies were “allowed”. Allowed? This is a voluntary act, we are told. But the building societies do not want to volunteer in that way. They are happy to volunteer in another way and to use the alternative scheme. On that basis, I believe that this is the time to test the opinion of the House.
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendment No. 6:
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendments Nos. 7 and 8:
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendment No. 10:
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  • Speaker
    Baroness NoakesBaroness NoakesConservative
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    My Lords, our names are to the amendments in this group, and we strongly support them. Parliamentary oversight and transparency are ingredients that are largely missing from the Bill. These amendments, together with amendments that I shall move later, are essential to underpin the dormant-account scheme. In Committee, we were repeatedly told that it was to be a voluntary scheme and that the Bill merely facilitated that. However, there is huge public interest in the success or otherwise of the scheme, and Parliament is being asked to set up the structure without being given any way of tracking the scheme as it goes forward—it is just written out of the script. The reclaim fund will publish important information about the work of the scheme in its annual report and in the list required by Schedule 1. Do the Government expect individual parliamentarians to search out that information all the time in case they miss something? It seems to me to be a no-brainer that the information should be laid before Parliament as soon as it is available. The reclaim fund is being set up as a statutory body; it could as easily have been a public body because it is channelling money towards the Big Lottery Fund. If it were a public body, it would have had accountability arrangements set out for it. In truth, because of the involvement of the Treasury and the oversight of the FSA, this is a hybrid body, and we need to reflect Parliament's natural interest in that. I fully support what the noble Lord, Lord Shutt, said on Clause 21 with regard to spending, the involvement of Parliament in that, and in particular the social investment fund, which the Government have told us is not one of their favoured spending priorities. There are many, including the Commission on Unclaimed Assets, which the Government charged with looking at how dormant account money should be spent, who believe that it is essential to set up a social investment fund. It needs a significant critical mass of money to get it going. One of the most disappointing things that we heard in Committee was that the Secretary of State mentioned throughout the Bill, who will be responsible for giving directions to the Big Lottery Fund in connection with how the money is to be spent, is to be Mr Ed Balls. He is the Secretary of State with responsibility for schools; he does not have responsibility for social investment. The chances of any money going to social investment without any parliamentary involvement at all seems to us to be very small, which is why we need to keep Parliament involved.
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  • Speaker
    Lord NasebyLord NasebyConservative
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    My Lords, I support the amendment. Can the Minster clarify whether the National Audit Office has the right to investigate the accounts and thereby report to the Public Accounts Committee?
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, we had intensive debates on these issues in Committee, as both the noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, indicated. Their arguments have not changed a great deal. We have thought about the issue carefully, and I will demonstrate more effectively than I was perhaps able to in Committee why the Government think that these two amendments are unnecessary. However, we are of course not against the objectives behind the amendments. Because the operation of this scheme—which I hasten to add is a private one—is directed towards public purposes and Ministers have a role to play in it, it must be accountable and transparent. We want to meet the objectives which noble Lords opposite have identified, but have gone about it in a different way. I shall explain why, and why our system and proposals will work. I first make it absolutely clear that the reclaim fund is not a government body. The legislation defines the reclaim fund and sets out a clearly defined set of conditions to which the fund is subject, including matters that it must include in its articles of association, but it is a private institution. The issues of parliamentary scrutiny and accountability for a private body are different from those for a public one, which would be directly answerable in the public domain. Of course we have a different approach from any non-departmental public body or other institution which the Government have set up. This is a private scheme. In this private scheme, banks and building societies may cancel their liabilities to customers only if they transfer their assets to the reclaim fund. Of course, the reclaim fund will be established in compliance with the conditions set out in this legislation, and will be authorised and supervised by the Financial Services Authority. The industry, which will set up the reclaim fund, published on 8 November a timetable for selecting candidates and having interviews later this year. We await further updates on the running of the reclaim fund and how it will be constituted, but it will operate within the constraints of this legislation. I therefore cannot say now who will be running the reclaim fund. That will depend on the selection process of these private institutions for this private body. Of course, if a suitable candidate does not come forward to apply for FSA authorisation at the end of the process, the industry representatives will have to establish a reclaim fund themselves. They have made a public commitment to that action of last resort. Once it is established under the provisions of the Bill, the reclaim fund will be entirely independent of government. The Government will not make appointments to the board or membership; nor do we feel it necessary or appropriate to do so. The expertise for managing the reclaim fund lies within the private sector, not government. We do not want to place controls over the reclaim fund in this way. Rather, we set out in legislation what we regard as sufficient checks and balances on a private institution to ensure that it will have a clear purpose from which it will not depart and that the requirements in legislation are enforceable in the highly unlikely circumstances that it would be necessary to take any action. However, the reclaim fund is not a public body. I maintain that the Opposition are putting forward proposals for parliamentary scrutiny that are applicable only to a public body. This is manifestly not one. In other circumstances, they would be only too eager to emphasise how government should regulate with a light hand. If I have stood at this Dispatch Box once, I have stood here a hundred times, and heard of the bonfire of regulations that is necessary for a light touch with all sorts of institutions. The reclaim fund is a private institution and we are proposing to regulate it with a light touch. The noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, are seeking the heavy hand of parliamentary regulation as if the reclaim fund were some kind of direct public body. I ask them to consider whether they really have a commitment to dealing with this body in this form. Have they in mind a precedent for a private company or institution being required to report directly to government or to Parliament in the way that their amendment contends? We have taken an innovative approach in the Bill to this interesting—I shall not say unique—institution, the reclaim fund. That is the nature of our task because we are introducing an unclaimed assets scheme that is about private property being reclaimed at best by those who have the right to own it, with the reclaim fund being only the residual position when attempts to restore funds to private citizens have failed. Then the money goes to the reclaim fund. The reclaim fund is a product of the work of the private institutions which are committed to this legislation. The other factor we must bear in mind is that these commitments are made by private institutions—the banks and building societies—to tackle the problem of moneys that have been placed with them for keeping which they cannot return to the proper owners. Those moneys will go to a reclaim fund that they will institute and be responsible for. That could not be further from a regulated public body. Clause 5 sets out the three purposes that the reclaim fund must have: it must meet repayment claims; it must manage money prudently; and it must transfer surplus funds to the Big Lottery Fund for distribution. Those are the three constraints on it. That is where public policy comes into play. The law defines this private institution, but the Bill sets out clear ways in which the fund fulfils the obligation. First, with regard to customer repayment, let me make the obvious point: the banks and building societies are making strenuous efforts to ensure, as best they can, that they reacquaint customers with their resources. A customer has a statutory right to repayment. If the money has gone to the fund because the account has been dormant for 15 years or more, the individual’s right to claim that money is still there, and the fund must have a process for how it can be claimed. That is public policy and is a constraint built into this legislation. However, that is not the same thing as parliamentary scrutiny. Secondly, the reclaim fund has to manage its money prudently. It will take control of significant assets, and we would all want to be absolutely assured that it maintains sufficient resources to meet any future claims from customers. Otherwise it will miss the principle on which we are operating. Individual customers have the right to their assets if they can establish a claim, even after 15 years or a multiple of 15 years. If the money is in the reclaim fund and it is theirs, the reclaim fund must repay it. That is specified in the Bill. The body will be subject to the Financial Services Authority—prudential regulation of such an institution. Thirdly, the reclaim fund is obliged to transfer its surplus to Big. It must on the one hand calculate how much money it needs to protect its undeniable duty to meet future claims, and on the other transfer the surplus money so that distribution can occur. We cannot specify these amounts of money. We do not know the original totals which will occur, let alone what this fund will look like as times goes on. Yet Schedule 1 to the Bill is absolutely clear on how the reclaim fund will operate. The legislation also states clearly that the reclaim fund may use the money it receives to defray its operating expenses as long as they are reasonable. Again, the body is prescribed in law—if this Bill becomes an Act. I emphasise that the reclaim fund has to be transparent. That is absolutely crucial to this dormant account scheme. The scheme will not work if it is not operating with full public awareness of what it is doing. We are all united in this House on this necessity for transparency. Schedule 1 requires the reclaim fund to publish annually a list of institutions participating in the scheme, the amount of money transferred into the scheme at individual institution level, the amount of money reclaimed by consumers also at individual institution level, and the aggregate amount of money that they pass on to Big. This information will be available for public scrutiny. It will be in the public domain, so this body has to be accountable. The issue identified by the noble Lord and the noble Baroness with their amendment is that this is not good enough and that we need parliamentary scrutiny of its operations. Of course if Parliament wishes to scrutinise or debate any specific figure or point of detail in any work of the reclaim fund, among us in this place we have the expertise to subject to public scrutiny a body which is fulfilling a public purpose but is a private institution. If there is any doubt that we might lack the expertise to do that, I do not doubt our capacity for that for one instant. The other place is scarcely going to let any malpractice occur without Members of Parliament finding many conceivable ways of drawing public attention to any misuse of that body’s rights and powers. I appreciate the intentions behind Amendment No. 17—that parliamentary scrutiny of the directions to Big is required. But we have clear transparency of operations. Establishing a role for Parliament in the issuing of directions regarding Big’s expenditure in England is a pretty heavy-handed way of controlling this position. Of course the Government are bound to say that this is excessively heavy handed, but the Delegated Powers Committee, which reported last November, noted that the approach set out in the Bill follows the model that functions under the National Lottery Act, and is satisfied that it meets its requirements for parliamentary scrutiny. We are not building afresh here; we are following a model that already operates.
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    Viscount EcclesViscount EcclesConservative
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    My Lords, will the Minister read out more of what was said by the Delegated Powers Committee, of which I am a member? I believe it said, as he rightly stated, that it was a finely balanced affair. This was following the scheme in the lottery Acts, but if it had not been for that, the powers taken were wide enough to be described as having a legislative purpose. So it was a balanced comment; it was not wholly favourable.
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, the noble Viscount is well versed in these issues. I was not going to suggest that there was 100 per cent approval from the Delegated Powers Committee—heavens, I have far too much respect for its members to think that they cannot find a number of weaknesses in the legislation. On the question of scrutiny, however—I believe that the noble Viscount, Lord Eccles, would concede this point—the committee regarded the Government’s position as being well within the confines of the way in which the provisions of the National Lottery Act already operate. Indeed, this House considered that Act, as did the other place, to a very great extent a few short years ago. The amendment deals with the powers of the Secretary of State. The noble Baroness is distressed that one particular Secretary of State is vested with the responsibility of exercising these powers. I make the obvious point that there must always be one. In circumstances in which it is clear that a number of Ministries have a real interest in this issue, I assure the House that the work will be the product of interdepartmental work by civil servants. However, there must be ministerial responsibility, and the appropriate Ministry here is the Department for Children, Schools and Families. Big plays a very important part in the operation of the lottery, and this House has recognised that role. The suggestion is that Big should operate under the National Lottery Act without excessive constraints, but that in its operation of this particular issue, there should be additional parliamentary scrutiny of the direction. Let me say that the affirmative procedure—in other words, if the Secretary of State had to table approval for the decisions that he has to take—would exaggerate the necessity. It was not thought necessary with the National Lottery Act, which set up a public body. This is a private body; yet it is being suggested that the parliamentary scrutiny of that body should be at that level of intensity. I cannot recall a time when noble Lords opposite—certainly not noble Lords speaking for the Official Opposition—have suggested that a private institution should be subject to this degree of intensive parliamentary scrutiny. It seems odd that this was not suggested with regard to the lottery, but that it is suggested in this rather specific and relatively small-scale operation of Big. It is suggested that those directions should be subject to this intensive parliamentary scrutiny, and I can maintain only that the demands are excessive and unnecessary. This body will be accountable, transparent and answerable. There is no question that it will not be subject to public scrutiny as envisaged in the Bill. I hope that the noble Lord will accept the Government’s argument.
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    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Naseby, for their comments. The Minister does not have the same sight on this as I have. Clause 5(4) says: “The Treasury may give a direction … requiring it”. If that is not the Treasury saying to this private company, “You shall do something”, what is? That is so clear. All Amendment No. 10 says is that these people who are required to do things had better be required to send some accounts. The Treasury should then lay those accounts before Parliament and tell us about the directions. That is simple and straightforward; I see no great problem in that. The dilemma for the Minister is his concern that this is a sort of private affair. The main thing is that this is primarily about something that is being done for the public good. Lots of people want to see the right thing being done for the public good. It therefore seems to me that this very simple matter should be acceptable. The Minister has an idea that Amendment No. 17 is heavy handed. Perhaps he needs a bit of help. There is all this talk of this being voluntary, but only one volunteer decides how the Big Lottery Fund shall spend the money. There has been tremendous concern about the disposition of the money. Many people could think of all sorts of bright ideas for the use of this money, but by and large people have thought, “Fair enough: youth, yes—bearing in mind where the money is coming from; financial inclusion, yes; social investment bank, not quite certain but we’ll give it a go”. However, this one volunteer will say, “£300 million for that, £50 million for that, and £50 million for that”. Surely the people who have had such great concern about the disposition of these resources and who represent people in various places should have a say in this, rather than it being at the whim of one Minister at the particular moment when the penny drops, the money is available and Parliament is not involved. It beggars belief that that is the position. I therefore wish to test the opinion of the House.
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    Baroness NoakesBaroness NoakesConservative
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    moved Amendment No. 12:
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    Lord MonsonLord MonsonCrossbench
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    My Lords, as I was not aware that the noble Baroness, Lady Noakes, was not proposing to move Amendment No. 11, I was having a relaxed cup of coffee and missed my turn to move Amendment No. 11A. However, as Amendment No. 12 is in many ways an alternative to it, perhaps I may speak to them both. Amendment No. 11A was based on the presumption that it is not unreasonable for an individual to decide to put few hundred or a few thousand pounds into a bank or building society for the proverbial rainy day, and to leave that sum wholly undisturbed for 15, 20 or even 25 years if such a day never arrives. If that is accepted, the account holder should not have to stay awake at night worrying whether his account might be declared dormant against his wishes, nor should he be put to any other form of inconvenience. However, as the Bill is drafted, the only other way in which he can be 100 per cent confident of not having to worry is by formally declaring that he does not want to receive any communication whatever from the bank or building society concerning the account. Who but the most extreme eccentric would in practice want to opt for such a course? I suppose that the only exception would be someone who does not want other members of his family to know that he has a large amount of money stashed away in an account. But such people cannot amount to more than one depositor in 1,000, at the outside. I submit that most normal people would positively want to receive a statement at least once a year to verify that their account was still in existence and had not been misappropriated by some rogue trader. They would also want to know what interest had been earned and what bank charges, if any, had been deducted. Indeed, where interest-bearing accounts are concerned—and most such accounts will earn interest, however little—I suspect that it would be illegal for the bank or building society to fail to send the holder at least a yearly statement setting out the interest earned in the financial year and the tax deducted. How else could the holder complete his or her tax return? Perhaps the Minister could confirm that I am right in that assumption. Amendment No. 11A, which cannot now be moved, would have ensured that such basic information is provided and that the account remains officially non-dormant—officially being the point. It may be that the noble Baroness’s amendment will achieve the same objective in a more roundabout way, the only snag being that the ball would then be entirely in the court of the bank or building society. At least 99 per cent of them can be trusted to be conscientious about this matter, but a few might not be. However, we shall have to wait to hear what the Minister has to say about that.
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    Lord BachLord BachLabour
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    My Lords, we believe that Amendment No. 12 is unnecessary. It does not alter the position of account holders potentially affected by the scheme. Instead, the amendment mirrors how the scheme is intended to operate: that banks and building societies will transfer only genuinely dormant accounts to the scheme. The Bill’s provisions set a clear minimum requirement that an account must meet for it to be eligible for transfer to the scheme. First, there must have been no customer-initiated transaction in the account for 15 years. The scheme is voluntary for financial institutions, and we believe that one of its key advantages is that banks and building societies will have the flexibility to refer to other forms of customer-initiated activity before deciding whether an account is truly dormant. That includes correspondence, e-mails, telephone calls and activity on other accounts. Institutions may differ in the approach that they take to recording such activity, but we fully expect banks and building societies not to transfer these accounts where they are aware that an account is active. Noble Lords have occasionally in our debates seemed sceptical of banks’ and building societies’ intention to act on their knowledge of customer activity under the definition provided in the Bill. However, the scheme has been designed to give both banks and building societies the ability to act on whatever knowledge they may have about the account or the account holder. This will allow individual institutions to take a more sophisticated approach, suited to their particular capabilities, to identifying dormant accounts. This approach will be more sophisticated than would be permitted under similar international schemes which commonly focus only on customer-initiated transactions.
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    Baroness NoakesBaroness NoakesConservative
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    My Lords, I apologise to the noble Lord, Lord Monson. I looked for him to tell him that I did not intend to move Amendment No.11 but he was not in his place and I did not know which place he was in. I hope his concerns are covered by my own amendment, as I said in my introductory remarks. The Government said that they fully expect the banks to behave in a way that meets the concerns I have raised and that money would not be transferred. The Minister says that the Act is designed to give the banks the ability to act on their knowledge. However, our concern is that they must act on the knowledge they have or on any other information that is available to them. The Minister also referred to the Banking Code, which is welcome and sets out some useful points. However, that is a voluntary code and not universal. Finally, he referred to this as a voluntary scheme. However, for the account holders it will become a compulsory scheme if the banks are allowed to define their own rules without reference to their knowledge of the account holders. I therefore wish to test the opinion of the House.
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    Baroness NoakesBaroness NoakesConservative
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    moved Amendment No. 13:
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    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, our names are attached to this amendment and I would like to speak to it. I would call this “accountability and action”. As the Minister said earlier, this is a novel way of going forward; if so, it had better be right. The triennial report would be a very good way to consider that and to see whether reuniting is going fine, whether the reclaim fund is working well and whether we have confidence in the voluntary scheme. I am particularly attracted to the paragraph that says we need to raise the horizons and look at other orphan assets. We know that in other places, such as Ireland, other assets have been brought in. If this report is brought forward, it will enable people watching the scheme to look at international comparisons. I hope that the scheme is a great success. As the Minister indicated, I am an enthusiast for the scheme. I hope that insurance, unclaimed dividends, shares and betting slips—you name it—can be brought into the scheme. Earlier today the Minister said, “Let’s see if we are proved right”. One way in which we can see if the Government are proved right is to get a report about how things are doing and to lay it before Parliament.
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, the Government think that in principle the Opposition have a strong argument. We agree in principle with the concepts that lie behind the amendment. This is a good opportunity to look to a time when the scheme is up and running. We need to consider such matters because this is an innovative scheme. I emphasise the fact that the transfer of money into the scheme will be managed by a reclaim fund run by the private sector, under private arrangements put in place by the reclaim fund of the banks. That will be in compliance with the legislation, the Banking Code and the FSA regulations. We agree that the Government should not lose sight of the scheme once it is inaugurated. We have no intention of losing sight of it. It is right that at some stage the Government will return to it after its implementation to review whether the scheme is effective and delivering the right outcomes for consumers. We will think further about these issues. We are by no means convinced that this amendment should be in the Bill. I listened to the questions today and in Committee about the scope of the Bill. I remind the House that this Bill is restricted only to bank and building society accounts and that other assets and other schemes are outside the scope of the legislation. Therefore, when we look at the review we will be looking at that. I also do not see any great merit in the amendment which suggests that there should be regular reviews every three years. I cannot see the logic behind that. I can see the necessity for the Government to respond to the principle of review, and so at Third Reading we will come back with a statement on how we think that review should be carried out. We will consider carefully when an appropriate time for the implementation of the review will be, in line with better regulation practice and we will take into account the available data on participation levels and the amount transferred to Big for distribution. The noble Baroness may be right that after three years we will be in a position to make those judgments. We do not think that we are in a position at this stage, and certainly it would be wrong to place in the legislation an amendment which ties us down on the matter. The noble Baroness is right that this scheme should not be implemented or operated without a review. I undertake—
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    Lord Norton of LouthLord Norton of LouthConservative
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    My Lords, I am sorry to interrupt the noble Lord, particularly on Report, but he referred to a statement at Third Reading rather than the possibility of bringing forward an amendment. May I draw his attention to the fact that a precedent was set on the Pensions Bill by agreeing an amendment that provided for some degree of post-legislative scrutiny, which is what is being sought here?
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I understand that point but the noble Lord will recognise that I have crucial reservations about the amendment. We agree with the principle and we will take steps to implement it. However, we do not think that it should be in the Bill, and certainly not in the terms of the amendment. There is no disagreement between us in principle as regards the objective, which we will seek to realise. I undertake to be clearer at Third Reading than I am today as regards how the Government foresee that happening. I am aware that this may not—
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    Lord HigginsLord HigginsConservative
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    My Lords, I find the Minister’s statement somewhat puzzling. He is saying that the measure will not be in the Bill, that the Government will do something about the matter in some other, unspecified way, but that we will not find out what that is until Third Reading. He has had long enough to think about this rather simple point. Can he give us some clue about what the Government have in mind?
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I indicated why the amendment is unacceptable to us and the reservations we have about it. The noble Lord makes the obvious point that the Government should be ready for all developments at all times. These arguments were presented in Committee. The Government are asked to listen to the arguments made in Committee and to respond. The amendment has been tabled today on Report. I am indicating that the Government agree with the principle. We have listened, we agree with the principle and we will take constructive action. At Third Reading I will announce how the Government envisage that action should be taken. I am signalling to the House that I do not think the measure needs to be included in the Bill. Of course, the House must judge the value of the point I am making. I hope that I will at least be given credit for the fact that I am not indicating straightforward disagreement with the amendment; far from it. I accept the principle behind it. The Government have the right to indicate that they will try to solve this problem in their own way. It will then be for the House to judge whether that way is satisfactory.
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    Baroness NoakesBaroness NoakesConservative
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    My Lords, I thank the Minister for that reply and the noble Lord, Lord Shutt, for supporting the amendment. When the Minister started to speak I thought that we were getting somewhere but, as he pointed out, we considered a very similar amendment in Committee. He said very similar things in responsethat that—there would be some kind of review at some time—but he gave no indication of what would be in it, when it would take place, whether Parliament would be involved, or of a lot of other things. The only advance we have made concerns the things that the Minister does not want. He does not want there to be a regular report to Parliament and he certainly does not want it to include other assets. We think that those two aspects are very important. The Minister has made no attempt to talk to me about the content of a report, notwithstanding the fact that we started Committee in early December. I hear what he says about making a statement on the Government’s view at Third Reading but I cannot believe that that will be satisfactory. I wish to test the opinion of the House.
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    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendment No. 15:
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    18:46
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    Lord BachLord BachLabour
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    My Lords, we on this side appreciate and admire the noble Lord’s spirited attempt to ensure that the investment of dormant account funds in communities across the UK is properly recognised. It is our intention that the distribution of dormant account funds should be appropriately publicised, reflecting the unique opportunity they present to make a real difference to communities across the UK. However, the effect of the noble Lord’s amendment is to impose a UK-wide brand. I hope that the House will appreciate that, just as it is important that the devolved Administrations set their own spending areas, so it is important that the use of dormant account resources is branded in a way appropriate to each of their communities. At this early stage, it is not appropriate to take decisions about the branding and publicising of dormant account fund investments that would then stand, whether they were right or wrong. I hope that when the appropriate time comes, expert and public opinion will contribute to the consideration. There may well be a degree of consultation, particularly among young people, about what the brand should be in Scotland, Wales and England. With the greatest respect, these are matters that should be properly beyond the House. This does not need to be in the legislation. If the amendment was prompted by a desire for government reassurance yet again about the ways in which dormant account funding would be delineated from other funds distributed by Big, which I know in large measure it is, let me once again try to reassure the noble Lord and the House. Big is clear that any non-lottery funding will be accounted for and promoted independently from lottery funding. The Bill requires Big to report annually on any grants made with dormant account money, and Big has committed regularly to update its website with grant details. This will be clearly branded as distinct and separate from lottery funding. The Big Lottery Fund is fully accountable to the Secretary of State and Parliament for lottery distribution. This level of accountability will be extended to dormant account money in our reporting and in access to information on our funding. I remind the noble Lord, as I am sure he knows, that Big already runs a non-lottery funding programme, the Community Assets programme, on behalf of the Office of the Third Sector. This is an example of a programme that is clearly branded as distinct and separate from lottery funding. Big’s work on the Community Assets programme is accompanied by the following statement: “The Big Lottery Fund is delivering the Community Assets programme on behalf of the Office of the Third Sector. This is not lottery funding”. That is one example of how Big already manages a clear separation of its funds. The Government expect that Big will similarly manage to ensure that dormant account funding remains publicly and operationally distinct. While we have great sympathy and more with the noble Lord’s intention, we think that it is too early to give a definitive name to this fund. I repeat that those who run it in other parts of the country will want to brand it in their own ways. I ask the noble Lord rhetorically, “Is it really for us, today, while the Bill is going through Parliament, to give it a name that, once given, cannot easily be changed?”. I thank him very warmly for dealing with this issue, but I invite him to think again and perhaps to withdraw his amendment.
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    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, I thank the Minister for his contribution. It may well be that there are other, brighter ideas. I hope only that those who make inquiries as to possible names will make inquiries of people who come up with brighter names than three-letter words such as “Big”. I am sure that better can be done. I hope that words that engender excitement can be put into the title. The Minister possibly realised that I would not necessarily press the amendment, and I will not do so on the grounds that I am frankly more interested in substance than top show. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
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    Viscount AstorViscount AstorConservative
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    moved Amendment No. 16:
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    Lord Howard of RisingLord Howard of RisingConservative
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    My Lords, I support the amendment. Some of the other lottery distributors have considerable knowledge of the sectors in which they work, and it seems only sensible to allow the Big Lottery Fund the flexibility of making use of those organisations, especially those that have specialist knowledge in the spheres that meet the criteria set out in the Bill. Indeed, that would be a cheap and effective way of distributing funds. The Big Lottery Fund should be not only permitted but encouraged to make use of that pool of talent. All the reasons the Big Lottery Fund put forward explaining why it would be an appropriate distributor of dormant money hold true for other lottery distributors. I hope that the Minister will be sympathetic to this small amendment. It does not in any way restrict the Government in directing this money to the causes that they have defined; instead, it increases the chances that the money will be distributed by the organisation that is best suited to the purpose.
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    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, I have a quick question for Minister. The Heritage Lottery, for example, could decide that a dig involving young people was a good thing. Would that dig get money from Big?
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I am grateful to those who have spoken in the debate and particularly the noble Viscount, Lord Astor. We missed him in Committee. He is more than welcome to discuss, in his inimitable way, issues in relation to the Lottery on which we have discoursed together on many occasions. The amendment possibly had a modest objective. The noble Viscount may have been seeking the assistance of other agents among the lottery distributors in distributing the resources in accordance with the priorities identified in Clauses 17 to 20. The noble Lord, Lord Shutt, asked me whether Big could ask other lottery distributors to hit certain targets within the framework of Clauses 17 to 20. The answer is yes; Big currently does that outside the scheme. Big does, from time to time, hit the objectives that it wants to achieve in partnership with other lottery distributors. The case that the noble Lord, Lord Shutt, mentioned is an illustration. The delivery of the Parks for People programme is run with the Heritage Lottery Fund. Big has got that experience and I cannot see anything that would inhibit Big from following that objective within the provisions of Clauses 17 to 20. However, I fear that what the amendment would—and what in fact the noble Viscount intended it to do—enable Big to operate outside the priorities in Clauses 17 to 20 and to follow other priorities that obtain in relation to lottery funds and spending. What, otherwise, would be the point of his reference to the pressures on other expenditures and schemes within the Lottery if they did not need supplementation from this fund? I cannot accept that. He will appreciate that we would expect Big to work separately; this account is separate. Big has got to be accountable for the separateness of that account—all our processes of accountability require that. As to the use of agents for the distribution of the money for the purposes defined in the Clauses 17 to 20, we expect that to happen—not to a huge extent but where it is felicitous for it to do so. However, the amendment opens up the wider field; namely, that the dormant account proceeds might fill the gaps in funding denied to the lottery through other decisions. We cannot accept that because that would be putting this fund into the framework of lottery priorities. We have built into the Bill priorities for expenditure. If the amendment had referred to the use of agencies and involved felicitous interchange, I would have been able to give it the warmest of welcomes because it would have been consonant with present practice. Unfortunately, the noble Viscount indicated, as we had anticipated, that the amendment is a bit more strategic than that and we do not accept that strategic objective. I hope that he feels that he has pushed this as far as it can go and that he will withdraw the amendment.
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  • Speaker
    Viscount AstorViscount AstorConservative
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    My Lords, the Minister has given an interesting reply. He has accused me of opening gaps by trying to extend where this money could be spent. My amendment does not do that. It refers very clearly to, “meeting expenditure that has a social or environmental purpose”. Those are exactly the words on page 8, Clause 15(1). I have mirrored those words, so I have not opened any gaps. All I have tried to do is to show that the Big Lottery could give money to other lottery distributors, to be spent on exactly the same basis, subject to all the provisions in Clauses 17 to 20, as the Minister said. I think he said in response to the noble Lord, Lord Shutt, that they could do that. I will have to study what he said with care; if he did say that, I am grateful—that is one of the things we were asking for. He explained why he thought that my amendment was defective; I do not necessarily agree with that. However, I take his final point, which was that it could be redone in a better way. I know the Minister has had a difficult and bruising afternoon and I do not wish to add to his woes any more. I will look at what he said and see whether his words give us comfort on this—they may do—or whether they encourage me to come back with a slightly amended amendment that fits my purpose and does not break any of the principles, with which I agree, that the Minister wants to make sure are held throughout this Bill. I am not just trying to open gaps. I am grateful to him for his reply and beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 21 [Directions to Big Lottery Fund]:
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    moved Amendment No. 17:
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  • Speaker
    Lord Howard of RisingLord Howard of RisingConservative
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    moved Amendment No. 18:
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  • Speaker
    Lord Shutt of GreetlandLord Shutt of GreetlandLiberal Democrat
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    My Lords, I am not inclined to support the amendment. I have no idea whether 10 per cent is the right figure, although it sounds reasonable. However, I am a member of a charitable trust for which the figure would be higher. It depends how you describe the 10 per cent and what funds come within it. Monitoring grants—seeing that things are going well and stopping problems—is all part of the business of grant making. Some people may say that that is part of the grant, while others may say that it is part of administration. Timing may be also an issue if there were to be such monitoring, as the figure might be 9 per cent one year and 11 per cent another. I am not inclined to support the amendment, although I very much appreciate the principle of not wasting money and wanting real value for money.
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, the noble Lord, Lord Shutt, made a similar speech in Committee, which I greatly applauded. I am happy that he has produced an encore so that I can offer my applause again. In fact, I shall quote what the noble Lord said in Committee. He did not quite repeat himself, so I shall delight the House by showing how extraordinarily accurate and perceptive he was. He said: “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”.—[Official Report, 15/1/08; col. GC 470.] That is graphically put; I could not express it as well myself, which is why I indulged in the quotation. I am grateful to the noble Lord for his contribution today, too. The necessity of bearing down on administrative costs is, of course, continually with us. We share that objective with the noble Lord, Lord Howard. Like the noble Lord, Lord Shutt, we do not think that Big’s current spending is outrageously large, given that Big is involved in complex disbursements of money. That brings me to whether an annual cap would make any sense. The noble Lord, Lord Howard, has vast business experience, so I shall not venture down any road in trying to enlighten the House on areas that he knows inside out and far better than I do. However, for a body that operates, as Big does, a portfolio of operations over time—commitments are for more than three years and payments are made over five years or more—an annual cap would be the most extraordinary and arbitrary intrusion. I do not think that it would fit within the framework of any business that operated in quite the way that Big does.
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  • Speaker
    Lord Howard of RisingLord Howard of RisingConservative
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    My Lords, I thank the Minister. It will not surprise him to hear that I do not agree with him. Given that the fund already has more than 1,000 employees and an existing structure, that it has pitched to get this, and that it has briefed us on how its existing administrative overhead can easily absorb this new money, I think that it has massive flexibility within a 10 per cent ceiling on its expenses. It should have some discipline over what it spends. I know that that is not customary, but then it would be nice to think that at least some government organisations cannot spend whatever they feel like spending. I beg leave to withdraw the amendment. Amendment, by leave, withdrawn.
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