Report stage, 3rd reading in the Commons
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The Economic Secretary to the Treasury (Ian Pearson)Labour- Quote
- I beg to move, That the clause be read a Second time.
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Mr. SpeakerCrossbench- Quote
- With this it will be convenient to discuss new clause 2—Report to Parliament— ‘(1) The Treasury shall keep the operation of the dormant accounts arrangements under review. (2) From time to time the Treasury shall prepare reports to each House of Parliament on the operation of the dormant accounts arrangements. (3) Within three years of the commencement of this Act, the Treasury shall prepare its first report. (4) Each report shall include— (a) a review of the operation, effectiveness and scope of the dormant accounts arrangements; and (b) any other matters that the Treasury considers to be relevant to the operation of dormant account arrangements. (5) If the report shows that any of the matters covered by the report are unsatisfactory in any respect, the Treasury shall state— (a) the improvements that are to be made to the arrangements; (b) whether such improvements require legislation or could operate on a voluntary basis; (c) the timescales involved in achieving those improvements; and (d) the actions that the Treasury propose to take. (6) In preparing each report, the Treasury shall consult— (a) those persons who it considers to have relevant knowledge of the operation of the dormant account arrangements; and (b) such persons as it considers appropriate. (7) Each report shall be published in such manner as the Treasury shall determine, and shall be laid before each House of Parliament. (8) The Treasury may make an order removing the obligation to prepare reports in subsection (2) above. (9) An order made under subsection (8) above may not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.’.
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- Ian PearsonLabour
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- When we discussed the matter before us in Committee, a strong view was expressed that the Government ought to return to it at an appropriate time, having reviewed the progress of the Bill and the operation of the reclaim fund. That feeling arose largely after the Government overturned amendments made to the Bill in the other place that introduced triennial reviews in perpetuity. The Committee felt that such a review regime was excessive. However, the general feeling was that there should be a review and that a relevant clause should be inserted into the Bill. At the time, I expressed my view that the Government would naturally want to have a review, but I did not think it appropriate to put it in the Bill. However, having listened carefully to the Committee debate, I undertook to reconsider the matter and to introduce a new clause committing us to a review. Government new clause 3 will commit us to a comprehensive review set out in legislation and accountable to Parliament, so I hope that it will be recognised that we have listened. We had a very constructive debate in Committee. The new clause is clear and detailed, and commits us to a review of the scheme within three years after it is up and running. The review will cover the effectiveness of the scheme, including industry arrangements for reuniting customers with accounts before they become dormant, industry participation in the scheme and the arrangements for repaying customers whose assets have been transferred to the scheme. The review will be based on consultation with all the relevant parties, and we undertake to present our findings and conclusions in a report to be laid before Parliament.
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Tom Levitt (High Peak) (Lab)Labour- Quote
- I am very relieved to hear my hon. Friend say that the review will take place within three years of the scheme being up and running. New clause 3(5) states that the review will take place “within three years from the date when a reclaim fund is first authorised”. Does that mean from when the fund starts work, or from when the Bill is passed? What is meant by up and running?
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- Ian PearsonLabour
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- We mean when the reclaim scheme itself is up and running. I think that it is right that there will be a period of time between the passing of the Bill and the setting up of the reclaim fund. It seemed to us—we explored this in Committee—that three years was about the right length of time. In actual fact, it will be slightly less than that, because we would have to report in that period. Let me turn to the scope of the review. As I have said, it will consider the effectiveness of the legislation. That was a point that my hon. Friend the Member for High Peak (Tom Levitt) and other Labour Members raised. It will not attempt to review areas outside the legislation, such as the Financial Services Authority’s prudential regulation of the reclaims fund’s, management of money. It is right that FSA regulation is a matter for the FSA. We expect the regulator to make its own assessment of the effectiveness of its regime, too. New clause 2 does the same thing, in essence, as new clause 3. We naturally prefer our clause and think that new clause 2 is unnecessary as a result. The Government have listened and we have acted as a result of the representations that were made in Committee, and that is why we commend the new clause to the House.
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Mr. Nick Hurd (Ruislip-Northwood) (Con)Conservative- Quote
- rose—
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- Ian PearsonLabour
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- Before I sit down, I shall give way to the hon. Gentleman. He was not on the Committee, but I am sure that he takes an active interest in these matters.
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- Mr. HurdConservative
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- I thank the Minister both for giving way and for indulging me, as someone who was not on the Committee but who takes an interest in these matters. I welcome the indications that the Government have opened their mind to the idea of a review. The Minister will be well aware of concerns inside the third sector about the response of banks to this opportunity as a result of economic circumstances. He said that new clause 2 was very similar to new clause 3, but does he not see differences in the scope for more regular reports and in the pressure that the Opposition new clause would place on the Treasury to do more than just report what is happening and to come to the House to suggest improvements?
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- Ian PearsonLabour
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- There are some differences between new clause 3 and new clause 2. I thought it right to let the hon. Member for Fareham (Mr. Hoban) explain why he prefers his clause when he has his go. The Government will want to publish the findings of any review that we undertake and we will want to take forward any recommendations that come from it. Although some of the detailed wording is not in new clause 3, its spirit and intention would be the same, I think, as that of new clause 2, which I shall let the hon. Member for Fareham introduce.
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- Tom LevittLabour
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- My hon. Friend said that the review would be comprehensive, and he has also said that its recommendations could be acted on. In the knowledge that we will be left with a voluntary scheme, because the Government have committed to such a scheme, will comments about whether the voluntary scheme is working be allowed in extremis as a conclusion of the review? If the review recommended that we should move from a voluntary to a compulsory scheme, would that be one of the recommendations that would then be implemented?
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- Ian PearsonLabour
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- I understand where my hon. Friend is coming from. As I said in my opening remarks, the review will cover industry participation in the scheme. If, for some reason, there was little industry participation in the scheme, I would expect the review to conclude that the voluntary scheme was not working. However, as I explained in Committee, I have no reason to believe that there will not be extensive voluntary participation in the scheme. The British Bankers Association and the Building Societies Association have both confirmed that their members wish to participate in the scheme. My hon. Friend will find that more than 90 per cent. of retail deposits are potentially committed to participation already. Obviously, we would hope that more banks and building societies with retail deposits would make such a commitment as the Bill is passed and as the reclaim funds are set up. I do not think that the problem that he mentioned will materialise. It would certainly be within the scope of the review to consider industry participation in the scheme.
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Mr. Mark Hoban (Fareham) (Con)Conservative- Quote
- I am grateful to the Minister for tabling new clause 3, which reflects the commitment that he gave in Committee to return to the issue. A feature of the debates in the House and the other place has been that a review process is needed. In Committee, the Government sought to remove the new clause that was inserted into the Bill on Report in the other place. As a consequence of that decision in Committee, we are considering Government new clause 3 and new clause 2, which I tabled.
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Mr. Jim Cunningham (Coventry, South) (Lab)Labour- Quote
- Surely common sense would dictate that if further reviews were necessary in the light of new information, the Government would carry them out, so there is no need for new clause 2.
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- Mr. HobanConservative
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- I would rather have the comfort of knowing that the Government were obliged to have another review, rather than leave it to the whim of Treasury Ministers. That is a much more secure basis on which to have the review than to allow one review and for the matter then to be put back on the shelf and forgotten about. The requirement to have ongoing reviews, with the Government able to determine when those reviews should stop through the statutory instrument process in my new clause, would be a far better safeguard for consumers and voluntary groups and would show that the scheme was working effectively.
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- Mr. CunninghamLabour
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- Surely common sense would dictate that if further reviews are needed they will be held. How many reviews does the hon. Gentleman think we should have?
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- Mr. HobanConservative
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- The answer is that I do not know. We may have to have a review every three years until the end of time, although I suspect that that is not the answer. Equally, I am not certain that just once is the answer either. That is why new clause 2 seeks to place on the statute book the requirement for there to be further reviews until a statutory instrument removes that obligation. My new clause would give people greater certainty about the scrutiny of the process than the Government’s new clause. We are talking about money that belongs to consumers, to our constituents. I want to ensure that the reclaim process works properly and effectively, and when we are talking about potentially £400 million or £500 million, I am not sure that one review is sufficient. If the scheme is deemed to be working well at the end of one review, the Government could bring forward a statutory instrument to remove the obligation to have any future reviews. My suspicion is that one review will not be enough, and there will be a need for a second review. Therefore, rather than let it be at the discretion of the Treasury, it is important that Parliament should determine that there should be the capacity to have regular reviews of this issue. That is the main area where there is a difference between new clauses 2 and 3. I do not think that new clause 3 provides the comfort and assurance that the voluntary sector and consumers are looking for, and that is why it is deficient. New clause 2 offers much greater protection to the voluntary sector and consumers that the scheme will work in both their interests.
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Keith Vaz (Leicester, East) (Lab)Labour- Quote
- I did not have the pleasure of serving on the Committee, but judging from the speeches of my hon. Friend the Minister and the hon. Member for Fareham (Mr. Hoban), it sounded like a particularly civilised Committee stage. I do not know whether I am right or wrong. The hon. Gentleman feels that new clause 2 is slightly better than the Government’s, but I am not sure whether he will seek to divide the House. There is consensus on the need to review how the legislation operates, and I welcome the common-sense approach taken by my hon. Friend in tabling the new clause. He seems to have accepted the views put forward in Committee by both the Conservative party and the Liberal Democrats—whom we have yet to hear from, so I hope I am not misquoting them in advance. My only concern is the need for a degree of independence in the process, given the current climate. I understand why this has to be led by the Treasury—this is an idea that comes from the Treasury and Treasury Ministers—but it is important that the Government allow some degree of independence in the review process. We have not had this process before, but I envisage people being able to make written representations to the Treasury within a time scale enabling the review to take place. I am not sure whether that is what the Minister has in mind, or whether he proposes to elucidate further on how the process works, but it is important that we get as much detail as possible on the record, so that once the review process begins, people feel that it is open and transparent and they can put forward their views about how they can best express their concerns over what is happening.
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Mr. Jeremy Browne (Taunton) (LD)Liberal Democrat- Quote
- It feels as though we are dancing on the head of a pin when there are rather more pressing matters facing the banking sector. Nevertheless, that is perhaps inevitable at this stage of the legislative process. I welcome the fact that at all times, in the other place and in Committee in this House, the Bill has broadly commanded cross-party support. That is reflected in the Government’s new clause 3, which I welcome. I am grateful to the Government for listening to the representations that were made in Committee and for seeking, to some extent, to accommodate the concerns that Members from all parties expressed. With this legislation, there is, after all, a sense that we are entering slightly different territory, and, even though the headline concept is fairly straightforward, we are not certain about how some aspects of it will pan out in practice: whether 15 years, for example, will be an appropriate period for a bank account to be deemed to be dormant; the nature of the reclaim for people who want access to their funds after that 15-year period has elapsed; the mechanisms for distributing the money and the causes that it goes to; and many other features of the legislation besides. So my colleagues and I have always taken the view that some sort of review mechanism would be healthy and in the interests of the Government. The amendments, both in the other place and in this House, were not about Opposition point-scoring to try to put that process into the legislation; they were well-intentioned, and I am pleased that the Minister and his colleagues have sought to accommodate them and seen the wisdom in trying to take that approach. My party’s view in both Houses has always been that the review should be regular, although in Committee I was, like the hon. Member for Fareham (Mr. Hoban), happy to concede that having a review every three years for—as he put it—“the rest of time” might be somewhat excessive. No doubt, over a period the legislation would settle down and people would feel confident with how it worked in practice. Our concern now—as I said, we are dancing on the head of a pin somewhat—is whether one review is sufficient or whether subsequent reviews may be required. If they are, should that be expressed in the Bill or should the Government freely come to a conclusion about the issue after they have conducted one review? The margins of difference between us are pretty small, but in so far as the issue matters, I would prefer the legislation to express a mechanism for further reviews. Having said that, I should say that new clause 2 is rather loosely worded. I can see why Opposition parties would wish to support the new clause because of the broad principle of having more than one review. The Government, however, may be anxious, with their majority, about putting into legislation provision for carrying out reviews “From time to time”, as new clause 2 states. That seems extremely loose; it could mean anything—every 50 years, I suppose. On that basis, the Government could easily either bring forward reviews or completely ignore new clause 2, even if it were passed by the House today, on the basis that having a review a century from now would not be sufficiently frequent or urgent. In Committee, I made a concession when I had tabled a similar amendment that would have required the Government to consult “those affected” by the legislation. I was criticised by other Committee members, and I conceded that their criticism had some legitimacy and that my wording was too loose for a consultative process. However, new clause 2 would require the Government to consult “those persons who it considers to have relevant knowledge”. That strikes me as entirely open to interpretation by those undertaking the review. I take the point made by the right hon. Member for Leicester, East (Keith Vaz), who said that if the Government are reviewing their own legislation and are required to consult only those it regards as having “relevant” knowledge, they will pretty much have a free hand to consult whomever they see fit to consult—they may choose to consult only those who are likely to give the answer that they wish to hear.
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Rob Marris (Wolverhampton, South-West) (Lab)Labour- Quote
- Does the hon. Gentleman agree that the scope of new clause 3 is rather tighter than that of new clause 2 in respect of the topics that must be included in the review? I shall not read out new clause 3(2), but it seems more onerous on the Treasury in respect of the review than the provisions under new clause 2. New clause 3 seems more desirable in that respect.
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- Mr. BrowneLiberal Democrat
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- I agree. New clause 3 is better worded; it might have been drawn up over a weekend, but new clause 2 must have been rushed through the drafting process much more speedily than that this morning. New clause 3 is more tightly defined, but new clause 2 has provision for subsequent reviews, whereas new clause 3 does not. Those who would prefer more than one review, or at least the option of that, may be tempted to support new clause 2. As I am of the view that the option of more than one review may be desirable, I am more sympathetic to the objectives of new clause 2, although I see that the drafting of new clause 3 has greater merit.
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- Rob MarrisLabour
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- I am grateful to the hon. Gentleman for his generosity in giving way. As he pointed out, this is a case of angels dancing on the head of a pin, given that both new clauses rely on the discretion of the Treasury. New clause 2 says that reports should be prepared “From time to time”; as the hon. Gentleman pointed out, that is an incredibly elastic phrase. Under new clause 3, there is nothing to prevent there being more than one report, although there is no provision that there should be more than one. New clause 2 adverts slightly to there being more than one report, but “From time to time” is so elastic that both clauses would leave the issue to the discretion of the Treasury.
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- Mr. BrowneLiberal Democrat
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- That sums up our debate rather well. I hope that Members present do not feel that their time is not being spent sufficiently productively.
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- Mr. HobanConservative
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- I had not realised how much discussion could be had about a single new clause until the hon. Member for Wolverhampton, South-West (Rob Marris) walked into the Chamber. The advantage of new clause 2 is that even if the Treasury agreed to have only one review, at least there would be a mechanism for ensuring that we could have a debate, whereas under new clause 3 if the Treasury decides on a whim not to have more than one review, there is no formal mechanism for this House to challenge the Government on that decision.
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- Mr. BrowneLiberal Democrat
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- This conversation is getting more and more arcane. I conceded in my opening remarks that although on the face of it the Bill is quite straightforward, it has a few unusual features. We are navigating waters that have not previously been explored in this country, although similar schemes exist in other countries. There is therefore merit in having a review. Having said that, I think there is merit in periodically reviewing every piece of legislation that the Government introduce to see whether it has had the intended effect. In new clause 3, the Government make the useful concession of allowing a formal review. I do not want to be mean-spirited, because they have moved on this: they have listened to the concerns that have been expressed and, in a healthily non-partisan manner, sought within the bounds of what they regard as practicable to bring forward proposals that can command broad support. The Opposition parties may wish the Government to commit to further reviews, which would be desirable, but I can see why they would be reluctant to support the rather loosely drafted new clause 2.
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- Rob MarrisLabour
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- What are you going to do?
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- Mr. BrowneLiberal Democrat
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- I do not anticipate the Conservatives pressing new clause 2 to a Division. On the basis that it contains the broad principle of having more than a single review, I would be willing to support the Conservatives, but I suspect that the Government would use their majority to vote down that proposal on the basis that they share my concerns about its loose wording.
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- Tom LevittLabour
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- It is a pleasure to follow the hon. Member for Taunton (Mr. Browne), from whom I learned—I had not realised this before—that the Liberal Democrat party is in a position to make concessions. However, I will put that aside for the moment. As chair of the all-party group on the community and voluntary sector, and one to whom the sector has been talking loudly on this issue, I very much appreciate the spirit in which my hon. Friend the Minister has tabled this amendment, as he promised that he would following our debate in Committee. He has been as good as his word. I will, if necessary, follow him into the Lobby to support new clause 3. My hon. Friend the Member for Clwyd, South (Mr. Jones) and I were part of the awkward squad on the Back Benches in Committee—[Interruption.] I hear gasps of astonishment from my colleagues. As such, let me make one or two other statements about the new clause. I hope that my hon. Friend the Minister is right about the intention to pursue a voluntary scheme. I am much consoled and helped by his saying in response to my intervention that legislation to address a failing scheme could well be considered at a later date. I hope that that is not necessary. Although he did not say so, I suspect that he is of the opinion that inserting too many get-out clauses may undermine the voluntary scheme, and we certainly do not want to do that. We will have a voluntary scheme as a result of the legislation, and we all want it to work in the interests of the beneficiaries, and of the good standing of the banks.
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Mr. Charles Walker (Broxbourne) (Con)Conservative- Quote
- I too served on the Committee, and it was an extremely enjoyable experience. The sittings were very good natured, and if all Committees were like that, this place would be far happier and more productive. I am pleased with the direction of travel of the Bill. We are talking about large sums of money being taken from dormant bank accounts and being given to good causes, so it is important that once we establish the body overseeing that transfer of money, it is not out of sight and out of mind. We need to get it set up, and then be able to feel that we have done our job effectively and so move on. I am extremely pleased that in three years’ time we will revisit its performance when we can talk to the various parties involved in its operation to divvy up the cash. The banks and building societies will have their view, and some who have voluntarily signed up will have suggestions on how arrangements can be made even better. It will also give us the opportunity to talk to those who had not signed up to ask how we could persuade them to do so, without cajoling them with the threat of binding legislation. We can also talk to those who have been reunited with their money about their experience. There will be a good opportunity to sit down in three years’ time to establish whether the mechanism we are putting in place today is working and delivering efficiently and effectively. I hope that new clause 2 will get a further hearing because, if we decide not to have further three-yearly reviews of the performance of the body in Parliament, it is important that there is a debate in Parliament when it can come to a settled view that it is happy with the direction of travel after three years and that it needs to have no further involvement. I prefer our new clause 2 to Government new clause 3 and, while there is no place for partisanship in this debate, I suggest humbly to my hon. Friend the Member for Fareham (Mr. Hoban) that if he does not like new clause 3, in three years’ time, he might be in a position—as a Minister—to change it and ensure that we have such debates regularly.
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- Rob MarrisLabour
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- I shall cover three points: Treasury discretion, factors covered by any review, and those consulted. Although this is not a fantastically well-attended debate, and I was not on the Committee that examined the Bill, it is an extremely important matter because we are, as several hon. Members have said, talking about taking people’s money. Parliament must be extremely careful when passing any such legislation. I have given my opinion of Treasury discretion in interventions on the hon. Member for Taunton (Mr. Browne), who kindly accepted them. I do not believe that new clause 2(2), which begins, “From time to time” makes any difference—it is simply a statement of principle.
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Mr. Martyn Jones (Clwyd, South) (Lab)Labour- Quote
- I am sorry to interrupt my hon. Friend’s flow, but, as he did not serve on the Committee, perhaps he may be under a misapprehension. People’s money will not be taken—the money will always be there. People who lose contact with their funds will always have access to them—that is one of my reasons for pressing for the measure for the past 10 years. People can get their money. We are talking about using the money that cannot be given back to people for good causes rather than for profits for the banks.
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- Rob MarrisLabour
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- I stand corrected on the nuances—the measure would not take people’s money for ever more. However, it provides for taking people’s money, and they would have to go through a procedure to get it back if they resurfaced after, for example, 20 years. On Treasury discretion, new clauses 3 and 2 are effectively no different. I prefer new clause 3 because of the factors that it covers. On the review, new clause 3(2) contrasts with new clause 2(4). The subject matter that would be reviewed under Government new clause 3 is rather greater and more intensive than that envisaged under the Opposition’s new clause 2. Similarly, when one contrasts new clause 3(3) with new clause 2(6), the consultation process envisaged in new clause 3 is rather better than that in new clause 2. For those reasons, if new clause 3 is pushed to a Division, I will support the Government.
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- Ian PearsonLabour
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- We have had an interesting debate, which shows that there is not a great deal of difference about substance between all hon. Members who contributed. We all believe that a review is necessary, and most of the debate has centred around whether more than one review should take place and whether provision for that should be made in the Bill. The Government’s position is that a comprehensive review in three years is sufficient to establish whether the scheme is operating effectively and that further requirements for reviews constitute a heavy-handed approach. I understand the view of the hon. Member for Fareham (Mr. Hoban), who speaks for the Opposition, that new clause 2 specifies further reviews “From time to time”; the wording is fairly loose, as we have discussed. I also appreciate that new clause 2 includes a power to remove subsequent reviews through the affirmative resolution procedure. However, we do not believe that we need that amount of stricture. If the review demanded further consideration by Government, it could—and would—be conducted in the way that my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for High Peak (Tom Levitt) clearly outlined. If a review revealed that we needed to review the scheme still further because sufficient concerns remained, we would do that. Not putting something in statute does not mean that it will not happen.
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- Mr. HobanConservative
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- May I draw the Economic Secretary’s attention to a parallel? The Financial Services and Markets Act 2000 included a power to conduct a formal review of the FSA and the Financial Ombudsman Service in two years of their being established. That measure does not rule out further reviews, but only one review of FOS and the FSA has taken place. It is all very well Ministers saying, “Oh yes, we could have another review”, but, without a legislative requirement, the necessity for keeping the scheme under consideration will soon slip out of the Treasury’s mind. That is why new clause 2 requires further reviews, but also includes the power to remove the requirement, if appropriate. New clause 2 would force the Government to keep the matter on their agenda, whereas new clause 3 would allow it to drop off quickly, after the first review.
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- Ian PearsonLabour
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- Let me assure the House that we would commit to keeping the issue very much on the Government’s agenda, but that would also depend on what the first review concluded. If the first review concluded that the scheme was working well—that there was extensive voluntary participation, that the reclaim fund was operating efficiently and that money was going to the Big Lottery Fund and being spent in exactly the right way—it might also conclude that no further action was necessary other than to keep a watching brief. To commit ourselves to hold a review “from time to time” would not be a good legislative route to pursue. I should like to pick up some of the points that hon. Members have made. My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) made the point in his speech and in response to an intervention by my hon. Friend the Member for Clwyd, South (Mr. Jones) that we are talking about customers’ money. A great deal of time and effort has already been spent on reuniting customers with their money. My hon. Friend the Member for Wolverhampton, South-West talked about the procedures that people will need to go through to reclaim their dormant account money, so I ought to explain that doing so should be very simple. It should require no more than taking two forms of identification to one’s bank or building society and saying, “I’d forgotten that I had this money in my account. This is me—please give me the money.” All the wiring that will support subsequent claims on the reclaim fund to reimburse the bank or building society will not be seen by the customer, who will just have to undergo a simple transactional exercise, just as people go their bank or building society and withdraw money that is rightfully theirs. My right hon. Friend the Member for Leicester, East (Keith Vaz) made two important points. First, he asked whether there would be an independent element in the review and noted that the clause as drafted requires that the Treasury carry it out. As we have made clear, the review will be undertaken in consultation with industry, consumer groups and the voluntary sector. We see the process as a consensual one. We do not specify in the Bill whether a Treasury official would carry out the review or whether we want to commission independent consultants to do it, but that is a decision that we would want to make at a later stage.
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- Keith VazLabour
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- I am most grateful to the Minister, but I hope that he will not have consultants conducting the review. He has put a jolly good new clause before the House and presented a brilliant Bill. Let us not spoil it by bringing in the consultants. If he wants to bring someone in, he should choose some great, towering figure from business or wherever—I do not know what Lord Digby Jones is doing these days—who will have a proper, independent look. Please, please do not go to consultants.
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- Ian PearsonLabour
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- I take my right hon. Friend’s point. My point is that there will be extensive involvement and consultation as part of the review process. Whether the review team will be made up purely of Treasury officials or whether we want an independent person in charge, whoever they might be, is something that we can consider later, when drawing up the review. My right hon. Friend also discussed the liquidation of BCCI. I stand to be corrected, but my understanding is that accounts from the former BCCI are not likely to be transferred into the reclaim fund or meet the requirement of dormancy, as defined in the Bill as drafted. Should that not be the case, however, I will endeavour to come back to him. However, the principle is that the scheme is voluntary and the reclaim fund is a private sector organisation. There is discretion on the part of the participating banks and building societies to interpret whether such accounts are dormant. That is one of the flexibilities in the system, which we believe to be one of its strengths.
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- Mr. HobanConservative
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- The right hon. Member for Leicester, East (Keith Vaz) raised an important issue. Is the Minister saying, in effect, that the liquidator would be able to choose whether the remaining assets, in this case in BCCI, would be available for transfer to the reclaim fund? The liquidator’s duty to maximise the amount available for creditors would seem to suggest that doing so would be wrong and that any moneys remaining in dormant accounts should stay within BCCI and form part of a dividend to be distributed to creditors.
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- Ian PearsonLabour
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- My understanding is that the latter would obtain. There is also the issue of what would happen if money was transferred into the scheme and a bank subsequently became insolvent. In those circumstances, I think that the customer would still be able to reclaim their money, and that would be the right thing to do.
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- Keith VazLabour
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- The Minister said that the customer would be able to reclaim the money. Would they reclaim it from the liquidator, or would it go back to the insolvent bank first? I think that that was the point that the hon. Member for Fareham (Mr. Hoban) was making.
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- Ian PearsonLabour
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- If the money has already been transferred to the reclaim fund, even in an insolvency situation, and if a customer is—
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- Keith VazLabour
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- Would the Minister prefer to write to me about this?
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- Ian PearsonLabour
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- Let me try to explain it first. If it is still unclear to my right hon. Friend, I will endeavour to write to him. The key principle is that dormant accounts are transferred to a reclaim fund, then transferred on to the Big Lottery for distribution to worthy causes. If, at any time, a customer with a dormant account should realise that their account is dormant and want to get their money, they can go back to the bank or building society. That procedure would pertain in a normal situation, but I would suggest that it would also pertain in an insolvency. The customer would have the same rights as any other retail depositor in an insolvency. If I need to make any further clarification on that, I will ask leave of the House to do so. In conclusion, I do not think that there is a great deal of difference between new clauses 2 and 3. The principal difference is the question whether there should be a review from time to time, or whether there should be just one review, followed by the Government making a commitment that, if we felt further reviews were necessary, we would endeavour to ensure that they took place. I hope that the hon. Member for Fareham will not feel that he needs to press new clause 2 to a vote, but if he does, I will invite my hon. Friends and other hon. Members to oppose it, and to support the Government’s new clause 3. Question put, That the clause be read a Second time:—
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- Mr. Jeremy BrowneLiberal Democrat
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- I beg to move, That the clause be read a Second time. As the Bill has commanded cross-party support throughout its progress, it might, in keeping with that spirit, be worth my drawing attention before I discuss the substance of the new clause to the distinguished list of Members from all parties who are signatories to it. They include the deputy leader of my party, my hon. Friend the Member for Twickenham (Dr. Cable), and the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall), whose report on unclaimed assets recommended that a reserve power to create a register be included in the Government’s proposals, which is precisely the purpose of the new clause.
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- Rob MarrisLabour
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- The hon. Gentleman was referring to the hon. Members who were signatories to the new clause. The amendment paper lists six names, so I am curious as to why it also says that the total number of signatories is seven. Who is the seventh?
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- Mr. BrowneLiberal Democrat
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- I do not know; there are so many wise Members in this House, of all different parties, that the list could include hundreds. I can only speculate that those who have not signed have not been sufficiently attentive to notice that the new clause was there to be signed, because anyone who had had the opportunity to sign it would have taken that chance. The new clause was signed not only by the widely respected deputy leader of my party, but by hon. Members from all three main parties in this House, including the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire. The Committee’s report on unclaimed assets recommended that a reserve power to create a register be included in the Government’s proposals. The right hon. Gentleman was also primary sponsor of early-day motion 1581, which I, too, have signed, along with other hon. and right hon. Members. It calls for a reserve power to create a register if reunification efforts prove insufficient. That is the nub of the matter, and I shall address it in due course. The new clause was also signed by the hon. Member for Norwich, North (Dr. Gibson), chairman of the all-party group on cancer, and by two Conservatives, the hon. Member for Bromsgrove (Miss Kirkbride), who I believe used to be a vice-chairman of that group, and the hon. Member for Broxbourne (Mr. Walker), who was a member of our Public Bill Committee. It was also signed by the Member who has perhaps devoted more time and effort to considering dormant bank accounts than any other—the hon. Member for Clwyd, South (Mr. Jones). He, too, has expressed support for a reserve power for a register, and did so on Second Reading and in Committee. In summary, unlike the other new clauses that we have discussed this afternoon, this measure is supported by Members from all three parties; it is doubtless supported by Members from other parties too. That is because the intentions behind it are entirely laudable, and it would help the House if I were to provide a small amount of background. We are concerned with the ability of charities to access legacies, which are a vital strand of the income of charitable organisations. The Building Societies Association and the British Bankers Association have estimated that up to £500 million is sitting in dormant accounts, but that estimate is disputed—there are a range of views as to how much money will be realised as and when this Bill becomes law. Some think that the sum may be as high as £5 billion, so we are talking about a large sum. It is worth setting out a few facts for the House to give context on unclaimed funds and the impact on the charitable sector. One in seven people leave legacy gifts to charity, and those average 5 per cent. of their total estate. The Institute of Fundraising estimates that legacies accounted for 36.3 per cent.—more than a third—of the voluntary income received by charities in 2007, and that that totalled £1.6 billion. Let us consider the impact that those legacies have on specific well-known charities. Some 46 per cent., or almost half, of the British Heart Foundation’s voluntary income came from legacies last year, as did 33 per cent. of Cancer Research UK’s voluntary income, totalling £135 million. This is not controversial; hon. Members on both sides of the House understand how important it is for the charitable sector that legacies can be realised, because they form a vital part of their funding. This country has an extremely healthy charitable sector. Many charities in Europe caring and catering for people afflicted by illness or other circumstances look enviously at the British charitable sector, because it raises more money, and employs and deploys more people, for charitable causes than those in many comparable countries. We are very well served by our charitable sector, and it is important to ensure that it can access the funds that it requires and that were intended for it by people in their legacies. In the view of many in the charitable sector, charities cannot adequately locate legacies left in dormant accounts. In that regard, everyone welcomes the industry’s main initiative: the website www.mylostaccount.org.uk, which allows any person or charity to search online using basic information. That facility has been useful to many people, but nevertheless a feeling remains that it is not sufficient and that some charities will be unable to access the money intended for them.
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- Rob MarrisLabour
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- I am listening very closely to the hon. Gentleman; I understand his logic, but why does the new clause not refer to executors or administrators of estates? It is they who would be seeking to fulfil a bequest made, for example, by a deceased person in their will to the Royal Society for the Prevention of Cruelty to Animals, of which I am a member. In such a situation, the RSPCA would have a vested interest in accessing any money due to it from the estate and in ensuring, if it could, that the estate had sufficient funds. However, surely that is primarily the duty of the executor or administrator. Should the register not advert to them rather than to registered charities?
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- Mr. BrowneLiberal Democrat
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- The hon. Gentleman makes a reasonable point about where the emphasis should lie. If the new clause does not cater for that point sufficiently, it is because it was inspired by representations from many charities keen for progress to be made. In Committee, I tabled an amendment to create a reserve power allowing a register of dormant accounts to be set up in the triennial report, if the scheme’s reuniting practices were found to be inadequate, but the Government were reluctant to accept that reporting requirement. However, Government new clause 3 introduced a mechanism allowing for a one-off report after three years to consider how the legislation has worked out. New clause 1 is particularly appropriate given the adoption of Government new clause 3. If the report were to find that the ability to reunite charitable organisations with legacies intended for them is inadequate, new clause 1 would be all the more valuable. In the Lords, an amendment to introduce a reserve power to create a register was narrowly defeated—this takes me to the crux of new clause 1. It had been argued that it was desirable for individuals to be able to access a register to find moneys that were rightfully theirs. Concerns were expressed, although representations were made that those concerns were unfounded, that a database that was drawn so widely and accessed by a large number of people might cause problems. New clause 1 has been drawn much more tightly to take account of those concerns.
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- Mr. Martyn JonesLabour
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- I shall not detain the House for long, but I wanted to point out why I put my name to the new clause. One of the main tenets of the Bill is to encourage people to get their money back—to get as much as of this money as possible back to its original owners and to those who are entitled to it. They include those whose wills have lost contact with their bank accounts and so on. It should ensure that those who should have the money have the money. One of the best ways to do that, as has been seen throughout the world in all the other many countries that have such legislation, is to have a centralised register. That is so much easier than having to tout data around all the different banks and building societies. If there is a central register that people know about, the process is much easier. I know that we have mylostaccount.org.uk, but I do not see why the Government should set their face against the new clause, which would be an added benefit for people who have lost contact with their money. It would also mean that not many more data were flying around. At the moment, those data have to be put into whatever other process has to be gone through, and sent around to various different organisations. There cannot be so much risk of data falling into the wrong hands. I wish that the Minister would reconsider the issue at this late stage and try to accept the new clause.
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- Mr. WalkerConservative
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- If I have any concern about the Bill, this is one of the areas that I am most concerned about. We recognise in the House that charities derive a significant amount of their income from legacies, and the fact is that the Bill does not make adequate provision to ensure that that is adequately reflected when the money in dormant building society accounts is divvied up. I have added my name to the new clause almost in a probing way, because I would very much like the Government to accept that part of the large sums of money that we are talking about could make a significant difference to the funding of charities in this country. If 5 per cent. of legacies goes to charities, it would not be unreasonable for the Bill to reflect that by having 5 per cent. of the dormant bank and building society accounts fund set aside to be distributed to the charitable sector. I appreciate that, in going to the Big Lottery Fund, the money will go to good causes or to a good cause, but that is a very specific allocation. I have listened to the arguments of a coalition of charities, and I am very sensitive and alive to them. In particular, the money that will be set aside from dormant bank and building society accounts could make a huge difference to less well-funded charities. Many popular charities do not struggle to secure funding and charitable giving, but a number of very worthy charities find it very difficult to raise funds, because they do not have the infrastructure or do not strike the same chord with the public. I will not try your patience, Madam Deputy Speaker, by going through a range of the charities that struggle for funds, but I point out that mental health charities, for example, find it very difficult to raise funds. I go to many sporting events and see sporting teams wearing pink for breast cancer, which is an honourable and noble thing to do, but I see very few sporting teams wearing something to help to raise funds for the mentally ill, and I should like more of them to do so. If I could prevail on the Government, I would say, “Please look at this.” We are talking about hundreds of millions of pounds. Would it not be possible to go away, rethink and ask officials, “Couldn’t we set aside 5 per cent. of the fund in a mechanism that would enable it to be distributed to the charitable sector?” That would find favour among many charities and among many of our constituents as well.
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- Rob MarrisLabour
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- I support the concept of a register, for some of the reasons set out. We could be doing many things to tighten data protection. For example, Wolverhampton city council has no port for a memory stick on many of its computers, so there is no chance of a memory stick with information on it going missing, because a memory stick cannot be plugged in. We are focusing on charities in the new clause. Although that focus is extremely worth while—I very much support what has been said about charities—it is too narrow, because individuals who should inherit money from dormant bank accounts could not do so, because of the regulations envisaged in the new clause. Charities could do so, as one class of beneficiary, but not individuals. That takes us on to a little background on what happens on someone’s death, which some hon. Members might not be aware of—I am; I was a solicitor before I entered the House. For shorthand, I will refer to executors, rather than referring in the legal way to executors and executrices and administrators and administratices, because that confuses people. In everyday terms, when someone dies without a will, administrators are appointed to deal with the estate. If someone dies with a will, executors are appointed. However, there will be a grant of letters of administration on intestacy or a grant of probate if someone dies with a valid will. However, for the sake of argument, let us simplify and say that those who deal with the estate are executors. The executors will distribute the money of which they are aware in accordance with the deceased’s wishes if there is a will and in accordance with the law of intestacy if there is no will. If someone dies intestate and there is no beneficiary at all, the estate goes bona vacantia, which is referred to in the explanatory notes and means that the Crown gets it. If someone dies with a will and leaves a bequest to a charity in it, the charity should get the money. However, there may not be enough money in the estate, or it may be that the charity is the residuary beneficiary. For example, the will might say, “I leave all my furniture to my kids, and everything else I’ve got goes to the Royal Society for the Prevention of Cruelty to Animals.” The RSPCA is then the residuary beneficiary, and gets everything that is left over after the furniture has gone to the kids. That residuary sum will be higher if there is a dormant bank account that can be brought back in to swell the estate. The RSPCA, in the example that I gave, would then get more. The difficulty with the wording of new clause 1, worthy as it is, is that it focuses only on charities. Let us say that someone dies and leaves several bequests in their will, which is quite common; often they leave a specific bequest of a named sum to a charity, and the residuary beneficiaries are their children. In that situation, the residuary beneficiaries may not get all that they are entitled to if they did not know that their deceased parent had a dormant bank account that had been swept into the reclaim fund, but that could come out of it if they ever found out about the account.
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David Taylor (North-West Leicestershire) (Lab/Co-op)Labour- Quote
- I am grateful to my hon. Friend for imparting his professional knowledge to the House. Could he go a little further and say whether there is any legal obligation imposed on executors and administrators to conduct a reasonably thorough search for less obvious assets, such as dormant accounts, that the deceased may have left?
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- Rob MarrisLabour
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- My hon. Friend has an accountancy background, not a legal background, but he is absolutely right to use the term, “a reasonably thorough search”. Executors have to take reasonable steps; they do not have to search to the ends of the earth to find assets that might be brought into the estate and distributed in accordance with the law on intestacy, or the wishes of the deceased. That brings me neatly to my point about the way in which the new clause is framed. It does not do what I—and, I suspect, those who tabled it—would like it to do. It focuses on charity, for obvious reasons, but there is a simpler way of doing things. I preface my remarks by saying that I think that there should be a register. There is a body that hands out grants of probate. One applies to it, shows it that there is a valid will, and that one is the executor and so on, and one gets a nice, stamped document back with “grant of probate” on the top. It has the name of the executor on it, and the name of the deceased, whose estate the executor is going to sort out. I cannot remember the body’s name, because it is a quarter of a century since I did such work. When that body—I think that it is a court of some sort—acceded to a request for a grant of probate and sent out that grant of probate, it could check a register to see whether the deceased had any dormant bank accounts. It could then let the executors know. If there was a dormant bank account, the executor could get the money back from the reclaim fund and use it to increase the value of the estate. Those who were entitled to distribution from that estate, be they individuals or charities, would then get more money. Let us have a register, but it would be much simpler if the court that hands out grants of probate could simply check that register—that would, to some extent, deal with data protection issues—and inform the executors that it knew that there was a dormant bank account, because it had found the name on the register. That would be a much simpler way of doing things. It would benefit charities, which is what those who tabled the new clause admirably wish to do, and benefit others.
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- Mr. HobanConservative
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- New clause 1 clearly shows that there has been some movement on the issue since we debated it in Committee. I am not entirely clear from the speech given by the hon. Member for Taunton (Mr. Browne) how he expects the register to work in practice. For example, it is not clear whether we are talking about a voluntary register, which would go with the grain of the scheme envisaged in the Bill, or a compulsory register, to which banks and building societies would have to sign up. That is an important distinction to draw. As I mentioned, the scheme in the Bill is voluntary; banks and building societies have the right to opt into it. All the arrangements are predicated on that basis. I am not entirely clear whether the hon. Gentleman would require banks and building societies to put this information on a register and therefore convert the scheme from a voluntary to a compulsory scheme. He may wish to intervene to clarify that.
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- Ian PearsonLabour
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- New clause 1 proposes giving the Government a power to establish a central register and to put in place specific arrangements regarding charitable legacies. The Government share several of the concerns expressed by the hon. Member for Fareham (Mr. Hoban). I was disappointed that he did not want to accept new clause 3, but it seems that, on new clause 1, we are thinking along similar lines. We debated the issues at length in Committee in the light of a similar amendment, and I am happy to set out our strong belief in the importance of effective reuniting arrangements and our commitment to ensuring a scheme that is effective, transparent and, above all, fair for consumers, and our legitimate concerns about the implications of the new clause for consumers and for human rights. I recognise the position of some representatives of the charitable sector, including the Unclaimed Assets Charity Coalition, and I welcome its contribution to the debate and pay tribute to its valuable work. All parts of the House share a commitment to ensuring that charities get money that is rightfully theirs. Naturally, I welcome all constructive suggestions about how industry reuniting arrangements might be further improved, and I should welcome discussions between the British Bankers Association, the Building Societies Association and the charities to see what more can be done.
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- Mr. WalkerConservative
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- I know that this issue was gone over in Committee and in another place, but is the Minister aware that charities are concerned that, in effect, they will be cut out of the loop and lose 5 per cent.—potentially—of the legacies in the dormant bank and building society account fund? Would it not be better for 5 per cent. of the fund to be earmarked for distribution to charities? Is it not something that the Minister might consider at this late stage?
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- Ian PearsonLabour
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- I heard the hon. Gentleman make that suggestion in his contribution, and if he feels that strongly about it, I am surprised that he has not tabled an appropriate amendment for discussion today. Naturally, we welcome all constructive suggestions about how relationships can be improved, and my understanding of the charities movement is that, yes, it has some concerns. It wants to continue putting pressure on banks and building societies to do all they can to ensure that there are simpler arrangements so that the movement can get its rightful money. However, I must stress that, as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) pointed out, the issue is not just about charities. The key question is, how do we ensure that the rightful owners of dormant accounts are reunited with their property so that only genuinely dormant accounts are transferred to the scheme? The proposals are right and fair for customers, because, after all, it is their money. Whether it involves the estates of deceased persons, or individuals who have simply forgotten where they have put their money, both have similar rights, and we must continue to focus on reuniting them with the property that is rightly theirs. The Government welcome the commitment of the banks and building societies to a major reunification exercise in the run-up to the scheme becoming operational, and, in particular, we welcome the launch by the British Bankers Association, the Building Societies Association and National Savings & Investments of the “mylostaccount” website in January, to which Members have already referred. Almost 190,000 people have already used this free cross-industry service to reunite themselves with tens of millions of pounds. We welcome the commitment of individual institutions to institution-by-institution efforts to reunite. We have seen the fruits of that through high-profile efforts by HBOS, Lloyds TSB, HSBC and Nationwide. My strong advice to individuals who think that they might have a bank, building society or national savings account or premium bonds of which they have lost track is that they should go to www.mylostaccount.org.uk. The service is free; people tap in their basic information—name and current and previous addresses—and can make multiple searches for free. If people are owed money from such accounts, they can find where it is and get access to it. They need not go to commercial fee-charging services for the privilege; the process is simple. The “mylostaccount” website already allows executors, nominated representatives and even beneficiaries of wills to conduct searches for lost accounts. Executors can ensure that anyone or any institution, including charities, due legacy income from moneys in dormant accounts receives their entitlement. I would expect an executor, as part of the reasonable steps that they should take, to go to the minimal trouble of visiting the website, feeding in basic information and checking whether any money of which they are not aware is due to the relevant heirs and successors. That would be an eminently reasonable and proportionate step for executors to take. The current arrangements are working and will continue to be effective in allowing people to be reunited with their money. We will, of course, keep the matter under review; the review clause on which we voted a few moments ago will include a review of the effectiveness of reuniting arrangements, so the issue will not be forgotten. However, I should like to repeat the concerns that I set out in Committee about a register and the power to introduce one. First, it is important to recognise that financial institutions must respect the confidentiality of the information that they hold about their customers. Transferring such information to a central source would in effect require banks to breach that confidentiality; it is difficult to see how that would be compatible with the framework of current UK law on confidential information and data protection, and it would raise human rights issues. I am not saying that it would be impossible to do that but, as the hon. Member for Fareham suggested, it would raise significant issues about the overall design of the scheme. The hon. Member for Taunton (Mr. Browne) said that other countries had similar schemes, but obviously he is aware that other countries have compulsory schemes, whereas we are proposing a voluntary scheme.
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John Hemming (Birmingham, Yardley) (LD)Liberal Democrat- Quote
- rose—
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- Ian PearsonLabour
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- The hon. Gentleman has just walked in; if he sits down and is patient, I might give way to him in a moment. Let me just make this basic point: other countries have compulsory schemes and their registration schemes are part of that. If we had a registration scheme, a number of issues would be raised. How would the register be enforced and monitored? What would be the legal penalties for non-compliance? Those major issues would have to be dealt with through additional primary legislation, so we could not take such a step lightly. Furthermore, significant amounts of data would be moving to a different system. At the moment, individuals can interrogate the current banking system, with all its firewalls for confidentiality, through the “mylostaccount” website. Having a registration scheme would mean that all the personal information of the depositors of accounts worth about £400 million to £500 million would have to be transferred to a registrar who would operate a new scheme, and that would raise serious data protection issues. As the hon. Member for Fareham suggested, it would also raise significant cost issues by placing a significant administrative burden on the scheme. Fundamentally, I do not believe that we as a Government should be taking the reserve powers suggested by the hon. Member for Taunton, which are not necessary. Nor are they desirable, because they would challenge the fundamentally voluntary nature of the scheme, raise serious data protection and confidentiality issues and, in the view of some people, raise concerns about the potential for fraud. Including these powers in legislation would not be a good use of parliamentary time. They would have significant implications for future primary legislation, because they could not be created by this provision alone but would require further clauses to be inserted into this Bill or, probably, an extensive consultation period and a completely new additional Bill. For those reasons, I invite hon. Members to oppose new clause 1.
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- Mr. Jeremy BrowneLiberal Democrat
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- I wish to follow up on a few points from our short debate on new clause 1. The hon. Member for Wolverhampton, South-West (Rob Marris) asked who were the magnificent seven who put their names to the new clause. I will run through them: my hon. Friend the Member for Twickenham (Dr. Cable), the right hon. Member for West Dunbartonshire (John McFall), and the hon. Members for Norwich, North (Dr. Gibson), for Clwyd, South (Mr. Jones), for Broxbourne (Mr. Walker) and for Bromsgrove (Miss Kirkbride). I have obviously missed out myself as an important signatory, but I notice from the amendment paper that it is in fact the hon. Member for Bromsgrove who is missing. We are both no doubt pleased to have our names attached, but that is a matter for the record, and I will turn to the more substantial points. Genuine and reasonable concerns have been raised about the confidentiality of the information about account holders. Charities would search against the register using their name, date of birth and last known address, so any match would allow them only to contact the financial institution to undertake a claim in the normal fashion. They would not be giving out reams of information about the bank account holder in the way that some Members fear. I reiterate that this has been tried and tested in other countries, where those fears have not been borne out. I was asked whether the scheme would be voluntary. I suppose that, going with the grain of the Bill as a whole, that is likely to be the case. However, it would, to some extent, be voluntary in name only, because most of the institutions, with regard to the Bill as a whole, feel a degree of compulsion to be involved with the scheme, even if it is a moral rather than a legislative compulsion. I remind Members that the first line of the new clause says: “The Treasury may make regulations as are necessary for the establishment, maintenance and operation of a register of dormant account funds”. It would not compel anybody to do anything, but it would provide that facility.
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- Mr. WalkerConservative
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- Does the hon. Gentleman accept that a register may well be complicated, and that if the Government do not like that complication, then why not, instead of giving the Big Lottery Fund 100 per cent. of the moneys contained in the dormant bank or building society account held by a third party, give it 95 per cent. and earmark 5 per cent. for distribution to charities?
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- Mr. BrowneLiberal Democrat
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- That is an interesting alternative suggestion. Although it is not contained in the new clause, I imagine that the hon. Gentleman shares my concern about trying to ensure that the money intended for charities reaches them to the maximum degree. I was asked whether this provision would be additional and complementary to the website or would replace it. I think that it could and should be complementary. Points were raised about the cost. There would be a cost but, as the hon. Member for Broxbourne implied, there is currently a cost to the charities, who fear that they may not be united with money that was intended for them. Of course there would be an administrative burden if we were to set up a register, but one would hope that the total amount of money realised for charities would exceed the cost of administering the scheme many times over.
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- Rob MarrisLabour
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- In his opening remarks, the hon. Gentleman said that there were compulsory registers in Ireland and Canada. Can he give us an indication of the cost of running those registers, by way of comparison?
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- Mr. BrowneLiberal Democrat
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- No, because I do not have that information available. Ireland, for example, has a far smaller population than ours—it is about 5, 6 or 7 per cent. the size of that of the UK—so there would be difficulties in making a direct comparison. There may be economies of scale in running such a scheme in a country with a much larger population, such as our own. The parallels are not absolute in that the scheme in the new clause is voluntary. My earlier point was that Canadian and Irish residents are similarly concerned about data being used appropriately, but as far as I am aware, that process has not proven to be a great problem in those countries. In conclusion, under the House’s decision to adopt new clause 3, a provision has been made for a review. It seems appropriate to those in my party that the Treasury take on that power. It may have a register—it is under no obligation to do so, but that would be a reasonable part of any review that the Treasury can decide to have, thanks to the earlier vote. We are seeking to complement the process, and go in the same direction as the Government. Overwhelmingly, we are putting forward the voice of the charitable sector, which has made many representations to us, and is broadly supportive of the new clause. On that basis, I ask hon. Members to support it. Question put, That the clause be read a Second time:—
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- Mr. HobanConservative
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- I beg to move amendment No. 10, page 4, line 42, leave out subsection (4).
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Madam Deputy Speaker (Sylvia Heal)Labour- Quote
- With this it will be convenient to discuss the following amendments: No. 12, page 5, line 1, at end insert— ‘(4A) Where the Treasury gives a direction under subsection (4), that direction shall be published within 28 days of it being given.’. No. 11, in schedule 1, page 16, line 32, at end insert— ‘(ca) the name of each bank and building society listed in the FSA Register in respect of which no monies were transferred to the fund.’.
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- Mr. HobanConservative
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- Two of the amendments in this group relate principally to the operation of the reclaim fund. In relation to the debate on how the fund will work, the Treasury has made it clear from the outset that this is a voluntary arrangement, and that the fund would be a private company set up by the British Bankers Association and the Building Societies Association to manage the transfer of money into the reclaim fund. It will also manage the reclaim process and determine how much money will be passed across from it to the Big Lottery Fund. My concern is that, under clause 5(4), the Treasury will have the power to give a direction to the reclaim fund requiring it “to give effect to any specified object that it has” or “to comply with any specified obligation or prohibition imposed on it by a provision that its articles of association are required to make under Schedule 1.” In Committee, the Minister said that it would be the sole responsibility of the Financial Services Authority to regulate the reclaim fund for prudential purposes, and that the fund would be authorised by the FSA. That is fine, and we can understand the reasons for the limits on that involvement. However, there is still a requirement for the Treasury to give directions. In Committee, we tabled an amendment proposing that, when such directions were given, they should be subject to parliamentary approval. The Government opposed that amendment, but we were reassured that these powers would be deployed only as a last resort. It is difficult, therefore, to work out why the Government were so reluctant to allow parliamentary scrutiny in this area. Indeed, when we pressed the Minister on the circumstances in which the power would be deployed, he said that the Government did not have any particular area specifically in mind, because they did not anticipate any problems. So, we have a power that the Government do not believe will be used, and they do not believe that its use should be subject to parliamentary scrutiny. I could accept the power to give directions, if it were to be subject to parliamentary scrutiny, but I do not accept it without such scrutiny. This is an unsatisfactory situation. I have therefore tabled amendment No. 10, which proposes to omit subsection (4) of clause 5, which would make the measure more in keeping with the spirit of the legislation, namely that the reclaim fund is to be a private company established by the BBA and the BSA, and that it should operate as such, without Ministers having the power to give directions to the company to force it to act in a particular way. Amendment No. 12 deals with this issue in a different way. It proposes that, when the Treasury gives a direction under clause 5(4), that direction should be published within 28 days of its being given. If there is to be no parliamentary scrutiny, and if these powers are to remain part of the Bill, there should at least be some publicity given to the direction. Accepting this amendment would not be a big step for the Government to take, if they believe that the powers are absolutely essential for them to have. They should not be afraid of publicising such directions. Indeed, elsewhere in the Bill, there are provisions for directions to be given to the Big Lottery Fund, and such directions will be publicised through the Big Lottery Fund’s accounts. So there is a clear role for the publicising of directions. Amendment No. 12 would provide a vehicle—although not as good a vehicle as a statutory instrument—for Parliament to scrutinise the Treasury’s use of the power of direction. Members of Parliament would be able to ask questions, and the Treasury Select Committee would be able to investigate the Treasury’s use of the power. A softer scrutiny element is therefore involved. The amendment is a perfectly reasonable proposal to achieve some level of parliamentary scrutiny, if the Government are so wedded to keeping on the statute book a power that, at the moment, they do not expect to use. Amendment No. 11, which goes back to an issue that we discussed in Committee, concerns the level of publicity that should surround this part of the scheme. Schedule 1(3) contains a provision for the reclaim fund to publish certain information in its accounts. At the moment, that information is limited in four ways. The fund must publish its accounts and reports in accordance with the Companies Act 2006. It must publish “the name of each bank and building society that transferred money to the fund in that year, and the amount transferred by each one”. It must publish “the name of each bank and building society in respect of whose accounts payments were made from the fund in that year following repayment claims and, in relation to each of those banks and building societies, the total of the payments made”. It must also publish “the total amount transferred in that year to the body or bodies for the time being specified in section 15(1).” However, that does not include a requirement to name and shame, by saying which institutions have not contributed to the reclaim fund. As part of the series of measures that we need to take to ensure maximum scrutiny, and to ensure that we know that institutions are taking seriously their commitment to be part of this voluntary scheme, the reclaim fund should make it clear in its accounts which institutions have not contributed to it. When we debated this in Committee, the Minister argued that it was not the job of the reclaim fund’s horizon scan to find a list of banks and building societies, and to determine whether or not they had contributed. He said that the FSA had a register of such entities. I have learned a lesson from my previous drafting experience, which is why amendment No. 11 refers specifically to the list of banks and building societies that the FSA will hold in its register. The reclaim fund would therefore not have to do any horizon scanning; it would simply have to compare the list in the register with the banks and building societies listed under paragraph 3(1)(b). Those that were not so listed would be listed under proposed new paragraph 3(1)(ca), which would tell us exactly which had not contributed to the scheme. That measure would maintain keep the spotlight on those institutions that had not co-operated with the scheme. These are three very reasonable amendments. Amendment No. 11 is about scrutinising who has not contributed to the scheme. Amendments Nos. 10 and 12 give the Minister some choice: either to take out the powers in the Bill or to require the Treasury to publish the direction within 28 days of publication. The Minister will have his own views, and I suspect that he is minded to reject both, but given that the Government rejected parliamentary scrutiny of the direction—in the Minister’s words, it is the “ultimate sanction”—there needs to be some check on the Government. If they are not prepared to accept such a check, amendment No. 10 is the right road to go down.
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- Rob MarrisLabour
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- Let me reverse the position of amendment No. 10 for a moment. If clause 5(4) were not in the Bill—precisely what the amendment is designed to achieve—and I moved an amendment to put the wording of subsection (4) back into the Bill, I suspect that the Government would respond by arguing that it was unnecessary and there was no need for it—[Interruption.] The hon. Member for Fareham (Mr. Hoban) is looking puzzled; I am saying that if I attempted to insert that wording into the Bill, the Government would probably say, “We don’t need it; it is redundant”, as they often do in respect of amendments coming from both sides of the House. We are told that we do not understand and that there is no need for the amending provision. If I ask what clause 5(4) does—if, as one anticipates, the Government resist amendment No. 10, which would remove that provision—the answer is that it gives the Treasury a power that I suspect it needs, because I cannot see anywhere else in the Bill where it defines who the members of the reclaim fund are. It will be a company, which has to have members—the shareholders—although I know that the Bill provides that they are not going to get dividends. It seems to me that clause 5(4) is needed on account of this lacuna, whereby the members of “the” or “a” reclaim fund are not specified. I appreciate from paragraph 51 of the explanatory notes that the “British Bankers’ Association and Building Societies Association have committed to lead on the selection or establishment of a body to act as a reclaim fund.” However, when the Minister responds to the blandishments of the official Opposition on amendment No. 10, I hope that he can elucidate that and clarify whether I am right that clause 5(4) is necessary because the Bill does not specify who the members of a reclaim fund should be. It would be for the members of that fund to carry out enforcement if the directors failed to give effect to specified objects or to comply with the provisions in the memorandum of association and articles of the fund. Usually, one would expect the members of the company— with a limited guarantee or otherwise—to be responsible for enforcement. It is for them to say, “You are not complying with the rules of our organisation or company. As directors, you should be, so if necessary, we will take you to court to get you to comply”. If one does not know who the members are, however, one cannot say that the watchdog power exists, which is why subsection (4) is necessary.
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- Mr. HobanConservative
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- If it were that simple, the Minister would have said that in Committee, but let me quote what he did say, as the hon. Gentleman did not have the pleasure of serving on it. The Minister said: “We do not have particular areas specifically in mind because we do not anticipate any problems. This is a voluntary scheme. A private company is going to be set up in accordance with the legislation, and we have confidence that it will appoint people who will run the reclaim fund in an effective way.”––[Official Report, Dormant Bank and Building Society Accounts Public Bill Committee, 14 October 2008; c. 17.] The Minister clearly had confidence that the members would be correctly chosen by the British Bankers Association and the Building Societies Association, but even that obvious statement does not quite explain why this power is in the Bill.
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- Rob MarrisLabour
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- I am grateful to the hon. Gentleman for that helpful intervention, but taken as a whole—I name no individuals—the track record of British bankers over the past two years in running a tight ship within their organisations has not exactly been a stellar one. According to the Hansard excerpt which the hon. Gentleman helpfully read out, the British Bankers Association and the Building Societies Association will set up one or more reclaim funds that could—I stress the word “could”—become a cosy little club that does not regulate itself properly, does not comply with its memorandum or articles of association and does not comply with the objects of the reclaim company. In that case, clause 5(4) is therefore necessary and amendment No. 10 should be rejected. If my analysis is correct, it raises the question why the legislation does not offer a little more clarity on who the members of a reclaim fund company should be. It also suggests that the Treasury should, in some guise, be a member—not the dominant member, but a member—of a reclaim fund so that in its role as a member, it could enforce compliance with the memorandum and articles of association were the directors to fail to comply. I hope that the Minister will set my heart at rest as to why clause 5(4) is in the Bill and explain that, although it should not be part of the Bill, its inclusion is necessary because of the lacuna in respect of lack of enforcement that follows from our not knowing who the members are.
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- Mr. WalkerConservative
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- This is an interesting set of amendments. When the Bill becomes an Act, it will result in the establishment of a reclaim fund, which will be a limited company. If it is to carry the support of the public, the operation of the scheme must be transparent and its decisions, as well those participating in the scheme, must be subject to scrutiny. We will look into that in three years’ time, but what we will really want to know is which banks and building societies are foot dragging and are choosing not to participate. If we know who they are and we can benchmark them against those who are participating, we could bring them before the Treasury Select Committee, for example, which could then ask them directly why they are not participating in the voluntary scheme. It may be that banks and building societies have very good reasons not to participate, but equally it may be that they frankly cannot be bothered. Only through public scrutiny and public opprobrium can we bring them to the table. I say “only”, but there is, of course, another mechanism: statutory regulation. In that case, after three years, the House says, “You organisations are not pulling your weight. We have tried the voluntary route, but we are now going to go down the compulsory route—and you will participate in this scheme.” That would be a great shame, but it could happen. As for the Treasury’s direction of this limited company—the Treasury’s right to direct it—it would be helpful if the Minister put some scenarios before the House to explain why or when the Treasury might wish to exercise such power. After all, having served in Committee, I believe I am right to believe that the Bill allows for the establishment of a limited company that would be regulated by the Financial Services Authority. Only extreme circumstances would allow the Treasury to start to interfere in day-to-day operations, but we know that such circumstances arise, as we have seen recently in the banking sector—I sincerely hope that this rather small organisation does not experience the same type of crisis in two or three years’ time. I listened to the hon. Member for Wolverhampton, South-West (Rob Marris) and I heard his concerns, so I think it would be helpful if the Minister brought us in on some of the conversations he has had with his civil servants on what circumstances might trigger a direct intervention from the Treasury. If nothing else, that would put our minds at rest.
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- Mr. Jeremy BrowneLiberal Democrat
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- I rise to say briefly that I agree with the hon. Members for Broxbourne (Mr. Walker) and for Fareham (Mr. Hoban) that amendments Nos. 10 and 12 propose a bit of an either/or provision. Speaking as one who wants the greatest degree of independence and transparency, however, I believe that going down one of the proposed paths would further those objectives. The public need to enjoy confidence in an organisation. They need to believe that it will not be unduly manipulated or directed by the Treasury, but will be able to operate with a bit more freedom of spirit. As was said earlier, it would be helpful to know something about the composition of the group. I do not think that it should be seen as merely a wing of the Treasury. It would be helpful if the Treasury provided a direction, or even instructions, to the effect that the group should be open to scrutiny by Parliament and by the wider public, and we should be able to know the basis on which such orders were given. I consider that amendments Nos. 10 and 12 would further those objectives, and are laudable for that reason. Amendment No. 11 is slightly different. It would name and shame those who chose not to participate. I instinctively take the view that schemes of this sort should be voluntary rather than compulsory, because I tend to regard compulsion as undesirable unless it is wholly necessary. However, as the hon. Member for Broxbourne pointed out, if a stage is reached when most banks and building societies are demonstrating good will—making it clear that they want the scheme to work and want to support, indirectly, the projects for young people on which it is envisaged that a large amount of the money will be spent—while others are not participating, not for good reasons but because they regard the scheme as burdensome, unnecessary and not part of their core business, it seems reasonable for us parliamentarians, and the public as a whole, to know which banks are entering into the spirit of the enterprise and which are not.
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- Mr. WalkerConservative
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- It is quite simple: a list of participants should be published, and if the name of a building society or bank does not appear on it, shareholders, Ministers and Back-Bench Members of Parliament should be able to ask questions about its absence.
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- Mr. BrowneLiberal Democrat
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- Unless I have misunderstood it, the amendment proposes the publication of a list of banks and building societies that have not participated, rather than a list of those that have done so—although for those with a good knowledge of the sector, the end result would be the same.
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- Mr. HobanConservative
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- Let me clarify the proposal for the benefit of the hon. Gentleman and my hon. Friend the Member for Broxbourne (Mr. Walker). The amendment would ensure that the accounts of the reclaim fund listed those who had participated in terms of the amounts that they had transferred, but also listed those who had not participated.
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- Mr. BrowneLiberal Democrat
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- That is a helpful clarification. It would obviously be much easier for a member of the public to identify the offending banks—those that had not entered into the spirit of the legislation—if there were a list of banks that had not participated rather than a list of those that had, which would mean trying to work out which names were not on the list. This is difficult territory. It could be argued that if a scheme is made voluntary and huge moral pressure is then put on bodies to comply, it is voluntary in name only.
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- Mr. WalkerConservative
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- In essence, what my hon. Friend the Member for Fareham (Mr. Hoban) is rightly demanding is a factual demonstration of, and factual information on, the state of play.
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- Mr. BrowneLiberal Democrat
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- Absolutely. We are not making a moral judgment about the names on the list, although others may seek to do so; we simply want factual information on whether the institution in question has chosen to participate in the scheme. The hon. Gentleman made a good point when he said that the Treasury Committee, for example, could invite non-participating institutions to appear before it and discuss why they did not wish to comply. They might, of course, have good reasons. The scheme might not be working as we expected it to when we passed the legislation. The group with most cause to reflect on why the institutions were not participating might be not the institutions themselves, but the Members of Parliament who had established rules that did not work as they had wished. That would, I hope, emerge in the review in three years’ time, and might make the scheme more attractive to those who had not participated but did not object, in principle, to doing so. I suspect, however, that other institutions would not have participated because they did not see participation as a core function of their organisation. I suppose that they would be right in that view, but nevertheless they would not have been willing to give up the time or effort to demonstrate the good will that would be part of complying with the scheme. They would see the benefits to society as a whole as conferring no immediate benefits to them, and would therefore regard participation as a waste of their time. That strikes me as a far less attractive reason for non-participation. All that amendment No. 11 does is enable the information to be put before us. We should not automatically draw conclusions from the composition of the list, but it would enable us and the wider public to ask further questions that would be useful in revealing the motives of organisations that had sought not to participate. For all those reasons, I consider the amendments interesting and helpful, and I hope that the Government will view them with an open mind.
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- Ian PearsonLabour
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- Clause 5(4) contains a direction-making power as an ultimate safeguard allowing the Treasury to take action to ensure that a reclaim fund complies with its company objects and articles of association. We discussed the clause in Committee, and I am grateful for the contributions that were made then. I emphasise that the direction does no more than require the reclaim fund to give effect to, or comply with, requirements to which it is already subject under the Bill, which place restrictions on its objects and articles of association, and which will have been approved by Parliament. In other words, the fund must comply with the law. Let me explain why I believe the direction to be a necessary part of the Bill, and respond to what has been said by my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) and others. The Financial Services Authority will authorise the reclaim fund, and establish ongoing prudential regulation to ensure that it has enough money to repay customers. That is in keeping with its role as a financial regulator, and with its consumer protection role. However, the FSA is not expected to go beyond its statutory objectives and make rules governing other areas of the fund’s operations. The Government do not intend to use the direction-making power to involve themselves in the day-to-day running of the reclaim fund and the management of its money. That will be the sole responsibility of the FSA, which will regulate the reclaim fund for prudential purposes. This power is different: it is an ultimate sanction that the public will rightly expect us to have to ensure that the reclaim fund functions in accordance with our legislation in areas that the FSA will not regulate for prudential purposes. Opposition Members invited me to be specific, so let me give two examples. The first concerns the requirements in schedule 1 relating to the publication of information by the reclaim fund. A private sector company might decide for some reason that it did not want to make public the information whose publication is required by the schedule. Such publication would not be part of ordinary prudential regulation, but would clearly be desirable in the interests of transparency. I have no reason to doubt that a company would want to publish its accounts, but I think it right for us to provide that ultimate safeguard as a back-up. My second example involves the reclaim fund’s use of money to cover reasonable running costs. That too might not be covered by an ordinary prudential regulation regime, and might therefore fall outwith the FSA’s powers. If we considered that a company was acting unreasonably and in an excessive way, we would think it right to take action. That would not be covered in normal circumstances. I do not think that it is likely to happen, but I think that we should have powers to act in that unlikely event. I stress that the powers would enable us to act in wholly exceptional circumstances, when serious concerns arise about the behaviour of the reclaim fund which are not covered by the prudential regulatory regime, and when we believe that the Government are required to act.
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- Rob MarrisLabour
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- In my experience, we in this Chamber do not generally pass provisions in Bills that simply say, “Thou shalt comply with the law.” Instead, we set out what the law is in our democracy, after which it passes through Parliament—and very often it includes sanctions to encourage people to comply with the law and to extract penalties if they fail to do so. Clause 5(4) is therefore a curious measure, because it simply says, in terms, “Thou shalt comply with the law”, albeit the law and the rules of the company. This returns us to the question I put earlier, which I hope my hon. Friend might address: who are to be the members of the company?
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- Ian PearsonLabour
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- I understand my hon. Friend’s point, but let me explain what we are doing. We are setting up a reclaim fund which will be a private company. We have made it clear that it is not the Government’s intention to appoint members of the reclaim fund, and clause 5(4) does not allow the Government to do that. As a private company, the reclaim fund will also have to comply with company law, and we would expect it to have the highest standards of corporate governance. There might be instances in which that is not the case, however, which is why we think these powers are needed as an ultimate sanction. We do not expect to use them, and let me emphasise again that day-to-day issues are matters for the company’s directors and members.
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- Mr. WalkerConservative
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- I thank the Economic Secretary for the reassurances he gave me a few moments ago. Will it be for the company to set direct remuneration at the outset, or will it receive guidance from the Treasury?
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- Ian PearsonLabour
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- That will essentially be a matter for the company, because it is a private company. I imagine that discussions will be held between members of the Treasury and members of the reclaim fund, and that they will also include the Financial Services Authority, which has some overall responsibilities with regard to remuneration. Let me emphasise again that we expect the reclaim fund to be run in accordance with our legislation, FSA regulation and company law, and for it to meet the highest standards of corporate governance, but we need the power to ensure that that is the case, which is why we shall invite Members to reject amendment No. 10.
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- Rob MarrisLabour
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- My hon. Friend refers to clause 5(4) as being the ultimate sanction, but the provision itself simply refers to “a direction”. Usually when the House talks about sanctions, they are specified, as with a fine of up to level 5 in a magistrates court, for example. A criminal penalty, or a mechanism for determining such a penalty, is usually specified in such Bills. That is what I regard as a sanction. I do not regard the phrase “give a direction” as a sanction, however. If we reject amendment No. 10, as I suspect we will, and retain clause 5(4), I shall be unsure what sanction would be imposed if a reclaim company failed to follow such a direction.
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- Ian PearsonLabour
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- It is my understanding that the normal parliamentary use of the word “sanction” is such that it can include a range of measures; there might be penalties and fines, but others might also apply. Perhaps I am using the word loosely in this circumstance, but the direction in question is clearly a power to direct a company to conform with its articles of association under the law. Amendment No. 11 would add the requirement for the reclaim fund to include in its articles an obligation to publish the names of all banks and building societies on the FSA register in respect of which no moneys were transferred. As I said in Committee, I have reflected carefully on the debate about having a requirement to publish a list of non-participants, and I am grateful for the opportunity to address the point again today. We remain committed to doing everything we can to ensure that the scheme is transparent. Our scheme already places comprehensive requirements on the reclaim fund to publish information about how the scheme is working, including the following: a list of participating institutions; the amount of money that is going to be transferred into the scheme, by individual institution; the amount of money reclaimed by account holders post-transfer, by individual institution; and the amounts transferred to the Big Lottery Fund. The Government’s amendments in Committee also require the reclaim fund to publish its annual accounts and company reports as soon as possible after the end of the financial year. I hope that that demonstrates that we have listened to the debate and are seeking to reinforce the transparency of the scheme where it is possible to do so, but I remain of the view that we should not go further and require the reclaim fund to publish a list of non-participants drawn from the FSA online register of all FSA-authorised institutions. On one level, that would be unnecessary. The names of all banks and building societies operating in the UK are available from the FSA’s website. The FSA currently publishes a bespoke list of banks, which is updated on a monthly basis, and a list of building societies is also accessible from its website via a simple search of its online register, which is updated every day. New requirements, in addition to the material published by the FSA, would place an unnecessary burden on the reclaim fund. If the reclaim fund were obliged to recreate or redesign the FSA’s lists, it would effectively have to monitor the market, as the regulator currently does, for firms entering and exiting the market, and that is not its function. On the amendment, I am concerned about the unintended consequences of naming and shaming institutions that appear on the FSA register but are not participating in the scheme, because some might be eligible to participate but not be in possession of dormant accounts to transfer into the scheme. Banks may be FSA-authorised to accept retail deposits, but may not currently undertake this activity, or they may not have a book going back as far as 15 years. More than 300 banks and building societies are authorised as deposit takers by the FSA. Among them, there may be institutions without dormant accounts. Such a requirement would not be useful for consumers or fair for the individual institutions. Requiring the reclaim fund to publish a more refined list of institutions would be an additional and unreasonable burden on it. Before moving on to amendment No. 12, let me clarify the position I outlined on remuneration in response to a question from the hon. Member for Broxbourne (Mr. Walker). Expenses must be reasonable, as set out in schedule 1, and the reclaim fund will make this transparent. On the point about sanctions raised by my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), if the reclaim fund failed to comply with legislation, the Government would have the power to seek an injunction from the court to ensure that that was rectified. On amendment No. 12, I am inching towards what the hon. Member for Fareham (Mr. Hoban) had to say. The amendment would require the Treasury to publish its direction-making powers. This provision was set out in the memorandum to the Delegated Powers and Regulatory Reform Committee, which did not comment on it in its report. We therefore do not feel that there is any particular reason to include in legislation a requirement that any direction be published. As I have said, although we do not expect to use this power, I am not aware of any likely reasons why, if we were to do so, it should not be made public to the House in the form of a written or oral statement, without having put a requirement in the Bill for it to be published. We could return to this matter in the other place, but I do not think it is a substantive issue, because we do not expect to use this power, and if we were to do so, we would want to be clear about why we were using it and make statements in the usual way.
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- Mr. HobanConservative
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- May I deal with some of the comments that the Minister made? Amendment No. 11 proposes the publication of the names of the banks and building societies that have not contributed to the reclaim fund. I do not mind if they have to explain to the public why they have not contributed. If their argument is that they do not have dormant accounts or retail deposits, that is a fine explanation. I am more interested in those that have dormant retail accounts and do not make transfers to the reclaim fund. It should be easy for people to identify those institutions, and that is why I tabled the amendment.
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Mr. Deputy Speaker (Sir Alan Haselhurst)Conservative- Quote
- I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.
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Simon Hughes (North Southwark and Bermondsey) (LD)Liberal Democrat- Quote
- I beg to move amendment No. 8, page 9, line 17, after ‘State’, insert ‘no later than 1st March in the preceding financial year’.
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- Mr. Deputy SpeakerConservative
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- With this it will be convenient to discuss the following amendments: No. 5, in Clause 17, page 9, line 31, after ‘meeting’, insert ‘revenue or capital’. No. 6, page 9, line 31, after ‘of’, insert ‘existing or new’. No. 7, page 9, line 38 , at end insert— ‘(1A) At least three-quarters of the dormant account money for meeting English expenditure distributed in each financial year shall be distributed for the purposes set out in (1)(a) above.’. No. 1, in Clause 18, page 10, line 5, at end insert— ‘(1A) Any order made under this section shall ensure that at least half of the distribution of dormant account money for meeting Welsh expenditure must be made for meeting revenue or capital expenditure on or connected with the provision of existing or new services, facilities or opportunities to meet the needs of young people.’. No. 2, in Clause 19, page 10, line 15, at end insert— ‘(1A) Any order made under this section shall ensure that at least half of the distribution of dormant account money for meeting Scottish expenditure must be made for meeting revenue or capital expenditure on or connected with the provision of existing or new services, facilities or opportunities to meet the needs of young people.’. No. 3, in Clause 20, page 10, line 25, at end insert— ‘(1A) Any order made under this section shall ensure that at least half of the distribution of dormant account money for meeting Northern Ireland expenditure must be made for meeting revenue or capital expenditure on or connected with the provision of existing or new services, facilities or opportunities to meet the needs of young people.’. No. 13, in Schedule 3, page 19, line 13, at end insert— ‘(2A) The strategic plan for England must have regard to the likely level of the funds transferred to the Big Lottery Fund from the Reclaim Fund and shall set out the allocation of these funds between the priorities set out in section 17(1).’. No. 14, page 19, line 27 , after ‘(3)(b)’, insert ‘and the priorities for spending set out in section 17(1).’. No. 4, page 24, line 26, at end insert— ‘Estimates 9A The Big Lottery Fund shall no later than one month before the end of each financial year publish an estimate of the apportionable income which it expects to have available for the following financial year.’. No. 15, page 24, line 32 , at end insert ‘which shall include— (i) the amount distributed in the year in— (a) England, (b) Wales, (c) Scotland, and (d) Northern Ireland; (ii) the amount of expenses defrayed in the year in accordance with subsections (1) and (2) of section 25; (iii) the amount paid to the Consolidated Fund in accordance with subsections (3)(a) and (b) of section 25.’.
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- Speaker
- Simon HughesLiberal Democrat
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- All the amendments in this group are in my name, except for amendments Nos. 13, 14 and 15 which were tabled by the hon. Member for Fareham (Mr. Hoban). They deal not with how the money gets into the pot but with how it is distributed, and they follow our helpful Second Reading and Committee debates. I tabled these amendments to encourage the Government to be more specific about their general commitments. Amendment No. 8 tests the Government on the time scale for implementation. Ministers have been very helpful; indeed, I have been offered a meeting later this month with the Financial Secretary, which I intend to take up to discuss how soon money can be forthcoming, particularly for youth projects, about which I wish to speak in particular. Earlier this year, Ministers indicated that some of the money that they anticipate coming from dormant bank and building society accounts could, so to speak, be advanced against the expectation. Does that offer remain on the table or will we definitely have to wait for money to be collected, identified and transferred to the Big Lottery Fund before it can be distributed? Amendments Nos. 5 and 7 seek to probe the Government’s intentions about how much of the money in the kitty can go to services for young people and to test the sort of funds and projects that can be linked. I shall come back to that issue in a second. Amendment No. 7 identifies a minimum percentage of the total. As colleagues will know, there are three identified projects for England, one of which is youth services. Ministers have been helpful in indicating that they intend that, in England, most of the money could go to youth services and I have heard reports that the proportion might be up to four fifths of the total. I would be keen to hear whether that suggestion can be tied down. Amendments Nos. 1 to 3 relate to Wales, Scotland and Northern Ireland. I hesitate to trespass in that area, because Ministers have said that they will leave that entirely to the devolved legislatures. However, I have picked up very positive messages about the keenness of people in Scotland and Wales—I have not tested this in Northern Ireland—to spend the money on youth services there. I want to see whether the Government would be willing to encourage that to happen elsewhere in the devolved Administrations. Amendment No. 4 is about Big Lottery Fund procedures, and seeks to ensure that people know in advance what will come down the track in their direction. Two weeks ago, Mr. Speaker was kind enough to select youth crime in Greater London as the subject for an Adjournment debate in Westminster Hall. It was a well-attended debate, involving colleagues from both sides of the House. It was very positive. People said that a huge number of very good initiatives in the communities in all the 33 local authorities were doing well, had done well and could do well. The burden of most people’s song in that debate, and certainly the burden of mine, was that rather than seeking to reinvent the wheel and to obtain money through public processes and the Big Lottery Fund for a new project or a capital project, we should seek to support existing projects and to build them up. Many colleagues, when they talk about different issues to do with the voluntary sector, make the case that the trouble is often that groups can apply for money for a new capital project but cannot necessarily apply for money to continue the revenue spend on a project that is already up and running. Two days after the debate in Westminster Hall, and just over the river in the Royal Festival Hall, there was the launch of a campaign by a coalition of organisations, principally in Lewisham, Southwark and Lambeth. It is called “Enough! Make Youth Violence History” and seeks to bring together organisations that are doing very good work to deter young people from knife crime, gun crime and violence, and to give them positive and alternative role models. The message from that successful event was that some very good organisations work with young people in the front line and that they should be supported and built up. One of the aims of the event was to say to the Government that they should recognise what good work those organisations do. Ministers in the Home Office were helpful and supportive. As it happened, they could not attend that evening, but I know that they have been positive towards the initiative. The other message of that evening was that when people ask, “What can I do to help deter people from violence, gun crime and knife crime?”, those groups should say, “Come and volunteer with us.” Many organisations are looking for volunteers, so it is a matter of matching the corporate sector volunteer or the private individual volunteer with those organisations. Given that there is no statutory obligation in England—or anywhere across the UK—to provide youth services, this Bill is the only place in the current legislative programme where campaigns for developing existing youth organisations tie into the Government’s programme for being helpful and putting more money in the kitty. That is a welcome proposition. Amendment No. 8 would amend clause 16, and would seek to ensure that the amount was prescribed in good time every year for it to be really useful. The proposal in the amendment is that the Government should prescribe the amount by 1 March every year, ahead of the new financial year, so that there is clear notice of what the total amount will be. That will mean that everybody will know in good time what the total sum will be for which people can bid. The next few amendments are very clear, and I want to ensure that the Government are also clear that the intention behind the amendments is to put on the face of the Bill the fact that the money could go both to revenue spend and capital projects. I hope that the Government will be helpful and will say, “Yes, there will be no barrier to people bidding for money from the Big Lottery Fund for revenue projects.” In my constituency, a state-of-the-art youth centre—one of the best in the country—is about to be opened. Ministers have been very helpful and supportive, particularly the Minister for Children, Young People and Families. It is called the Salmon youth centre in Bermondsey, and it is a fantastic state-of-the-art project. We also have other good smaller projects, as we all do in our constituencies. They are not looking for new buildings, but for money to support additional workers. Let me give two examples. A project called XLP works across the south London boroughs and takes a double-decker bus out to estates to offer young people positive things to do. However, it does not yet have the personnel to do that all the time. It would like to, but it needs a bit more revenue funding. It goes into schools with a very good show called “Gunz Down”, which takes an hour and plays to the third, fourth and fifth years in secondary schools. It could do more if it had more revenue funding. Another good youth project, funded by Oasis, runs just over the bridge from us here, on the Lambeth-Southwark borders. It has a radio project for young people, which teaches them skills in presenting and so on. The project, like the youth clubs, is open certain nights of the week but it cannot open every night because it does not have the funds. There is not much money to fund such youth work. The plea from such groups is, “Please allow us to have the money for revenue not just for capital.” Amendment No. 6 says, “Please will you confirm, O Government, that we can have the money for existing projects, not just new projects?” I think that that is the case—I have heard nothing to suggest that it is not—but it would be very helpful if that could be confirmed. Amendment No. 7 seeks to test how much money the Government envisage will go to the first of the three categories that they have set out. They have set out three purposes. The first is “the provision of services, facilities or opportunities to meet the needs of young people”. The second is “expenditure on or connected with…the development of individuals’ ability to manage their finances, or…the improvement of access to personal financial services”. That is obviously important. The third is that such payments should be “made to a social investment wholesaler.” There are three identified projects in England. The Government have said that they intend that the bulk of the money will go to youth services. Amendment No. 7 asks whether we should have a bottom line that says that at least three quarters of the funds should go to that cause, whether that is a reasonable line to draw and whether the Government are willing to make that commitment. If not, can we hear from the Minister what the bottom line is intended to be? Amendments Nos. 1, 2, and 3 are intended to test whether the Government are willing at least to say that half the money going to Scotland, Wales and Northern Ireland should be for youth facilities. I hope that the Government will be encouraging the devolved Administrations even if they are unwilling to be prescriptive. That would be welcome in Scotland and Wales, as I know from all the conversations that I have had. If the Bill is to be seen to have a purpose, a very good purpose across the four countries of the United Kingdom would be to spend the money on youth facilities.
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- Mr. HobanConservative
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- I shall start by saying a few words about the amendments tabled by the hon. Member for North Southwark and Bermondsey (Simon Hughes). He will find, as we found in Committee, that the Government’s main priority is expenditure on youth services. That has been a recurrent theme, and it is clear from debates in the House and the other place that that is where the bulk of the money will go. Although he might not get commitments to absolute percentages, he is pushing at an open door. Amendment No. 4 is sensible; people will need some idea of how much money will be available for those causes. I want to continue the theme of the distribution of money and to pick up the final spending priority identified for England: the social investment wholesaler. I tabled amendment No. 13 to deal with that, and I shall spend a short time talking about it. It is fair to say that people who work in social enterprise and social investment had expected that the unclaimed assets would be used to help to fund a social investment wholesaler. Certainly, there has been a great deal of debate about that. The Commission on Unclaimed Assets, chaired by Sir Ronald Cohen, considered the amounts that would flow from dormant bank and building society accounts as the way in which a social investment wholesaler could be set up. Subsequent to its report, it did some work in trying to set up the appropriate framework into which moneys could be transferred. As I suggested earlier, however, it is clear that the Government’s order of priority for spending is very much that set out in the Bill. Spending on youth services comes first, followed by financial inclusion, and the social investment bank comes very much at the bottom of the list. The Minister said in Committee that the social investment bank would receive resources to get off the ground if resources permit. It was clear to me that the amount of money available could be relatively small. That will disappoint the people in that sector who saw this as an opportunity to receive investment in social enterprise. In evidence given to the Treasury Select Committee, it was suggested that about £330 million over five years would be required to set up a social investment wholesaler. At the moment, it is not clear how much money will be available, not just to that cause but to the other two causes. Again, the Minister said that there is still great uncertainty about the quantum of resources available to the Big Lottery Fund. We touched on that on Second Reading and in Committee. In amendment No. 13, I ask the Government, when looking at the Big Lottery Fund’s pattern of expenditure during the next few years, to recognise that transfers into the BLF are likely to be of a lumpy nature. We expect that, in the first year, significant moneys will be released from banks to the reclaim fund and the BLF. In effect, the money accumulated in dormant accounts over a long period will be released to the BLF in the very early stages of the process. That significant lump sum will create the opportunity for money to be put into a social investment bank, the investment profile of which will be front-loaded. It needs a large injection of capital up front, followed by top-ups at a later stage. Clearly, if the Government want to give some money to a social investment bank, recognising the fact that the flow into the fund will mirror the large amount at the outset and that smaller amounts will come every year thereafter, as a new year’s worth of dormant bank accounts become available for transfer to the reclaim fund, the opportunity might perhaps arise at the start of the process for significant investment in a social investment wholesaler. It is much less likely, as the unclaimed assets process continues, that sufficient money will be available to set up a social investment wholesaler of sufficient magnitude to make a difference to the third sector. I ask the Government to think about the flow of funds into the BLF and how it might be used to support a wholesaler. Of course, we must also bear in mind the fact that a social investment wholesaler could use its funds to support initiatives for financial inclusion and youth services, so there could be a flow back to the spending priorities. I want to touch briefly on amendment No. 14. I want to ensure that the BLF’s consultation on its strategy includes the three causes referred to in the Bill: youth services, financial inclusion and the social investment wholesaler. There seems to be a gap in the consultation process; it should go back to those three causes and look at needs in that context. Amendment No. 15 is intended to probe the Government’s thinking on the information that will be published by the BLF in its accounts, to ensure transparency about the amounts distributed to England, Wales, Scotland and Northern Ireland and much more clarity about the expenses defrayed, not only those of the BLF but those that will be reimbursed to the consolidated fund from the BLF. One of the reasons why we tabled that amendment was to ensure clarity about the amounts allocated to England, Wales, Scotland and Northern Ireland. We debated the issue in Committee, where it became apparent that the Barnett formula would be used as the basis for that, but that is not stated in the Bill, as is the Government’s custom. Amendment No. 14 would ensure transparency in that respect. Concern has been expressed, particularly in the other place and to a lesser extent during our proceedings in Committee, about the cost of the BLF, whether it will ensure that its expenses are proportionate to the amounts that it distributes and whether it will spend that money wisely. As I said in an earlier debate, every pound spent on administration is a pound not available to the good causes. In Committee, the Minister argued that we should make sure that we do not spend too little on administration so that the money was targeted at the right places. However, it is important that there is transparency in the accounts of the BLF, or the reclaim fund element of it, about the amount spent. We have to ensure that the BLF knows that people will not lose sight of the amount spent. There is another area that needs clarity. The Bill makes provision for the BLF to reimburse expenditure incurred by the Secretary of State—and from our discussions in Committee, we know that it will be the Secretary of State for Children, Schools and Families. Given the maxim that we need transparency about how money is spent, so we can be sure that we have the best value for money, it is important that we make certain that the amounts repaid to the Secretary of State are published. In essence, there are two elements to this group of amendments. First, it allows us to air issues to do with the social investment bank, and to make sure that it does not drop off the end of the list of priorities. If resources permit, perhaps some money will be devoted to it, particularly given that money will have to be allocated up front to ensure that it is viable. Secondly, we must ensure transparency in how the money is spent. That relates to the amounts awarded to the different nations of the United Kingdom, and to ensuring that we do not lose sight of the money spent on expenses.
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- Mr. Jeremy BrowneLiberal Democrat
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- I rise briefly to echo a few of the themes that have already been touched on, and to ask the Minister for clarification on one or two other matters. First, I should like to mention the point made in the previous contribution about how the Government intend to allocate money between the parts of the United Kingdom. Representations have been made to me by people in Wales, who express concern about the fact that the Barnett formula gives 5.84 per cent. of spending to Wales, whereas the Big Lottery Fund, using a needs-based formula, gives Wales 6.5 per cent. That is not a huge difference, but if we are talking about reasonably significant amounts of money, it is obviously a difference that will interest people in Wales—and, of course, by implication, the other three parts of the United Kingdom, because there is only so much money in the pot, and the more that goes to one part, the less there will be for others. It would be useful if the Minister indicated precisely how the allocations will be made. As we discussed in Committee, one could make a case for many different bases. One could, straightforwardly, allocate the funds according to population, or according to some sort of assessment of need. One could even use as a basis the number, or indeed the value, of dormant bank accounts in each part of the United Kingdom. It would be reasonable to have some sense of the basis on which the decision will be made. My hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) touched on the percentage of money that will go to youth services, as we did in Committee. I suppose the Minister may slightly feel that he is being pulled in different directions, because in Committee we discussed whether the Government ought to seek greater flexibility. At a later date, way beyond the period that we are envisaging—perhaps 20, 30 or 40 years from now—the Government may wish to redirect the spending to a cause that is particularly fashionable or important at the time. Of course, the Bill does not provide for that; the Government would have to introduce new legislation. They may wish to consider that. More immediately, a reasonable concern has been expressed about what percentage will go to each of the three causes identified. That is a legitimate point, because if 90 per cent. were to go to youth services, and only 5 per cent. to each of the other two interest areas, there would obviously be a very different impact on youth services than if a third went to each of the interest areas. The Government could do a little better than just saying what the three areas are. I agree with the Conservative spokesman, the hon. Member for Fareham (Mr. Hoban), that all the mood music seems to suggest that, for the Government, youth services will be the priority. My hon. Friend the Member for North Southwark and Bermondsey mentioned 75 per cent. of the funding going to the first of the three priorities, youth services. From everything that I have heard, and from debates in which I have participated, my hunch is that that is roughly the sort of percentage allocation that the Government are considering, but the Minister may be able to be more helpful and give the House a steer on what is envisaged.
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- Tom LevittLabour
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- I planned to intervene on my hon. Friend the Minister when he responded on this group of amendments, but the issue that I wanted to raise was mentioned by the hon. Member for Taunton (Mr. Browne). I realised that my question would probably be so long, Mr. Deputy Speaker, that you would take a dim view of it as an intervention, so I thought that I would make a contribution instead. First, I accept that the hon. Member for North Southwark and Bermondsey (Simon Hughes) has tabled perfectly legitimate probing amendments; I have every confidence that my hon. Friend the Minister will respond to them in a way that allows them to be withdrawn. In Committee, I tried to get my head around the issue of the size of the entire pot, but did not manage to do so. I am not talking about the figure. Clearly we do not know the exact figure and there is much speculation, covering a wide range of numbers, about what it might be, but does my hon. Friend expect a huge splurge at the start with all the backlog being distributed in one go? Presumably the size of the pot would tail off pretty quickly over future years, coming down to a fairly minimal level in the not-too-distant future when the entire backlog had been spent and when, because people were more aware of the issue, fewer people were allowing their accounts to become dormant. Or does he expect a degree of housekeeping, whereby not all the backlog would be spent in year 1? Perhaps there would be a build-up over two or three years and a gradual reduction after that. Or does he expect that as far as possible the fund would be distributed at a fairly constant level over a number of years? The way in which applications are made will be influenced by the spending profile of the pot over the future years. I do not think that the answers to my questions will influence hon. Members should the matter go to a vote, but they would provide a useful context in which to see these perfectly legitimate probing amendments on which I am confident that we shall not have to vote.
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- Ian PearsonLabour
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- I very much appreciate the probing nature of the amendments tabled by the hon. Members for North Southwark and Bermondsey (Simon Hughes) and for Fareham (Mr. Hoban). The legislation defines the basic architecture for the operation of the reclaim scheme, how it will transfer funds to the Big Lottery Fund and the general principles surrounding how those funds will be allocated. As has been noted, and as my hon. Friend the Member for High Peak (Tom Levitt) just mentioned, there is significant uncertainty about what funds will be transferred and when, so it is difficult to be precise in response to a number of the amendments, but I hope to be able to give sufficient clarification of some of the general themes in order to give the House the assurances that it naturally wants. We are all keen to get on with this and to see money going to the good causes that are specified in the Bill. It will be for the banks and the reclaim fund to decide the speed with which they transfer dormant assets in the first instance. It is likely that that will occur in a number of tranches, but although we do not know whether the original figure of £400 million to £500 million will be the actual figure, it will be built up over a relatively short period of time, and then we expect a steady funding to the tune of some tens of millions of pounds once the initial quantum of money has been transferred. This offers a number of opportunities to discuss issues such as that raised by the hon. Member for Fareham as to whether this provides an opportunity to have an up-front capitalisation for what the Bill terms a social investment wholesaler, and that is something that we would want to discuss. As has been made clear on a number of occasions, the funding priority overall in relation to dormant accounts has always been youth provision, and that remains the case.
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- Tom LevittLabour
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- I am happy with the model that my hon. Friend has just described, but it seems to suggest that a lot of money will be going into the fund but will not be distributed straight away and, given the quantities that we are talking about, there might be a period in which a significant amount of interest would be earned. Would that interest be added to the fund and be available for distribution?
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- Ian PearsonLabour
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- It is one matter to decide how much money goes from banks and building societies into the reclaim fund and over what period—I have tried to give some indication as to how it would be likely to operate—and there is another set of decisions in terms of the transfer of funds from the reclaim fund to the BLF. We would expect the reclaim fund initially to take a relatively cautious approach about the amount of claims that are likely to be put upon it as a result of wanting to reunite people with their money. That will be a judgment for it to make and we would expect it to do so in a reasonable way, but to transfer funds to the BLF in accordance with directions that will be provided by Government. Exactly what stance the reclaim fund takes in terms of the amount of the balance that it needs to hold in reserve in case of future repatriation is an issue that adds further uncertainty to deciding how much should go to the good causes and over what period of time. Amendment No. 8 seeks to ensure that the Secretary of State makes orders apportioning available sums between the four countries at least one month before the new financial year. I understand that it seeks, along with a number of others, to try to tease out the Government’s intentions on timing, and we fully recognise the need for advance planning when it comes to the voluntary sector. We have often been in the situation where the voluntary sector has not had sufficient advance warning, making it difficult to operate efficiently. It is the Government’s intention that apportionment orders will be made in such a way as to ensure that each country is aware of the likely sums that will be available, and can therefore draw up directions or revise existing directions on the relative priorities for spending in good time so that the BLF has sufficient time to plan distribution programmes in accordance with such directions. We do not see the need to specify in legislation a date by which an apportionment order will be made. The issue of apportionment will be kept under review in consultation with the devolved Administrations, but we do not anticipate that apportionment orders will be made on an annual basis. We envisage an initial order when the scheme is live, but no immediate or annual review. That is not to say that the formula will not be reviewed, merely that we do not intend that it would necessarily be updated at a fixed annual date.
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- Simon HughesLiberal Democrat
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- That is helpful. Certainty over a two, three or four-year period is obviously better than not knowing from one year to the next, but I reinforce the point that when announcements are made, I assume that 1 March would be the latest possible date and that it would be the Government’s intention in any year when they make an apportionment decision that they will seek to make it much earlier in the preceding financial year.
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- Ian PearsonLabour
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- We would always seek to act in as good time as we could in such matters. Amendment No. 5 seeks to clarify that English expenditure on youth can be revenue or capital. I understand its probing nature and would simply argue that it is unnecessary because clause 17 is wide enough to enable the BLF to direct resources to either revenue or capital spending without the need for the clarification or qualification proposed. Our ambition is for all young people to have access to high-quality, attractive and safe places to go. These should offer a wide range of exciting positive activities to support young people to reach their full potential, but also to help improve relations between young people and the wider community. We therefore intend for unclaimed assets in England to be invested in new and improved youth facilities in every constituency, allowing ever more young people to participate and to benefit. Our vision is for unclaimed assets funding that is primarily intended to support investment in youth facilities, not to meet ongoing costs. We recognise, however, that some time-limited resource funding may help to ensure the viability of capital projects—for example, to support project management and delivery costs. I anticipate that, where appropriate, the spending directions may enable such resource spending, and we are clear that, as drafted, the legislation allows us to do so. I hope that that gives hon. Members a clear indication both of our thinking in that area, and of why we think that amendment No. 5 would be unnecessary.
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- Simon HughesLiberal Democrat
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- I should like to clarify two points. First, will the Minister confirm that, if the legislation is passed as drafted, Government policy will not prevent the Big Lottery Fund from interpreting existing and new revenue and capital widely, as the implication appears to be, and that the BLF will be free to make that choice? Secondly, will he confirm that, often, a judgment of sustainability should be made on what has been happening? If a project has been going for 10 years and going well, that is often much better evidence of sustainability than a new project, whose sustainability nobody, with the best will in the world, can guarantee.
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- Ian PearsonLabour
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- I agree strongly with the latter point. On the former, obviously the BLF has to operate within the legislative framework in the Bill and in accordance with the Government’s directions. I shall talk in a minute about the strategic plan, which I hope will provide even more clarification. Amendment No. 7 is unnecessarily prescriptive in its attempt to specify a fixed proportion of dormant accounts funding to be directed at youth spending. I understand the spirit in which the amendment was tabled, but we have made it clear that our spending priorities will be for youth, financial inclusion and, as resources and state aid permit, the social investment wholesaler. It would be unnecessarily constraining to include in the legislation a specific percentage figure.
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- Simon HughesLiberal Democrat
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- I understand why the Minister has been very, very careful on that amendment, in which I sought to push him on a percentage, but are my hon. Friend the Member for Taunton (Mr. Browne), the hon. Member for Fareham (Mr. Hoban) and all of us right in thinking that, in England, the Government intend most of the funds at any one time to be used for the first intention, youth services and facilities, rather than for either or both of the other two priorities? Is that the clear policy intention?
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- Ian PearsonLabour
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- The Government’s clear policy intention has always been that youth spending in England should be the priority, but there are other considerations, particularly with regard to the build-up of the fund, as I mentioned earlier. If the Government were minded to support and take forward the social investment wholesaler, it might need up-front capitalisation, but over time we have been very clear that youth funding is very much the priority. I appreciate that amendments Nos. 1 to 3 are probing ones, but one principle of the scheme is that it is rightly and properly the responsibility of the devolved Administrations to determine their own spending areas within their respective countries, so that they identify priorities that best reflect the needs of their communities. That was spelt out in the Treasury’s May 2007 consultation, which also recognised that the priorities in those countries might change over time. Although the hon. Member for North Southwark and Bermondsey invites us to be prescriptive, I must reject his invitation and say that, in the spirit of devolution, we believe it right to ensure that the devolved Administrations are free to determine their own spending areas. On the spending formula, as we have said in Committee and on previous occasions, the Barnett formula is the most appropriate way of allocating funds. We discussed the matter with the devolved Administrations, and they agree with the approach, so I invite hon. Members to reject amendments Nos. 1 to 3. Amendment No. 13 would require the BLF to set out in its strategic plan for England how it has regard to the likely levels of funds that it will receive from the reclaim fund. I mentioned earlier to the hon. Member for Fareham, when discussing the way in which the reclaim fund would be capitalised through dormant accounts, that it gives us an opportunity to consider the social investment wholesaler, so I assure him that it will not be forgotten. It was one of his key points. Amendment No. 14 would require the BLF, when consulting to identify spending needs while drawing up the strategic plan, to take into account the priorities for the three spending areas for England. Again, that would be unnecessary, because the identification of the overall needs for England is, in essence, the delivery of the requirements of the spending direction, and they set out the priority to be accorded to each spending area. That brings me on to talk about drawing up the strategic plan on the Secretary of State’s instruction, and why it has been included in the Bill. We are concerned to ensure that we enable the BLF to take a strategic approach to distributing funding in England within the parameters of the spending directions. It is right that, within the general framework for directions, on which we will insist, the BLF has responsibility for drawing up its strategic plan, and that, as part of the plan, it gives advance notice to voluntary organisations of its funding priorities in the directions.
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- Simon HughesLiberal Democrat
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- Assuming that the Bill receives its Third Reading tonight and, as we all hope, a speedy Royal Assent, will the Minister sketch out—this touches on the next amendment, the final one in the group—the timetable from now to the end? What is the timetable for the directions, for the strategic plan and for the first money to come through the system?
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- Ian PearsonLabour
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- If I may, I shall say more about that when I turn to the next amendment, because it is probably more convenient to do so then. However, I should point out that there are certain issues in respect of the Financial Services Authority and regulatory approval of the reclaim fund, and they will limit the speed with which we can do some of those things. Amendment No. 4 would require the BLF to publish one month before the financial year-end an estimate of the amount of money available for apportionment in the following year. I presume that the intention would be to make the funding flows between the reclaim fund and the BLF more transparent and, perhaps, to enable distribution in every respective country, and I appreciate the desire to do so. The Bill already makes the necessary provisions to document the funding flows between the reclaim fund and the BLF. The fund is required to publish the total amount that it has transferred to the BLF in any one year and the BLF’s apportioning of that funding between the countries of the UK will be determined by the apportionment order issued by the Secretary of State under clause 16. I appreciate that amendment No. 4 has been tabled for the purposes of probing, but the problem with it is that providing estimates of the amounts available for distribution the following year is likely to be difficult—for a couple of reasons at least. First, the BLF relies on the reclaim fund to identify the sums that it does not need to retain to meet anticipated repayment claims and its own costs for the following year. Secondly, the amendment imposes a forecasting requirement on the BLF, but it would be up to the reclaim fund to decide when it is appropriate for those sums to be released for distribution. We anticipate that the BLF and the reclaim fund will plan the way ahead. Trying to specify that in legislation rather than allowing for a normal and constructive working relationship would be difficult, and we have no reason to believe that the reclaim fund and the BLF will not work constructively together. Amendment No. 15 would require the BLF to record in its annual accounts the amounts that it had distributed in each of the countries of the UK and the expenses that it had defrayed out of its dormant account income, in respect of the BLF’s own expenses and those incurred by the Government in the administration of the scheme. Under clause 21, the Secretary of State already has the power to make financial directions to the BLF, including directions in relation to the form of accounts or methods and principles for the preparation of the accounts. We anticipate that the nature of the directions issued will follow the form of directions given to the BLF by the Department for Culture, Media and Sport under the lottery legislation. It makes sense for the accounting requirements to be similar. When we discussed those issues in Committee, there was a general feeling that there should be procedures similar to those now operated by the Department for Culture, Media and Sport, although the Secretary of State for Children, Schools and Families will be offering the guidance. The regulatory framework will be essentially the same. Amendment No. 15 is therefore unnecessary and we oppose it. I apologise for how long I have taken to cover the amendments, but it is right to put on the record some points of clarification that emerged from discussion of the probing amendments.
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- 19:30
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- Simon HughesLiberal Democrat
- Quote
- Colleagues can be released, and the dogs can be taken off; hon. Members can have an early evening and get ready for the fray tomorrow. I am grateful for the Minister’s helpful response. I have taken on board what he has said. People in the voluntary sector, particularly those with an obvious interest in the three categories set out for England and those who work in projects supporting young people, will want to have inputs into the strategic plan and the continuing discussions between the reclaim fund and the Big Lottery Fund. I hope that that will be facilitated. Everybody is interested in speeding things up, and I want to make clear that the purpose has been to get the message across that good, high-quality work, involving excellent individuals, is being done with young people. We must make sure that this new opportunity does not seek to reinvent the wheel only for the purposes of erecting new buildings, but that it builds on the good practice, experience and activities that exist anyway. I hope that there will be collaborative efforts and I appreciate the Minister’s good will. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 30 Commencement
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- Speaker
- Simon HughesLiberal Democrat
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- I beg to move amendment No. 9, page 14, line 36, leave out subsections (1) and (2) and insert— ‘(1) Part 1 shall come into force on 5 January 2009. (2) Part 2 shall come into force on 6 April 2009.’. If the amendment is agreed to, part 1 of the Bill will come into force next year on the first working day after the new year bank holidays and weekend in all parts of the United Kingdom, and part 2 will come into force at the beginning of the next financial year. The amendment is absolutely a probing one, and I anticipate that the Minister will say that there are technical reasons why the Bill cannot come into force as quickly as I suggest. My amendment is really designed to do two things. First, it says that we should get on with things once Royal Assent is over. Secondly, it seeks to encourage the Minister to give us a helpful answer on how soon we can get on with things. The Minister may be obliged to resist the two dates that I have suggested, but it would be useful if he could say when—if there were a fair wind and everybody was helpful—the earliest dates for the Bill’s implementation could be. If he did that, it would encourage people in the industry to get on with things, make people understand that the Government are serious in their intent and allow beneficiaries to see that the opportunity is not one of “jam tomorrow”, but “jam really quite soon”. It would also be in everybody’s political interest, because some time between now and June 2010 there has to be a general election. The Government have a motive for getting on with the legislation; that would be in their interest and in the general public interest.
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- 19:45
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- Ian PearsonLabour
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- Yes, I do want to get on with things as quickly as possible, and I share the hon. Gentleman’s enthusiasm, and that of all hon. Members, for a scheme to be up and running as soon as possible. I assure him that the Act will be brought into force as speedily as possible and in good time. I am not, however, persuaded of the need to specify an early date, as the amendment does. After Royal Assent, a number of important elements must be considered before any scheme can launch and any money can be transferred from financial institutions to the reclaim fund and subsequently to the BLF. Most notably, the Financial Services Authority will need to consult on the rules around its regulatory regime for the reclaim fund. The FSA has committed to consult shortly after the Bill gains Royal Assent and I certainly encourage it to do that as speedily as possible. The consultation process on that important detail will, however, rightly take time, as hon. Members have said. The dormant accounts contain people’s money, and they have a right to it. We need to be sure that a candidate reclaim fund will need to apply to the FSA and gain authorisation. Presumably, a bidding process for setting up the reclaim fund will have to take place. Once an authorised reclaim fund exists, however, the scheme can be operational quickly. Our ambition is for the scheme to be operational by the middle of next year, but obviously there are a number of hurdles before we reach that stage. In that context, the call for an early commencement of the Bill is not relevant because that would not affect the early introduction of the scheme. However, I assure the House that the Government will want to move with all reasonable speed to ensure that the scheme is not unnecessarily delayed, that we get on with it and that we deliver the sort of benefits that the Bill can have for our citizens.
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- 19:45
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- Simon HughesLiberal Democrat
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- Again, the Minister has been helpful; the phrase that I take from his response is “the middle of next year”, which is an encouraging marker. Will he give one more indication, just so that people can be clear? If the implementation is to take place in the middle of next year, when does he expect the first payments to be made? Would they also happen in the middle of next year, or would they take another month or three months? I am trying to see whether I can get the Minister to say that some time next year he would expect the money to have come out of the accounts, gone through the reclaim fund and the BLF and come out at the other end. Is that expectation reasonable? Given what the Minister has said, it seems that it is.
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- Ian PearsonLabour
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- What I would wish to happen is that during the course of the financial year 2009-2010 we have not only a reclaim fund up and running, but banks and building societies transferring money into it. I would also like to think that the reclaim fund will be making decisions during that financial year to allocate initial sums to the Big Lottery Fund. That is quite an ambitious timetable, but it is not unrealistic that we can move at that pace, and that is exactly what we should do.
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- Simon HughesLiberal Democrat
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- I am grateful to the Minister for his reply. I shall come for my meeting with his colleagues with a good knock on the door and all the encouragement that I can muster. I hope that the Government will be able to move this matter forward as quickly as possible and look forward to a speedy delivery once the Bill receives Royal Assent. On that basis, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Order for Third Reading read.
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- Speaker
- Ian PearsonLabour
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- I beg to move, That the Bill be now read the Third time. We have had an interesting debate on Report. I am grateful to all hon. Members who took part and to those who served on the Public Bill Committee. I am grateful for the good spirit and the constructive approach taken by Members of all parties. As a Government, we have listened to several of the arguments that have been made here and in the other place, and the Bill has been greatly improved as a result. I recognise that transparency and openness are important in these areas. Our debate on the review clause in Committee and the Government amendment that we passed this evening have helped to demonstrate that we have been listening. It is a fact of life that people often forget about or lose track of small deposits of money in bank and building society accounts. That may be because they have changed address or lost contact with their bank, or perhaps they have died without anyone being aware of the account. As a consequence, a large amount of money is lying dormant in bank and building society accounts. It was a Labour party manifesto commitment that we would act to legislate in this field. The 2005 pre-Budget report set out that the Government had decided that the time had come for such a scheme in the United Kingdom, and the Bill is a key part of turning that ambition into reality. The latest estimate from the British Bankers Association and the Building Societies Association is that by the Bill’s definition between £250 million and £350 million in banks and £130 million in building societies is potentially available. Although those volumes of money are relatively small in the context of the financial services sector as a whole, such sums have the potential to make a significant impact for projects in the community. Throughout our debates, the Government have been deliberately clear that we see the spending priorities in England as youth services, financial capability and inclusion and, if resources permit, investment in the long-term sustainability of the third sector. Those important areas are included in the Bill. The potential of the scheme to make a real difference in every community on the basis of those priorities is clear. We have argued, following extensive consultation, that an alternative disbursement option should exist for small institutions to distribute assets in their local communities. On several occasions, the case has been made that special treatment should additionally be afforded to all building societies. We have listened to those arguments and carefully considered them. However, as I said in Committee, we continue to believe that the significant impact that that would have on assets going into the national scheme, and the duplication of national level distribution, would mean that the potential benefits to society were reduced. Widening this small and local scheme to all building societies is therefore not desirable. Although we did not debate amendments on this today, amendments were debated in Committee and in another place. We remain firmly convinced as a Government that the scheme has been designed in the most appropriate way to be able to provide benefits in the priority areas that we have identified. The Bill offers an historic opportunity to allow these assets to be used for the wider benefit of society, and it does so while maintaining an approach that is user-friendly and protects customers. Ultimately, if customers discover that they have lost their bank, building society or national savings account and want to get their money back, they will be allowed to do so, and there is nothing in the Bill to prevent it. However, using dormant accounts represents an opportunity to provide significant benefits to some of the most deprived communities by improving youth provision and helping with financial capability and inclusion. I commend the Bill to the House.
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- 19:50
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- Mr. HobanConservative
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- The Minister rightly said that we dealt with the debates on Report as we did with the debates in Committee—by setting out from the outset to be constructive and to take the opportunity to understand and to challenge the Government’s intentions. I think that the Bill is better as a consequence. We are at the “end of the beginning” stage of this legislation. The Committee stage did not take long, but it took some time for the Bill, having received its First Reading in this House in February, to get to its Second Reading when we returned after the summer recess. Since then, we have dealt with it very quickly to get to this point. There are four key aspects. First, we need to ensure proper protection for consumers so that they know that if money is transferred from their account to the reclaim fund, there is recourse for them. As a preparatory step, banks, building societies and National Savings & Investments have done as much work as possible to be able to unite customers with their money. The second important feature is the establishment of the reclaim fund and its functions. We have debated the reclaim fund and how we are going to monitor the way in which it works in practice. The third key area, which we discussed under the penultimate group of amendments, concerns the role that the Big Lottery Fund will undertake and how it will set out its strategy. The fourth key area is the next stage of the process, or the next challenge—determining how the money will be spent in practice on the ground. This presents a huge opportunity to find some innovative and exciting projects that can benefit from dormant accounts. We had a debate about the initial release of money from bank accounts to the Big Lottery Fund. It is vital that the Big Lottery Fund plans this process well. If it gets it right, that can make a significant difference to communities across the country. It will need to work hard to ensure that the opportunity is maximised and that the money is used effectively. The Bill will leave this place slightly weaker than when it arrived. The Government have weakened some of the aspects of parliamentary scrutiny that were inserted in the other place. However, I will be gracious in accepting that new clause 3 provides some scrutiny. It may not be as robust and the review not as frequent as Opposition Members wanted, but it ensures that the functioning of the scheme will be reviewed. One of the features of the discussions throughout all the Bill’s stages has been the importance of ensuring that the scheme works properly.
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- 19:55
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- David TaylorLabour
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- Does the hon. Gentleman recall my intervening on him on 6 October, when the Bill was previously debated in this Chamber? We both agreed that as a price for not being included in the Bill, National Savings & Investments should be doing more to link dormant accounts. NS&I has written to both of us, and I, for one, am more impressed by what it now does in relation to investment accounts, premium bonds and so on. Is he of the opinion that it should remain outside the Bill?
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- Mr. HobanConservative
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- The hon. Gentleman raises two points. I looked back at the Hansard report of the Second Reading debate; I thought that I had been complimentary about the work that the National Savings & Investments bank had done in reuniting customers with their accounts. It is important work, even though the dormant moneys will not be transferred into the reclaim fund—something which any review should consider. The bank should continue to work as hard as it can to ensure that people are united with their assets, and I am sure that it understands the importance that this House places on it continuing to do such good work in finding the owners of such accounts—
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- Mr. Deputy SpeakerConservative
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- Order. Time has allowed me to be indulgent, but I should remind the House that on Third Reading we should be discussing what is in the Bill, not what is not in it.
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- 19:55
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- Mr. HobanConservative
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- I am grateful for that guidance, Mr. Deputy Speaker. You will understand from the exchange that I had with the hon. Member for North-West Leicestershire (David Taylor) why I may have chosen to trespass on your good will on this occasion. Returning to the Bill, new clause 3 provides an opportunity to scrutinise how well the reunification arrangements work, which is important because we want the scheme to work. It is important to bear in mind that the money we are talking about—we have talked about the projects on which it might be spent and the opportunities that might be provided—comes from the accounts of bank customers. We need to make sure that in our enthusiasm and keenness to see that money flow through to good projects, we never forget that the process of getting it into the Big Lottery Fund should be done well. The Bill is an important step forward in resolving the debate on the use of money in dormant bank and building society accounts, and it will provide a good opportunity to develop youth services, financial inclusion and the social investment wholesaler. It is important, bearing in mind the source of the money, that we ensure that it is spent wisely, efficiently and well. That task will be entrusted to the Big Lottery Fund. All those who have an interest in the Bill, whether they are consumers, banks, charities or the Big Lottery Fund, will be well aware from the conclusion of our proceedings that we want not only to ensure that the scheme works properly, but to continue to scrutinise how it works to ensure that we get the best value possible from those assets.
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- 19:55
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- Mr. Martyn JonesLabour
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- I congratulate the Minister on the passage of the Bill and on the addition on Report of a review process. The Bill will mean more money flowing back into the hands of the public and important charities. Many of us had hoped for a much tighter check on the UK banking system and a mandatory scheme. I expressed my cynicism about the banking system and bankers in general in Committee and at other stages of the Bill’s consideration. I remind the House that in 2004, I asked the banks how much they had in dormant bank accounts. Six of them replied, saying that they had £419 million, while 16 did not—or would not—reply. Given that they are now talking about £250 million, there is a bit of a discrepancy, and I would like to know what has happened to that money. I let the Minister off too lightly in Committee when I said it was perhaps the definition of 10 extra years. On a back-of-the-envelope calculation, I do not think that that is true, because the banks had £400 million four years ago, and they have been going for perhaps 50 to 100 years in this country. I think that there is more money, and I hope that it will show up. I wait with interest to see which banks comply with the demands of the voluntary scheme. That is why I am grateful for the review procedure, which should give us some indication of the performance of the voluntary scheme at an early stage. I hope for a proportionate distribution of the moneys across the regions of the UK. The money could provide much-needed funding for community projects to help the many volunteers and organisations throughout Britain who work with young people every day. I look to the future of other dormant asset schemes, such as insurance funds, share certificates and gambling debts. I hope to work with the Treasury on legislation in those areas in the near future. The Bill is a good start, and I am proud to have had some small influence on its reaching the statute book.
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- 20:02
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- Mr. Jeremy BrowneLiberal Democrat
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- Most legislation takes several months to pass through all the stages in both Houses, and in the time that we have been talking about dormant accounts, the banking sector has changed beyond all recognition and we now have a rather large number of semi-dormant banks. Nevertheless, the legislation is important in its own right, and it is good that it was studied in such detail in both Houses. I pay tribute to those in the other place for getting the ball rolling. This is exactly the type of Bill that lends itself well to beginning in the other place because of the range of expertise available there and the fact that it is traditionally less partisan in its outlook than this Chamber. None the less, the deliberations we had in this Chamber and in Committee have been useful, and I congratulate the Minister on his constructive outlook and on seeking to be more accommodating than some Ministers have been on other occasions with regard to the provisions and proposals advanced by Members of other political parties and by those on their own Back Benches. I echo the sentiments of the hon. Member for Fareham (Mr. Hoban) in that I would have preferred some of the amendments made to the Bill in the other place to have remained, rather than seeing them removed in Committee, but the Bill has nevertheless been scrutinised in some detail, and my party, along with all other parties welcomes it. It is well-designed legislation that will, I hope, achieve the objective we all share. I echo the point made by other hon. Members that we should not forget that the money in question belongs to private individuals. They have chosen not to touch it, either wittingly or unwittingly, for a long period of time, but I do not want the state to regard it as its role to confiscate the money of private individuals. It was important that we made sure that there was detailed consideration of the provisions for reuniting people with their funds, and I am pleased that the Minister and others took those issues seriously. I hope that the review we have agreed on this evening ensures that, as it becomes a reality across the country, any problems in the legislation will be ironed out. Finally, the Bill’s objectives are entirely laudable, and all of us—looking around the Chamber, I see people from urban, inner-city constituencies and those who represent rural areas in far-flung parts of the country—see a need in our constituencies to ensure that young people are engaged by projects that stimulate them and that ensure that they can play a full role in society. I know that the Bill envisages money being spent in different areas, but there is a consensus that the main thrust of the legislation will enable more provision to be made for youth facilities. Anyone who plays an active role as a constituency MP will see the benefits of that. I am keen that the money should be additional. I know that it is hard to define in legislation what constitutes additionality, but everyone would feel that the legislation had not achieved its objectives if the money merely displaced projects already funded by the Government. Our deliberations have been positive and constructive. I hope that the scheme that is put in place is effective and that, sooner rather than later, our constituents will see the benefits of our deliberations.
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- 20:04
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- Mr. WalkerConservative
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- I would like to say how much I enjoyed serving on the Committee that considered the Bill. I spoke on Second Reading, I was on the Committee, and I am making a brief debut on Third Reading. The amounts of individuals’ money we are talking about are probably quite small, because people tend not to forget large amounts of money lying in bank accounts. I know that I have a couple of bank accounts—with the Chelsea building society and Barclays bank—from 20 years ago, with probably about £10 in each, and I am more than happy for that money to be put towards good causes. Although the amounts we are talking about are small in each individual dormant account—not in all, but in most—when we add them up, as the Minister did when he educated the House, we find that about £500 million is available to put towards good causes. Of course, the money does not belong to banks—they are its custodians. It belongs to people who have perhaps died or forgotten that it is there. If they or their executors do not intend reclaiming it, I see no harm in putting it towards good causes. It is a good and noble thing to give that money to good causes—alleviating poverty and helping young people get a foothold in life and a chance to make something of themselves. I am pleased that there will be a review in three years of the reclaim funds’ performance and the limited company in charge of distributing the money. That review may provide an opportunity to examine the performance of the Big Lottery Fund and perhaps to tweak things around the margins. I know that I have tried the Economic Secretary’s patience—I will not try yours, Madam Deputy Speaker—but if it is decided in three years that charity should get perhaps 5 per cent. of that money, it would be no bad thing. In responding to a point that the hon. Member for North Southwark and Bermondsey (Simon Hughes) made, the Economic Secretary referred to an ambitious timetable of implementation. We have waited so long for the Bill that he can afford to be a little cautious. Let us ensure that we get it right: if it is not ready to launch by the middle of next year, I do not believe that anyone would be too critical if we delayed it by two or three months. It is important to get it right the first time so that it carries the public’s confidence. If the Economic Secretary misses a June, July or August launch, he will receive no criticism from me.
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- 20:08
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- Simon HughesLiberal Democrat
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- The Bill is clearly a good measure, supported by all parties and improved during its passage through Parliament. I shall make one short, broad point and reinforce a specific point that I made earlier. While not taking assets from people against their will and always respecting the rights of private ownership that are upheld in documents such as the European convention on human rights, we are right to ascertain, as public policy, whether private assets can be used for the public benefit rather than not used at all. We have done similar things over the years. Mercifully, since the last war, we have released people who are mentally ill from asylums where they had been locked away for decades. They had something to give, and society has realised that people with mental illness can make a huge contribution. We have also realised that in the case of people with disabilities, who were often hidden away—
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- 20:11
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- Madam Deputy Speaker (Sylvia Heal)Labour
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- Order. I understand the hon. Gentleman’s general point, but he must now confine his remarks to the Bill instead of drawing analogies.
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- 20:11
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- Simon HughesLiberal Democrat
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- I was trying to steer close to the sort of thing that you would accept on Third Reading, Madam Deputy Speaker, but I shall steer closer to the Bill’s central point. It is amazing to relate, but if one is very rich, one probably has assets that are hidden away, which one does not think about. The Bill rightly provides that, though the moneys are private, if they have been forgotten and unused, there should be a facility to use them, even though they can be reclaimed. I want the fact that the Government have followed that route in relation to money in accounts to encourage them to be equally purposeful about other assets that are held privately—for example, land on brownfield sites or empty housing. I shall not go further, Madam Deputy Speaker. I simply remind the Government that they can be positive in a similar way about other matters.
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- Mr. Jeremy BrowneLiberal Democrat
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- Nationalise everything?
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- 20:11
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- Simon HughesLiberal Democrat
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- Absolutely not. My specific point, which is central to the Bill, is to do with the fact that we are having a bad year in Britain for violent youth crime. London has been especially afflicted, with more than 20 teenagers killed.
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- 20:11
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- Madam Deputy SpeakerLabour
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- Order. I understand the seriousness of the hon. Gentleman’s point, but I ask him to confine his remarks to the content of the Bill so that we can deal with Third Reading.
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- 20:11
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- Simon HughesLiberal Democrat
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- My point is absolutely about the Bill’s content, if you will bear with me, Madam Deputy Speaker. The Bill’s priority is for money to be spent on facilities for young people. The measure is important because it will allow the money to be used to deal with one of the major problems that has afflicted London and the rest of the country—the violence caused to and by young people. Many people will put the money that may become available—whatever the amount—to good use because they know the ways in which to prevent young people from going astray and being violent to one another. The Government should view the Bill not only as social or financial policy but as part of the immediate response to a problem that is endemic in all our communities. Out there, people are sick to death of the idea that youth violence cannot be tackled in our society. The Bill is a small mechanism for dealing with that, but it could be important. It is totemic about opportunities: a little bit of resource can turn around significant numbers of people in our community. An important consequence of the Bill will be more resources for all our constituencies, counties and regions, which will allow those who work to make youth violence history to feel more encouraged and better able to do their job. The Bill will therefore be welcome in my part of the world and this city. Question put and agreed to. Bill accordingly read the Third time, and passed, with amendments.
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