Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 280 - 299)



  Q280  Mr Fallon: I am here to ask questions—

  Ed Balls: Because I actually think that the unclaimed assets—

  Q281  Mr Fallon: — and you are here to answer them. You have explained that we can count all this money, but somehow it is not sitting in your account. Let us turn to the issue of disbursement.

  Ed Balls: I explained, because it is a reduction in the national debt.

  Q282  Mr Fallon: Let us turn to the issue of disbursement. Originally, it was proposed that a great chunk of this money would be spent on the Social Investment Bank. Sir Ronald Cohen gave evidence to this Committee on that a couple of weeks ago. It now looks as if you are going to spend more of the money on youth centres, financial capability projects, and the suspicion is, in fact, that you are topping-up the money that would otherwise be spent from the Lottery Fund, which has lost £675 million to the Olympics.

  Ed Balls: I am not sure I understood the premise of the question. At what point was it said that the money would be spent predominantly on the Social Investment Bank?

  Mr Fallon: That was the proposal by the Commission that Sir Ronald Cohen chairs.

  Q283  Chairman: He says it is £350 million over five years.

  Ed Balls: It is perfectly appropriate for Sir Ronald Cohen and his Commission to make proposals as they see fit, as to how they would like to spend this money. Believe me, there is no shortage of people who have ideas as to how to spend this money, and it would be much easier to spend the money if there was a lot more of it. However, I do not think that at any point the Government has said that its view, as opposed to the view of an independent commission set up in order to give its views—I do not think the Government has ever made such an indication. If you go back to the autumn of 2005 when the Government first said it wanted to move forward with a manifesto commitment, it said at that time that it believed there should be two priorities for the spending of resources: youth services and financial inclusion. In the consultation document which we produced a few weeks ago in May, which I am sure you will have seen, we said that while our starting point had been to spend the money on youth services and financial inclusion, we had now seen the Unclaimed Assets Commission document and we saw the case, if resources allowed, for making a contribution from unclaimed assets to supporting social enterprise. That, I think, will depend upon the outcome of the consultation here, the volume of resources and the views of the Third Sector and the social enterprise sector. There has never been, to my mind, any presumption that the money would be spent on the Social Investment Bank. In fact, the opposite: the starting presumption was that it would be spent on youth services and financial inclusion.

  Q284  Mr Fallon: We will get the bad news to Sir Ronald Cohen. That means, in effect—

  Ed Balls: I have spoken many times to Sir Ronald Cohen on this very matter, and I do not think he and I have any difference of understanding of this position.

  Q285  Mr Fallon: So, in effect, you are spending it on youth services, youth centres, youth projects which would otherwise have been funded out of the Lottery Fund, which you have raided to pay for the Olympics. In essence, Minister, you are robbing people's private bank accounts to pay for Olympic mismanagement.

  Ed Balls: With respect, we are not spending any money on anything at the moment, because we are consulting on the basis of primary legislation which in due course will allow us to release additional resources for youth services and financial education. I would say that that is a very good thing for us to be seeking to do. As for the Olympics, there is no suggestion, I do not think, and no reasonable case can be made, that we are diverting money from the Big Lottery Fund and trying to replace it through unclaimed assets. I do not think that is true at all. I think the Big Lottery Fund has been absolutely clear that not only will they maintain all their commitments, their existing commitments, but through to the beginning of the next decade will also retain the same share of resources going to Third Sector, social enterprise projects in their overall spend as now. So I understand that people make these allegations, because they see unclaimed assets and Lottery Olympics and think: "If we put the word Lottery together we can make an accusation". I think, if you dig into it, you will find there is not any substance in the accusation whatsoever.

  Q286  Chairman: Can I just clear up, then, in terms of the Social Investment Bank? Sir Ronald Cohen was clear to us when he came here that this was a Commission which was requested by the Government. They have suggested that to get the Social Investment Bank or to invest in poorer communities in the UK they would need £350 million over three years. He envisaged that coming from unclaimed assets. However, you are saying to us this morning that it will not come from unclaimed assets. That would suggest in our mind that the Social Investment Bank proposal is maybe not going anywhere. It is dead, in other words.

  Ed Balls: I did not quite say that, and I do not want in any way to be misinterpreted—

  Q287  Chairman: Then help us clear this up.

  Ed Balls: Sure. The Commission on Unclaimed Assets is independent of government. It was not set up at the behest of the Treasury, or the Government, as I understand it, but it has done some really good work and we were very pleased to talk to the Commission about the work which it has done. Indeed, while we started out with a position that money from unclaimed assets would be spent on youth services and financial inclusion, because of the work of the Unclaimed Assets Commission and their proposal in the Social Investment Bank, we have said, following discussions both with the Commission but, also, with the Third Sector, that we would add a third objective into our consultation document which is to support social enterprise. We say, though, that that will depend upon the resources which are available, the consultation and the detail of the proposals which may come forward. I think it would be quite premature at this stage to say that one particular institution is going to receive a certain quantum of resources in advance of any decision about—

  Q288  Chairman: The important point, from our Committee's point of view, is maybe to communicate to you that he was very clear that to get this thing off the ground, to have a starting chance at all, it needed £350 million over five years. Something like £50 million or £100 million just would not do at all.

  Ed Balls: I understand that—

  Q289  Mr Mudie: Minister, when—

  Ed Balls: Just to answer that question, if I could, Chairman. I do apologise, Mr Mudie.

  Q290  Mr Mudie: Accepted.

  Ed Balls: I understand exactly Sir Ronald's position. He wants to have a Social Investment Bank up and running, and he wants it to start with a sufficient endowment to be successful, and he wants some unclaimed assets money to go into that. I do not think that he thinks that unclaimed assets will be the exclusive funder of that institution, but he would like a portion of unclaimed assets. We started from wanting to fund youth services, and we will, and financial inclusion, but if the quantum of resources allow us to make a contribution to social enterprise, which could be in the form of a Social Investment Bank, we will. However, it would be quite wrong and impossible to come along at this point and say all the unclaimed assets money is going to go into this institution, because that would be to renege on a series of commitments, which we will not do. I think Sir Ronald knows that very well.

  Q291  Mr Mudie: Are you going to consult on what you are going to spend the money on?

  Ed Balls: We produced a whole document.

  Q292  Mr Mudie: You have not answered the question in either of them, on the question of disbursement. So I am just asking you: are you going to consult on what you are going to spend the money on?

  Ed Balls: We are consulting in detail on distribution—

  Q293  Mr Mudie: No, you are not. In both documents you have produced a page of questions, and not one of them is on disbursement. So I am asking you a question: in neither of your consultation documents have you suggested you are going to ask the public to give their views on how you should spend the money. Are you going to do so? It is a straightforward question.

  Ed Balls: From the beginning, our position has been that we will spend the money—

  Q294  Mr Mudie: Does that mean "No"?

  Ed Balls:—on youth services and financial inclusion?

  Q295  Mr Mudie: You have sent out two consultative documents—

  Ed Balls: We have a whole consultation here.

  Q296  Mr Mudie: No. Tell me in either consultative document where you ask the public to give their views on what the money is going to be spent on. It is not in them. So I am just asking: when do we get round to that stage of consultation?

  Ed Balls: The questions are very clear—

  Q297  Mr Mudie: If it is public money or if it is private sector money and you are not going to nationalise it, why do you take the decision on what it is going to be spent on? If you are going to be this even-handed: "Oh no, it's their money; we are not going to nationalise it. We are only going to bloody spend it!"

  Ed Balls: "Are the principles underpinning the distribution of the available surplus assets the right ones? Where is the greatest need for funding and finance for Third Sector organisations? What kind of activity should the wholesaler focus on?"[1] These seem to me to be the right questions to be asking. My sense, and you may have a different view, is that there is widespread support in the country for improving our financing of and provision of youth services. We all know that people want safer communities, but they also want decent places for young people to go. From the very beginning when the Government said—

  Q298  Mr Mudie: Genuinely, where do you think I get that sense?

  Ed Balls: From talking to your constituents.

  Q299  Mr Mudie: Are we at the stage of government where we can read the public's mind? Why, when you are raising £350 million, do you ask every other question but you are taking the decision on one of the key questions that the public will be interested in, on how the money is spent? Just let me ask you a question, and ask you "Yes or no?" You were very straightforward with Angela in replying to: "If the banks do not participate what will you do"—"Nothing". So you gave that blunt answer. Give us a blunt answer here—yes, or no. Are you going to have a public consultation on what this money is going to be spent on? Yes or no.

  Ed Balls: We are consulting on whether we should spend on youth services or financial inclusion, so the answer to that is no, we are not consulting on that; we are consulting on how to spend the money so that we can deliver money for youth services and financial inclusion. That was the position from the beginning. I think you will find there is widespread support for spending money on better youth services, and I would think in your constituency, as in mine and the constituencies of Members round the table, we all know that youth services is an area which has been under-funded for decades, and we should do something more about that. We could have decided to say there is an amount of money, have a broad-based consultation on what to spend it on, but that is not the road we have gone down. We have said from the beginning—

1   Note from witness: Quoting from Second consultation document, p35 Back

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