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7.4 pm

Mr. Richard Spring (West Suffolk) (Con): It is very good to follow the hon. Member for High Peak (Tom Levitt). There is clearly a particular Derbyshire interest in this subject. I also congratulate the hon. Member for Dudley, South (Ian Pearson) on his new role at the Treasury. I think that he combines it with his role at the Department for Business, Enterprise and Regulatory Reform, where I suspect, on balance, he will have more fun. However, we welcome him to his new role.

Like the rest of my hon. Friends, I fully support the motivation behind the Bill and I certainly welcome the spirit in which the Chief Secretary to the Treasury spoke about her approach to considering possible amendments in Committee. That is good for the purposes that lie behind this legislation. I wholeheartedly believe that allowing money in dormant accounts to be used to help good causes or to be reinvested in the community is completely the right thing to do, and it certainly has my full support.

The Bill follows a long period of consultation and discussion, which we heard about, between the Government and the banking sector, as well as with the Treasury Committee and the Commission on Unclaimed Assets, chaired by Sir Ronnie Cohen. There was much discussion during the Select Committee’s proceedings as to how the money should be directed, and there were a number of suggestions. It is worth looking at some of those that were put forward. The right hon. Member for Birkenhead (Mr. Field) and the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) suggested that the first claim on the unclaimed assets should be given to the victims of the wind-up of occupational pensions. The Prince’s Initiative for Mature Enterprise called for a focus on
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microfinance for the over-50s to enable more of that generation to start up businesses. Although many worthwhile ideas have been floated, I welcome and support the allocation of the unclaimed assets to improving youth services in particular, and to tackling financial inclusion and boosting social investment.

However, my hon. Friend the Member for Fareham (Mr. Hoban) talked persuasively about the issue of additionality, which was at the heart of what the original lottery legislation was all about. The point is that these areas are already funded by Government expenditure, and I should like the Minister to tell the House how this money will be spent differently from money already spent by the Government on new services. This is an important point, and we come back to the additionality factor.

When the Bill was debated in Committee by Members in the other place, Lord Howard of Rising mentioned that the Economic Secretary admitted in his evidence to the Treasury Committee that youth services had been underfunded for years—a point that I think is generally accepted throughout this House. However, that raises some question marks over the ability to guarantee that the revenue from dormant accounts will not be substituted for normal Government spending. I come back to the point that it is crucial that we all understand what the Government have to say about this issue. Can the Minister therefore tell the House what proportion of money in dormant bank accounts will be transferred to the Big Lottery Fund? If he cannot answer that question, is it wise to make specific commitments about the use of funds, such as those made on youth centres? I look forward to his reply.

Before this money is given to help these good causes, it is vital that there are robust measures in place to reunite owners with their unclaimed assets—a point that has been powerfully made by a number of Members today. I very much welcome the banking industry’s efforts to achieve that, which I believe to be absolutely genuine. That is all the more essential as this is a time when many families are under great economic stress, and the situation is getting worse. It is also crucial that once the liability is off the bank’s balance sheet, there is reserve in the reclaim fund so that it can still pay out to customers who come forward in future to claim their assets. That possibility has to be considered. The Government must continue to give an assurance that a balance will be struck between funding good causes and protecting the customer.

The British Bankers Association believes—we have heard many estimates—that that there is between £250 million and £350 million in dormant bank accounts. The Building Societies Association estimates that there is some £150 million in dormant building society accounts. Taking those figures together, we are talking about £400 million to £500 million in UK dormant accounts.

I would be interested to hear whether the Government agree with the Treasury Committee that banks’ estimates of funds in dormant accounts are more likely to be underestimates than overestimates. The Chief Secretary touched on that, but it would be interesting to learn a bit more about the Government’s evaluation of this matter after their consultations with the banking industry and the building societies. The House of Commons Library agrees with that assessment, because it believes that the scale of unclaimed assets


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The Halifax alone has £700,000 of unclaimed money for customers located in the east of England, some of which undoubtedly belongs to my constituents.

I am glad that many banks and building societies are now focusing their efforts on becoming more proactive in reuniting customers with their accounts. To take up the point that the hon. Member for High Peak made, this voluntary activity—the framework of this legislation—will work only if such a process materially takes place. We must monitor the situation to see whether a more statutory basis is warranted in future.

Last month, HSBC started to send out letters to its 17,000 customers who have unclaimed money in dormant bank accounts; the average amount in their forgotten accounts is £1,400. In the same spirit, Lloyds TSB announced earlier this year that it had brought in a search agency to track down the holders of 120,000 dormant savings accounts. A number of hon. Members have mentioned the website that provides a free service to help to trace lost accounts and savings. That website, which I have visited, brings together the three tracing schemes of the British Bankers Association, the Building Societies Association and NS&I into a single website, meaning that anyone who has a dormant or lost account with a bank or building society or NS&I, or with all three, can initiate a search simply by visiting the website. It is free to use, it averages more than 760 claims a day and I find it easy to access. I am encouraged by the progress that has been made in accelerating the process of finding the owners of dormant accounts. Following the consultations, I believe that the banks and building societies understand the importance of getting this issue right, and the House will welcome the fact that there seems to have been movement in that direction.

It is so important that the process of reuniting lost accounts and savings with their owners is kept under review and works effectively. It is essential that the effectiveness of the scheme and the amount that the banks have transferred for investment is constantly examined. If we are to have a statutory scheme, it is imperative that it is accountable to Parliament. Such a provision had been missing, so I was pleased that in the other place the Conservative party successfully amended the Bill to ensure that the reclaim fund sends specified information to the Treasury, which must then lay it before Parliament. I was also pleased that their lordships voted in favour of another amendment, which was sponsored by Baroness Noakes, to provide for a triennial review of the scheme’s operations.

It is also vital that the money passed on to good causes remains entirely separate from and additional to normal Government spend. As I mentioned at the beginning of my speech, the Bill’s objectives are entirely admirable, yet I am worried that the Big Lottery Fund has increasingly become insufficiently independent of Government. For example, the BLF has awarded about £1 billion in grants to statutory bodies such as schools, local councils and national health service trusts since 2004. In a March 2005 press release entitled “Healthy Food in Schools—Transforming School Meals” the then Education Secretary, the right hon. Member for Bolton, West (Ruth Kelly), unveiled a £280 million package to
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transform the quality of school meals. Despite the fact that more than a fifth—£60 million—of the money was coming from the BLF, the Government seemed happy to take the credit for that decision 36 days before the 2005 general election. That is not at all the spirit in which the lottery was founded or in which it should operate. Unclaimed assets should be used solely for the benefit of society; they should not be used to solve, even by implication, any short-term problem or to achieve what is considered desirable politically by any Government.

I would like the Minister to assure the House that all money given to the BLF from dormant accounts will go only to projects in the voluntary and community sectors, where it should really go. If the money is to be spent differently, what measures will be in place to ensure that the BLF does not duplicate Government spending? I simply cannot see how additionality will stay intact. Given the choice, no Minister will choose to spend money that comes from his own budget over money that will come from the BLF. I am afraid that such has been the pattern for a number of years. That is why money that has not come as a result of general taxation must be accountable to an independent body.

In passing, let us consider the composition of the BLF. There is an argument as to whether it should be the distribution body that implements the legislation. Over the years, a number of questions have been raised about the role of the lottery. If there is a change of Government after the next general election, we will introduce a national lottery independence Bill to free the national lottery from political interference by making the National Lottery Commission and the distribution bodies accountable to Parliament.

Martin Horwood: I have a lot of sympathy for what the hon. Gentleman is saying, because I recall exactly the same points being made two or three years ago during the passage of the National Lottery Bill. It was designed to do precisely what he is describing: to give the Big Lottery Fund much more independence from Government. I think that that Bill addressed that quite successfully, so there may be no need for any additional Bill. Does he agree that the problem is that the Bill before us tends to undermine that approach by, once again, giving Government the power to set strategic priorities for the BLF?

Mr. Spring: I am grateful to the hon. Gentleman for making that point, and I am glad that he agrees with me. People need to be assured that there is proper and discernable distance in these matters, and I return to the point of the national lottery’s creation. I was the shadow Minister when the national lottery’s purpose and function was changed after the 1997 general election. That had the effect of taking money away from the original good causes and, in retrospect, it was a mistake.

The assets under discussion in this Bill are clearly not Government money, so I see no reason why they should be distributed through a body that enjoys close relations with the Government. Another reason why I am concerned that the Government are proposing to give unclaimed money from dormant accounts to the BLF is that I fear the amount of money that can be passed on will be diminished by the BLF’s significant operational costs. This money should be going straight to charities, but instead of going to worthwhile causes, a proportion of
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the money—too much, in my view—will go towards paying salaries and administration costs. I would like the Minister to tell the House what proportion of these unclaimed assets will be diverted to administration rather then to helping young people and so on?

Tom Levitt: Towards the end of my contribution I pointed out that the BLF’s overheads are about 9.1 per cent., which makes it the leanest of all the lottery distributors. The hon. Gentleman cannot get around the fact that even if the Government or the banking industry were to do the distribution, there would be overhead costs. The evidence suggests that the BLF is the leanest distributor and, therefore, perhaps the most efficient and the best for carrying out this purpose.

Mr. Spring: The costs of salaries, administration and all the rest are too high, irrespective of what the hon. Gentleman says about the BLF. As the costs are high, we must consider whether there is a more efficacious way of distributing the money to the people whom we wish to help.

Lord Howard of Rising tabled an amendment in the other House to stop the BLF spending more than 10 per cent. of the funds it receives on administration, and this argument is most definitely worth examining. The national lottery distribution fund’s income for 2006-07 was more than £1.2 billion, 17.6 per cent. of which will never find its way to good causes—instead, it is used to fund the quangos that run the lottery. Administration costs for the national lottery distributors totalled £204 million in 2006-07 and the Big Lottery Fund spent the highest total amount—just under £77 million—on its operating costs. That represents more than 12 per cent. of the total value of grants awarded, according to my figures. In comparison, Scope and Children in Need spend 2 per cent. and 4.4 per cent. respectively, so this may not be the best way to proceed. The Big Lottery Fund employs 1,103 members of staff, compared with the Treasury which employs 1,170. The BLF distributes £630 million annually, but the Treasury distributes 500 times that amount, and—I have to say—it grows every day.

I support the Bill, but we need to consider whether the mechanism for distribution is the correct way forward. It is a substantial amount of money, which we may have underestimated, and Government spending may become more restricted. Our communities will demonstrate increasing need because of the economic situation, and we must ensure that the money will reach the causes that it is meant to reach in the most efficacious way possible.

7.21 pm

Mr. Brian Binley (Northampton, South) (Con): May I welcome the Minister to his new position? I hope that we do not burden him too much on his first outing. I look forward to seeing him appear before the Business, Enterprise and Regulatory Reform Committee, and I wish him well with his joint commission. It is good to see.

Like many others, I generally welcome this Bill. It will create a real opportunity to provide additional help in several areas that need greater attention, of which youth services are a particularly good example. I am happy to give it my general support, but—as the hon. Member for High Peak (Tom Levitt) said—we have to
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get it right. The big belt will come early on, because money will be collected from dormant accounts in which it has built up over a long time, and the amount that can be expected thereafter will diminish. That is one of my concerns, and I am sure that the Economic Secretary will wish to address it later.

Many of my other concerns have already been mentioned, but I hope to make some novel points. I am concerned about the administration of the scheme and its associated costs. The Bill does not help us very much with that concern, and I would like to know more. I am especially concerned about how the money will be distributed. Lack of scrutiny is also a concern. The Big Lottery Fund has come more and more under Government control, and we need to ensure that scrutiny is transparent and open to the general public. I am not sure that we have been told how that will be achieved. On the basis of the law of diminishing returns, the question is whether enough money will be available to meet the objectives laid down by the Government and to meet the promises that we might make about future funding to people who receive moneys early on.

The final concern is exactly how much money is lying in dormant accounts. The Secretary of State has rightly said that estimates vary massively. The British Bankers Association estimates the value of dormant accounts at between £400 million and £500 million. The Sun—and I leave it to the Economic Secretary’s discretion whether to believe its figures—says that the value is £1 billion. The spectrum seems to grow daily.

I rarely congratulate the banks, but they deserve our congratulations in one respect. Since the launch of the mylostaccount.org.uk website, many people have been rightfully reunited with the money in their dormant accounts. The number of people claiming for lost accounts has trebled since the website went online, with 760 claims being made a day. To date, 140,000 people have been helped, which is a sizeable effort by the banks. A cost argument was made by the hon. Member for South Derbyshire (Mr. Todd), who is no longer in his place, but that is not my point. My point is that that figure was achieved through use of a website, which is not the most costly form of distributing information. Perhaps we should ask why the banks did not do this before. The Economic Secretary might be able to tell me what conversations he has had in that respect and whether there is a case for the banks to answer.

NS&I has had more than 25,000 successful traces, amounting to £41 million of restored assets, and to date Halifax Bank of Scotland has reunited people with more than £18 million of dormant funds. HSBC has also made sizeable efforts to return funds. The banks are to be commended, but their efforts will detract from the amount that will be available in future years.

The success in tracing dormant accounts will have an impact on the estimates of the revenue that will be raised, and the Government have already said that money is to be earmarked primarily for youth services, among other projects. They also want to use the money for financial capability and inclusion services. My golly, if there was ever a good time to think about financial capability and inclusion, especially for bankers and the City, this is it. Given that, more money will need to be spent on the Government’s objectives.


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I especially welcome the boost for the third sector. Incidentally, I hate calling it the third sector; it sounds like something out of “Star Trek”. I prefer to call it the voluntary sector. We are promising a sizeable amount of money for some sizeable projects. At a fringe event at the Labour party conference, the Minister of State, Home Department, the hon. Member for Oldham, East and Saddleworth (Mr. Woolas), who was then Minister with responsibility for the third sector, confirmed that a financial institution to channel those funds “is going to happen”. That will involve further sizeable cost.

Under an amendment in the other place, building societies and banks with group assets of less than £7 billion would be able to distribute some of the money through their own community schemes. There are 59 building societies in the UK, many of them capable of taking up that offer, and many smaller banks will want to do the same, although pray God they survive the present conflagration of banks. The money will therefore add up to a sizeable amount. We must ask how much money will be available to meet the expectations that have been raised in the fields to which we have referred.

I am also concerned about the proportion of money that will be issued by the Minister, as I understand it, to England, Scotland, Wales and Northern Ireland. I hope that I will be forgiven if I say that I am concerned that the Government have that matter under their control through the Minister. I am sure that the present Minister is a most honourable person; I have no doubt about that at all. However, when I consider the way in which the revenue support grant has been used for political ends and the way in which the Government have shifted money to those areas that they consider their priority—it is not unnoticeable that many of those areas are where Labour Members sit, but I would not cast any aspersions about that—it raises concerns. It is fair to ask questions about the possible creation of greater concern about the proportionality of the distribution of the money. I believe that the Government should make a statement on the issue before the Bill is passed—I hope that we will hear something tonight.

I have talked about the money being considerably less than was expected, and I wonder whether the Government are not promising more than they can deliver. What percentage of the funds would be channelled into new projects such as those mentioned by many people tonight? Into what other areas might the money go? I am concerned about the differential between England, Scotland, Wales and Northern Ireland. I recognise the point about devolved government, but that is no reason to diminish our rights in the country of my birth and infant nurture, England. I fear that we might miss out again, and I do not think that my constituents would be overly happy about that. I could go on about many other issues, but they have been raised by other Members tonight and I would not want to test your patience, Madam Deputy Speaker, by referring to issues that have already been well rehearsed.


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