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My major point of concern is the Government having their hands on money on which they should not have their hands. Like many people in my home county of Northamptonshire, I have a healthy fear of the Government’s ability to spend my money and their money. I therefore want perfect clarity and transparency
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in how that money is to be spent. I fear that when Government projects go over budget—we all know that they regularly do—there is a temptation to find ways to ease money out of other sectors from which it perhaps should not be eased and to place it into areas that are, in truth, the Government’s responsibility.

I do not want to dwell too much on the Olympic games, but they are a particularly good example of how moneys that were not meant to be spent on such projects are now being spent in large sums. We were originally told that the Olympic games would cost £3.4 billion with a further £738 million coming from the private sector. That has grown to £9.325 billion with only—

Madam Deputy Speaker (Sylvia Heal): Order. I wonder whether the hon. Gentleman is now going to relate his remarks to the Bill that we are discussing.

Mr. Binley: I am grateful that you should direct me in that manner, Madam Deputy Speaker. The final statement that I was about to make was about the amount of money coming from the Big Lottery Fund to support the Olympic games. That is why the two earlier figures were relevant. It is estimated that 20 per cent. of the Big Lottery Fund’s money from between 2007 and 2013 will be spent on the Olympic games. I and many of my constituents certainly believe that that is an improper use of lottery fund money.

I raise that point in the hope that we will not see such behaviour with regard to the dormant funds of many honest and good people who have forgotten about them, died or moved elsewhere, leaving behind the money in the bank accounts that we need to take in this way. I call on the Minister to reassure us that that money will not be spent to prop up Government expenditure over the next three, four or five years, when the Government will be stretched.

I come to the end of my remarks, but I have one final plea. Enough comment has been made and enough concerns have been expressed tonight to make us wary and—to support the comments made by the hon. Member for High Peak—to make us dedicated to getting this right. I know the Minister to be an honest and fair man and that he will want to achieve the same outcome. I hope that he will tell us as he sums up how he might achieve that and how the Government might act in Committee to meet many of the concerns that have been raised this evening and to prove conclusively to the British people that the measure will be a fair and honest way of spending money from dormant accounts and to use it rightly for good ends, rather than to support the Government at a time when their own financial concerns are under immense stress.

7.36 pm

Mr. Charles Walker (Broxbourne) (Con): It is wonderful to be back after a long summer recess, and thank God we are back. Let us look at what happens when the House goes into recess for 10 weeks: Russia goes to war, there is a global banking crisis, stock markets are routed and inflation hits 5 per cent. The nation can breathe more easily now, because we are back. Parliament is back and those troubles will be quickly put behind us.

Let me make a serious point. When we started the debate a number of people asked whether, given the problems in the financial and banking sectors, this was the right time to have the debate and whether we should
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not focus on more important and pressing matters. On reflection, this probably is the right time to have the debate. We cannot allow the ongoing banking crisis to dominate everything we do in our political lives, because the world goes on. I am more than happy to have this debate today.

The fact that we have to raise such concerns about whether we should be having the debate is testament to the fact that we have an incompetent banking sector that has overextended itself in a number of ways with other people’s money—a bit like the Government, in fact, although it would be churlish to continue down that line. Every cloud has a silver lining, though. When I left here in July, as a politician I belonged to the most hated profession in the country. I came back as a member of the second most hated profession in the country, because we have been replaced by investment bankers. I am slightly grateful for that.

Let me be serious. It is important to recognise that the money that we are discussing does not belong to the banks. It is deposited in banks at the moment but it belongs to people who have forgotten that it belongs to them, who have died or who have simply failed to use their bank account for a number of years. I recall at least one building society account and one bank account from my early teens that I no longer use. One is with Barclays and one with the Chelsea building society, but there is not a lot of money in either—there was, I think, about £10 in each one when I last looked 30 years ago.

We need to discuss sensible measures for the long-term use of this money. I have been slightly confused by the numbers discussed today. Some people have said that the figure is £500 million, while my hon. Friend the Member for Northampton, South (Mr. Binley) told us that The Sun had scandalously said that it could be £1 billion. My researcher said that it is somewhere between £15 billion and £20 billion, according to the unclaimed assets register in 2007. I am sure that he has a great future as an investment banker, taking £1 and leveraging it 30 or 40 times. However, a vast sum is involved, and perhaps a lot of the money on the unclaimed asset register lies in different places outside people’s bank accounts.

There is a good argument to return the money to the community. I am sure that local communities can put it to better use than the banks can. My word, if they could not do that, they would be in trouble. With the greatest respect, they can probably put it to better use than the Government can. As one of my hon. Friends pointed out, the Government spend £500 billion or £600 billion a year, so even if the sum is £1 billion or £2 billion at the high end, it is but a fraction of what the Government spend. Nevertheless, it is still an enormous sum that can make a great deal of difference to a huge number of people.

Of course, I would very much like young people to benefit from that cash. We have a number of issues with youngsters, many of whom are absolutely wonderful members of the community, but many of whom need a good deal more time and care spent on them to ensure that they have the opportunity to live out happy years as youngsters and to grow up into productive members of society. Many organisations—the Sea Scouts, the Scouts, the cadet forces and so on—do wonderful things with young people and have a proven template that works, and they could put the money to good use.
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Many community facilities could receive investment. Young people have lots of energy that they want to get rid of, and that energy needs to be channelled. A number of boxing clubs around the country struggle for funding, year on year, but they are very good at diverting youngsters from the street and possibly from a life of crime. All those things are good.

A number of hon. Members have also pointed out that charities have some claim to the money. It would be fantastic if some of the money went to hard-pressed charities. After all, about one in seven people make a bequest to charity in their wills. Of course, the cancer charities, such as Cancer Research UK, do a fantastic job. They help tens of thousands of families, and they raise tens of millions of pounds to alleviate suffering and find new cures. However, on the whole, cancer charities are well funded; they have high levels of public awareness. Now, in the run-up to world mental health day, it would be wonderful if some of the less glamorous charities that struggle to secure funding could find a way to access the money. I leave that with the Minister to reflect on.

I served on the Committee that considered the National Lottery Bill and went for the Big Lottery Fund. I have met representatives of the Big Lottery Fund, which is full of bright, capable people, but I am not sure whether “big” is the right word to use; it is a sort of slightly smaller and ever-shrinking lottery fund. Trade descriptions officers would probably have a few concerns about the use of the word “big”. It is a bit like buying cereal at discount retailer. It is very cheap, but it is called luxury cereal to make it look attractive. The Big Lottery Fund is being rather over-egged as a vehicle to deliver the money. Too much of what the fund does involves replacing expenditure that should come from the Government.

I would be extremely concerned if the money just went to fund more things that should be funded by central Government. My constituents in Broxbourne, like those of my hon. Friend the Member for Northampton, South, would be very concerned to think that money, which could make a once-in-a-generation difference to young people in their community and to charities that serve their community, was somehow siphoned off to fund expenditure and projects that most people think the Government should fund. Again, I have tried to raise that issue in a non-partisan way, and I hope that the Government will take that concern on board.

I should just like to have a little dig at the banks—why not? I would be foolish to let this opportunity pass, to be honest. To be fair, we have heard a lot of Members say today, quite rightly, that the banks have been good at tracking down the people whose accounts have fallen into disuse and repatriating the money to the original depositors, but it took the banks rather a long time to get to that stage. We wonder what they have been doing for the previous 20 or 30 years.

I might have heard wrong, but I understand that some of the money may go towards making people financially literate—educating them about bank accounts and borrowing—and the banks have a lot to fear from that. They have made a huge sum over the past 10 years by playing off people’s lack of financial literacy. They have ruthlessly pushed self-certification mortgages and people borrowing far more than they can pay back—five or six times their earnings—and they should hang their
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heads in shame. Of course, we must all take responsibility when we borrow money, but the banks have been pretty shabby in their behaviour.

Finally—I hope that this point does not take me out of the bounds of the Bill, Madam Deputy Speaker—the banks simply refuse to serve many communities. They have no interest in serving them, because they do not believe that there is any profit in doing so. We have heard that banking is a low-margin business. Banking is not a low-margin business. The margins in banking are very good, and one has only to look at the banks’ profits to realise that that is the case. The reason investment banks are in trouble is that they got very greedy, and a number of retail banks got very greedy as well. If the money goes towards educating people about the risks of over-extending themselves, that is a good thing. If that has an impact on the banks’ ability to make profits from the most vulnerable people in our society, that is an even better thing.

7.46 pm

Martin Horwood (Cheltenham) (LD): I rise to defend the good name and judgment of mutual building societies and, in particular, the Lords amendments that seek to allow the largest of those building societies to exercise their judgment and to follow the priorities of their members, rather than those of the Government, in distributing some of the funds that we are discussing tonight.

I claim two qualifications for speaking this evening. As Member of Parliament for Cheltenham, I am, perhaps slightly unexpectedly, the local MP for the Chelsea building society’s headquarters. I could not speculate about why it went up-market and ended up in Cheltenham, but I am glad that it did so, as it has been a welcome contributor to the community in Cheltenham and a responsible and ethical presence in our community. I am one of the few hon. Members who has successfully won funding by applying to the national lottery funds and bank and building society foundations in my earlier career as a director of fundraising for a national charity. So I have had experience of the funding processes of both sides, and I shall return to some of that experience later in my remarks.

It is rather a topical time to debate these issues, particularly the status of the mutual building societies. It is all very well for the hon. Member for Broxbourne (Mr. Walker) and other Conservative Members to decry the greed and irresponsibility of the banks, but the Conservative party is rather a fickle partner in that respect, since it has been absolutely in love with the banking sector and some of the more exciting practices of, for instance, the demutualised building societies for many years. It obviously encouraged that process when in government. It is telling to note that we have now witnessed the final demise of all the demutualised building societies. They have all either crashed or been swallowed or nationalised. We have none left, but we have a relatively healthy mutual building society sector, which, thankfully, is still with us. The mutuals still have tens of millions of members and £150 billion-worth of assets, and they are one of the healthiest sectors of the financial services industry, with loans overwhelmingly backed by retail savings.

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We ought to listen to the large mutual building societies. They have concerns about the direction of the legislation, and those concerns were reflected in the Lords amendments. In the Bill, there is a £7 billion threshold above which banks and building societies would lose control of the funds. Funds above the threshold would be handed to a reclaim fund that would be administered, ultimately, by the Big Lottery Fund. The amendments proposed in the Lords removed that threshold for building societies and allowed larger building societies, but not banks, to administer those fund through their own charitable foundations. That was a good thing. I am afraid that I was disappointed by the Chief Secretary to the Treasury’s opening remarks, in which she suggested that the Government would try to overturn those amendments. I hope that the Economic Secretary to the Treasury and his colleagues will think twice before fighting that battle, because they would be quite wrong to do so.

After all, what is the difference in principle between a building society that has more than £7 billion-worth of assets and one that has less than £7 billion-worth of assets? There is no difference apart from size. Both are mutual organisations that exist for the benefit of their members and that have exercised good judgment in doing so; £7 billion is a completely arbitrary figure to choose. As I pointed out in an intervention, the Chief Secretary to the Treasury rather misleadingly implied in her opening remarks that we were talking about the stratospheric, top layer of the building society market, and that most building societies would still be able to administer their own funds. Of course, that is true in numerical terms, but in terms of the assets, the 80-20 rule applies. Some 83 per cent. of all building society assets are controlled by the seven top building societies.

We need to examine the Government’s rationale for trying to remove the right of building societies to administer funds that are made available from dormant accounts. That will tell us a lot about the Bill. Perhaps the Government think that the Big Lottery Fund will be a more efficient, more expert and more supportive funder than the building societies’ own foundations. I have to say, from my experience as a charity fundraiser, that the reverse is true. The lottery funders, through no real fault of their own—it was more the fault of the way in which the original legislation was designed—had to administer a pretty bureaucratic, awkward system, from which most charities found it a bit of a nightmare to extract money. In contrast, bank and building society foundations such as the Lloyds TSB and the Nationwide and Chelsea building societies foundations have extremely good reputations in the voluntary sector. They are able to administer funds wisely, and as hon. Members have said, the fact that they look to some of the less popular, more difficult causes earns them a lot of praise in the voluntary sector.

Perhaps the Government thought that there was a higher rate of dormancy among large building societies. Again, I am afraid that the reverse is true; building societies generally have higher average balances and therefore a lower rate of dormancy overall. The statement might apply to the large banks, but it certainly does not apply to large building societies.

Perhaps the Government thought that they are better judges of how the money should be spent, because of their strategic plans. That brings us back to the issue of independence and additionality. I am really disappointed
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by the fatal words in clause 23(3), which do a lot to undermine the good work that the Government did—I am happy to give them credit—during the passage of the National Lottery Bill only three years ago. That Bill sought to address the issue of the mistreatment of some of the lottery funds. That mistreatment had given lottery funders quite a bad reputation. One need only think of the way in which the New Opportunities Fund was set up; on one notorious occasion, funding announcements were made by a Minister at a Labour party conference. There was the school meals episode, in which the Government awarded hundreds of millions of pounds not from their funds, but from lottery funds. Those are examples of exactly the kind of practices that the National Lottery Bill was designed to prevent. It was a good piece of legislation that enjoyed all-party support. It should have tackled the issue and made unlikely any further Government intervention. However, clause 23, entitled “Directions to Big Lottery Fund”, has the fatal phrase:

It is sad to read those words in the legislation. They begin once again to undermine the independence of the lottery funders. The funds are no more the Government’s than any other lottery funds ever were.

In the case of banks, money from dormant accounts is, in a sense, the property of the original bank account holders, but in the case of building societies, it is certainly the property of the members of the building society. It is unfortunate that the Government should seek to exercise their control by means of strategic plans on how the money should be spent. I am perfectly happy to accept that youth services, for instance, are underfunded; they have perhaps been neglected in previous years. However, that does not make it right for the Government to start rewriting the rulebook on how lottery money is spent.

Perhaps the Government thought that there was no difference in kind between banks and building societies. However, the legislation accepts that there are different kinds of accounts. Perhaps the Economic Secretary would like to explain why National Savings & Investments is exempt from both the £7 billion rule and the legislation as a whole. It is regarded as different and special. I would say that the mutual building societies are different and special, in that they have an obligation to serve their members. The money is, in a real sense, not the company’s property but the property of its members. It has a duty to its members, and not to any shareholders who could be suspected of ulterior motives by the Government. There is an important difference in kind, which is rightly reflected in the Lords amendments.

Perhaps the Government think that the big building societies are somehow less able to manage, account for and distribute funds than the Big Lottery Fund or the Government. Once again, the reverse is true; almost all the large building societies have already set up an infrastructure that has a very strong reputation when it comes to accounting for, recording and reporting the use of charitable funds. Their established charitable foundations are a well-established, highly respected set of bodies that are very good at administering charitable funds.

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We are left with only one obvious explanation why the Government should seek to apply the £7 billion threshold to building societies as well as banks: the Government must have some political reason for bolstering the Big Lottery Fund. Perhaps there is embarrassment about the underfunding of youth and other services that they now seek to support. Perhaps they are embarrassed about the use of lottery funds to subsidise the Olympics. However, I urge them to resist their command-and-control tendencies and those slightly Stalinist inclinations that have characterised so much new Labour legislation. I ask them to step back and recognise the importance of the independence of the mutual building societies, and of the Big Lottery Fund, and to trust those bodies to stand up to political interference and to administer funds wisely, as they have done with regard to many hundreds of millions of pounds over decades. The Government should take this opportunity to dispel any suspicions. I very much hope that the Lords amendments will stand, and will not be removed by the Government. If the Government take the path that I suggest they take, they will have my full support.

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