Previous Section Index Home Page

Simon Hughes: 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
3 Nov 2008 : Column 80
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.

Ian Pearson: 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.

Simon Hughes: 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?

Ian Pearson: 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
3 Nov 2008 : Column 81
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.

Simon Hughes: 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?

Ian Pearson: 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
3 Nov 2008 : Column 82
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.

Simon Hughes: 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


7.45 pm

Simon Hughes: 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.’.

3 Nov 2008 : Column 83

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.

Ian Pearson: 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.

3 Nov 2008 : Column 84

Simon Hughes: 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.

Ian Pearson: 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.

Simon Hughes: 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.

7.50 pm

Ian Pearson: 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
3 Nov 2008 : Column 85
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.

7.55 pm

Mr. Hoban: 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.

Next Section Index Home Page