Dormant Bank and Building Society Accounts Bill [Lords]


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Tom Levitt: I am grateful to my hon. Friend, who has made a significant announcement. I hope that he will answer the other point that I raised earlier: the review must be able to achieve something. If it is dealing with a voluntary code established by a group of volunteers who are running the scheme, it is difficult to see what teeth the review might have to change the direction if necessary. I would not exclude giving the review the power to recommend that the scheme be made mandatory. I do, however, share his concern that we would not want to go back to primary legislation to implement whatever was recommended by the review. I welcome what he has said but it needs to be a review that can make changes that are necessary. I accept that a sledgehammer is not an appropriate tool to crack a nut; neither is a feather.
Ian Pearson: I agree with my hon. Friend. We should not commit to reviews and mention them in Bills, when they will be just exercises that take up administrative time and do not produce anything positive. I would expect the review to be a thoroughgoing analysis that would lead to action that produced change, within the confines of the legislative framework and the powers available to the Government through what will by then, hopefully, be the dormant bank and building society accounts Act. With that and the commitment that I have made in mind, I hope that hon. Members can support me in agreeing that clause 12 should not stand part of the Bill.
Question put and negatived.
Clause 12 disagreed to.
Clauses 13 and 14 ordered to stand part of the Bill.

Clause 15

Banks making transfers under section 2: information in directors’ reports
Question proposed, That the clause stand part of the Bill.
The Chairman: With this it will be convenient to discuss new clause 1—Building societies making transfers under section 2: information in directors’ reports
‘(1) Where—
(a) the directors of a building society are required by section 75 of the Buildings Societies Act 1986 (c. 53) (Directors’ report) to prepare a report for a particular year, and
(b) in that year the building society made transfers in relation to which section 2 applied,
the report must identify each of the charities concerned and specify the amount transferred to each of them.
(2) The requirements of subsection (1) are to be treated for the purposes of the Building Societies Act 1986 as requirements of that Act.’.
Mr. Hoban: New clause 1 stands in my name. Having further considered the new clause and the explanatory notes to the Bill, I feel that the new clause is sadly redundant, although it was very well drafted. What I do not understand—the Minister may be able to help me out—is why the provisions referring to building societies are not in the Bill, whereas those relating to banks are.
Ian Pearson: The situation is as the hon. Member for Fareham suggests. We believe that the new clause is unnecessary. The explanatory note on clause 15 states that the Treasury intends to amend the regulations—made under the Building Societies Act 1986—that deal with building society accounts and reports, so that they include the same requirement to report on participation in the smaller institution scheme. The answer to the hon. Gentleman’s question is that where a regulation-making power, under which the relevant provisions can be made, already exists, it is normal practice for that power to be used, rather than making a new power with primary legislation. That is why we are explaining what we are doing using that power, and that is why that detail is in the explanatory note rather than in the legislation.
Question put and agreed to.
Clause 15 ordered to stand part of the Bill.
Clause 16 ordered to stand part of the Bill.
Schedule 2 agreed to.

Clause 17

Distribution of dormant account money by Big Lottery Fund
Mr. Hoban: I beg to move amendment No. 29, in clause 17, page 9, line 17, at end insert—
‘(4A) Any grant or loan made under subsection (1) must not—
(a) replace or substitute for government or local authority expenditure;
The amendment tries to establish, in a not very elegant fashion, the principle that the money from the reclaim fund is in addition to Government spending. That is important. People whose money will be transferred from their dormant accounts to the reclaim fund and then to the Big Lottery Fund will want to know that that is not a substitute for Government expenditure, that it is increasing the resources available for youth services or for financial inclusion. There is no guarantee of that in the Bill. If the choice of the three causes in England had been different, the concern might not be relevant. The problem arises because there is Government expenditure on the provision of youth services, and councils already spend money on it. Financial inclusion is a significant priority not only for the Minister’s Department, but for the Department for Children, Schools and Families and the Department for Work and Pensions. I have looked at Government output and know that money is spent on this area.
I do not believe that any Member of this House would want to see the money that taxpayers contribute to financial inclusion drop from £12 million this year to £10 million next year because the Government know that £2 million will come in from dormant accounts. If an additional £2 million comes in, we want to see £14 million spent on that cause so that there is a boost in spending. I have not touched on the social investment fund in the context of additionality because I do not believe that the Government are currently providing that capital to a social investment wholesaler.
I hope that the Minister understands our concerns. Our argument is that, if this funding comes on stream part way through a comprehensive spending review period, it will be easier to check the additionality because the spending plans will be set out in the CSR. Given that the current CSR will expire at about the time this money comes on stream, it would be very easy for the Government to set their spending priorities taking into account the money that will flow from the scheme. With the amendment, we are looking for confirmation from the Government of the mechanism that they will use to ensure that the money is genuinely additional.
Another problem relates to the Big Lottery Fund, which will be the distributor. It does not give money only to voluntary organisations. That would be one way of ensuring that there were additionality. Having said that, there are even difficulties in that area because on the financial inclusion front some Government money goes to Citizens Advice, which is a voluntary body.
At the start of the CSR period, the Government could decide to reduce the amount of money that is spent in the affected areas in the knowledge that the business plan of the reclaim fund suggests that £10 million or £20 million a year may go to the three causes, as stipulated in the Bill. There is a concern about the additionality of this money and it was not satisfactorily addressed in the other place. Lord Howard tabled an amendment to try to achieve an end of this sort.
Kerry McCarthy (Bristol, East) (Lab): I entirely understand where the hon. Gentleman is coming from and I appreciate the intention behind the amendment. I am keen to ensure that there is no such element of substitution. Local authorities rightly make decisions on whether to fund new projects or carry on funding existing projects. It would be difficult to implement the amendment without tying the hands of local authorities and saying that they must continue to fund existing projects. If they withdrew the funding for an existing project, they would not be able to use the new money to replace it. I am concerned by the practicalities.
Mr. Hoban: I do not dispute the challenges behind this proposal. However, I do not want a situation in which a local authority decides to withdraw funding because it knows that money will come. That is why new subsection (4A)(c) in the amendment states that the money must not
“replace statutory funding that has been withdrawn or is in danger of being withdrawn”.
It would be easy for a local authority to decide not to fund a youth club, a youth group or a financial inclusion project in its area in the knowledge that it will be bailed out by the Big Lottery Fund. That is a challenge. The Big Lottery Fund currently gives money to local authorities that might in a way be substituted by some of the money that will come through the scheme. Additionality is critical to the Bill because people want us to spend more money on these priorities, not to substitute the money from dormant accounts for Government money.
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One of the original objectives of the national lottery was to try to increase the money available to community organisations and voluntary groups. That purpose has been diminished somewhat because money from the Big Lottery Fund goes to meet some Government priorities. There is a sense that if this creeps into the allocation of money from the reclaim fund, there will be no augmentation of the resources available: the same money will be spent but will be funded from different sources. We want some assurance from the Minister about how he believes the scheme will work in practice to ensure that additional money is found and this is not a substitute.
Mr. Field: My hon. Friend has got is absolutely right but I fear that the pass has already been well lost on this matter. Immediately after my hon. Friend succeeded me as the shadow Financial Secretary to the Treasury I had the joy of spending a year on the arts and culture brief, one of the elements of which was the National Lottery Act 2006. As my hon. Friend rightly points out, at the outset the national lottery was designed with four heads in mind: arts, charities, heritage and sports, as well as the millennium fund in the run-up to and immediately after the turn of the century.
The 2006 Act set up the Big Lottery Fund. There are some very good people working there. I cast no aspersions on their work, but there is little doubt that the whole issue of additionality and substitution was cast to one side by the Government at that time. Time and again we warned that setting up the Big Lottery Fund would move away from the initial heads for lottery funding. I fear that is precisely what will happen with the Big Lottery Fund taking over the issue of dormant accounts. It will inevitably be assumed that a certain amount of money will come from these dormant accounts each year and there is a worry that it will not therefore be additional. There will be an element of substitution, particularly when Government spending at local or national level is likely to be tight in the years to come.
The Big Lottery Fund, which now spends over half of the lottery funds that are distributed, does so according to one or two of the original objectives when the lottery was set up nearly a decade and a half ago. It also spends, as the Minister will be well aware, significant sums in areas such as health, education and other promotional elements, which would usually be expected to come from general Exchequer funding. The worry here is that there will not be that sense of additionality in some of the funding and some of the proposals that the Big Lottery Fund will have in mind in its distribution policies. I fear that by passing it on to the Big Lottery Fund, we will not be in any position to monitor it properly.
Tom Levitt: The hon. Gentleman will be aware that the Big Lottery Fund has always denied the Conservative party’s allegations of breaches of the additionality rules. However, there is an acceptance that a lot of Big Lottery Fund funding goes into partnerships that may involve statutory bodies, but that does not mean that the funding itself is not additional to that being provided through statutory measures. I believe that Conservative party policy would be to reduce that part of Big Lottery Fund funding which does not go directly into the so-called good causes—the charities. That would reduce by about 16 per cent. the money that it puts out. It would damage the partnership funding. I accept that on paper that may be a grey area, but does the hon. Gentleman not accept the undertakings and the assurances that the Big Lottery Fund has given that additionality is maintained in its actions?
Mr. Field: I do not entirely accept those undertakings. It is extremely difficult. The hon. Gentleman used the phrase “grey area”. I would use the phrase “muddying the waters”. It comes to the same thing. Clearly there is a level of uncertainty about whether funds will be additional. Given the difficulties we will face in relation to public expenditure and the difficulties at local government level with the various partnerships to which the hon. Gentleman refers, there will clearly be confusion. It is therefore important that we have this debate.
Mr. Hoban: I shall give my hon. Friend an example of that confusion. The Big Lottery Fund recently took me on a tour of projects in my constituency. One project was to provide funding to the borough council for play opportunities, which is a good example of the potential for problems. Would the borough council have spent money from its own resources on play opportunities or was it additional? That is where the problem comes from; once one starts to fund what could be seen as a statutory or a Government priority, one starts to lose the clarity about whether the funds are additional.
Tom Levitt: I do not know of an equivalent body to Home-Start UK. It is a magnificent organisation for the families that it helps. I conceded that there was a grey area, but I think that it is a small one and it is inevitable in partnerships with statutory funding and non-statutory funding. Does the hon. Gentleman accept that those partnerships and joined-up funding can be more effective in delivering socially advantageous programmes than they could be if the two were funded completely separately and never the twain should meet? Conservative party policy, by not funding partnerships, would make the Big Lottery Fund less effective in the way that it helps our communities.
Mr. Field: I do not accept that, although I do accept what he said before. Clearly, joint funding is often the most beneficial method for our constituents. The question is where that public funding should come from. The initial idea was that the national lottery would be a ring-fenced fund. I trust that there is a hope that the dormant funds will not simply be used to substitute funding from cash-strapped local or national Government, but will provide additional funding in the way envisaged in the clauses that we will come to shortly. I hope that the Minister will give some credence to what my hon. Friend has said. It has been worthwhile to put on the record that we have expressed some very deep concerns, not least because there is likely to be some confusion as the waters are a little muddied.
 
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