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Clause 17 refers to distribution being made for,
That makes sense. But paragraph (c) refers to distribution being made,
There is an intriguing explanation of this in subsection (2), which states that a,
- “‘social investment wholesaler’ means a body that exists to assist or enable other bodies to give financial or other support to third sector organisations”.
Sadly, not being a draftsman or as clever as the Minister, I have no idea what that means. In fact, there is no explanation in the Explanatory Notes. Can the Minister explain what on earth a “social investment wholesaler” is in this context? It is absolute gobbledegook to me.
We all give the Government credit for the principles behind the Bill—the principle regarding dormant accounts is a good one—but the big question is how the money is to be distributed. We know it is going to go to the Big Lottery Fund, but why just to that fund? The Big Lottery Fund is an amalgamation of the New Opportunities Fund, the Community Fund and the Millennium Commission, and it has done quite well since it was set up by the
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Those distributing bodies are under real pressure because under the recent Olympic Lottery Distribution Fund order that the Government laid before the House, the Secretary of State is going to transfer £1.085 billion from the National Lottery Distribution Fund to the Olympic Lottery Distribution Fund between February 2009 and August 2012. This sum, as the order states, represents a previously agreed transfer of £410 million plus an additional £675 million. This will have a huge effect on both heritage and the arts. It begs the question: why are they not included on the list? Why is the money going only to the Big Lottery Fund? After all, their budgets are being squeezed. Their budgets are smaller than the Big Lottery Fund, which gets 50 per cent of all the money. I remind your Lordships that the Big Lottery Fund will probably distribute close to £700 million this year.
If one follows the chain through, it raises the issue of whether the Government are, in effect, allowing this money to go to the Big Lottery, and then money that would go to the Big Lottery is given to the Olympic Games. It is a circular motion. It begs the question of whether the Olympic Games are being bailed out in this way. I hope that is not the case. I hope the Minister will be able to say that he will not be coming before the House with any additional orders for taking money from the lottery.
On the previous lottery Bill we had arguments about prescription, specifying matters and additionality. I am delighted to see that in both Clause 21 and Schedule 3 those points are addressed and that we will not have to refight those arguments. I congratulate the Minister on succeeding, again, against the Treasury. But there is a concern because it has proven more difficult to ascertain whether the money given out by the Big Lottery Fund is additional. As we know, it has given money to provide hospital scanners and so on, some of which we believe should be part of normal expenditure.
I welcome the Bill although it does raise some questions. I am sure the Minister will answer them when he winds up. We will have an interesting time in Committee probing him on some of the details and checking that the directions the Government can give to the Big Lottery Fund on the way the money is spent does not allow them to control the distribution of funds. I hope that that is not the case. I look forward to the Minister’s response.
6.15 pm
Lord Shutt of Greetland: My Lords, I thank the Minister for outlining the purposes of the Bill. It has a fairly dull name for an incredibly exciting and life-enhancing Bill; I am an enthusiast for it.
I should declare my own position. For some years I have been a trustee of the Joseph Rowntree Reform Trust Limited; I am chairman, a director and a trustee of the Joseph Rowntree Charitable Trust. We are not
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It is now 11 years since I penned a pamphlet for Demos entitled The Building Society Bounty. I was concerned about the demutualisations that were taking place and, whatever the principles involved in whether it was right for a mutual to remain as it was or to be demutualised, my concern was whether it was right for a specific generation to pick up all the benefits of intergenerational equity that had been built up, often over 150 years or so. It was like the parlour game of pass the parcel; the music stopped and those who happened to have a pass book ran off with all the assets.
The Bill has limited aims. It is about gathering in, holding and spreading out to good causes. There is a definition of “dormant accounts” and a suggestion that they are accounts that have not been touched for 15 years. It has been suggested also that that is too long; that perhaps it should be 10 or 12 years. This has happened in other countries and we hope it will happen in the UK. I have read that in one country the period is three years. I do not argue with 15 years because it may be right. We could perhaps cope with 10 or 12 years but I am not going to argue that point.
We all understand that a big effort has to be made to reunite the dormant money with the rightful owner—that is only right and proper—and then, at the appropriate time, to transfer it to the intermediate agency, the reclaim fund. After weighing up the probabilities of a reclaimer appearing, the reclaim fund will transfer dormant money from large banks and building societies to the Big Lottery, or from smaller ones with under £7,000 million in assets to a local trust or foundation. That is allowed for in the Bill, but it is all voluntary.
There is not enough prescription in the gathering-in but there is too much in the spreading- out. There has been a fair period of consultation on the gathering-in, but some say there has not been as much consultation on the spreading-out as there might have been. The Government have looked at the position in Ireland, which is ahead of us in this work, and I have read and carefully considered the report of the Treasury Select Committee of the other place on the work it has carried out on this.
The Bill is too limited in scope. Before it was published, it was the draft Unclaimed Assets Bill; now it is the Dormant Bank and Building Society Accounts Bill. Is this just the start? It covers two specific areas: banks and building societies. However, in Ireland, post office accounts—equivalent to National Savings here—have been brought within the scope of the equivalent legislation, as were unclaimed life assurance policies two years later. What about shares and dividends? We should look at non-take-up following demutualisations. I have the latest figures for Standard Life, the Scottish
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Government savings are important. The Treasury estimates that there is just short of £1 billion in them. There should be a level playing field with the private and mutual sector. During the past four or five years, I have looked in detail at the Northern Ireland budget and kept my eye on the Ulster Savings scheme. It was closed by the Government in March 1997. I suggested four or five years ago that the unclaimed assets of that scheme should go to the Community Foundation for Northern Ireland, but was told that it was “too early”. However, I had to raise the matter again a few months ago, because it was the last time that the assets were in the Budget book before going off the edge. I received a letter from the noble Baroness, Lady Amos, who stated that the cash was not ring-fenced and that the balances had already been used to fund public services. She said that a few months ago, but I could have been told that four or five years ago. The Government have not been clear about that.
Pages 59 to 61 of the Treasury Select Committee’s report refer to what happens in the US state of Vermont, for which it lists 110 different categories of unclaimed asset. The Bill deals with two. The Bill makes provision for four orders and three regulations, plus sub-orders for Scotland, Wales and Northern Ireland, but why does it not make provision for an order to extend the provisions of the Bill to other forms of asset?
I turn to the definition of dormant bank and building society accounts. The Bill refers to 15 years—I could have been persuaded of 10 or 12, but I shall leave that aside for now. However, what about the starting point? Reference has been made to the voluntary Banking Code, which states:
“If you have money in a dormant account, it will always be your property (or if you die, it will become part of your estate). This is the case no matter how many years pass”.
However, the Banking Code was first introduced in 1992, which, amazingly, is 15 years ago. We are therefore talking about assets that, in terms of the Bill, were dormant before the Banking Code was introduced. The code followed the Jack committee and was established in 1992. What about earlier years? When did history start? The Halifax Equitable Benefit Building Society, the precursor to the Halifax, was started in 1871. In terms of the Halifax, is that the starting point?
I shall share with your Lordships an experience of my own. I found in a drawer a passbook for the Yorkshire Bank. The account was opened just after my wife and I were married. The book states that it was opened on 5 March 1966. I thought that it was mine, but it was my wife’s. There must have been a specific savings plan, because a few pounds were put in, then they were drawn out. There now remains, 41 years later, the princely sum of five shillings and
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I turn to the voluntary or compulsory nature of the scheme. What is in it for the volunteers? The British Bankers’ Association and the Building Societies Association say that they will be in it, but will they? How can we be certain? What about the overseas element? We know, for example, that the Bank of Ireland and the Allied Irish Bank are in business here in the UK. Has any dormant money there already found its way under the Irish Sea, or is it in a separate UK bank or subsidiary? What about overseas ownership? The demutualised Abbey National Building Society is now part of the Bank of Santander. Is the decision whether to join the voluntary scheme to be made here or in Spain? Similarly, the Yorkshire Bank is now Australian-owned. Other changes in ownership of banks and building societies, if they demutualise, can take place. Could banks volunteer now, then be taken over, and backtrack later?
Apart from the BBA/BSA indication, the only really persuasive issue is the comfort of indemnity via the reclaim fund. I shall not say too much about it—I understand the indemnity point—but I have one question for the Minister: does he have any idea of the generosity/caution ratio of the reclaim fund? The reclaim fund will have to say, “Yes, 15 years have passed and we’ve tried very hard, but we haven’t been able to reunite, but, you never know, something might crop up”. What will be the balance? To what extent will it be able to say, “Well, we think that we could put in 80 per cent”? Or will it be 60 per cent? Does the Minister have any indication of that?
On spreading out the money to the good causes and the main scheme, I was—as previous speakers have said that they were—surprised at the specific prescription of the money being provided for,
- “services, facilities or opportunities to meet the needs of young people ... or connected with ... the development of individuals’ ability to manage their”—
- “the improvement of access to personal financial services, or ... made to a social investment wholesaler”.
I asked myself, “Is there a problem here? Is it to do with the manifesto?”.
The Labour Party manifesto of 2005 said:
“There are many bank accounts that are lying dormant and unclaimed, often because people have forgotten about them or because the owner has died. We will work with the financial services industry to establish a common definition and a comprehensive record of unclaimed assets. We will then expect
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So there is not the precision there that is now in the Bill.
Bearing in mind the source of the money, the category about assisting the financially excluded is bang-on right, and there is no question of that. I would have expected housing to be mentioned, however. Think about what building societies were set up for. If Shelter could use a significant grant, that would be quite appropriate. Furthermore, although I am very much in favour of supporting youth, I would have said “youth and community”. We are talking about capital money—although there is no problem whether we are talking about capital or revenue, ultimately, in how the money is used. But you would not want a place to be built in a rural area that could be used only for youth when it was quite obvious that it could be used for the community more generally. It would be out of keeping with today’s thinking not to have a place that is multi-use.
I highly approve of the position for the second scheme, involving smaller banks or building societies, and that resources can be used locally. However, there is a problem. This is where I come back to the nine years that I put into the Community Foundation for Calderdale. In a place such as Halifax, the Halifax Building Society was, and HBOS is, an incredibly important part of the community. If you are looking for money from the private sector in a community whose major employer and institution is so huge, it can well be the first port of call. Under this scheme, if HBOS followed the BBA advice, it would have to sign up to the main scheme. There should be a compromise so that with organisations as big as HBOS, which clearly have an incredible local involvement but whose depositors, former members and shareholders are UK-wide as well, we balance the national interest in the incredible potential resource nationally, which is obviously beyond the local need, with the local need that is clearly still there.
In other words, we have a cliff edge in this Bill. We are told that there are 60 building societies, 52 of which are below the cut-off line of £7,000 million. I shall give a little case study of the Skipton Building Society. The figures are easy to cope with. That building society is based in Skipton, in the Craven area of Yorkshire. It has been a successful and progressive building society and is now number six in the list of building societies. Its asset base of £10.5 billion puts it in the top eight, and it is above the £7,000 million for the alternative scheme. Would the Minister agree that there should be a way of avoiding the cliff edge, so that there is an element of local generosity available? I happen to know that in Skipton there is a community foundation called the Craven Trust, which in my view would be particularly well placed to look after local money.
Number nine on the list of building societies is Derbyshire Building Society, with £6 billion. There is also a community foundation in Derbyshire—and again, that would be an appropriate body to use the money. There would be something wrong in my book if Derbyshire could benefit locally and Skipton and
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Earl Attlee: My Lords, I am grateful to the noble Lord for giving way. I am just wondering whether I will be able to have dinner tonight, or not.
Lord Shutt of Greetland: My Lords, the noble Earl has ample time for dinner. I believe that this is an important Bill, as I hope he does—and I hope that he stops and listens.
There are three ways for the smaller bank or building society to act. They could create or add to their own charity, or they could give to a community foundation, which now covers 95 per cent of the country. Indeed, they could have a discrete fund within the foundation. Or they could do nothing. They could say that by order the figure of £7,000 million could be raised. The Skipton Building Society, which gave evidence to the Treasury Select Committee of the other place, raised the issue with its members, and 88 per cent of its members believe that the money should not go in the direction of government. Half its members agree with the potential scheme. I suspect that many people would think that the National Lottery was somewhere near government—and this is an area in which we have to be careful.
On the Big Lottery Fund, as the Minister knows, since we have been here before, I have a preference for local and regional decision-making on grants. But if the local element is enhanced, perhaps the system as described could be right. There is a case for the Big Lottery, with its expertise in grant-making covering the national scheme. The Bill is clear in its transparency as to accounts. But I am doubtful of the name—the Big Lottery—being used for the money. Perhaps a new brass plate could be ordered, even if it is placed outside the doors of the Big Lottery, and perhaps rather than “dormant” it could refer to the “reawakened” fund, so that it is clear that these funds have not been raised from gambling, which is an issue that has been upsetting to some.
Finally, this is an important and exciting Bill. I return to the theme of a rich seam. Early calculations in Ireland were that there would be €3 million from the scheme, and €196 million came out of it in the first year. They were wrong by a factor of 64. Early estimates here are £450 million, on these very restricted proposals. If that factor were applicable here, the figure raised would be £28.8 billion in the United Kingdom. That is not a forecast—but it could be that £450 million is a little on the low side.
I look forward to the Committee stage in which we shall endeavour to improve, enhance and localise the splendid opportunities available in the Bill.
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6.39 pm
Lord Monson: My Lords, I hope to be relatively brief. While freely acknowledging the good intentions of its sponsors and supporters, I must confess to considerable misgivings about this Bill, specifically Part 1. Despite the safeguard incorporated in it designed to prevent the effective confiscation of an individual's assets, I none the less fear that de facto confiscation could sometimes occur in whole or, more likely, in part as the Bill stands. At the very least, it could involve individuals in unwelcome time and trouble when they finally come to discover their entitlement, particularly if they are old or confused, as may statistically often be the case by the nature of things.
There are many reasons why people may want to keep sums of money undisturbed in an account for 15 or more years. For example, they may not want to keep their rainy day nest egg in the proverbial sock under the mattress for fear of being assaulted or robbed in their home—an increasingly likely scenario, unhappily. At the same time, they may have a deep distrust of stocks and shares in whatever form. You and I would almost certainly advise anyone investing for 15 or more years to put their money into a selection of well-run unit trusts or, better still, well-run investment trusts standing at a good discount to net asset value. But there are many who would never entertain such a sensible proposal, in particular if they burnt their fingers over Railtrack or Northern Rock shares.
People should not be penalised for being suspicious, stubborn or unsophisticated. Moreover, someone who puts money into certain types of building society account for 15 years—accounts whose relatively high interest is earned in return for restricted withdrawals and substantial notice periods—is not necessarily being silly or irrational. Their funds may sometimes even keep or very occasionally exceed the rate of inflation.
Another aspect came to light yesterday evening in your Lordships' House when I briefly mentioned this Bill to a friend from overseas who was dining here. She told me of a Jewish acquaintance living in the near East who deposited a five-digit sum with a London bank and left it totally undisturbed for 20 years, just in case life started to become difficult for people of Jewish origin in their part of the world. One suspects there must be hundreds—perhaps thousands—of similar cases where members of potentially vulnerable political, ethnic or religious groups have transferred funds to the supposed safety of United Kingdom institutions as a contingency fund to keep their families afloat should things go wrong.
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