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If, therefore, it is accepted that some people have subjectively valid reasons—even if sometimes cranky reasons—for keeping money undisturbed in banks or building societies for decades, how will the Government protect their interests?
It is claimed that Clause 2(2)(a) will do the trick: provided the account holder instructs the bank or building society not to communicate with him or her concerning the account, it will not be reclaimed. But most sane account holders will positively want to be communicated with once or twice a year with statements showing the opening and closing balances
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What about interest? A small current account will earn no interest; a larger one a fairly derisory rate. But a well-chosen building society account could earn on average 5 per cent gross or 4 per cent after 20 per cent tax. Compounded, that would increase a £5,000 deposit to £7,400 after 10 years. Will an individual whose £5,000 in a dormant building society account has been switched into a “reclaim fund” in 2008 be able to claim back £7,400 in 2018 when he suddenly reappears from some distant part of the world? If not, this surely constitutes partial confiscation of his or her assets.
Will the Minister assure the House that under no circumstances will there be attempts to extend the provisions of this legislation to the Channel Islands or the Isle of Man? If one or more of the legislatures of those territories decides to do so of their own free will, all well and good, but there should be no arm twisting.
6.46 pm
Viscount Eccles: My Lords, I, too, will try to keep my remarks short. There are two schemes in the Bill, as has been pointed out. There is what you might call the general or public sector scheme, which is much the bigger part of the available money, and the alternative scheme. The general scheme is bureaucratic and complicated. The alternative scheme is very simple. In fact, you only have to look at the space given to the alternative scheme in the Bill to see that it must be simple, but it would come out with a much more diverse funding than the general scheme, which is constrained.
The Treasury Committee report that came out in August concentrated on consultation. The Committee took a lot of evidence—from the NCVO, the Charity Bank and the British Bankers’ Association, which has been referred to, but interestingly not from the Big Lottery Fund as far as I could make out. In conclusion 15, which is on disbursement, the report states:
“We regret the Government's decision to make its choices on funding priorities without meaningful prior consultation with relevant stakeholders”.
The Government's reply, which has already been given to us by the Minister, was, “Well, we said what we were going to do in the Pre-Budget Statement of 2005. That was our decision and our minds are made up”. That is the first “given” in this situation.
The second “given” is the arrival of the Big Lottery Fund. That is wrong in principle. If you are going to support the third sector, you do not come up with a public sector solution. It is the wrong way to go. That leads me to say that I entirely agree with the noble
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Big is also wrong for practical reasons. These moneys are too small to make much difference to its operations and likely to remain so on the figures given by the Minister. The Big Lottery’s level of activity is shrinking at the moment, which gives it a major management challenge. It paid out grants in 2005-06 of £900 million. Its income the following year was £640 million. Clearly, that will not support the continuation of £900 million of disbursements. Its commitments in 2006-07 were £400 million, which is a reflection of the fact that, whether as an intended or unintended consequence of the Olympics, the Big Lottery Fund has to reduce its operations drastically to meet the prospective funding from lottery funds. The last figure is less than half the first—£400 million and £900 million respectively.
What has been happening at the same time to the Big Lottery Fund’s costs? The answer is that they have continued to rise. The Minister referred to running costs. They have risen from £72 million in 2005-06 to £77 million in 2006-07. This leads to awful ratios. Their ratios are quite out of order. If you look at the Wellcome Trust, which has been referred to, or the Gatsby, which the noble Lord, Lord Sainsbury of Turville, is very much involved in, the Esmée Fairbairn or any of the other big trusts, you will find that on balance the ratio of costs for administering their funds and making grants vis-Ã -vis the grants themselves is about half that of the Big Lottery Fund. That leads me to wonder what is the sustainable level of Big Lottery Fund grants, given its own original statement and given more recent statements.
The Big Lottery Fund’s own report published in July states—in a joint introduction by the chairman and chief executive—that it,
But in fact its disbursements have already fallen. They were 900; last year they were 750. What will they be this year? Is it not risky to put another responsibility on to the Big Lottery Fund when it already has major issues to deal with?
As regards my next point, I support my noble friends Lord Astor and Lord Inglewood. My noble friend Lord Inglewood would have made this point if he were present. However, he has a family commitment and the timing of this debate has meant that he is unable to be present. As noble Lords know, he was the chairman of the committee that looked into whether works of art should be exported. He has said on many occasions that if only £25 million a year had been provided over the last few years, many works of art would not have gone abroad. He wanted to draw the Minister’s attention to that as a good cause. If additional money is to be provided, could not that cause be supported. Other witnesses have suggested that there should be a much more diverse
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The Government should think again. Are they stuck with the 2005 decision or could they be a bit more imaginative? What do they consider the original depositors would think about most of their money going into the single stream that is proposed by the Government? As regards the alternative approach, it is not difficult to raise the £7 billion ceiling; in fact, I believe that the Bill provides for a regulation to do just that. That would give us much greater scope. If the scheme were voluntary and private, I think that many more of the institutions that have potentially dormant assets would become enthusiastic about it, whereas I fear that if they think that the scheme is government controlled and that the disbursements will also be controlled by the Government through the DCMS and the lottery fund, they will not want to join it with anything like the same enthusiasm.
6.54 pm
Lord Tope: My Lords, like, I think, all other speakers in the debate thus far, I welcome the intentions of the Bill, if not necessarily the way that they are to be fulfilled. As my noble friend Lord Shutt said, this is an untapped seam. As he also demonstrated, the seam that could be tapped is very much larger than is covered in the Bill. So I join him in wishing that it was not as prescriptive as it is, and hoping that before too long—I hope during its passage—it will become less so.
I was also a little surprised that the Government have chosen to put quite such a prescriptive measure in Clause 17 with regard to England. I say straight away that I very much welcome the provision for youth. Like many other services, youth services have suffered greatly during the years of restrictions on local authority budgets. However, I wonder why it was necessary to be so prescriptive. I again agree with my noble friend Lord Shutt—it is always a good idea to agree with one’s Chief Whip—that it would be better to refer to youth and community purposes in that regard.
I want to concentrate my remarks on the distribution mechanism proposed in Part 2. I ask the Minister specifically why the Government have chosen the Big Lottery Fund as the distributor. In saying that I make no criticism of the Big Lottery Fund, the way it does its job or the decisions that it makes; my criticism, if there is any, is directed at the Government, not at the Big Lottery Fund. As a matter of principle, is it now government policy that all money not drawn directly from taxation should be distributed by national non-departmental agencies such as, in this case, the Big Lottery Fund? If this is a point of principle, we should be clear about it, or is there some other reason why this is happening? I ask this particularly in the context of the work that another arm of government has been doing to develop local strategic partnerships—LSPs in shorthand—and the new process for funding them that is about to be introduced through local area agreements, usually known by the acronym LAAs.
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At this point I must declare my own interest. I am a member of the local strategic partnership board in the London borough of Croydon, on which I represent the Metropolitan Police Authority, and of the local strategic partnership board in the London borough of Sutton, on which I sit as the executive councillor for community safety, leisure and libraries. So in both cases I have a very real interest—although not a pecuniary one, I hasten to add—in what is proposed here and in the opportunities that it gives.
These local strategic partnership boards are statutory bodies and exist in all parts of England. They bring together on one board and in one place all the statutory bodies in that area—the local authority, the police, primary care trusts, learning and skills councils, Jobcentre Plus, and, most importantly, the business sector, the voluntary sector and the community sector. They are brought together on one board and their role is to work together to agree the priorities for their area and to address in partnership how those priorities will be achieved. Those priorities are then reflected in the local area agreement, which is agreed with the relevant government regional office. The Government have just revised their method of funding these strategic partnerships into a new process based on identifying improvement targets for the area, drawn from the new national indicator set, as published in the Comprehensive Spending Review. Alongside the new local area agreements, local strategic partnerships will be given a new single pot area-based grant from government. This brings together a number of specific grant-funding streams previously received by the partner agencies as specific grants. Then the local strategic partnership—which I again stress includes as very real partners the voluntary and community sector—will decide locally how those funds are distributed in accordance with the priorities that have been set locally.
The context of my question is that this new mechanism created by government, which involves all the relevant players in a local area, would determine how funds are distributed to meet locally determined priorities. Why is that not an appropriate mechanism to deal with the funds released through unclaimed assets? Why do we have to go through the process of setting up a whole new regime?
Did the Government specifically consider using local strategic partnerships and this new mechanism as the distribution mechanism? If so, why was it rejected? I think it is probably conceptually impossible that the Government would not know what another arm of government was doing, but if they did not consider it, why not? The decision seems at odds with the clear leadership role for local authorities envisaged in Aiming high for young people: a ten year strategy for positive activities, published jointly by the Treasury and DCSF as recently as July of this year. Paragraph 4.22 of that publication states:
“The investment of unclaimed assets from dormant bank accounts offers a once-in-a-generation opportunity to stimulate more visionary and ambitious thinking about what can be achieved through partnership, co-funding and putting young people in the lead. The Government wants to see a network of high-quality dynamic and attractive places for young people to go that reflects circumstances and uses existing provision, such as community buildings, libraries and art centres”.
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It continues at paragraph 5.18:
“Local authorities need to play a strong leadership and coordinating role, working with a wide range of local partners from the statutory, third and private sectors to provide high quality services for young people”.
That could not sound more like a role for the local strategic partnership. All that is missing is any reference to it. So why does it not feature in the Bill?
The briefing from Barnardo’s, under the heading “Local ideas to meet local needs”, states:
“In order to have maximum impact on communities, the funds from this scheme should be targeted at projects that are responsive to the needs and priorities of communities”.
Who is better placed to judge that than the local strategic partnership in which all those interests are represented, including—I say again—the voluntary and community sectors? Barnardo’s goes on to say:
“Local and regional knowledge is essential in targeting resources to have the most impact by designing and delivering services to meet local need”.
Why is a national agency like the Big Lottery Fund—albeit through its regional offices—better placed to determine that than the local strategic partnership board? Later on Barnardo’s states:
“We also believe local organisations and individuals are often best placed to advise on the overall impact projects may have on communities, providing information on how well proposals would complement others in their areas”.
Again, the local strategic partnership is clearly best placed for that, but there is no reference to it in the Bill.
As I said at the start, I intend absolutely no criticism of the Big Lottery Fund or its work; my questions are to the Government and about their decisions. I understand that 80 per cent of responses to the consultation supported the Big Lottery Fund; and I understand why. Was the new and developed role of the local strategic partnerships, and particularly the new funding regime, which is about to come into existence, part of the consultation? I think probably not. Even among the 80 per cent who supported this, concerns were expressed that funding through a national organisation might render the application and decision-making process overly bureaucratic and therefore time-consuming and resource intensive for smaller third-sector organisations to manage. Knowing this Government, it is likely that they will press ahead with using the Big Lottery Fund as the distributor. If so, how does the Minister see local strategic partnerships fitting into the process? For instance, will the Big Lottery Fund be required—not requested—to consult local strategic partnerships before making its decisions and to take properly into account any recommendations made there? Indeed, will the local strategic partnership be able to apply for funding from this source?
I am conscious not only of the time, but also that I am the last speaker from the Back-Benches. I had expected that the concerns expressed by a number of us from the Unclaimed Assets Charity Coalition of 52 charities would have already been mentioned in the debate. As I am the last speaker from the Back-Benches I will raise briefly the coalition’s concerns so that they are on the record, and I hope that the
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The coalition makes five points about what it wants from the Bill. I will quickly read them so that they are on the record and the Minister can respond to them. It says it wants: first, any activity to reunite owners with their assets to include provision for identifying unclaimed assets from deceased people's estates; secondly, the establishment of a “one-stop shop” for searching data to reclaim lost assets; and, thirdly, the definition of an “unclaimed asset” to be extended in time to include more financial assets. I think that point has been covered in the debate. Fourthly, it wants a recognised scheme to identify unclaimed assets held by financial institutions. Its preferred approach would be mandatory. Finally, it wants the dormancy period of what is considered an unclaimed asset to be reviewed. It thinks that for many asset types 15 years is too long. I hope that the Minister will respond to those points because they are important and undoubtedly we will return to them during what I think will be a very interesting and, if I may say so, quite a challenging Committee stage to the Bill.
7.07 pm
Lord Newby: My Lords, like other noble Lords who have spoken this evening, I welcome the Government’s proposals to put dormant assets to positive use. I particularly welcome a number of the Bill’s features. The concept of the reclaim fund is clever and the plan on how to make it work has much to recommend it. In particular, the fact that depositors will still have access to their funds beyond the 15-year period is crucial, and the Bill deals elegantly with the point. Like my noble friend Lord Shutt, I strongly agree with the special provisions for smaller banks and building societies.
I know that the Government have undertaken consultation on the Bill but fear that, at least in certain respects, this consultation has followed the pattern of Treasury consultation down the ages, which is to put out proposals for consultation and then completely ignore what people have said. The fact that the Government have almost entirely repudiated the Treasury Select Committee’s comments and suggestions is extremely unfortunate because those comments were in most cases extremely sensible.
We on these Benches will, as we have heard, wish to examine in Committee a number of issues regarding the operation of the reclaim fund and the distribution to good causes. There are a number of general issues, but I will raise just a few. The first is the importance of trying to reunite assets with their owners before the assets reach the fund. It is much better for the owners of the assets to use them as they wish rather than for
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I am not clear whether that can best be dealt with by including additional provision in the Bill or whether those are administrative provisions that are best dealt with by the banks, building societies and the reclaim fund. However, we need to be satisfied that, whatever provisions we put in place, maximum effort is expended to reunite people with their assets. I am not sure that I agree with the Unclaimed Assets Charity Coalition about 15 years being too long. It seems to me that you must pick an arbitrary figure, and it is probably about right.
The next issue is whether membership of the scheme should be voluntary or compulsory. I am very far from convinced by the Government’s arguments for voluntary involvement. If the idea is so important, why should any bank or building society be able to avoid it? The Government’s answers on this point in their response to the Treasury Select Committee are pretty thin. They argue:
“A voluntary approach enables the use of private sector expertise ... A voluntary approach means that it will be the private sector that takes responsibility ... The voluntary approach brings added flexibility ... A voluntary scheme also takes account of better regulation principles”.
All those are highly questionable assertions which I will examine in Committee.
The next issue, raised by a number of speakers, is whether the Bill is correct in limiting its scope to banks and building societies. Again, I greatly enjoyed reading the Government’s response on why National Savings & Investments should not be included in the scope of the Bill. They explained that it was completely unnecessary because that money is,
and therefore is “already benefiting the community”. I wonder whether the Government could explain how they came to that conclusion and whether the unclaimed assets from National Savings & Investments might, at the very least in future, be identified in some way in government accounts so that we would know exactly how they were “benefiting the community”.
There is also the issue of whether we should extend the scope to other sorts of assets, including insurance policies. My inclination at this stage would be to follow the precedent in the Financial Services and Markets Act, in which additional categories of financial activity can, by order, be brought within the
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