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Lord Bach: I repeat what has been said throughout from this side during the two days of Committee so far: this is a private sector company that will be set up by the BBA and the BSA. We have faith that they will set up a suitable and proper company on the basis of what they have said in the document I have just referred to. We are putting through the Bill that sets up that scheme. If the noble Lord requires more information about what they have in mind, I suggest—again, with the greatest respect—that the people to be asked are not sitting on this side of the Committee today. That is the best answer I can give him at present. We will not be responsible for setting up this company.

Baroness Noakes: The Government cannot abdicate their responsibility in this regard. They have brought forward this Bill to cover the precise circumstances of taking dormant account money into a company and then on to the Big Lottery Fund. They cannot just say, “We haven’t the faintest idea what these organisations that are nothing to do with the Government are going to do about setting up the body in the middle. We’re going to put some rather odd bits in legislation, we’re going to resist any suggestion that there should be further transparency in relation to this body, and we expect Parliament to accept that proposition”. I cannot think of any example when any Government have asked Parliament to pass a Bill on such a flaky basis.

The Deputy Chairman of Committees (Baroness Fookes): We appear to have an interregnum. Is the noble Baroness seeking to withdraw now?

Baroness Noakes: I thought I had withdrawn, but then I had something else to say on it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Newby moved Amendment No. 29:

The noble Lord said: First, I associate myself with the noble Baroness’s most recent comments. This is the most pathetic sight one could imagine: two Ministers, supported by serried ranks of civil servants, being asked the simplest questions about the reclaim fund—the central feature of the Bill in terms of new bodies being established—and not only are they incapable of answering them, but they seem to think it is rather ridiculous that they are being asked. With all due respect, it is not for us to go scurrying around asking bodies outwith the Government how they believe the Government’s will is to be interpreted; it is for the Government to tell us how they expect things to operate.

Amendment No. 29 is yet another minor amendment that I hope—but do not expect—that the Government might be able to accept. It is clear that the reclaim fund, despite the best efforts of Ministers to claim that it is nothing to do with them and that it is a private sector body, while not technically a public body, is at the very least a hybrid body. Since we tabled this amendment—indeed, during this afternoon —it has become clear that far from being a neutral

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catalyst or a mere channel, the fund will have some knotty issues to deal with about how it divides up the money between what it retains and what it passes on.

The fund is potentially subject to Treasury direction, so it seems wholly appropriate that Parliament should keep a close eye on it. All the amendment says is that the fund should print an additional few envelopes every year and send its annual report to Parliament where it can be formally received and make it that much more likely that committees in another place and noble Lords in your Lordships’ House will be able to scrutinise what the reclaim fund is doing. I beg to move.

Baroness Noakes: It will not surprise the Committee to learn that we fully support the amendment in the name of the noble Lord, Lord Newby. We believe that transparency is one of the necessary counterweights to put into the mix of this curious body that is being created—a hybrid body with clear public interest in what it is doing. While supporting the amendment that would compel the fund to present its annual report to Parliament, I ask the Minister to say how the Government expect the reclaim fund to comply with its obligation in respect of publication in paragraph 3 of Schedule 1. There is no specification of how publication is to be made. Is it to be sent to people or advertised? Is it just to be sneaked on to a website without any publicity? There is a lacuna at the moment regarding what should be done about publication. When one deals with company law generally, it is normally quite specific about what sort of publication is required or permitted. The Government have not necessarily dealt with that in sufficient detail in the Bill.

6.30 pm

Lord Bach: My Lords, I repeat what I said in answer to Amendment No. 27. I know that I am at risk of repeating myself but these series of single amendments deal with the same kind of points and I find it slightly surprising that they should have been de-grouped in the way that they have been. Be that as it may, I repeat that the scheme will be highly transparent, which is important. The reclaim fund will be required to publish information about which institutions are participating in the scheme, the amount of money transferred into the scheme and the amount of money reunited with account holders at individual institution level. It will also be required to publish the amounts it transfers to BIG. Under company law, the reclaim fund will be required to prepare and file annual accounts with Companies House, which may be accessed by all interested parties. We expect that under company law and accountancy rules the reclaim fund will publish an explanation of its reserves, including those to meet anticipated reclaim requests and expenses, so that there is a true and fair view. Detailed information about its financial position will be available from its annual accounts.

Amendment No. 29 seeks that this should be presented to Parliament. The information that the reclaim fund will be required to publish will be publicly available. We can see no compelling reason why this information should be presented to Parliament. I do not think the noble Lord has identified the way in which he suggests it should be. As I argued earlier, it would not be

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appropriate for the reclaim fund to have to publish information about non-participating banks and building societies, with which it will have no contact.

Amendment No. 29 would oblige the reclaim fund to take on a new role, rather in the way that Amendment No. 27 would. I take the noble Lord’s point that it may not be a dramatic new role, but it would be a monitoring role and that is not the point of the setting up of the reclaim fund. It would add some costs and would reduce the amount of money available for distribution.

The press notice of 8 November from which I quoted, particularly in reply to the noble Viscount, Lord Eccles, sets out the process for setting up the fund and how that fund will operate. The legislation that we are debating sets out the conditions to which the fund will be subject. It will be authorised by the FSA and there will be checks and balances in the articles of association, including the information that the reclaim fund will be required to publish and how the disclosure requirement will be enforced. The level of information that is required is set out in the Bill and I have already referred to it. How the information is published will, in the end, be up to the reclaim fund company. We would expect directors to take a sensible approach to it.

This will be a private company—a point that the noble Lord, Lord Newby, has made constantly during the Committee’s proceedings—and how the information is published will be up to it. If it does not publish the information that it is required to by the Bill, which we hope will become an Act of Parliament, then other considerations come in. But we do not see a compelling necessity for there to be a report to Parliament on this matter.

Baroness Noakes: Parliament has its time taken up to create this body and there is therefore sufficient public interest for the Government to take legislative time. However, after that, Parliament will be told that it is nothing to do with it. It is all very well saying that the fund is a private company. We have established that it has public purposes, as Ministers have said. Parliament has a clear interest in the effective working-out of the scheme that Parliament is being asked to support. I do not understand, and perhaps the Minister will explain, why the Government believe that it is inappropriate for Parliament to be given information on this scheme. It seems to me to be wholly necessary.

Lord Bach: The noble Baroness is entirely wrong when she says that it has nothing to do with Parliament. Any parliamentarian in either House can raise any matter regarding this scheme when and where they want to. However, there is no need for information to be presented to Parliament when it will be in the public field.

Lord Newby: I have the greatest respect for the Minister, but how he can believe that its incurring of some costs—the cost of putting in an envelope a few copies of a report—is an argument that is worthy of consideration, I do not know. How he can say that it involves a new role, I do not know. We are talking about material which may be on a website to which most parliamentarians will never have access—and if they have access to it, they may miss the date on which

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the information is made available. It does not do the Government credit to suggest that the report simply be sent to Parliament or that sending it to Parliament would somehow involve a new monitoring role. Those arguments do not stand up. This is a minor amendment which recognises the fact that this body is set up by Parliament and the irrefutable logic that Parliament will want to take more interest in what it does than in the average company established for other purposes. Therefore, I am disappointed, though perhaps not surprised, that the Government feel unable to support the amendment. In the mean time, and until we have thought further about what we want to do with it, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Newby moved Amendment No. 30:

“Directors to the Reclaim Fund

The noble Lord said: The Committee will be pleased to know that I do not intend to spend much time on this probing amendment. All the issues that surround it have been debated at great length. It is no use asking the Government who the shareholders and the directors will be, or anything like that, because they have not the faintest clue. When I was an innocent in the ways of a reclaim fund, it seemed to me logical that since it was being set up by the Government, they might want to have some part in appointing the directors to it. Given the Government’s role, including government nominees on the board seems at least worth considering, even if they were a minority. However, I am sure that the Minister will be unable to give me any more information than he already has in answer to questions about directors raised by the noble Baroness and other noble Lords. Therefore, I see no purpose in spending longer on the amendment but to say that if he has found in the past hour any new information which would shed light on that issue, I would be very grateful for it. I beg to move.

Lord Higgins: I have not participated in this series of debates on the exact nature of the fund and so on, but I am becoming increasingly puzzled. It is perhaps my own fault for not having got involved in this matter earlier. As I said yesterday, I was appointed to the system which operated in Switzerland. I was just rereading the advertisement which asked people who had possible dormant accounts to come forward. It said:

and so on. It continued:

So far as I can recall, there was no government involvement whatever, and I am beginning to wonder why we have this legislation. I am 100 per cent in favour of the objectives of uniting the accounts with their owners on the one hand and the money being made available for charitable purposes on the other. However, I am beginning to wonder whether the Government feel

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somehow that arranging it in this way will mean that some credit will fall on them because of the charitable purposes aspect. One of the concluding paragraphs in the advertisement that I have just quoted reads:

which indeed was the case. So I begin to wonder whether it is necessary to set out in detail in the legislation how the fund is to be set up, what the basis of it should be and so on. On the other hand, Schedule 1 spells out a number of bits of information without in any sense being comprehensive, and the debates that we have just had deal with the issues piecemeal.

As I said, I begin to doubt whether the objectives cannot be fulfilled otherwise. If we are to go down the legislative route, I hope that between now and Report we can come up with a schedule that spells out all the points that have been picked up in the debates over the past hour or so. I do not think that you can have a schedule setting out odd bits here and there but omitting other important points.

Baroness Noakes: We do not support the amendment in terms because we do not think that it is appropriate for the Government to appoint directors—certainly not all of them. I can see that there might be a case for some government nominees, given the public nature of this issue. However, I think that the main purpose of the amendment is to probe what is happening so that we can be satisfied that it is acceptable, and therefore I support it to that extent.

Lord Bach: I, too, agree with the noble Lord, Lord Newby, he will be pleased to hear, in that I do not think that it will be particularly helpful to the Committee to repeat arguments that have been employed on other amendments of this kind. However, it was the noble Lord who emphasised in debate on earlier amendments yesterday that this was to be a private sector company. The Government could have attempted to set up a public sector company or some sort of hybrid company, but this will be a private sector company set up by the organisations to which I have referred.

The Bill seeks to set some sort of constraint around that company so that the public can be satisfied that it will be prudently run and that it will come under FSA rules and regulations. However, I do not consider fair the criticism that suggests that somehow the Government should know exactly what kind of company this will be—that is, whether it will be a company limited by guarantee or by shares. The point is that it will be a private sector company, and we hope that the terms of the Bill mean that it will act effectively to do the sort of things for which noble Lords, such as the noble Lord, Lord Shutt, have been arguing for many years. So, in my view, attacking the Government for not knowing every detail about how the company is to be set up is a good subject for debate but it does not really go to the heart of the matter. The heart of the matter is that we need to see the scheme set up.

I take the point made by the noble Lord, Lord Higgins. The answer to it is that we, as the Government, want as light a touch as possible in this field. The building societies and banks have agreed

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that they will take part in a scheme such as this and we are delighted that they take that view.

We want to work with them in order to ensure that the scheme works but we do not want the heavy hand of government to be present throughout the Bill. For parts of the scheme, it will be important to set out some guidelines, and those are ahead of us, but I do not think that it is a fair criticism to say, “Well, at this stage the Government do not know how every part of this will work”.

The heart of the question put to me by the noble Lord, Lord Higgins, with his vast experience, was: why do we need government legislation at all? Frankly, we need the legislation in order for banks to be able to cancel their liabilities to customers in the first place when they transfer their money. If we did not pass this legislation, there would be no way in which banks could cancel their liabilities to customers, and they would then keep those liabilities on their balance sheets while losing the assets. At heart, that is why we need the legislation.

6.45 pm

Baroness Noakes: Perhaps I may intervene before the noble Lord, Lord Newby, decides what to do with his amendment. The Minister said that we were criticising the Government for not giving every detail about the scheme, but our complaint is that we are not getting any detail about how the scheme will work in practice. It is not that we do not have a fully worked-out solution but that we have a barely sketched-out solution. That is the burden of our problem with the way in which the Government are handling the Bill.

Lord Higgins: I would be taking up the time of the Committee wrongly if I went into detail. I say only that this was not a problem in Switzerland. It is not as though the Swiss banks are unsophisticated, and perhaps we should be looking in rather more detail at how this problem worked out in practice.

Lord Newby: At this stage of the day, for the noble Lord, Lord Higgins, to ask very astutely why we are here is a shaft of light but, at the same time, it is deeply depressing. It seems to me that there is an asymmetry in the Bill. The Government talk about a light touch but it must be the lightest touch possible. In fact, if there has been a touch at all in terms of how the company will operate, we have yet to see it. However, the Bill is pretty prescriptive with regard to how the money is spent. We do not mind if there is a light touch on how the scheme operates—it is up to the banks and building societies to get the cash in—but, my word, once the cash comes in, we are very keen to be prescriptive about how it is spent.

At this stage, I assume that the banks and building societies are wedded to this model and therefore we had better proceed on that assumption, but I am afraid that, so far as I am concerned, today has been extremely depressing in terms of gaining an understanding of how the Government want the scheme to work. However, as I said when introducing it, this is a probing amendment and I beg leave to withdraw it.

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Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 6 agreed to.

Clause 7 [Bank”]:

Lord Higgins moved Amendment No. 31:

The noble Lord said: We enter, I hope, more straightforward waters. In her opening remarks, my noble friend Lady Noakes said that there were many respects in which we thought the Bill needed to be widened. In a sense, the purpose of this amendment is to avoid doubt because it relates to Clause 7, which is concerned with the definition of “bank”. The question is whether the Bill will cover, and whether the participants will include, National Savings & Investments. In my view, it certainly should. It would be bizarre if the clearing banks and building societies disposed of their dormant accounts but the National Savings Bank did not.

Members of the Committee will note that I use the expression, “National Savings Bank”. It is a little over 35 years since I suddenly found myself the Minister responsible for national savings. It was the heyday of savings; the savings ratio then was something for which the present Chancellor would be green with envy. In the aftermath of, “You have never had it so good”, and Harold Macmillan, ERNIE—the system of premium bonds introduced by him—was so successful that I had to go to somewhere near Blackpool to set off a new number-generating machine because the first one could not cope with the number of donations to national savings.

I also had to go to Glasgow to look round the national savings establishment there. What most impressed me, and indeed, which they impressed on me, was the extent of the dormant accounts. I presume that there is an even greater number now in the national savings arrangements. Clearly, if we were to distribute these to their rightful owners, we would have to set some de minimis amount, as some of the amounts involved are very small indeed. The reason for arguing that it be included in the Bill is that it is operated as a bank. I will not say who the owner is—it is not me. I have discovered a Post Office Savings Bank book, which clearly describes the system as a bank. It is possible to make deposits, withdrawals, have cheques made out, and so on. It also pays interest at one ha’penny per £1 for each complete calendar month. Clearly, it operates as a bank, paying a rather better rate of interest than NatWest now pays on my current account.

It was a good system. You could buy government stocks, take out annuities, and so on. At all events, it was clearly a bank. As I said, a de minimis amount would probably have to be fixed, but the rightful owners ought to be informed and attempts to trace them made. Perhaps the Minister will confirm that the system will include that in the arrangements for reuniting people, and if necessary, pass on the assets to the reclaim fund.

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