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The noble Baroness said: Amendment No. 50 marks the end of Part 1 of the Bill. It calls for a report on the dormant account arrangements to be made within three years of the commencement of the Act. We have spent a great deal of time debating Part 1 and it is clear that there are a number of areas of concern about the effectiveness of both the statutory arrangements and the non-statutory arrangements which will exist in parallel with the Act. We challenged the Minister to explain how the Bill will work in practice in a number of areas, including the interface between banks and the reclaim fund in relation to repayments, and we were told that there was a lot of work to be done and that we had to be patient.

We have raised a number of concerns which can be summarised as: will these voluntary arrangements work in practice? We would all like a voluntary scheme to work. Certainly we on these Benches do not want to set up regulatory structures where voluntary arrangements work perfectly well, but we also think that it is incumbent on the Treasury to monitor the outcome and, if there are causes for concern, to set out how it will deal with them. I do not start from the assumption that if these voluntary arrangements do not work the next step is statutory rules or compulsion; it may well be the renewal of a voluntary scheme.

One aspect of success is that account holders can easily and speedily be reunited with their property, whether before or after their accounts have been transferred to the reclaim fund. Another is that the scheme will genuinely release significant funds for good causes.

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The experience of schemes outside the UK is that large sums are available. Let us judge the scheme on how well it does. Hence, the report required by this amendment focuses on the amounts that have been released and those that still could be released, as well as on the arrangements for reuniting and reclaiming. I do not believe that that will impose onerous requirements on the Treasury, as it should be monitoring these matters in any event.

A published report, as required by my amendment, will allow an opportunity for public debate about the way forward if improvements are required. It might show that the scheme is a rip-roaring success and that nothing needs to be changed. That would be a cause of great celebration. However, I am sure that the Treasury would then be very eager to get the good news out. If there are matters that need to be improved to maximise the potential of the scheme or minimise the unintended consequences of the way in which the scheme has been set up, that too should have public focus. I hope that the Minister will see that the amendment is intended to help to focus on the ongoing operation of the scheme. I beg to move.

Lord Newby: We support the amendment very strongly. Our view is that the scheme is at best a hybrid scheme. It certainly has a significant statutory element to it, so Parliament should be scrutinising it rigorously on a regular basis.

The proposal in this amendment provides a peg on which to hang parliamentary scrutiny of how the reclaim fund is operating. The specific elements of the amendment are self-explanatory and sensible, and we hope that the Government will agree with us, in the spirit that the Minister operated under a few minutes ago, and signify some support for it.

Lord Hamilton of Epsom: I, too, strongly support the amendment. So much legislation that goes through simply disappears into the ether at the end of the day, and there does not appear to be the opportunity to have any sort of retrospective look at it. This would be an enormously beneficial action to take, and I hope that it is supported by the Government.

The Lord Bishop of Chelmsford: I, too, support the amendment. There are issues of transparency and accountability, and it would give people confidence in the new scheme if we could enact something along these lines.

Lord Bach: The amendment is very clear. Let us consider what we are doing here. The legislation enables a voluntary dormant account scheme for the participating institutions to be set up. The responsibility for managing those assets will lie with a reclaim fund run by the private sector. The scheme will be highly transparent; the fund will publish the amount of money that flows into the scheme, so it will be public knowledge. It will publish the amount that is repaid to consumers, so it will also be made public. Reuniting customers with their accounts will be the responsibility of the bank and building society sector, which is committed to supporting the scheme

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by launching a comprehensive reuniting campaign before the launch of the scheme itself and to ongoing efforts to reunite customers with their accounts. We welcome all those commitments.

The Government are working constructively with the private sector and with National Savings & Investments, which is taking a lead in reuniting efforts alongside the banks, encouraging them to put in place effective arrangements and will continue to do so. We are not proposing that the Government should publish information about the flows of money into the scheme or to customers, as it is more sensible for the responsibility for that to remain with the reclaim fund. Nor are we proposing to publish information about the reuniting work that the sector has pledged to do. We think it sensible that responsibility for that and for work to improve those arrangements lies with the banking sector. I know that that is not an answer that will appeal to those who supported the amendment, but it is important that the reclaim fund and the banking sector in their respective ways look after their own responsibilities.

However, I can give a little ground to the noble Baroness in terms of a review of the scheme. We will determine an appropriate date for a review once the scheme is established, but I can tell the Committee that there will be a review at some stage after the scheme is established. However, I am afraid that I cannot accept the amendment.

Lord Shutt of Greetland: That is a very interesting answer. Will the review look at whether the scheme can be expanded to bring in further assets such as insurance? Does the Minister have that in mind? It would be an even more generous contribution at this point.

Lord Bach: I congratulate the noble Lord, Lord Shutt, on seizing the moment—this late on a Thursday afternoon, he deserves special congratulation. I cannot guarantee what the review will consider. I can go only so far as to say that it will review the scheme as it has worked up to that date. I think that that is the answer that the noble Lord expected.

Baroness Noakes: We are promised some unspecified jam at some unspecified time. The Minister cannot have expected me to welcome that with open arms. Indeed, he confirmed that he did not expect it.

My amendment is rather modest, designed not to look at facts, but at how well the scheme is working in practice. The Treasury tells us that it will review it, but it will not tell us when. It does not tell us exactly what it will do. That is not satisfactory. Is it not a pity that we are in Grand Committee and not on the Floor of the House? However, we are where we are, so we will have to defer more extensive consideration of the amendment until a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Schedule 2 agreed to.

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Clause 15 [Distribution of dormant account money by Big Lottery Fund]:

Lord Newby moved Amendment No. 51:

The noble Lord said: We now move from raising the money to spending it. We heard in the first part of the Bill a mantra from Ministers which I can guarantee we will not hear in this part. The first half of the Bill was all to do with the voluntary scheme; this half is to do with how the Government plan to spend the money that the banks have so generously donated.

The logic of the Government’s approach, with them having said that it is a voluntary scheme and accepted that it is money that the banking sector holds, is to say to the banking sector, “We agree that this is a voluntary scheme. You will voluntarily put the money into the reclaim fund and, then, as it is money from you, why don’t you decide how you are going to spend it? You can spend it along the lines that you currently spend funds in your charitable activities and, in respect of the some of the building societies, that will happen anyway”. There would have been logic in that, and we would have had a much shorter Bill.

As Ministers are aware, we on these Benches have from the start suggested that the scheme should not be voluntary, but statutory, and should cover all banks and building societies. Therefore, the logic is that we want to have a say in how the money is spent. We are, as it happens, being given that chance, because the Government want the best of both worlds: they want the banks to sort out the difficult issues around raising the money and administering it, but they want to get the benefit of how it is spent. I am sure that we can imagine the Prime Minister joyously opening a series of youth clubs up and down the country that have been funded from this scheme.

4.30 pm

The two amendments in this group seek to tease out the Government’s priorities about how the money will be spent. Although, to a certain extent, it is prescriptive, to another extent it is pretty unclear. Clause 15(1), for example, states that,

Yet, in Clause 17, which deals with how the money will be spent, no environmental purpose is included.

Turning to my second amendment in this group, in Clause 17 we also see the interesting insertion of the word “or” between paragraphs (a) and (b) and paragraph (c) in subsection (1) which define the three different areas in which it is proposed that the money should be spent. To a casual reader, that would mean that the money was either to be spent on youth provision and financial literacy or that it was to be made available to a social investment wholesaler. I suspect that that is not what the Government mean at all. I think that they mean that it will be distributed to a combination of those three channels. However, we would welcome some clarification from Ministers as

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to why the word “or” appears there and whether what they have in mind is a simplistic reading of the Bill whereby the money will be distributed to one or the other.

I should also welcome Ministers’ views on an expansion of the point that I have just raised. What are their priorities regarding the three strands, assuming that they mean that the three strands should all receive a degree of funding? Do they have it in mind to divvy up the money three ways equally or do they intend to divide it in another way? Of course, how the money is spent may depend on how much money there is. This will be the subject of debate when we come to a later amendment tabled by the noble Lord, Lord Hamilton, in which he says that a social investment wholesaler must take priority by being given the first £250 million of the scheme. However, taking the figures produced by the BBA, we may well find that only £250 million is available in total, and in that case priorities will presumably be rather different than if £2 billion were available. Therefore, it would be useful to know whether the Government agree with the estimate of the amount of money that will be available.

The next question, which we will be debating in later amendments, is how the money can best be used. By that, I mean where the money can have most effect. It seems to me that, although we have accepted from the start that all these three strands are very important and that they are, quite properly, areas which might benefit from the fund, on closer examination the third area is the one where the money can have the biggest impact, not least because there are already so many other programmes which help young people and help financial literacy and financial information. For example, in December I was intrigued to see that the Government produced their financial inclusion action plan, which proposes that £130 million should be spent on access to financial services and financial literacy over the period 2008-11. However, it seems to me that the need in relation to the social investment wholesaler and the fund’s ability to have an impact are arguably greater than elsewhere. All those involved in the social investment movement believe that a government commitment to a social investment wholesaler would generate significant funds from elsewhere, which is unlikely to be the case under the other two strands. There is also now a pent-up demand in the social enterprise sector for funding, and increased support across all parties—and certainly within government—for social entrepreneurs to play a bigger part across the whole raft of activity, not least in the provision of public services.

At the beginning of the week I was privileged to be present at a reception held by the All-Party Social Enterprise Group. This was attended by social entrepreneur ambassadors from across the country who had been identified by the Social Enterprise Coalition, and during the course of the evening I was able to talk to them about what they were doing. Like many Members of the Committee, no doubt, I go to a lot of receptions, quite a few of which are fairly dreary events, particularly at the end of the evening when one is looking at one’s watch and hoping to get

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away. Somewhat to my surprise, that event was extremely inspiring. It is not that I do not expect social entrepreneurs to be inspiring, but we do not always have access to them.

I was impressed by the range of activities in which these entrepreneurs are involved. They are doing the things that we as a society want done, often in the areas of health, education and other aspects of public provision. In my view—I have not had time yet to discuss this in any great detail with my colleagues, either here or in another place, although I have no reason to think that they will disagree—this third strand should get priority within the Bill. I have no idea what the Government’s view is at this stage. As we begin to discuss the distribution process, I hope the Minister can lay out the Government’s thinking on how they see the three different elements they have identified being funded and what are going to be their priorities. I beg to move.

Lord Hamilton of Epsom: The noble Lord, Lord Newby, mentioned the £250 million referred to in my amendment for the social investment bank. He made the point that the British Bankers’ Association says that the total amounts raised might be £250 million to £350 million and that if it is at the bottom end of that it would be a problem.

The question of youth was raised and I should be grateful to the Minister if he could clarify the issue. The Prime Minister said at the Labour Party conference:


I am sure the Minister will accept that that comma is quite significant. It could mean that we will use unclaimed assets from dormant bank accounts to build new youth centres, and then we will spend a quite separate £670 million on youth.

I believe the £670 million is spread over three years and that quite a lot of that money has already been allocated by the Government. However, the significant question is exactly how much has been allocated out of unclaimed assets for youth. I do not expect an answer now but if the Minister could find out for me for when we meet again next Tuesday I would be grateful. Quite clearly, if that has been pre-empted we are arguing about what is left over from there. I would be grateful if he could deal with that for me.

Lord Howard of Rising: As the noble Lord, Lord Newby, has pointed out, we have reached the point of deciding how to spend the money. One of the problems that I perceive as we go through the Bill is that there is a lack of clarity on this spending and I would be grateful if the Minister could clear up how the money is to be spent and, most importantly, whether some of this money will be used as a substitute for government programmes in order to save the Government having to spend money where they have made commitments.

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My noble friend Lord Hamilton asked about youth. An announcement was made only recently by Mr Balls on how much money will be spent on youth. Was he counting on cash from some of the unclaimed assets, or was he saying that it was government spending? It certainly appeared to be spending by the Government as opposed to spending unclaimed assets, which after all are not government money. The whole point of the Bill is that money should be made available to projects to which the Government are not committed, and where government funds would not be appropriate. We will seek to clarify that matter. I hope that the Minister will make a start when he speaks.

The Lord Bishop of Chelmsford: It is important that we are focused when thinking about how the money is to be used. If confidence in the fund is to be built, the money needs to be used in a way which has a distinctive flavour and achieves something which will not be achieved by other means. My heart sank a little when we spoke of building youth centres. Those of us in the faith communities and the churches have been involved in work with young people for a long time. Buildings are important, and churches sometimes struggle with that, but it is the relationships and the quality of the work that are really important. We must be focused.

When the new fund comes under public scrutiny, it is important that it does not fall into the trap of being felt to be used for things that should be financed by other means—I have in mind the public debate around the lottery fund. If we are going to use the fund for young people—I am very supportive of that idea—we must do some careful thinking so that the way in which the fund is used is innovative.

Surely we need to frame the legislation in a way that is enabling of the people who are going to make decisions to have the freedom to make them. We must be careful lest Governments or anybody else so constrain the scheme that it does not have the freedom to manoeuvre in the areas that it is given to cover. We must be careful to frame the clauses in such a way as not to box the whole scheme in.

I want to see the scheme being innovative; I want to see it working in ways which make good sense on the ground. If it is to support young people, it must be for the building of good relationships and good-quality relational work, and it must recognise where that work is taking place and what needs building up and supporting. I want to see the fund build confidence by having that distinctive flavour, with people seeing that it is something new, different and making a distinctive contribution.

Viscount Eccles: It is true that a public body is much more comfortable with spending money on 3D assets—bricks and mortar—than on the provision of services. I know from my own experience of buildings being provided in which to meet people, but of nobody being told that they can meet in them and of there not being anybody to talk to when they got there. As the right reverend Prelate said, this whole question is much more a matter of people than of buildings—about how to make it work.

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4.45 pm

I have an extended question about the Big Lottery Fund and why it is selected as it is in Clause 15(1). At Second Reading I raised some of the management issues facing the board of the Big Lottery Fund, as it shrinks in size—which it is undoubtedly bound to do because of the Olympics. It is in a state of constant flux and change, dropping some 19 programmes and starting up some 24. It is the heir to two lottery funds, one at least leaving behind it an unsatisfactory performance in the Government’s view, and to a third temporary fund—the Millennium Fund—which ran its course, also not without leaving problems behind. It is unwise to rely on Big, which has yet to establish a track record or any clear identity in the minds of the public, in contrast to the heritage, sport and arts funds. Indeed, Big may fail in its purpose, and it is an extraordinary proposal that it should become the monopoly distributor of 90 per cent of dormant moneys.

Unfortunately, it is clear that the Government wish to control as much of the third sector as they can, which is surely out of order in this instance. As it is set out in the Bill, private moneys are to be exclusively distributed by a public sector body that is closely controlled to deliver a social engineering agenda. Its approach to additionality is defined by saying:

In other parts of the document it is absolutely clear that Big sees its duty as delivering government themes and outcomes.

Surely the choice of potential distributors needs to be widened. There is no case for a Big monopoly. It is not as if there are no other older and better established institutions. To cite but one, there is the Charities Aid Foundation. Nor would it be difficult to find other candidates to come forward and gain the Secretary of State’s support to be nominated as distributors.

Lord Davies of Oldham: I am grateful to all noble Lords who have participated in this interesting debate. We have certainly changed gear; it always adds a certain liveliness to proceedings when we discuss spending. We shall discuss these issues for a little while yet. An amendment has been tabled with the dreaded concept of additionality added to it. I say “dreaded” because for those noble Lords who were not present when we discussed the lottery several years ago—and I exclude the noble Viscount, Lord Eccles, who was present at the debates—we had endless discussions on the issue of additionality. No one in the Committee can underestimate the glee with which I saw this concept reappear in an amendment—and predictably so. It will raise the same problems of definition, too, when we actually get to it.

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