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I fully support what the noble Lord, Lord Shutt, said on Clause 21 with regard to spending, the involvement of Parliament in that, and in particular the social investment fund, which the Government have told us is not one of their favoured spending priorities. There are many, including the Commission on Unclaimed Assets, which the Government charged with looking at how dormant account money should be spent, who believe that it is essential to set up a social investment fund. It needs a significant critical mass of money to get it going.

One of the most disappointing things that we heard in Committee was that the Secretary of State mentioned throughout the Bill, who will be responsible for giving directions to the Big Lottery Fund in connection with how the money is to be spent, is to be Mr Ed Balls. He is the Secretary of State with responsibility for schools; he does not have responsibility for social investment. The chances of any money going to social investment without any parliamentary involvement at all seems to us to be very small, which is why we need to keep Parliament involved.

Lord Naseby: My Lords, I support the amendment. Can the Minster clarify whether the National Audit Office has the right to investigate the accounts and thereby report to the Public Accounts Committee?

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5.15 pm

Lord Davies of Oldham: My Lords, we had intensive debates on these issues in Committee, as both the noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, indicated. Their arguments have not changed a great deal.

We have thought about the issue carefully, and I will demonstrate more effectively than I was perhaps able to in Committee why the Government think that these two amendments are unnecessary. However, we are of course not against the objectives behind the amendments. Because the operation of this scheme—which I hasten to add is a private one—is directed towards public purposes and Ministers have a role to play in it, it must be accountable and transparent. We want to meet the objectives which noble Lords opposite have identified, but have gone about it in a different way. I shall explain why, and why our system and proposals will work.

I first make it absolutely clear that the reclaim fund is not a government body. The legislation defines the reclaim fund and sets out a clearly defined set of conditions to which the fund is subject, including matters that it must include in its articles of association, but it is a private institution. The issues of parliamentary scrutiny and accountability for a private body are different from those for a public one, which would be directly answerable in the public domain. Of course we have a different approach from any non-departmental public body or other institution which the Government have set up. This is a private scheme.

In this private scheme, banks and building societies may cancel their liabilities to customers only if they transfer their assets to the reclaim fund. Of course, the reclaim fund will be established in compliance with the conditions set out in this legislation, and will be authorised and supervised by the Financial Services Authority. The industry, which will set up the reclaim fund, published on 8 November a timetable for selecting candidates and having interviews later this year. We await further updates on the running of the reclaim fund and how it will be constituted, but it will operate within the constraints of this legislation. I therefore cannot say now who will be running the reclaim fund. That will depend on the selection process of these private institutions for this private body. Of course, if a suitable candidate does not come forward to apply for FSA authorisation at the end of the process, the industry representatives will have to establish a reclaim fund themselves. They have made a public commitment to that action of last resort.

Once it is established under the provisions of the Bill, the reclaim fund will be entirely independent of government. The Government will not make appointments to the board or membership; nor do we feel it necessary or appropriate to do so. The expertise for managing the reclaim fund lies within the private sector, not government. We do not want to place controls over the reclaim fund in this way. Rather, we set out in legislation what we regard as sufficient checks and balances on a private institution to ensure that it will have a clear purpose from which it will not depart and that the requirements in legislation are

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enforceable in the highly unlikely circumstances that it would be necessary to take any action. However, the reclaim fund is not a public body. I maintain that the Opposition are putting forward proposals for parliamentary scrutiny that are applicable only to a public body. This is manifestly not one. In other circumstances, they would be only too eager to emphasise how government should regulate with a light hand. If I have stood at this Dispatch Box once, I have stood here a hundred times, and heard of the bonfire of regulations that is necessary for a light touch with all sorts of institutions. The reclaim fund is a private institution and we are proposing to regulate it with a light touch. The noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, are seeking the heavy hand of parliamentary regulation as if the reclaim fund were some kind of direct public body. I ask them to consider whether they really have a commitment to dealing with this body in this form. Have they in mind a precedent for a private company or institution being required to report directly to government or to Parliament in the way that their amendment contends?

We have taken an innovative approach in the Bill to this interesting—I shall not say unique—institution, the reclaim fund. That is the nature of our task because we are introducing an unclaimed assets scheme that is about private property being reclaimed at best by those who have the right to own it, with the reclaim fund being only the residual position when attempts to restore funds to private citizens have failed. Then the money goes to the reclaim fund. The reclaim fund is a product of the work of the private institutions which are committed to this legislation. The other factor we must bear in mind is that these commitments are made by private institutions—the banks and building societies—to tackle the problem of moneys that have been placed with them for keeping which they cannot return to the proper owners. Those moneys will go to a reclaim fund that they will institute and be responsible for. That could not be further from a regulated public body.

Clause 5 sets out the three purposes that the reclaim fund must have: it must meet repayment claims; it must manage money prudently; and it must transfer surplus funds to the Big Lottery Fund for distribution. Those are the three constraints on it. That is where public policy comes into play. The law defines this private institution, but the Bill sets out clear ways in which the fund fulfils the obligation. First, with regard to customer repayment, let me make the obvious point: the banks and building societies are making strenuous efforts to ensure, as best they can, that they reacquaint customers with their resources. A customer has a statutory right to repayment. If the money has gone to the fund because the account has been dormant for 15 years or more, the individual’s right to claim that money is still there, and the fund must have a process for how it can be claimed. That is public policy and is a constraint built into this legislation. However, that is not the same thing as parliamentary scrutiny.

Secondly, the reclaim fund has to manage its money prudently. It will take control of significant assets, and we would all want to be absolutely assured

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that it maintains sufficient resources to meet any future claims from customers. Otherwise it will miss the principle on which we are operating. Individual customers have the right to their assets if they can establish a claim, even after 15 years or a multiple of 15 years. If the money is in the reclaim fund and it is theirs, the reclaim fund must repay it. That is specified in the Bill. The body will be subject to the Financial Services Authority—prudential regulation of such an institution.

Thirdly, the reclaim fund is obliged to transfer its surplus to Big. It must on the one hand calculate how much money it needs to protect its undeniable duty to meet future claims, and on the other transfer the surplus money so that distribution can occur. We cannot specify these amounts of money. We do not know the original totals which will occur, let alone what this fund will look like as times goes on. Yet Schedule 1 to the Bill is absolutely clear on how the reclaim fund will operate. The legislation also states clearly that the reclaim fund may use the money it receives to defray its operating expenses as long as they are reasonable. Again, the body is prescribed in law—if this Bill becomes an Act.

I emphasise that the reclaim fund has to be transparent. That is absolutely crucial to this dormant account scheme. The scheme will not work if it is not operating with full public awareness of what it is doing. We are all united in this House on this necessity for transparency. Schedule 1 requires the reclaim fund to publish annually a list of institutions participating in the scheme, the amount of money transferred into the scheme at individual institution level, the amount of money reclaimed by consumers also at individual institution level, and the aggregate amount of money that they pass on to Big. This information will be available for public scrutiny. It will be in the public domain, so this body has to be accountable.

The issue identified by the noble Lord and the noble Baroness with their amendment is that this is not good enough and that we need parliamentary scrutiny of its operations. Of course if Parliament wishes to scrutinise or debate any specific figure or point of detail in any work of the reclaim fund, among us in this place we have the expertise to subject to public scrutiny a body which is fulfilling a public purpose but is a private institution. If there is any doubt that we might lack the expertise to do that, I do not doubt our capacity for that for one instant. The other place is scarcely going to let any malpractice occur without Members of Parliament finding many conceivable ways of drawing public attention to any misuse of that body’s rights and powers.

I appreciate the intentions behind Amendment No. 17—that parliamentary scrutiny of the directions to Big is required. But we have clear transparency of operations. Establishing a role for Parliament in the issuing of directions regarding Big’s expenditure in England is a pretty heavy-handed way of controlling this position. Of course the Government are bound to say that this is excessively heavy handed, but the Delegated Powers Committee, which reported last November, noted that the approach set out in the Bill follows the model that functions under the National

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Lottery Act, and is satisfied that it meets its requirements for parliamentary scrutiny. We are not building afresh here; we are following a model that already operates.

5.30 pm

Viscount Eccles: My Lords, will the Minister read out more of what was said by the Delegated Powers Committee, of which I am a member? I believe it said, as he rightly stated, that it was a finely balanced affair. This was following the scheme in the lottery Acts, but if it had not been for that, the powers taken were wide enough to be described as having a legislative purpose. So it was a balanced comment; it was not wholly favourable.

Lord Davies of Oldham: My Lords, the noble Viscount is well versed in these issues. I was not going to suggest that there was 100 per cent approval from the Delegated Powers Committee—heavens, I have far too much respect for its members to think that they cannot find a number of weaknesses in the legislation. On the question of scrutiny, however—I believe that the noble Viscount, Lord Eccles, would concede this point—the committee regarded the Government’s position as being well within the confines of the way in which the provisions of the National Lottery Act already operate. Indeed, this House considered that Act, as did the other place, to a very great extent a few short years ago.

The amendment deals with the powers of the Secretary of State. The noble Baroness is distressed that one particular Secretary of State is vested with the responsibility of exercising these powers. I make the obvious point that there must always be one. In circumstances in which it is clear that a number of Ministries have a real interest in this issue, I assure the House that the work will be the product of interdepartmental work by civil servants. However, there must be ministerial responsibility, and the appropriate Ministry here is the Department for Children, Schools and Families.

Big plays a very important part in the operation of the lottery, and this House has recognised that role. The suggestion is that Big should operate under the National Lottery Act without excessive constraints, but that in its operation of this particular issue, there should be additional parliamentary scrutiny of the direction. Let me say that the affirmative procedure—in other words, if the Secretary of State had to table approval for the decisions that he has to take—would exaggerate the necessity. It was not thought necessary with the National Lottery Act, which set up a public body. This is a private body; yet it is being suggested that the parliamentary scrutiny of that body should be at that level of intensity.

I cannot recall a time when noble Lords opposite—certainly not noble Lords speaking for the Official Opposition—have suggested that a private institution should be subject to this degree of intensive parliamentary scrutiny. It seems odd that this was not suggested with regard to the lottery, but that it is suggested in this rather specific and relatively small-scale operation of Big. It is suggested that those

29 Jan 2008 : Column 585

directions should be subject to this intensive parliamentary scrutiny, and I can maintain only that the demands are excessive and unnecessary. This body will be accountable, transparent and answerable. There is no question that it will not be subject to public scrutiny as envisaged in the Bill. I hope that the noble Lord will accept the Government’s argument.

Lord Shutt of Greetland: My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Naseby, for their comments. The Minister does not have the same sight on this as I have. Clause 5(4) says:

If that is not the Treasury saying to this private company, “You shall do something”, what is? That is so clear. All Amendment No. 10 says is that these people who are required to do things had better be required to send some accounts. The Treasury should then lay those accounts before Parliament and tell us about the directions. That is simple and straightforward; I see no great problem in that. The dilemma for the Minister is his concern that this is a sort of private affair. The main thing is that this is primarily about something that is being done for the public good. Lots of people want to see the right thing being done for the public good. It therefore seems to me that this very simple matter should be acceptable.

The Minister has an idea that Amendment No. 17 is heavy handed. Perhaps he needs a bit of help. There is all this talk of this being voluntary, but only one volunteer decides how the Big Lottery Fund shall spend the money. There has been tremendous concern about the disposition of the money. Many people could think of all sorts of bright ideas for the use of this money, but by and large people have thought, “Fair enough: youth, yes—bearing in mind where the money is coming from; financial inclusion, yes; social investment bank, not quite certain but we’ll give it a go”. However, this one volunteer will say, “£300 million for that, £50 million for that, and £50 million for that”. Surely the people who have had such great concern about the disposition of these resources and who represent people in various places should have a say in this, rather than it being at the whim of one Minister at the particular moment when the penny drops, the money is available and Parliament is not involved. It beggars belief that that is the position. I therefore wish to test the opinion of the House.

5.38 pm

On Question, Whether the said amendment (No. 10) shall be agreed to?

Their Lordships divided: Contents, 193; Not-Contents, 133.

Division No. 2


Addington, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Anelay of St Johns, B.
Arran, E.
Ashdown of Norton-sub-Hamdon, L.
Astor, V.

29 Jan 2008 : Column 586

Attlee, E.
Barker, B.
Beaumont of Whitley, L.
Bell, L.
Blaker, L.
Bledisloe, V.
Bonham-Carter of Yarnbury, B.
Bottomley of Nettlestone, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brittan of Spennithorne, L.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Burnett, L.
Buscombe, B.
Byford, B.
Caithness, E.
Campbell of Alloway, L.
Carnegy of Lour, B.
Cathcart, E.
Chadlington, L.
Chalker of Wallasey, B.
Chidgey, L.
Clement-Jones, L.
Cohen of Pimlico, B.
Colville of Culross, V.
Colwyn, L.
Cotter, L.
Courtown, E.
Craig of Radley, L.
Craigavon, V.
Crickhowell, L.
Cumberlege, B.
Darcy de Knayth, B.
De Mauley, L.
Dean of Harptree, L.
Denham, L.
Dholakia, L.
Dixon-Smith, L.
D'Souza, B.
Dykes, L.
Eccles, V.
Eccles of Moulton, B.
Eden of Winton, L.
Elles, B.
Elliott of Morpeth, L.
Elton, L.
Erroll, E.
Falkland, V.
Falkner of Margravine, B.
Feldman, L.
Ferrers, E.
Flather, B.
Forsyth of Drumlean, L.
Fowler, L.
Garden of Frognal, B.
Gardner of Parkes, B.
Glenarthur, L.
Glentoran, L.
Goodhart, L.
Goodlad, L.
Goschen, V.
Greenway, L.
Griffiths of Fforestfach, L.
Hamwee, B.
Hannay of Chiswick, L.
Hanningfield, L.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Home, E.
Hooper, B.
Howard of Rising, L.
Howarth of Breckland, B.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Hunt of Wirral, L.
Inglewood, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Kimball, L.
King of Bridgwater, L.
Kirkham, L.
Kirkwood of Kirkhope, L.
Knight of Collingtree, B.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lawson of Blaby, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Lindsay, E.
Linklater of Butterstone, B.
Liverpool, E.
Livsey of Talgarth, L.
Lucas, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
Macfarlane of Bearsden, L.
MacGregor of Pulham Market, L.
Maclennan of Rogart, L.
Maddock, B.
Maginnis of Drumglass, L.
Mancroft, L.
Marlesford, L.
Masham of Ilton, B.
Mawhinney, L.
Mayhew of Twysden, L.
Miller of Chilthorne Domer, B.
Montgomery of Alamein, V.
Montrose, D.
Morris of Bolton, B.
Naseby, L.
Neuberger, B.
Neville-Jones, B.
Newton of Braintree, L.
Noakes, B.
Northbrook, L.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Cathain, B.
Park of Monmouth, B.
Patel, L.
Patel of Bradford, L.
Patten, L.
Perry of Southwark, B.
Platt of Writtle, B.
Prior, L.
Quinton, L.
Rawlings, B.
Razzall, L.
Reay, L.
Redesdale, L.
Roberts of Conwy, L.
Roberts of Llandudno, L. [Teller]
Rogan, L.
Roper, L.
Rotherwick, L.
Saatchi, L.
St John of Fawsley, L.
Saltoun of Abernethy, Ly.
Sandberg, L.
Sandwich, E.
Seccombe, B. [Teller]
Selkirk of Douglas, L.
Selsdon, L.
Sharman, L.

29 Jan 2008 : Column 587

Sharp of Guildford, B.
Sharples, B.
Shaw of Northstead, L.
Sheikh, L.
Shephard of Northwold, B.
Shutt of Greetland, L.
Skelmersdale, L.
Soulsby of Swaffham Prior, L.
Steel of Aikwood, L.
Stewartby, L.
Stoddart of Swindon, L.
Taylor of Holbeach, L.
Tebbit, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Swynnerton, L.
Thomas of Walliswood, B.
Tonge, B.
Tope, L.
Tordoff, L.
Trimble, L.
Trumpington, B.
Tyler, L.
Ullswater, V.
Verma, B.
Wade of Chorlton, L.
Wakeham, L.
Waldegrave of North Hill, L.
Walker of Worcester, L.
Wallace of Saltaire, L.
Walmsley, B.
Walpole, L.
Warsi, B.
Wilcox, B.
Williamson of Horton, L.
Wolfson, L.


Acton, L.
Adams of Craigielea, B.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L. [Teller]
Barnett, L.
Bassam of Brighton, L.
Bernstein of Craigweil, L.
Bhattacharyya, L.
Billingham, B.
Bilston, L.
Birt, L.
Borrie, L.
Boston of Faversham, L.
Boyd of Duncansby, L.
Bradley, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Christopher, L.
Clark of Windermere, L.
Clinton-Davis, L.
Corston, B.
Crawley, B.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L.
Desai, L.
Dixon, L.
Donoughue, L.
Dubs, L.
Elder, L.
Elystan-Morgan, L.
Falconer of Thoroton, L.
Farrington of Ribbleton, B.
Filkin, L.
Ford, B.
Foulkes of Cumnock, L.
Fyfe of Fairfield, L.
Gale, B.
Gavron, L.
Golding, B.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Griffiths of Burry Port, L.
Harris of Haringey, L.
Harrison, L.
Hart of Chilton, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Janner of Braunstone, L.
Jay of Paddington, B.
Jones, L.
Jones of Birmingham, L.
Jordan, L.
Judd, L.
King of West Bromwich, L.
Kinnock, L.
Kirkhill, L.
Layard, L.
Lea of Crondall, L.
Lipsey, L.
Lockwood, B.
Lofthouse of Pontefract, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Mason of Barnsley, L.
Maxton, L.
Meacher, B.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Yardley, B.
O'Neill of Clackmannan, L.
Parekh, L.
Pitkeathley, B.
Plant of Highfield, L.
Prosser, B.
Prys-Davies, L.
Puttnam, L.
Radice, L.
Rea, L.
Rendell of Babergh, B.
Richard, L.
Rooker, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B. [Teller]
Scotland of Asthal, B.
Sewel, L.
Simon, V.
Smith of Gilmorehill, B.
Smith of Leigh, L.

29 Jan 2008 : Column 588

Snape, L.
Soley, L.
Stone of Blackheath, L.
Sutherland of Houndwood, L.
Symons of Vernham Dean, B.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Truscott, L.
Tunnicliffe, L.
Turner of Camden, B.
Wall of New Barnet, B.
Warner, L.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Elvel, L.
Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.

5.51 pm

Schedule 1 [Provision to be made in articles of association of reclaim fund]:

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