The Economic Secretary to the Treasury (John Glen) I beg to move,
That the Bill be now read a Second time. Over the past decade, the
dormant assets scheme has released more than £800 million to tackle
systemic social challenges and to support the communities that need
help most. This Bill is estimated to unlock £880 million of
additional funding to ensure that the dormant assets scheme can
continue to support innovative, long-term programmes addressing
some of our most...Request free trial
The Economic Secretary to the Treasury ()
I beg to move, That the Bill be now read a Second time.
Over the past decade, the dormant assets scheme has released more
than £800 million to tackle systemic social challenges and to
support the communities that need help most. This Bill is
estimated to unlock £880 million of additional funding to ensure
that the dormant assets scheme can continue to support
innovative, long-term programmes addressing some of our most
pressing social and environmental challenges. The scheme is led
by industry and backed by the Government. Its aim is to reunite
owners with their financial assets; where that is not possible,
the money supports vital social and environmental initiatives
across the UK.
Consumer protection is at the heart of the scheme. Dormant assets
remain the property of their owners, who can reclaim any money
owed to them in full at any time. However, only a small
percentage do so, meaning that the rest of the money lies
dormant. The scheme responds to the imperative to put the money
to better use.
The Bill marks the completion of a five-year review in
collaboration with industry leaders, including an independent
commission and a public consultation. The scheme’s success is
down in no small part to the commitment and drive of the banks
and building societies that have led the charge on unlocking
dormant assets for the public good. However, it is only right
that the scheme continues to grow and evolve.
Currently, only assets from dormant bank or building society
accounts are eligible to be transferred into the dormant assets
scheme. The Bill will enable Reclaim Fund Ltd, the scheme’s
administrator, to accept a broader range of asset classes in the
sectors of insurance and pensions, investment and wealth
management, and securities. Of course, there could be even more
dormant assets to unlock in future. The Bill will therefore
introduce a new power to provide the flexibility to expand the
scheme through regulations.
I stress that the four core principles that underpin the
scheme—voluntary participation, reunification first, full
restitution and the additionality principle—will remain unchanged
by the Bill. The Bill will require the Secretary of State to
“carry out periodic reviews of…the operation of the dormant
assets scheme and…any use made of the powers”
to extend the scheme.
(Strangford) (DUP)
There are many worthwhile projects that local communities would
like to bring forward. How can they feel that they are part of
this project and gain advantage from dormant bank accounts?
I thank the hon. Gentleman for his intervention. There will be a
consultation; I or the Under-Secretary of State for Digital,
Culture, Media and Sport, my hon. Friend the Member for Mid
Worcestershire (), will come to it
later.
The Bill makes provision to reflect Reclaim Fund Ltd’s
establishment as a Treasury non-departmental public body and
names it as the scheme’s only authorised reclaim fund. In
addition, the Bill includes a new power for the Treasury to
designate additional authorised reclaim funds in future. To
guarantee consumer protection, the Bill’s money resolution will
enable the Government to cover the liability, in the form of a
loan, for reclaims should any authorised reclaim fund face
insolvency.
The Bill will amend the approach to distributing dormant assets
funding in England, aligning it with the model used in the
devolved Administrations, who have powers to focus funding
through secondary legislation, provided that it is within the
parameters of social or environmental purpose. In England, the
Dormant Bank and Building Society Accounts Act 2008 restricts the
English portion of funding to youth financial inclusion and
social investment. The Bill will enable the current restrictions
to be removed from primary legislation and put into secondary
legislation so that the scheme can respond to changing needs over
time. The Bill will require the Secretary of State, before making
an order, to publicly consult on the social and environmental
focus of the English portion of funds. No changes to the existing
restrictions can be made until and unless a new order is
laid.
After 10 years of operation, it is right that we carefully
consider how the scheme can deliver the greatest impact once it
has been expanded.
(Solihull) (Con)
With the expansion in the amount of money and the number of areas
subject to the scheme, there is a danger that we could end up
swamping the economy in those areas. We therefore need to broaden
out the scope of the good causes towards which the scheme can
work.
I thank my hon. Friend for that point—a legitimate point that
will be raised in different ways across the country during the
consultation, and one on which the Secretary of State will need
to reflect in due course before an order is laid.
It is vital that we afford everyone a fair and open opportunity
to have their say, so the Government plan to launch the first
public consultation, which will last for at least 12 weeks after
the Bill receives Royal Assent. Until we have launched the
consultation and fully considered the responses, the Government
are not prepared to make decisions or commitments on the ways in
which future funds will be used in England. To do so would
clearly undermine the validity and transparency of the
consultation exercise.
(Thirsk and Malton)
(Con)
Under the current legislation—the Charities Act 2011—urban
regeneration is one of the areas that distributions are allowed
to go into, but it is not clear whether they can go to, for
example, a regional mutual bank. As my hon. Friend knows, the
all-party parliamentary group on fair business banking is
strongly in favour of that. Could the point be clarified in the
Bill to facilitate a quicker move to fund those regional
mutuals?
In short, no; that will not feature on the face of the Bill.
However, my hon. Friend is a doughty advocate for that cause, and
I am sure he will make a hearty contribution to the consultation
which will inform the Government’s response in respect of those
future parameters.
Mindful of time and the need for contributions from so many
Members on both sides of the House, I will end by reiterating
that the Government are committed to supporting industry efforts
to reunite more owners with lost money, and to provide a
practical way for unclaimed and unwanted funds to be put to good
use. The dormant assets scheme has achieved that, and we are
determined to ensure that it continues to be a success. I hope
that the Bill will command cross-party support this evening, and
that we will be able to work together on expanding the scheme to
unlock hundreds of millions of pounds more for good causes
throughout the country in the years to come. I commend the Bill
to the House.
21:11:00
(York Central)
(Lab/Co-op)
In 2008, Labour set out a new principle in the House: to put
dormant assets from bank and building society accounts to work,
first by trying to reunite owners with their accounts but then,
when connections failed to materialise, by moving assets to
address social and environmental good causes. Labour’s vision has
since released nearly £8 million to infrastructure bodies which,
in turn, have multiplied the investment and expanded the work of
civil society. I continue to argue that the pounds spent by civil
society organisations stretch much further than those spent
elsewhere in the economy.
This is a success to celebrate, but the last two years have been
tough. As the sector's campaign slogan in response to the
pandemic says, charities have been “#NeverMoreNeeded”. Demand
went up and funding down as shops were shut and fundraising dried
up. That is why this legislation is really “never more needed”,
but it also furthers Labour’s ambition to introduce other assets
into the reclaim fund, now that the principle has been
established and the scheme has proved successful.
The three-year review should have taken place a decade ago, and
the legislation before us today should have already released
millions of pounds. If it had, the sector might have survived the
last two years more securely rather than ending up where it is
today. Today we are urging the Government to press on while also
ensuring that the Bill is in good shape.
Charities have been tested throughout the last decade as the
state failed to give the sector the back-up that it needed.
Charities and Labour have shared values and a shared sense of
purpose. We want to do all we can to transform our society, and
that is why we value charities so highly. Bursting with
dedication and expertise, civil society really is the heartbeat
of all our communities.
(Devizes) (Con)
Does the hon. Lady acknowledge that the Government put more than
£150 million into the charity sector last year, and does she
think that that was welcome, not enough or too much?
As I was going on to say, that money reached only 14,000
charities out of 169,000. As we see demand spiralling, we are
seeing charities struggling. The Government could have been far
more generous, as they have been to many other sectors during the
pandemic.
Every organisation has had to reinvent itself, digging deeper
into its reserves, borrowing where possible, and appealing to the
ever-generous public for help. We saw charities and mutual aid
groups spring up in every corner of every community. Where the
state stopped, charities took their service ever more deeply into
our communities. That is why this legislation really matters, and
why Labour will support its passage through the Commons today. It
arrives in a better state thanks to the extensive work undertaken
in the other place, and I particularly thank for his skilful
handling of it, to help it to reflect the priorities of civil
society.
In looking at the detail of the Bill, we are pleased to see that
the principles that Labour set out in 2008 remain, including that
of reuniting assets with their owners through extensive tracing
processes and ensuring that the owner will always be able to
claim the value of their asset in full if they seek to do so. The
principle of this being a voluntary scheme will remain, whereby
participants can opt in, and I encourage everyone to do so. When
dormant assets have been through thorough tracing processes, the
asset then transfers to the reclaim fund, which is responsible
for any reclaim that might occur, moving surplus into the hands
of identified organisations. Labour is most grateful to Big
Society Capital, Access, the Youth Futures Foundation and
Fair4All Finance for the way in which they have multiplied the
value of these assets and invested them wisely to help people in
our communities. Likewise, we are grateful to organisations in
the devolved countries.
Part 1 of the Bill expands the opportunity for the inclusion of
other financial dormant assets. The consultations to get to this
point have been thorough, and each new product carries its own
racing mechanisms and timescales to reduce risk. We welcome the
inclusion of all the named assets, but I want to press the
Minister further on pension schemes. While there is some
inclusion, I know that he is making the case that until the
pensions dashboard has been thoroughly tested, he is reluctant to
expand in this area. I appreciate that there has been significant
delay in the introduction of the dashboard, which has caused the
Government significant embarrassment. This delay is denying good
causes the assets that they want to put to work.
Perhaps the Minister could set out a timeline for further
widening the scheme to these kinds of products. It would be good
to hear from him what other assets he is considering for later
inclusion, whether they are direct cash or non-cash assets.
Charities cannot wait to benefit, and nor can the public. The
powerful testimonies from current beneficiaries demand that the
Government seek to expand. I know that the Second Reading of the
Bill in the other place raised many helpful suggestions as to how
that could happen. Wherever funds can be identified, Labour wants
to see them put to work for social and environmental good
causes.
Part 2 of the Bill focuses on a number of themes, the first of
which is the reclaim fund. Moving it under the auspices of the
Treasury is a positive move, placing it independently but with
lines into the Treasury. However, it is Labour’s consideration
that, 13 years since the scheme’s passage through this place, it
should be reviewed. Each reclaim product should be assessed
separately according to the levels of real risk to the reclaim
fund. If data from the first phase is observed, the scheme could
be more generous in its support to beneficiaries. The sector
agrees with that. A regular review would also help to identify
any risk in the scheme. The Government will now be responsible
for underwriting any deficit that might occur with a loan to the
scheme, but it is far better to avoid such risk in the first
place. My broader question is therefore: is the balance
right?
Before I address the matter of where the money is spent, I also
want to raise the question of the next stage of the Bill. After
such detailed consultation over many years, we need to ensure
that there is no further significant delay in preparing and
instituting secondary legislation. Labour wants to see this
process commence on the heels of this legislation, for it to be
thorough and allow sufficient time for response and for it then
to be expedited through secondary legislation.
I am most grateful for the addition of clause 29 to this
legislation. It was added on Report in the other place and it
highlights a deficiency in the distribution of the reclaim fund.
That is impeding civil society from thriving across many
communities and impeding the social levelling-up agenda. Imagine
doing a jigsaw and finding one piece missing: it mars the whole
picture. The reconstruction of civil society is the same. All the
schemes need to be in place, but the exemption of the community
wealth fund has meant that whole swathes of communities have been
robbed of the opportunity to build the very partnerships that
could tackle the deepest of challenges.
In my own constituency, we have a thriving and growing voluntary
sector under the superb leadership of York CVS. However, we have
areas of real deep entrenched deprivation. Tang Hall Big Local, a
local trust, has now developed micro-level infrastructure to
start tackling social injustice in the Tang Hall area. It is
utterly amazing to see the multi-agency approach and the multiple
offers, alongside community engagement—225 such areas have been
mapped out.
Imagine areas where there is no thriving CVS or a well-developed
civil society sector, on which the new integrated care systems in
the Health and Care Bill depend. Imagine this loss in the most
deprived and challenged areas, as they often are. The amazing
things that charities do just would not happen; the vital
partnerships and social infrastructure would not be built. This
is at the core of what the community wealth fund does. It
empowers communities to develop the partnerships needed to
transform themselves. Its inclusion will mean greater equality,
which is surely what levelling up is all about.
That is why the inclusion of the community wealth fund in the
Bill to build social infrastructure is so vital. The principles
of the Bill and the 2008 Act are too broad to provide such a
framework without clause 29, and the principle needs to be framed
in primary legislation. Without it the funds could go elsewhere
and will not meet the ambition that I trust the Government share
with Labour.
The Government do not need further pilots, as there are 150
projects at various stages of development. Those projects have
been evaluated and will continue to prove their value. When it
comes to the civil society sector, the Government always seem to
have the knack of overcomplicating things and missing the
opportunity it presents. If they really wanted to build back
better, they would have poured investment into community wealth
funds and seized this moment to bring about social
transformation. That is why Labour has pushed so hard so see it
included in the Bill, and the Lords supported it. I trust for the
sake of its impact that the Government will not lose the
opportunity to reaffirm the principle of a community wealth fund
in primary legislation to complete that picture.
In closing, I put on the record my thanks to the thousands of
organisations that have shown their support for taking the
reclaim fund forward, and to the participants in the dormant
assets scheme to date for their co-operation and engagement.
Across our communities, staff and volunteers are building civil
society, fighting inequality and injustice, and supporting people
with every need. Their contribution is outstanding and their
support is utterly amazing. It gives us all such pride to reflect
on all they do. Putting money to good work for them to multiply
its benefits has always been a principle that Labour has
advanced, and we will again throughout the passage of this
Bill.
21:22:00
(Solihull) (Con)
I declare an interest as chair of the all-party parliamentary
group on financial education for young people. Several key
supporters of the APPG have benefited from the dormant assets
scheme, in which I know my hon. Friend the Economic Secretary to
the Treasury takes a keen interest. His has often been a lone
voice in the wilderness when it comes to financial education for
young people, and we are grateful for his support.
It would be fair to say that the current dormant assets scheme
has far exceeded expectations since the passage of the Dormant
Bank and Building Society Accounts Act 2008. I was a financial
journalist at the time, and I well remember that it was seen as
revolutionary but relatively small-scale—a staging post. The then
Government thought it would raise about £400 million, but it has
raised £800 million. I also remember that there were a lot of
questions about exactly how it would be brought about, how fair
it would be and whether people would get their money back.
There were also questions about whether people would find their
money was just taken, whether it would be an example of the state
effectively piling into people’s lives, but we have seen a huge
amount of fairness. No one can complain—even those from 1864 who
lost money from their National Savings and Investments account
have not come forward to say they have been mistreated in that
respect.
I have seen in my constituency the huge amount of good this
scheme has done. Ordinary Magic, a group based in Shirley,
received £60,000 through the fund this year, and it is providing
support to local children—we know from the tragic events this
weekend exactly how welcome this is in my community—who are
suffering from mental health conditions by providing
psycho-education workshops to teach parents how to enable their
children to get through these difficult times and difficult
situations. It also provides personal, social, health and
economic education sessions in schools, enrichment holiday clubs
and breaks for children and carers, which is hugely
important.
As Chair of the Digital, Culture, Media and Sport Committee, I
believe it is incredibly important for our young people,
particularly those living among some of our most deprived
communities, to have access to the performing arts. I make
reference to the Citizens Theatre, based in Glasgow, which is
fantastic in its outreach. I know for a fact that it goes out
into the local community; I believe it even tries to recruit
young actors in chicken shops, cafés and other such places. The
distribution of the dormant assets scheme is therefore providing
enrichment experiences that young people in Glasgow need to
expand their confidence and explore their identities through the
stage. That would not be the case had it not been for this
legislation, which has cross-party support.
However, I believe we have a major disparity in the existing
system, whereby the devolved Administrations have more
flexibility in how the dormant assets funding is distributed in
comparison with England, where the funding is restricted to
groups promoting financial inclusion—obviously, I have an
interest in those—and social investment. While financial
inclusion and social investment charities both do important work,
it is only right that we widen our funding distribution here in
England as well.
That is why I support the Bill before the House. Under this
legislation, the Government will be in a position to increase the
flexibility on how funding is allocated over time. As they see
the money come in, they will be able to suit the distribution of
those funds accordingly and be able to bring about real change.
That is to be done through amending the Dormant Bank and Building
Society Accounts Act 2008, allowing the Government to set out
additional clauses through secondary legislation. It will thus be
subject to a departmental consultation in the public domain,
which is important, and will need the support of hon. Members
through parliamentary approval, as per usual.
Supporting this change by approving the legislation before us
will allow the Government to bring themselves in line with our
devolved Administrations, so they can set their distribution
priorities through secondary legislation. According to the
Association of British Insurers, which I understand is backing
the Bill, it is estimated that £2.1 billion currently sits in
dormant insurance and pension products. Let us just think of the
life-affirming, life-changing effects that that £2.1 billion, if
correctly and safely distributed with the right to reclaim, could
have on our communities across the country.
I concur with my hon. Friend the Member for Thirsk and Malton
() in his ambition for
community banks. I also place on the record my thanks to those
within banking and financial services who work tirelessly year
in, year out to reconnect dormant assets with their customers.
They really do not give up—even with the case in 1864 with
National Savings & Investments, they are probably still
writing letters. Indeed, I know the sector invests millions each
year in reuniting customers with their money. However, despite
some of their best efforts to reconnect dormant assets with the
customer, sometimes we know it is simply not possible. That said,
with the greater move to online banking, customers should be in a
far better position to keep track of their finances and
securities.
Finally, it is welcome that, following the Government’s public
consultation in July 2020, the existing scheme will be expanded
to include assets from the insurance, pensions, investments,
wealth management and securities sectors. This step will pump
even more funding into the dormant assets scheme, in turn
supporting some of the most innovative and inspiring work in the
third sector.
As the hon. Member for York Central () stated, we know the
charity sector has had an incredibly difficult pandemic; £750
million was hugely welcome, but the total shortfall across the
sector was £4 billion. Let us hope that some of the redirected
resources from this scheme can go towards that third sector, to
ensure that they can continue the work they do.
21:28:00
(Ochil and South Perthshire)
(SNP)
We in the Scottish National party welcome the Bill and the
expansion of the dormant assets scheme. The extra £880 million
now available as a result is very welcome, especially in what is
an extremely difficult time for so many up and down the country.
Already the scheme has delivered £745 million for social and
environmental initiatives. By expanding the current list of
assets that qualify for the scheme, up to £1.7 billion more could
be made available.
The Minister will doubtless be aware of the remarks made in the
other place about the Bill. Peers wanted clarity on its potential
costs and more detailed impact assessments of the expanded
scheme. specifically warned that
such details are important so that the scheme does not become
a
“piggyback fund for government when times are tough.”—[Official
Report, House of Lords, 26 May 2021; Vol. 812, c. 1039.]
Perhaps the Minister can assuage her concerns and give us the
detail that she asked for.
It is good to see that the Bill makes some changes to
distribution in England; the Secretary of State will have more
freedom to spread assets through secondary legislation, thus
allowing England to catch up with Scotland and the other devolved
nations. As pointed out in the other
place, the example set by the devolved nations through their
innovative thinking about how to spend the funds allotted to them
provided the impetus for the expansion of the scheme in England
through this Bill.
The pandemic has shown that the needs of the population can
change dramatically and suddenly. Flexibility in secondary
legislation is a useful tool to deal with such change, but we
must also ensure adequate consultation and scrutiny. We welcome
the requirement for the Secretary of State to launch a public
consultation and to consult the National Lottery Community Fund
before replacing or changing an order. However, it may also be
desirable to expand such consultation beyond that fund and to
include the devolved Ministers responsible for spending in their
nations and representatives of the voluntary and social
enterprise sectors.
It is reassuring that the expanded scheme will focus on reuniting
owners with their assets. With the expanded range of qualifying
products, it is estimated that £3.7 billion-worth of financial
assets lie dormant. With the elderly and vulnerable—especially
those without digital skills—among those most likely to lose
access or connection to their accounts in an increasingly
digitised world, such efforts are vital. That is why we on the
SNP Benches welcome the enhanced tracing and verification
measures that could lead to the reclamation of as much as £2
billion.
The Bill should be effective, but if we could get clarity from
the Minister on some of the points raised here and in the other
place, it would be much appreciated.
21:32:00
(Thirsk and Malton)
(Con)
It is a pleasure to speak in this debate. I am supportive of the
Bill and the widening of the jurisdiction of the legislation.
As I said in an earlier intervention, my brief remarks will be
centred on community banks, which, as both Ministers on the Front
Bench—my hon. Friends the Economic Secretary to the Treasury and
the Under-Secretary of State for Digital, Culture, Media and
Sport, the Member for Mid Worcestershire ()—know, the all-party
parliamentary group on fair business banking believes are at the
heart of social purpose. Indeed, the APPG’s recent “Scale up to
level up” report makes the case for regional mutual banks and
community development financial institutions, which could—and in
the case of CDFIs do—play an important role in fairness, making
sure that we level up properly, and in regional distribution in
terms of regional recovery.
Let us look at how regional mutual banks worked in Germany after
the most recent financial crisis. In the five-year period between
2008 and 2013, UK commercial banks withdrew financing to small
and medium-sized enterprises by around 25%, whereas in the same
period co-operative and community banks in Germany increased
lending to SMEs by 20%. That was an incredibly important time for
SMEs—they need funding to get through crises of that kind—and
co-operative and community banks take a different approach to
lending. Commercial banks are important in the UK but regional
mutual banks could play an important role by getting patient
capital to where it is really needed, which is to SMEs and the
productive economy.
Regional mutual banks are not just a feature of Germany, and this
is not just a romantic ideal; they are very much part of every G7
economy, with the US, Germany and Japan being examples of where
they work very effectively. They are not currently part of the UK
banking sector—they used to be—but the APPG sees them as crucial
to levelling up because they can have a genuine regional
focus.
Similarly, there are some very good examples of CDFIs. A business
enterprise fund in Bradford, Yorkshire, is key to making sure
that people who are financially excluded are financially
included. Regional mutuals are full-service banks. CDFIs are not
full-service banks, but they make sure that people on low incomes
are properly banked, which again works very much on a
relationship-based approach. They also lend quite significantly
to small and medium-sized enterprises.
There are 50 CDFIs around the country. They rely very much on
grants and loans rather than getting money from the markets, so
it is incredibly important that they see more funds going into
them. I see this as a real opportunity for some of our less
well-off communities to thrive in the future. These organisations
are sector-based, making sure, for example, that people from
black, Asian and minority ethnic communities and women are
properly supported.
One very good example of how CDFIs work is Prima Bakeries in
Cornwall, which is featured in our report, “Scale Up to Level
Up”. At the time, the business had 19 employees. It was refused
banking from its high street bank, so it went to its local CDFI,
South West Investment Group, which lent it the money it needed to
get through. It now has 96 people employed in that organisation.
That shows how CFDIs take a different, relationship-based
approach, rather than simply looking at the pure numbers, which
the big banks tend to do.
It would be very simple for us to try to expand the current
legislation—I take on board my hon. Friend the Minister’s
comments about going through a consultation. The difficulty with
consultations is the time that they take. I know that it is a
12-week consultation, but this kind of stuff might take months or
years to implement. It is quite clear from section 3(2)(c) of the
Charities Act 2011 that urban regeneration is an area that
qualifies for the distribution of dormant assets, but the people
who distribute them, Big Society Capital and Fair4All Finance,
currently think that regional mutuals and CDFIs do not qualify
for those funds.
If we could put something into the legislation, a simple
clarification rather than a wider consultation, on the basis that
these sectors could be funded through dormant assets—I know that
there will lots of different people trying to pitch for all kinds
of different things—it would mean money going to those
organisations much more quickly. If they are key to levelling up,
which I absolutely believe they are, it would be good to see that
consultation. We are looking for about £100 million to pump-prime
these organisations with this funding. I will table an amendment
to the legislation to discuss this at a later stage, because it
would be better to expedite this issue than wait for a long-term
consultation. No doubt we will have more time to discuss that at
a later stage.
Madam Deputy Speaker ( )
We have very little time left, so I must ask for very short
speeches, please.
21:37:00
(Bethnal Green and Bow)
(Lab)
May I start by declaring an interest as co-chair of the all-party
parliamentary group on philanthropy and social investment and
also chair of a national charity that has benefited from dormant
assets funding, as well as the many organisations that the
all-party group represents?
Since the last Labour Government introduced the Dormant Bank and
Building Society Accounts Act 2008, with cross-party support,
more than £800 million has been distributed to good causes. The
four organisations that have been involved with the
distribution—Big Society Capital, Fair4All Finance, Youth Futures
Foundation and Access, the Foundation for Social Investment—have
a proven track record and an evidence-based approach to
investment and support to charities and social enterprises across
the country.
It is vital that this Bill builds on the work and the evidence
underpinning the allocation of funding. It is also vital that we
look at some of the things that these organisations have
achieved. Big Society Capital alone has used the £425 million of
dormant assets to bring in another additional £2.5 billion of
social investment from other investors, so it is vital that we
ensure that that is built on and that there is not a power grab
by Ministers to allocate funding to their favoured causes. I hope
that the Minister will assure us that the consultation will be
meaningful and not an attempt to take away the proper
accountability, scrutiny and good governance that underpins the
current allocation of funding, through these agencies, to good
causes in our constituencies up and down the country.
Since 2019, the Youth Futures Foundation, which has a fund of £90
million, has started to allocate funding to young people. I have
seen how the charity that I chair has benefited; 70% of the
beneficiaries are from working-class and ethnic minority
backgrounds in different parts of the country. Many other
organisations up and down the country are also doing really great
work with young people. Youth Futures Foundation has distributed
nearly £19 million to 143 civil society organisations engaging
about 18,000 people during the pandemic, and there is much more
to do for those who face disadvantage and discrimination. As I
have said, the work of Big Society Capital has meant that
organisations have been able to build a social economy in their
areas, which has had benefits in a wide range of fields such as
tackling homelessness and building new social businesses across
the country.
Let us build on the achievements reached under the last Labour
Government and the cross-party consensus that has underpinned the
work of these multiple organisations. I hope that the Government
will ensure that lessons are learnt from the scandal of the towns
fund. There have been big concerns about funding being allocated
when Ministers have more control over it and there is less
accountability; funding must not be dictated by political
favouritism. Likewise, we hear the scandals of the personal
protective equipment contracts, with separate pathways for those
who have close connections with the ruling party. We must ensure
that we do not fall into those traps, because there is a great
deal of cross-party consensus on supporting organisations in our
constituencies up and down the country.
During the pandemic, we have seen how vital it is to support
charities. I have been fortunate to be able to work with
colleagues in the Conservative party, as well as Liberal
Democrats, SNP Members and others, through my all-party
parliamentary group. I hope that Ministers will take heed of the
representation that has been made and ensure that, rather than
the duty to consult just being paid lip service to, there is
proper protection and good governance in the future allocation of
the dormant assets funds, and that they do not just dish out
money to their pet causes, dictated by political considerations
rather than what is in the interests of community organisations
and charities across our constituencies and our country.
Madam Deputy Speaker ( )
We have less than 20 minutes left, so four minutes each please. I
call .
21:42:00
(Grantham and Stamford)
(Con)
Thank you Madam Deputy Speaker; I will keep my remarks brief.
This fantastic Bill will unlock literally hundreds of millions of
pounds to support communities and community businesses throughout
the country. The Bill is clear about where the money is coming
from, so let me talk briefly about where the money could go to.
The Dormant Bank and Building Society Accounts Act 2008 unlocked
funding to support our UK social investment sector, and I very
much hope that this Bill will do the same. The UK social
investment market has tremendous potential to transform
communities up and down the country, and to support businesses
that have a social benefit and charities that have specific,
targeted interventions. While discussing this Bill, it is
important that we reflect on the time since the 2008 Bill. In the
brief time that I have, I will highlight three points.
First, as has been mentioned by the hon. Member for Bethnal Green
and Bow (), in 2012 £425 million was
taken from the dormant assets pool to form Big Society Capital,
which was the world’s first social investment organisation. As
she quite rightly pointed out, it has done significant and
brilliant work to mobilise social investment capital, and has
helped to fund a lot of businesses and charities around the
country. However, it is important to point out, as my hon. Friend
the Member for Thirsk and Malton () did, that it is
constrained by the very specific, ringfenced scope of the
legislation at the time, to the extent that its mandate has
almost become overtly philanthropic. If we are really going to
unleash the potential of social investment, it is vital that we
look at the organisation’s scope to be able to invest in
businesses that have a social impact and make money. Their
financial track record over the past eight years shows that they
have a made a loss in six of those years. If we spoke to the
organisations themselves, they would agree that if they were
given more freedom to invest across the country in different
types of business, they could do a lot better.
My next point is on what are commonly known as social outcome
contracts, which were first launched in 2011. These are highly
complex, very Illiquid and somewhat
risky arrangements. We have had 87 launched in this country since
2011. They were billed as a way of mobilising billions of private
capital. Unfortunately, they have only mobilised £73 million. I
therefore urge caution on the Government ahead of proceeding with
allocations in future to make sure that they are not investing in
social outcome contracts that may not deliver what they say they
will.
However, there is one area that I would encourage the Government
to look at as part of their consultation, and that is to bolster
our liquid, tradeable social bond funds and the market that is
out there. These are issued by corporates and charities to
ringfence capital that has a social impact. We are a genuine
world leader in this. Last year there was $59 billion of issuance
that could multiply quite exponentially given what has happened
with green bonds. I encourage the Government to look at that in
more detail.
21:45:00
(Devizes) (Con)
The whole programme of dormant assets and the social investment
that it has mobilised has been a great success story. I pay
tribute to Sir Harvey McGrath, the outgoing chairman of Big
Society Capital, and to his team; and also to , formerly of this place, who
chairs the Access foundation, his colleague Seb Elsworth, and
others there. They have done an absolutely tremendous job.
Mobilising £8 billion of private money for £800 million of
dormant assets is not bad.
I recognise the points made by my hon. Friend the Member for
Grantham and Stamford (). The fact is that some
programmes do fail. The whole point of investment is that they do
not always work. We have to keep an eye on the overall returns
that funds like this generate. However, there are some tremendous
success stories, including in social outcome contracts. I declare
an interest regarding the one I founded—the West London Zone for
Children and Young People, which has leveraged public money
through social outcome contracts very successfully, bringing in
significant private investment and delivering great outcomes for
young people.
I recognise that, as the hon. Member for Bethnal Green and Bow
() said, it is not appropriate
for us, as MPs or Ministers, to be dictating the objects for
these sorts of funds. Nevertheless, I hope she will not mind if I
make some suggestions of the sorts of projects that would be
useful for this. My hon. Friend the Member for Thirsk and Malton
() is absolutely right that
there is a massive gap in our finance sector in this country
where we need small regional banks lending particularly to family
businesses. That is absolutely crucial. If this money could
support that, I would absolutely welcome it.
Then there is the opportunity for investment in personal debt
projects. I particularly reference the suggestion by Fair4All
Finance of creating a jubilee debt fund to tackle problem debt.
We could do that. Community foundations and existing charities
can and should be used as objects for significant capital
injections. They distribute money very effectively to small local
charities and causes.
Finally, there is the idea of a community wealth fund mentioned
by the hon. Member for York Central (). I absolutely agree with
her suggestion. I pay tribute to Matt Leach and Margaret Bolton
of Local Trust, who seem to have got those on both sides of this
House pretty much in their pocket when it comes to lobbying for
this brilliant idea, which I endorse too. A community wealth fund
could do all the things that we are describing to get money to
all these projects, whether commercial, charitable or social
enterprise. That is the sort of economy we need— a mixed economy
that includes all these different and great innovations.
Madam Deputy Speaker ( )
I must try to leave time for the Minister; therefore two minutes
will be just fine.
21:49:00
(Crewe and Nantwich)
(Con)
I broadly welcome this legislation, as it expands a positive
initiative. I understand the scheme is voluntary, and I would be
interested to hear the Minister’s thinking on whether we could
move towards a mandatory system for our larger institutions.
The focus of my remarks is on the use of the funds. As has been
stated, today, the money can only be used for youth, financial
inclusion or social investment in England. It has been helpful to
have those priorities set out in legislation. It gives certainty
to funders and guaranteed income streams, so I am wary of the
decision to strip it all the way back to consultation. I thank
Ministers for the time they have taken to explain to me that the
additionality principle is still in place and that the money must
still be spent on social and environmental causes. That has given
me some reassurance, but I wonder whether there is a halfway
house we can reach, where we retain the new flexibility that the
Minister would like to have for the Government, while perhaps
having a focus on things such as geographical and
deprivation-linked spending, so that we can tackle some of the
challenges around levelling up at the same time.
I often find that the most deprived areas are the least able to
put themselves forward to apply for funding. If there was some
kind of linkage to that, it would be welcome. That is why I
support some of the suggestions on a community wealth fund for
the 225 most deprived or left-behind neighbourhoods in the
country, one of which is Crewe St Barnabas in my constituency. I
have seen at first-hand the deprivation challenges that that
creates. Backing the community wealth fund, even if not through
legislation, but in the consultation process later on, would send
a powerful message to those wards and those parts of the country
that the Government are serious about levelling up. I thank the
Minister for his remarks.
21:50:00
(Sedgefield) (Con)
I will try to be as quick as I can. First, I compliment my hon.
Friend the Member for Thirsk and Malton (); I agree with everything
he said. Primarily, I want to speak to the proposal for the
creation of the community wealth fund through the Bill. The
Government have made it clear that levelling up is one of their
top priorities. That has been demonstrated through the
establishment of a Department, new funds for levelling up, the
£200 million community renewal fund and so on. That is all very
welcome, but it is only part of the story. Those things will not
by themselves be sufficient to level up the most deprived or
left-behind neighbourhoods. They are focused on shovel-ready
physical infrastructure—an excellent starting point—but we should
not forget that we also need to build the social capital needed
to develop and sustain prosperity in left-behind
neighbourhoods.
I agree with the Government that we need to invest in
community-led infrastructure at the neighbourhood level to ensure
that the levelling-up agenda is successful. A community wealth
fund would complement existing initiatives by addressing the need
to help communities develop and sustain the social infrastructure
that is the lifeblood of strong communities, building social
cohesion and laying the foundations for a strong local
economy.
The community wealth fund, which would invest in the 225 most
deprived or left-behind neighbourhoods in this country, would
repair the social fabric in those communities where it is most
frayed. That is the particular focus of the all-party
parliamentary group that I jointly chair, and I thank everyone
who contributes to it for increasing my motivation. We also need
to consider how we deliver this fund and what we do, and I would
like us to consider the idea of the late Jonathan Sacks that a
social covenant, which is relational and human, is preferable to
a social contract, which is transactional and bureaucratic. This
Bill has the potential to further strengthen families,
communities and the nation, and I would like the Minister to
consider that as a methodology for getting it there and letting
us trust the people. I will explore that further in my ten-minute
rule Bill on Wednesday.
Madam Deputy Speaker ( )
I thank the hon. Gentlemen for being really brief; that was
totally brilliant.
21:52:00
The Parliamentary Under-Secretary of State for Digital, Culture,
Media and Sport ()
I thank all hon. and right hon. Members for their valuable
contributions in the debate today, many giving examples of the
huge impact that dormant assets funding has had in their
constituencies, and we see that right across the country. I am
pleased that the Bill has such obvious support across the House
and in the other place. It is clear that we all share the
ambition to ensure the scheme’s continued success in unlocking
dormant assets for public goods.
I would like to address some of the points raised today. Time
will not allow me to give full details, and we will be debating
the issues and details of this Bill in its later stages. I am
also happy to discuss with colleagues across the House issues
raised today ahead of the Committee stage, should there be an
appetite to do so.
Members have raised a wide range of issues, in particular
regarding future spend considerations. Clause 29, as mentioned by
the hon. Member for York Central (), enables the Secretary of
State to launch a public consultation on the social or
environmental purposes of the English portion of the dormant
assets funding, as the hon. Member for—[Interruption.]—as the
hon. Member for Ochil and South Perthshire () pointed out. Sorry, this is
what happens when Members change constituencies. We do not have
the flexibility in England that they have in the devolved
Administrations, and that is something we would like to correct,
as my hon. Friend the Member for Solihull () mentioned.
The Government plan to launch a consultation that will last for
12 weeks after the Bill receives Royal Assent and clause 29 is
commenced. We anticipate that summer 2020 is the earliest that
that will be possible. The consultation will enable the public to
have their say on how the impact of the scheme can continue to be
felt by the people and communities who need it most. We are
committed to ensuring that the process is broad and
inclusive.
As the consultation is dependent on the Bill passing with the
measure included, it is too early to speculate on the causes that
may be included, and I would not want to pre-empt the conclusions
of the recommendations. As we have heard this evening, however,
many suggestions are being put forward by hon. Members in this
place and the other place about vehicles or future causes that
could be included, and we are certainly open to hearing them.
We are not opposed to considering, for example, community wealth
funds, as articulated by several hon. Members. My hon. Friend the
Member for Thirsk and Malton () mentioned alternative
measures involving mutuals and credit unions. My hon. Friend the
Member for Grantham and Stamford () mentioned alternative
measures too. We will consider them all in the consultation.
As outlined by the Economic Secretary to the Treasury in his
opening remarks, the Bill is designed to ensure that we continue
to have the core principles in mind, such as additionality, as
raised by several hon. Members. It is important that that
underpins the success of the scheme, as it has for the last
decade. The 2008 Act describes additionality as
“the principle that dormant account money should be used to fund
projects, or aspects of projects, for which funds would be
unlikely to be made available by…a Government department”
or devolved Administration. I reassure hon. Members that that
principle will remain, which will ensure that funding is directed
to causes that fulfil the scheme’s objectives while being
additional to central or devolved Government funds.
I reassure the hon. Member for Bethnal Green and Bow (), my hon. Friend the Member
for Devizes () and others that that means
that the Government do not have direct access to dormant asset
funding and cannot influence it. The money must go to the
appropriate causes, as defined in legislation, which have a
continuing focus on social and environmental purposes, which is
pivotal. As I said, several hon. Members have mentioned
alternative measures and we look forward to continuing the
dialogue with them about where the funding should go, but the
core principles will continue to apply.
We will continue the debate in the future stages of the Bill, but
I reiterate that its key purpose is to present the opportunity to
significantly expand the scheme—we are talking about hundreds of
millions of pounds of additional funding—while protecting
participating institutions and rightful owners. We want to
continue to make sure that, where possible, money goes back to
those who own the funds or are rightful owners of the money.
As a result of the Bill, we hope to release hundreds of millions
of pounds of additional funds for social and environmental causes
across the nation. I look forward to working together to pass
this important piece of legislation, so we can proceed with that
expansion as soon as possible to ensure that the UK remains a
world leader in deploying dormant assets at scale to society’s
benefit across the country.
Question put and agreed to.
Bill accordingly read a Second time.
Dormant Assets Bill [Lords] (Programme)
Motion made, and Question put forthwith (Standing Order No.
83A(7)),
That the following provisions shall apply to the Dormant Assets
Bill [Lords]:
Committal
1. The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
2. Proceedings in the Public Bill Committee shall (so far as not
previously concluded) be brought to a conclusion on Thursday 13
January 2022.
3. The Public Bill Committee shall have leave to sit twice on the
first day on which it meets.
Consideration and Third Reading
4. Proceedings on Consideration shall (so far as not previously
concluded) be brought to a conclusion one hour before the moment
of interruption on the day on which those proceedings are
commenced.
5. Proceedings on Third Reading shall (so far as not previously
concluded) be brought to a conclusion at the moment of
interruption on that day.
6. Standing Order No. 83B (Programming committees) shall not
apply to proceedings on Consideration and Third Reading.
Other proceedings
7. Any other proceedings on the Bill may be programmed.—(.)
Question agreed to.
Dormant Assets Bill [Lords] (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No.
52(1)(a)),
That, for the purposes of any Act resulting from the Dormant
Assets Bill [Lords], it is expedient to authorise the payment out
of money provided by Parliament of sums required by the Treasury
for the purpose of making loans to, or in respect of, an
authorised reclaim fund.—(.)
Question agreed to.
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