Dormant Assets Bill [HL] Commons Amendments 3.53pm Motion on
Amendments 1 to 4 Moved by Lord Parkinson of Whitley Bay That the
House do agree with the Commons in their Amendments 1 to 4. 1:
Clause 12, page 12, line 6, at end insert— “(4A) The reference in
subsection (4)(b) to money that could be transferred as mentioned
in section 8(1)(a) includes money held by an investment institution
that is not within the definition in section 8(3)...Request free trial
Dormant Assets Bill [HL]
Commons Amendments
3.53pm
Motion on Amendments 1 to 4
Moved by
of Whitley Bay
That the House do agree with the Commons in their Amendments 1 to
4.
1: Clause 12, page 12, line 6, at end insert—
“(4A) The reference in subsection (4)(b) to money that could be
transferred as mentioned in section 8(1)(a) includes money held
by an investment institution that is not within the definition in
section 8(3) which—
(a) is proceeds of the conversion by the investment institution
of a collective scheme investment into a right to payment of an
amount, and
(b) could, if it were held by an investment institution falling
within section 8(3), be transferred as mentioned in section
8(1)(a).”
2: Clause 29, page 22, line 12, leave out subsections (2) to
(4),
3: Clause 29, page 22, line 38, at end insert—
“(6A) In carrying out the first public consultation under
subsection (3)(a) the Secretary of State must invite views as to
whether the permitted distributions should be, or include, any
one or more of the following—
(a) distributions for the purpose of the provision of services,
facilities or opportunities to meet the needs of young
people;
(b) distributions for the purpose of the development of
individuals’ ability to manage their finances or the improvement
of access to personal financial services;
(c) distributions to social investment wholesalers (within the
meaning of section 18);
(d) distributions to community wealth funds.
(6B) For the purposes of subsection (3A) “community wealth fund”
means a fund which gives long term financial support (whether
directly or indirectly) for the provision of local amenities or
other social infrastructure.”
4: Clause 34, page 26, line 3, leave out subsection (8)
The Parliamentary Under-Secretary of State, Department for
Digital, Culture, Media and Sport ( of Whitley Bay) (Con)
My Lords, with the leave of the House, I will move that the House
do agree with the Commons in their Amendments 1 to 4. In doing
so, I will briefly summarise the changes which have been made to
the Bill since last it was before your Lordships’ House. All of
the amendments which have been made were brought forward by Her
Majesty’s Government and garnered support across all parties in
another place. Commons Amendment 1 is minor and technical,
responding to a drafting issue that was helpfully highlighted by
the Investment Association in its written evidence to the Public
Bill Committee. Amendments 2 and 3 respond to the lengthy debates
on how dormant assets money should best be spent, and
specifically the calls to establish a community wealth fund.
Amendment 4 is wholly procedural and removes the privilege
amendment made in your Lordships’ House, as is the procedure in
these cases.
First, I will speak to Amendment 1. This is a minor and technical
government amendment which is required to uphold the key
principle of full restitution: to ensure that people can reclaim
the amount owed had the transfer to the scheme not happened. This
amendment clarifies that money derived from collective scheme
investments cannot be transferred into the scheme as client
money. This is in response to feedback we received from the
Investment Association during the passage of the Bill, and we
thank it for its helpful feedback on this issue.
Without this amendment, there would be an unintended loophole
where ISA fund managers and investment platforms that hold
collective scheme investments, and are able to convert them to
cash, would be able to transfer this money into the dormant
assets scheme under client money clauses. The investment and
wealth management clauses of the Bill recognise the fluctuating
market value of investments by entitling owners of dormant
collective scheme investments to reclaim the value of the share
or unit at the point of reclaim. In contrast, the right to
reclaim under client money clauses does not account for the
market value, as the asset is already held in cash. We believe
that this applies to a small number of cases. However, if
relevant institutions have the contractual cover to sell the
asset on behalf of its owner and transfer the funds to the scheme
as client money, this would mean that the owner would be treated
differently from if their dormant asset had been transferred
under the investment and wealth management clauses. Remedying
this discrepancy protects the vital principle of the scheme: full
restitution. It ensures that the collective scheme investments
are excluded from the client money clauses, so that the owners of
these dormant assets will not be treated differently depending on
which type of investment institution happened to hold it for
them. Unfortunately, this will have the effect of excluding
collective scheme investments held by investment platforms and
ISA fund managers from the scheme at this time. Bringing them
into scope would require complex technical work, and we are
working with the industry to understand if and how this can be
accomplished in future under the power to extend the scheme
through regulations. We thank our industry partners again for
their thoughtful and very helpful feedback on this issue.
I now turn to Amendments 2 and 3. As noble Lords know, a key
topic of debate throughout the passage of the Bill has been the
proposal to use dormant assets funding to establish community
wealth funds in England. We have heard, both here and in the
other place, the merits of considering this model, not least from
the former before she left your
Lordships’ House. This is a model whereby left-behind communities
are empowered to make their own decisions on how best to develop
vital social infrastructure in their local areas. This kind of
devolved and very local decision-making is, of course, a key
tenet of the Government’s levelling-up White Paper, which was
published last week. We agree that this important proposal
warrants careful consideration—not only by the Government, but by
the public and voluntary industry participants that underpin the
scheme’s success. In Committee in the other place, the Government
made a formal commitment to include community wealth funds as an
explicit option in the first consultation launched on the
purposes of the English portion.
My honourable friend the Minister for Sport, Tourism, Heritage
and Civil Society met Her Majesty’s Opposition and the co-chair
of the All-Party Parliamentary Group for “Left Behind”
Neighbourhoods to discuss this commitment. With their support,
the Government brought forward Amendment 3 to place this
commitment in legislation. This responds to calls heard in both
Houses to refer to community wealth funds on the face of the
Bill—making a clear statement that the Government are considering
this model and are supportive of its underlying principles, while
protecting the integrity of the consultation process. We maintain
that an open and fair consultation, without predetermining its
outcomes, is essential to securing the expanded scheme’s
impact.
The Government are clear that Amendment 3 is the furthest that
the legislation is able to go in this area, and that is why
Amendment 2 removes community wealth funds from being
pre-emptively named as a possible option in a future order, in
favour of Amendment 3.
I thank noble Lords on all sides of the House for the
constructive debate that we have had on this issue. I am very
grateful for the spirit of positive collaboration shown
throughout the passage of the Bill. It is in this spirit that the
Government brought forward their amendments. I am also grateful
for the scrutiny it has received in the other place, and I
believe that this has presented your Lordships’ House with a
strengthened Bill. I hope that noble Lords will, therefore,
support the Government in these amendments, as was the case in
the other place. Sending this Bill on its way to the statute book
will enable the Government to shift our focus more swiftly to the
implementation of the scheme expansion, including launching the
consultation and unlocking hundreds of millions of poundsmore
across the UK. I beg to move.
(LD)
My Lords, I thank the Minister for his explanation of these
amendments. It was most helpful, particularly about Amendment 1,
which is very technical. Since it has come from the industry and
the whole thrust behind the Bill came from the financial sector,
which wishes to see many more assets unlocked in this way, we
should accept his explanation and stand behind that.
4.00pm
On Amendments 2 and 3, I confess that I am slightly disappointed;
it seems a slight watering-down of the decision made in this
House to include community wealth funds as specific beneficiaries
of these funds. I found it particularly regrettable that it
removes the guarantee that was in the amendment passed in this
House to establish at least one community wealth fund within the
next decade, which did not seem particularly onerous. Given that
there has been a general consensus, even in some parts of
government, that community wealth funds are something that we
should aim to establish, particularly in communities that
experience severe deprivation, it would have been good to see
that commitment remain. However, I take what the Minister
says—that we have probably got as far as we can go in this
Bill—and, given that community wealth funds are going to be in
the Bill and there is a hook on which to hang their establishment
in future, we should agree to the amendments at this stage.
(Lab)
My Lords, I express the gratitude of the Labour Benches to the
Government for the progress made on the Bill and the valuable
update that the Minister has given us this afternoon. I am
particularly pleased that the Government have brought back an
amendment covering the dormant assets scheme, although I rather
agree with the noble Baroness, Lady Barker, that it is a shame
that it was watered down, particularly regarding community wealth
funds.
When the Bill was in your Lordships’ House we were able to reach
agreement over periodic reviews of the dormant assets scheme and
subsequent reporting to Parliament, which will keep us abreast of
how much has been raised and how those funds have been put to
good use, which is valuable information for us. During its
passage through the Commons, the Government outlined some of the
options to be explored in the forthcoming consultation that the
Minister referred to, including making a specific reference to
community wealth funds. Like the noble Baroness, Lady Barker, I
would have liked to have seen work beginning on that, but at
least we have got it into the consultative framework.
For our part, we continue to believe that community wealth funds
should have significant value in communities across the country,
particularly in those areas underserved by other government
schemes and/or third-sector organisations. I remain grateful to
the noble Baronesses, Lady Kramer and Lady Barker, the noble
Lord, Lord Hodgson, and the right reverend Prelate the , who spoke in favour of the
community wealth fund amendment on Report, as well as to the
former , who I hope is now
enjoying the first fruits of the early stages of her
retirement.
(Lab)
Is this an appropriate moment to reflect on the roots of where we
are today on dormant assets, and to put on record again the part
played by Frank Field—the noble Lord, Lord Field—all those years
ago in pressing to get this off the ground and to get the
original legislation that we are now updating?
(Lab)
I am grateful to my noble friend for his support on that
point.
We on our Benches look forward to the consultation in due course
and hope that the department will continue to engage with
proponents of community wealth funds. Such funds could play an
interesting and, we think, valuable role in levelling up and
empowering local communities seeking their own solutions to local
problems, a feature of the White Paper that we very much
endorse.
May I use this occasion to ask the Minister what the Government
intend to do to ensure that we continue to widen the potential
scope for unlocking other dormant assets? Here I am thinking of
Oyster cards, proceeds from crime funds, unclaimed pensions and
unused insurance. It is worth reminding ourselves that the
independent commission report identified some £715 million from
investments and wealth management, £550 million from the pensions
and insurance sectors, £150 million from securities, and £140
million from banks and building societies. Unlocking that sort of
wealth unlocks a lot of power and gives great potential for
social benefit. These are not inconsiderable sums of money, and
if put in the right place and adapted, used and adopted for
levelling up, they could leverage in bigger sums still for the
hard-pressed communities that we want to see levelled up in the
next few years.
We are again grateful to the Government for what they have done
in improving the Bill. Your Lordships’ House played a valuable
and valid part in that process. We are slightly underwhelmed by
what has come back, but we are extremely grateful.
of Whitley Bay (Con)
My Lords, I thank the noble Lord and the noble Baroness for their
remarks, which reflect the cross-party work that has improved
this Bill throughout its passage and the interest that it has
garnered from all corners for the benefits that it will bring. I
am grateful to the noble Lord, , for reminding the House of
the contribution of the noble Lord, , and indeed many
others who have played close attention to this issue for a long
time.
To respond to the questions and points raised by the noble
Baroness, Lady Barker, we recognise that the provisions that were
inserted on Report in your Lordships’ House were permissive, but
the Government contend that Amendment 3 is preferable in three
main ways. First and foremost, it fulfils our commitment to
consult openly; we have emphasised throughout the passage of the
Bill that the consultation must be fair and transparent, and we
remain mindful of the need to bring industry along with us
alongside civil society and the general public. We cannot
therefore agree to any amendment that would suggest that the
process would be undercut.
Secondly, it recognises the widespread support and positive
impact that the current causes of youth, financial inclusion and
social investment have had. I am sure that noble Lords did not
intend to imply that those would be disregarded, but the
provisions that were inserted on Report in your Lordships’ House
were silent on those and thereby afforded community wealth funds
more legislative attention than those initiatives.
(Con)
My Lords, who is intended to select the investment managers for
these funds?
of Whitley Bay (Con)
My noble friend asks a good question, on which I will have to
write to give him the answer and the full list, if he will
forgive me for doing so.
I was just coming to the third reason why Amendment 3 is our
preferred way of proceeding. The provisions inserted in this
House would not achieve their objective of speeding up the pace
of delivery. We must reiterate that releasing this money will not
be immediate; indeed, we anticipate it taking several years for
the £880 million to be released, and we do not expect any funds
to be available for some time. Undercutting the consultation
process would not materially affect the pace of that funding
release. The Government have committed to launching the first
public consultation on the purposes of the expanded English
portion as soon as possible after Royal Assent. We anticipate
that it could be live as soon as this summer and will be open for
at least 12 weeks.
I repeat my commitment to write to my noble friend with the
answer to his question, and I beg to move.
(Con)
My Lords, before my noble friend sits down, does he agree that,
especially in current circumstances, it would be wholly
inappropriate to transfer funds from the TfL balance sheet by way
of seizing what are alleged to be surplus Oyster assets, many of
which are there because people, often from abroad, choose to
leave assets on their Oyster card for when they visit London,
which may be only once every few years?
of Whitley Bay (Con)
My noble friend raises an interesting point that has not been
made hitherto during the passage of the Bill, but I know that he
speaks with considerable experience from his time working with
TfL. If he allows me, I will write to him with further
information about the implications for Oyster cards, which is a
matter that has not been covered. It may have been covered in
another place, but I have not seen whether that is the case.
(Lab)
I remind the noble Lord that he did not answer my last question
regarding reviewing the future of other dormant assets. If he is
unable to do so at this point, I am happy to receive
correspondence on the topic.
of Whitley Bay (Con)
I apologise to the noble Lord, Lord Bassam, for not responding to
his question. We share the view that it is important to consider
how dormant assets funding can be used most effectively. We are
keen to get a wide range of views to help shape our position from
Parliament through the Select Committees in both Houses. I will
certainly write to him with further details if I am able to
provide them.
I can tell my noble friend that Oyster cards are not in
scope of the Bill, which is why the point has not been raised
hitherto. I will, however, take it back, and if there is any
further information to furnish him with, I will do so. I repeat
my thanks to noble Lords for the cross-party working on the
Bill.
Motion agreed.
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