Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)

It is a real pleasure to serve under your chairmanship, Dr. McCrea.

The amendment will enable a time limit for defining dormancy to be changed by order if evidence shows it to be inappropriate. We recognise that there is considerable debate over the most suitable length of that period for the purposes of a dormant account scheme such as this. It is our view that 15 years of customer inactivity is the most appropriate period to determine whether an account is truly dormant, but we recognise that others hold different views and that has been the subject of debate.

The 15-year figure was arrived at after discussion with industry and through consultation. It is also the figure that other countries, including Ireland, have adopted in legislation. Industry estimates that 80 per cent. of accounts that have had no customer-initiated activity for 15 years are truly dormant. Adopting a lower dormancy period would run the danger of having a higher reclaim rate with a corresponding increase in costs. In any case, any accounts that become dormant earlier will still be dormant when they reach the 15-year mark and come into the scheme then.

Nevertheless, we have listened to the arguments for a shorter period and we accept that, in the future, the experience of the operation of the scheme and of industry might suggest that an alternative figure is more appropriate. Accordingly, the Government amendment will introduce a reserve power for the Treasury to amend the dormancy period.

Amendment No. 28, which stands in the name of the hon. Member for Fareham, has the same objective. The fundamental difference between us is the level of parliamentary scrutiny, which we consider appropriate for the use of this power. Let me be clear: this is not a  power that the Treasury will use lightly. Plainly, this is an issue on which it would be appropriate and necessary to consult before any order was drafted. That said, we do not believe that this is the type of power to justify the use of parliamentary time that an affirmative resolution instrument would require.

We believe that this is an instrument in relation to which the negative resolution procedure is appropriate. Its scope is broadly similar to that to amend the asset limit for participating in the small and local aspect of the scheme. The Delegated Powers and Regulatory Reform Committee gave the opinion that a negative resolution procedure is appropriate and sufficient in that instance.

See this speech in context