New Clause 1 - Authorised reclaim funds: duty to assess and report

Part of Dormant Assets Bill [Lords] – in the House of Commons at 8:15 pm on 31st January 2022.

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Photo of Nigel Huddleston Nigel Huddleston The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport 8:15 pm, 31st January 2022

I thank all right hon. and hon. Members for their contribution to the debate and for the constructive way in which everyone has engaged with the Bill throughout its passage. I thank in particular those who have spoken this evening. My hon. Friend Danny Kruger has made his points about community wealth funds frequently and passionately, as have Paul Howell and Dame Diana Johnson, whom I will acknowledge again later. I can confirm for Jim Shannon that the expansion will cover Northern Ireland. My hon. Friend Claire Coutinho again spoke passionately about the impact that dormant assets funding will have on local communities. We should never forget that.

John Nicolson mentioned the principle of additionality, as did my opposite numbers on the Labour Front Bench, the hon. Members for Pontypridd (Alex Davies-Jones) and for Manchester, Withington (Jeff Smith). That principle underlies the Bill absolutely and completely. Regarding expansion, the Secretary of State is to conduct periodic reviews—within three years and then again in five years. The hon. Member for Ochil and South Perthshire mentioned that Scotland currently operates on a different basis, and that is one of the reasons why we have sought to expand where dormant assets money can be used.

I particularly thank my opposite numbers on the Labour Front Bench for their constructive contributions. Throughout, we have agreed on the principles. It is nice and good to see a Bill through its various stages with such a degree of consensus. Although we sometimes disagree on elements of detail, on the Bill’s overwhelming purpose and underlying principles there is complete agreement, and I appreciate the constructive way they have engaged with me.

However, I am afraid we do not believe that new clause 1—a proposal we debated in Committee—is necessary, largely on the basis that there is considerable oversight already, as I have explained before. Although the new clause refers to “authorised reclaim funds”, in practice it refers specifically to Reclaim Fund Ltd, as it is currently the only authorised reclaim fund in the United Kingdom. RFL publishes its audited annual reports and accounts on its website annually. In 2019 the Office for National Statistics classified RFL to the central Government subsector, and in April 2021 it therefore became a Treasury-owned arm’s length body.

Now that RFL is an ALB, Parliament has greater oversight of its operations and financial information. RFL has been consolidated into HM Treasury’s accounts, which are laid before Parliament on a yearly basis. Furthermore, it is standard practice for the annual reports and accounts of ALBs, together with any report from the auditors, to be laid before Parliament by the sponsor Department. That will happen for the first time this year.

Parliament will therefore have the opportunity to view RFL’s full statutory accounts and, like all ALBs, RFL cannot publish its accounts until they have been laid before Parliament. The Comptroller and Auditor General, operating through the National Audit Office, will audit RFL’s accounts from financial year 2021-22. The Government do not recognise a need for bespoke arrangements under the Bill, as Parliament already has greater oversight of RFL’s operations and financial information. I assure Parliament that the Treasury has a robust governance structure in place that ensures that it has oversight of any potential risk of insolvency. For those reasons, I ask that the House does not support new clause 1.

Government amendment 1 is a minor and technical amendment that will ensure that the principle of full restitution continues to be upheld, ensuring that people can reclaim the amount they would have been owed had the transfer to the scheme not happened. It clarifies that money derived from collective scheme investments cannot be transferred into the scheme as client money.

Unfortunately, this amendment 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 that can be accomplished in future under the power to extend the scheme through regulations.

Finally, Government amendment 2 responds to a key theme in the debates over community wealth funds, on which there has been considerable discussion this evening. It is testimony to the cross-party support for the scheme and the Bill that this issue has been talked about so much. I am very grateful for the spirit of positive collaboration that has been shown throughout the Bill’s stages. It is in that spirit that we are placing in the Bill our commitment to consult on community wealth funds.

I especially thank the right hon. Member for Kingston upon Hull North and my hon. Friend the Member for Sedgefield, the co-chairs of the APPG for “left behind” neighbourhoods, for helping the Government reach this shared position, as well as all those who have made representations. In her speech, the right hon. Lady spoke about creating opportunity, aspiration and inclusivity. I assure her that that is the instruction from my Secretary of State every single day in the Department—it is absolutely what we are here to do.

We have heard both here and in the other place of the many benefits of a community wealth fund model. The Government are committed to giving this important cause its due consideration. Amendment 2 will ensure that the consultation, which will launch as soon as possible following Royal Assent, must include CWFs as an option, along with the current causes of youth, financial inclusion and social investment, which have had widespread support over the past decade.

I understand that there have been concerns that the consultation process will cause undue delays to the money being released. Let me assure hon. Members that that will not be the case. The consultation will not delay the release of funds; rather, it will run in parallel with other necessary preparations.

Once again, I thank colleagues on both sides of the House for the constructive and collaborative debate today. For the reasons I have outlined, I ask that the House does not support new clause 1 and supports the Government amendments.