Dormant Assets Bill [HL] - Second Reading

– in the House of Lords at 3:47 pm on 26 May 2021.

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Baroness Barran:

Moved by Baroness Barran

That the Bill be read a second time.

Photo of Baroness Barran Baroness Barran The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport

My Lords, this Bill delivers on the Government’s commitment to expand the dormant assets scheme. Not only does the scheme provide a great opportunity to support industry’s work to reunite more people with their assets but it also has the potential to unlock hundreds of millions of pounds for good causes.

The dormant assets scheme takes a pragmatic approach to forgotten money. Rather than leaving funds to languish in dormant accounts, money can instead be channelled into long-term initiatives that address some of the UK’s greatest challenges. Since the scheme was established a decade ago, more than £1.4 billion has been transferred voluntarily into the system by banks and building societies. Of the total transferred, £106 million has been reunited with owners. The scheme responds to the imperative to put any money that is not reclaimed or reserved to good use. So far, £800 million has been released, including £150 million for coronavirus response and recovery.

I hope noble Lords will indulge me for a few minutes as I reflect on the impact of the original scheme. In England, funding is distributed via expert organisations. The first, Big Society Capital, was established in 2012. It received £425 million of dormant assets funding with the explicit aim of growing the social investment market. Since then, with partners, it has been able to invest more than £2 billion in social impact organisations. This includes around £200 million directly targeted at place-based investments, supporting left-behind communities to develop vibrant, local, social economies that reduce poverty and inequality.

The second, Access—The Foundation for Social Investment, seeks to support the development of enterprise activity and improve access to social investment. It has developed a £21 million programme of flexible recovery finance for the social sector and has made £7 million available for emergency Covid support through social lenders. Together, these organisations have grown the social impact investment market from £830 million in 2011 to more than £5 billion today.

More recently in 2019, the scheme supported the establishment of Fair4All Finance and the Youth Futures Foundation. By 2025, Fair4All Finance will have supported community finance providers to increase their lending capacity from £300 million a year to over £900 million, enabling more than 800,000 people to access affordable loans and escape high-cost credit. It is also working to grow the financial services market to support 14 million people in vulnerable financial circumstances. The Youth Futures Foundation is targeting support to young people from marginalised backgrounds facing barriers to work. By the end of this year, it will have directed £40 million towards funding and evaluating the largest range of youth employment interventions ever initiated in England.

Scotland and Wales use dormant assets funding for projects focusing on young people, climate change and sustainability, while Northern Ireland has worked with the National Lottery Community Fund to establish a £20.5 million Dormant Accounts Fund NI for the voluntary, community and social enterprise sector.

I thank in particular all those involved in the development, passage and implementation of the 2008 Act, several of whom are in the Chamber today; without their vision of what could be achieved, this would not have been possible. I am proud of what the current scheme has achieved to date and I hope that the Bill will continue to build on its notable successes.

With 34 banks and building societies now participating in the scheme, including all major high street banks, the current scheme is reaching a mature state, with significantly fewer funds flowing into the system each year. Over £300 million was transferred in 2011, but this will decrease to around £42 million per year in future. Expansion means that the flow of funds is not only maintained but will be increased substantially.

Consumer protection remains at the heart of the expanded scheme, with the continued priority being to locate and reunite people with their financial assets. Where that is not possible, expansion will enable more responsible businesses to redirect money to some of the nation’s priority issues. Full restitution will also continue to be a core principle. Asset owners will always be entitled to reclaim what they would have been owed, had their assets never been transferred into the scheme.

Industry expects that around £1.7 billion-worth of dormant assets could be eligible for transfer after expansion. Once transferred, a proportion is held back to satisfy any future reclaims and around £880 million could then be released. Money must fulfil the additionality principle, so it cannot be used as a substitute for central government funding. We have worked closely with industry leaders on how best to design expansion. I record my warm thanks for the support we have received throughout this process. I also thank everyone who responded to the public consultation, whose contributions have informed the shape of the Bill.

I shall now outline the main contents of the Bill. Currently, the dormant assets scheme accepts transfers only from dormant bank or building society accounts. The Bill expands the scope of eligible assets, so certain assets from the insurance and pensions, investment and wealth management, and securities sectors will be eligible for transfer. Our consultation response committed to considering how legislation could best provide the flexibility to expand the scheme further in the future. In reply, the Bill introduces a new power to broaden further the pool of eligible assets through future regulations.

The Bill also enables the specific focus of the English portion of funds to be set through secondary legislation, subject to statutory consultation. This harmonises the mechanism in England with the devolved Administrations and will allow the scheme to respond more flexibly to changing needs over time.

After 10 years of operation, we are at a critical juncture in considering the scheme’s overall operation, and now is the right time to think about how the scheme can deliver the greatest impact once it has been expanded. Therefore, subject to the Bill passing, we will launch a public consultation on the use of funds in England. The current restrictions of youth, financial inclusion and social investment will continue until any new arrangements come into force.

The Bill also includes provisions to improve the operation of the scheme: for example, by making owner reunification efforts a requirement before funds are transferred, with the exception of situations where efforts are considered disproportionate or unnecessary.

The Bill also reflects Reclaim Fund Ltd’s recent establishment as a Treasury non-departmental public body. It names Reclaim Fund Ltd as the scheme’s only authorised reclaim fund, and as a result the Government are seeking a power to enable the Treasury to add, substitute or remove an authorised reclaim fund in future through secondary legislation. The Bill also enables the Government to cover the liability for reclaims should any authorised reclaim fund face insolvency, in the form of a loan. Such a liability will be established following the usual parliamentary process.

In closing, I emphasise our mission to support industry efforts to reunite owners with lost money and to provide a practical way for unclaimed and unwanted funds to be put to good use. I hope that the Bill receives strong support from your Lordships so that we can proceed swiftly with its passage and continue to build on the scheme’s success. I look forward to all noble Lords’ contributions to this debate but in particular to the maiden speech of my noble friend Lady Fleet. I beg to move.

Photo of Lord Blunkett Lord Blunkett Labour 3:57, 26 May 2021

My Lords, I very much look forward to the maiden speech of the noble Baroness, Lady Fleet. I already welcomed it last week, thinking that she was going to speak, so forgive me if I ensure that I do not miss it on this occasion.

I welcome strongly this small but important part of the legislative process, which expands availability of and access to these funds, as the Minister has explained so clearly. I pay tribute to all those who have played a part over the last 13 years in making this a successful venture, and to those who have worked with organisations such as the Youth Futures Foundation, as the Minister described, using the money to find ways to improve people’s lives.

First, I will say a word about the important contribution that the noble Lord, Lord Field of Birkenhead, made in originating this programme. As noble Lords will know, he has been seriously ill but I understand and hope that he is now well on the mend. If he is not watching this afternoon, perhaps he will read in Hansard that we send our very best wishes to him. He pressed very hard for this under the Blair and Brown Governments, and he will be very pleased indeed with the work being done on reclaimed assets and putting them to proper use. He will be disappointed, as am I, that we have not been able to raise greater funding to undertake this valuable work and to put to use money that, as described in the legislation, lies dormant.

When we talked about this in 2004-05, we anticipated that as much as £8 billion to £10 billion and beyond would be accessible. That has not proved to be the case, but this legislation enables us to raise additional funds up to £1 billion, as the Minister described. However, as the Association of British Insurers points out in its briefing, in excess of £2 billion could be available. That obviously depends on the successful outreach to those who have not claimed funds to which they are entitled. While I understand that the dashboard being developed in the insurance and pensions industry will take up that important task of reuniting people with their resources, it would still be a very significant and, I hope, a beneficial outcome if we can raise substantially more than the anticipated figures given this afternoon.

It is almost as if we are facing two ways. We want to ensure that we reunite people with their legitimate funds, particularly in the pensions and insurance industry, where the number of people who do not notify their change of address when they move is staggering. If the figures are correct, 4% of people have not given notice of the change after a number of years. No wonder difficulties arise in reaching out and finding them, although I hope that the Minister will briefly indicate that it will be possible, even with data protection, to encourage the use of other data platforms, including local government, to ascertain where people have moved to and therefore reunite them with their funds. That apart, the critical element here is being able to put to work the massive dormant resource that still exists. I still believe that it is much greater than the amounts that the ABI has talked about.

The Minister mentioned Big Society Capital. Its predecessor, which the right honourable Hazel Blears and I were involved in establishing with the then Chancellor, was designed, as has happened since, to ensure we use that capital literally to kick-start the development of social capital, and the ability of communities to develop their capacity not only to fend for themselves but to create new initiatives that build from the bottom rather than the top.

The National Council for Voluntary Organisations has suggested that there might be the development of a community wealth fund. I hope that we might look at the existing community foundations. For instance, South Yorkshire’s Community Foundation does an enormous amount of good in my area. Making resources available to it for grant giving and establishing social capital funding that would enable community organisations to develop, flourish and become self-sustainable would be an extremely good move. I would be very grateful for the Minister’s confirmation that her department would be prepared to look at that as part of the development and use of the NDPB.

We have made good progress with the lottery over the years. It is much more likely to reach out to the parts that the Government now describe as requiring levelling up. It has certainly been true that it was, as so much of our nation is, southern and London-centric for understandable reasons to do with capacity to put in bids. In the past—not so much currently—the complexity of the bidding process provided a barrier to those who were not familiar with it. I hope it will be possible to make that much easier, perhaps through community foundations.

This is something that we all agree with and support. Clause 29 offers the opportunity of consultation, which the Minister mentioned. Perhaps she will confirm that it will be built into, and be a critical part of, the process. It is important to establish that that is the case, because Ministers move on and departments get reconfigured.

If, from this afternoon, we can have even greater optimism about being able to put this money to use while reassuring people that, if they reappear, their investment and contribution will still be available to them, that would be very good. I also hope that, although we are widening the criteria for access, it will be possible to continue with the existing programming criteria, because so much has been done, particularly on financial inclusion. Many of us have been engaged over the years in promoting social inclusion, and in avoiding exploitation and the way that misuse of domestic credit—and worse—has exploited people in greatest need. The answer to that has to be education on financial matters in school. KickStart Money and the APPG have been doing a really good job, and so have those working in teaching citizenship, which covers financial inclusion and the economy, as well as personal, social and health education.

This afternoon we give a very warm welcome to this legislation, building on what already exists and empowering and freeing people to be part of the solution to the challenges they face in their lives by providing the resources, funding and capital to turn themselves and their communities around through self-help and building from the bottom. It is by civil action that we ensure that, whoever the Government of the day, people remain in a position to fend for themselves, to build for themselves and to be creative in building safe, clean, green and functioning communities.

Photo of Baroness Barker Baroness Barker Liberal Democrat Lords Spokesperson (Voluntary Sector), Deputy Chairman of Committees 4:07, 26 May 2021

My Lords, I draw attention to the fact that I am an officer of the All-Party Group on Social Enterprise. I thank the Minister for the helpful way in which she introduced the Bill and for the briefings that she and her officials gave to noble Lords recently.

It is good that this Bill is starting its passage through Parliament in this House, because on one level it is impossible to object to it. The use of dormant assets—long forgotten, probably not missed and therefore not urgently needed—being redistributed to places where they are needed and can be used is something with which it is impossible to disagree. Moreover, the Bill builds on approximately a decade of experience of financial institutions transferring dormant cash assets to the Reclaim Fund Ltd for disbursal by four funds appointed in each of the nations of the United Kingdom. It is estimated by them and the Government that if we go ahead with the Bill, a further £2 billion-worth of other assets could be released.

However, there are some assumptions behind the Bill that the House should look at before we give the Government the freedom to go ahead. Some elements of how the scheme is currently working are not thoroughly explained. It is our duty, before we give Ministers the Henry VIII powers that they are asking for in this Bill, to ensure that we are satisfied that each of the Bill’s component parts is working to maximum effect and cannot be more efficiently and effectively undertaken by other people.

It is right to bear in mind that this is a limited source of money set out for a limited purpose. Throughout the debate, we will hear lots of suggestions of ways in which it should be extended, but this will never be a source of long-term sustainable funding for voluntary organisations or social enterprises. It is a one-off and therefore it has to be targeted. I like the focus on financial inclusion and the idea of transferring assets between generations in a targeted way, but we need to ask ourselves, and particularly to ask the Government, exactly how well the scheme has worked in the past.

Although the headline figures in the briefings that we have been given are compelling, we do not, for example, know the costs to industry, to the relief fund or to the distributors, nor do we know important things such as the quantum of the assets put into the recovery fund or the frequency with which they are put into it, only for them then to be rightly reclaimed by somebody who turns up and having to be returned to the institution. We should have that kind of information at our disposal before we move on to more complex assets. I leave it to other noble Lords, including those on these Benches, to talk about the much more complex difficulty of bringing in assets that cannot easily be crystallised because they are not in cash.

The Government have an obligation to bring this sort of detail to Parliament, so that we can avoid the temptation to use this as a fallback or piggyback fund for government when times are tough. The Government did themselves no favours last year when, in the first lockdown, the sector said that it could see that it would lose £4 billion of funding. The Government responded with £750 million of funding, £150 million of which was taken from these sources and thrown into a pot. They really need to think about that.

We are now 10 years on. We know now that one of the most pressing needs of poor communities is access to resources. There is no indication in the Bill of a responsibility to make sure that the voluntary sector bodies carrying out this work on financial inclusion will themselves be sufficiently viable for a number of years. That is missing. One of the problems is that we have relied, yet again, on the National Lottery as the distributing body in England, but this has never been part of what it does. I want to see us looking into how to get greater flow from this source into social enterprises. I agree with the noble Lord, Lord Blunkett, that, right now, there is a desperate need in communities for a source of capital to get viable social enterprises off the ground so that they can create employment. I therefore ask the Minister to make sure in her consultation that those bodies are included as a matter of right.

Finally, I am never a fan of Henry VIII powers in principle, and certainly not when there is not much obligation on Ministers to come back and report to Parliament. If we are going to let this Bill go through—and inevitably we will—I think that Members of your Lordships’ House should ask for a greater degree of reporting than the five-year post-legislative scrutiny given to the 2008 Bill that is responsible for this. We should ask them to come back with much greater detail about the costs and operations of the scheme and its benefits.

We are talking of billions of pounds, but the one thing missing in all that I have read on this is any estimate of the impact that this funding has had in communities, against the objectives set for it. It would be remiss of us to go ahead with this scheme if we do not even ask the question that would be asked of any little charity that applied for any funding: how is it going to demonstrate that it is making the difference that it says it will? With those caveats, I look forward to some detailed work on the Bill, which I am sure deserves to pass, but perhaps not in the form that is before us today.

Photo of Baroness Watkins of Tavistock Baroness Watkins of Tavistock Deputy Chairman of Committees

The noble and learned Lord, Lord Mackay of Clashfern, has withdrawn, so I call the noble Baroness, Lady Wheatcroft.

Photo of Baroness Wheatcroft Baroness Wheatcroft Crossbench 4:15, 26 May 2021

My Lords, I thank the Minister for introducing the Bill so clearly and enthusiastically. Its purpose, in extending the scope of the dormant assets regime to other sectors, is perfectly sensible. I look forward to hearing the comments of the noble Baroness, Lady Fleet, which I am sure will add significantly to the debate. Her dedication to the arts over the years makes her a very good addition to the House.

If assets have lain unattended and forgotten for 15 years, they should be put to better use, but I was intrigued to learn that the extension of the regime could affect an additional £3.7 billion of dormant assets and that the enhanced tracing of assets required under the regime could mean that, of the £3.7 billion, perhaps only £2 billion might be returned to the owners. If £2 billion could be returned to the owners under the new regime, can we be comfortable that financial institutions are doing what they can to trace the owners of assets? It seems to me that if such a significant portion could be traced under the new regime then what has gone before, over the past 15 years, has been somewhat slack.

What does this imply for the financial institutions and the need to do something before the 15-year threshold? Could the Minister say whether she believes that financial institutions should be prevailed upon more to return that money? However, if efforts to trace owners have genuinely failed, putting the assets to good use makes sense, and it would appear that, since the scheme was established, it has made good use of the funds. The operation of Reclaim Fund has been paid for through income on its investments, rather than depleting the assets being reclaimed, and there seems no reason why this should change because of RFL’s change of status to become a non-departmental public body.

Under the asset scheme, smaller institutions are allowed to deploy unclaimed assets to work directly with local charities. This seems to me to be wholly admirable, but, so far, only two institutions have opted to do so. I would be enthused to hear that others are interested in joining the Newcastle Building Society and the Cambridge Building Society in using unclaimed assets to benefit their local communities. Financial institutions that are close to the communities they serve can be very useful in building society and can play a part in the community.

Most of the money, however, is designated for social or environmental purposes—a very broad category. For England, which receives more than 80% of the cash, in line with the Barnett formula, the demands have been more clearly spelled out. It is specified that the money should be used for youth projects, financial inclusion or social investment. The Bill repeals this, and it is reassuring to know that there will be public consultation on how the increasing funds should be spent before the Government change the stipulations.

It is fair to say that those whose assets are being reclaimed would espouse a variety of good causes, varying from international aid agencies to those charities dedicated to looking after donkeys. But it is perhaps appropriate that these funds, which are available only because of the failure of individuals, either through carelessness or circumstances, to manage their money effectively, should be directed, at least in part, to financial education.

In particular, some of the money could fund vital schemes to make sure that all children in primary schools learned about how to manage money. KickStart Money, which backs this plan, claims that money habits are formed by the age of seven—when so much of a childhood is formed. A lack of financial education in the early years may in part be responsible for the fact that, prior to the pandemic, 11.5 million people in the UK had less than £100 in savings. That will not see them through a rainy day—or, worse still, through the sort of weather that we are experiencing now.

The situation has worsened. The Rowntree Foundation reported that 2.4 million people in the UK experienced destitution in 2019—a 54% increase since 2017. One in seven of those experiencing destitution was in paid work. In many cases, they have little idea of how to manage the money they have. They take on loans at onerous rates of interest. They use hire purchase schemes. A nationwide scheme to teach children about finance would have real benefits and might result eventually in there being fewer dormant assets to be employed in the way in which we are discussing—but that would be no bad thing.

Photo of Lord Adonis Lord Adonis Labour 4:21, 26 May 2021

My Lords, we are much looking forward to the speech of the noble Baroness, Lady Fleet, and to the great contribution that she will make to the House on the basis of her long experience of the cultural and media sectors. She is extremely welcome here.

We strongly welcome the Bill. Indeed, I cannot think of any good reason why anyone would oppose it unless they think that it is a great idea for dormant assets to sit untouched. Short of them being in some Swiss vault, having been improperly gained in the first place, why would anyone welcome that? This is a thoroughly welcome Bill and, as my noble friend Lord Blunkett said, it builds on a cross-party initiative that was taken nearly 15 years ago seeking to deploy dormant assets. The then Government sought to unlock assets that were in bank and building society accounts, and this legislation expands the range of assets that can be brought forward. I strongly welcome it and I hope that it has a speedy passage.

However, the noble Baroness who opened the debate invited us to look at the wider voluntary sector and the work that is being supported by these good causes. I should like to enlarge the scope of the debate in that direction. This is the principal measure in respect of the voluntary sector that the Government are bringing forward in this Session. It is one of the first measures that they have introduced after the Queen’s Speech, and the first measures introduced after a Queen’s Speech are a good guide to the priorities of a Government. I am at one with Iain Martin, who was quite insightful in his column in the Times last week. He said that the problem with the Queen’s Speech is that it lacked big themes and reform directions. He quoted a Conservative MP who said to him that the Speech was like reading from the Yellow Pages the first five or six items on the list. He compared that unfavourably with the Thatcher Government, who had a big and bold programme of reform of the public and private sectors in the 1980s, and the Blair Government, who had a similar level of reform after 1997.

What struck me as I was reading that and thinking about the Bill is that it is true of the voluntary sector, too. The Thatcher and Major Governments had a bold approach to that sector. Indeed, the National Lottery was one of the biggest and boldest reforms of the voluntary and third sectors—and the injection of funds into them—that we have seen in the history of this country. In the 27 years—or whatever it is—since the lottery has been in operation, an estimated £42 billion has been raised for good causes, and that of course has had a dynamic effect. The lottery has massively energised the voluntary life and good causes of this country and it dwarfs the resources that can be made available under the Bill.

The Blair Government sought to be as bold in their vision. The two particular bold things that we sought to push forward included the engagement of voluntary, private and religious-based organisations in the delivery, as appropriate, of public services. When I was Education Minister, we put a huge effort into developing public-private partnerships in respect of schools—particularly independently managed state schools, or academies, which I am glad to say have now spread far and wide. With the enormous partnership of my noble friend Lord Blunkett, we established more than 400 academies and raised more than half a billion pounds in charitable contributions, with huge energy from the sponsors, including notable Members of this House—the noble Lord, Lord Harris of Peckham, is a formidable academy sponsor—and I was very proud of the work that we did there.

The Charities Act 2006 sought to enlarge the scope of charitable endeavour. The single biggest form of charitable endeavour in this country is in education. That Act sought, in particular, to introduce the public benefit test into the definition of the charitable activities of private schools to enlarge their work. I want to come back to that in a moment, because it is a significant piece of unfinished business.

The Cameron Government started well. The idea of the big society is one that I should have thought everyone in the House would embrace as a direction of travel. It built on the National Lottery, on the engagement of the voluntary sector in the delivery of public services and on the Charities Act to enlarge the scope of what could be done by voluntary effort in meeting big, national objectives. I was a strong supporter of the National Citizen Service; indeed, I am a patron, and wish for it to be extended much more boldly than it has been, so that all young people get an opportunity to make an organised contribution to society which will set them on a track that, I hope, will live with them for the rest of their lives, bring our communities together in the way in which we need to—they are so divided, and have become more divided, in this country over recent years—and, in the jargon of today, engage them in levelling up. The tragedy of the big society is that it was a great idea but the policy was not there to follow it up and it essentially fizzled out.

The problem at the moment is that, under the present Government, there is no real strategy beyond a few measures of this kind that are fairly minor in the big scheme of things. The Minister said that perhaps £800 million or so may be raised from this measure over many years to come. That is all very worthwhile but the amount is small by comparison with the big measures that I have talked about. In some respects, we are going backwards.

Of particular concern to me is that the area of charitable endeavour in which we are going backwards is education. An attempt was made by the Charities Act 2006, which was long overdue, to focus the huge charitable assets invested in the education sector on the provision of genuinely charitable activity—by which I mean engaging in poorer communities and giving poorer students opportunities that they do not have. Unfortunately, that big policy emphasis has moved backwards in the past 15 years because of the rigid determination of private schools—which are of course charities, most of whose assets were given in the form of charitable donations, mostly for the education of the poor and underprivileged—and the failure to ensure that those assets are properly applied. That is a constant problem at the heart of our charitable sector, which we were seeking to get at in the 2006 Act.

That policy, by legal action on the part of the private schools, was reversed. Then, under the present Government—including through the appointment of a former Leader of this House as chairman of the Charity Commission; an unusually political act—the policy was actually put into reverse. The obligations that we had sought to impose on those private schools have now been entirely lifted. The private schools sector, which is substantially charitable, is now more focused on simply delivering education for the very rich and privileged in our society than it has probably ever been in the history of this country.

The British Sociological Association, in a paper published last month which is hugely important in order to understand what is happening to the charities sector in this country, estimates that £1 billion a year—I repeat, £1 billion—is spent on fee relief for less-advantaged children attending private schools. These are charitable institutions to start with, and command about £1 trillion-worth of assets between them. But according to the study of 142 schools by the association, 97% of the £1 billion is spent on subsidies to essentially middle-class families who can afford substantial fees; only 3% goes on the relief of fees in their totality, or up to a level of 75%, for families who have very low means. So what starts off as a hugely privileged sector, even in the work that it does that is supposed to be charitable—in relieving fees and giving access to these charitable assets—is not meeting those objectives.

While I welcome the Bill and think that what it does in its own small way is worth while, and while I welcome the laudable objectives for the charitable and voluntary sectors which have been played out in noble Lords’ speeches throughout the debate, we are being deeply complacent if we think that we are moving broadly in the right direction on these issues. We are moving backwards not forwards when it comes to the expansion and engagement of the charitable and voluntary sectors in the life of the country. It is a big part of the problem we have in levelling up across different parts of the country and different parts of the community. The Government need a much bolder and more coherent policy if we are to meet these big social objectives.

Photo of Baroness Fleet Baroness Fleet Conservative 4:32, 26 May 2021

My Lords, I am grateful to follow the noble Lord, Lord Adonis, who spoke so passionately, and for the opportunity to make my maiden speech. I begin in the traditional way by thanking the doorkeepers and the staff who have guided me more than once up and down the different corridors and made me feel so welcome. Black Rod, the Clerk of the Parliaments and officials here have all helped me to begin to understand how this place works. I also thank the Prime Minister for nominating me; my supporting Peers, my noble friends Lord Black of Brentwood and Lady Morgan of Cotes; and my mentors, my noble friends Lady Chisholm of Owlpen and Lady Sanderson of Welton.

I trust noble Lords will indulge me for a moment before I return to the business in hand. I would like to pay tribute to my ancestor Sir John Bowring. Although he left school at the age of 13, he became a protégé of Jeremy Bentham and was later elected MP for Bolton and, thanks to the patronage of Lord Palmerston, was appointed governor of Hong Kong. Sir John was well known for his progressive views on free trade, his ambition that the United Kingdom should have a decimal currency and his remarkable knowledge of languages. He spoke 12 fluently and understood 12 more. He also had an unfashionable enthusiasm for women’s participation in politics.

I hope that Sir John would have approved of my elevation to this House and perhaps also of my decision to take up a trade, for journalism is indeed a trade. Inspired by the formidable Clare Hollingworth, I headed for southern Africa, arriving shortly before the Soweto riots, and later I went to southern Sudan when it was on the brink of famine and civil war. As editor of the London Evening Standard, I too adopted unfashionable causes. In 2003, the newspaper backed London’s bid to host the 2012 Olympics and Paralympics. The view then was that Paris was bound to win and that even if we won we would not be able to build the facilities on time. Another unfashionable cause the Evening Standard supported was the wild-card Conservative candidate who wanted to become Mayor of London. The rest is history.

Music and music education now fills much of my life. During the pandemic, music has been a source of great joy and comfort to many. This last year has indeed been devastating, but the work of my noble friend Lord Mendoza as commissioner for cultural recovery and renewal has played a vital role in giving hope and funds to music and the arts. Teachers have valiantly persevered, maintaining music tuition wherever possible, often online. They recognise the important role that music plays in a child’s education, boosting mental health and self-esteem and improving cognitive ability to raise attainment in maths and English. Students from low-income families who take part in musical and creative activities are three times more likely to get a degree and a job. I live in hope that there will be renewed government support for music education, following the recent publication of the Department for Education’s Model Music Curriculum. I played a part as chair of the expert panel and believe that the document is an important step in helping our teachers to ensure that every child can access high-quality music education. Concert halls and village halls across the country are ready to take up the challenge of being part of the national rebirth through music and the arts. Like all those for whom culture and the arts are so important, I take this opportunity to urge the Government to negotiate speedily amendments to the visa restrictions and work permits for the EU for all our musicians, actors and artists. They are critical to the livelihoods of tens of thousands of wonderful people and vital to global Britain.

I also take this opportunity to give my full support to the Government’s proposal further to extend the dormant assets scheme in the Bill. I congratulate the Minister on the success so far. It is a remarkable achievement. I am very proud to have been very involved with the voluntary sector, so I look forward to an active role in the debate. Expanding this scheme is crucial to maintaining its impact and to contributing to the levelling-up agenda. Additional funds would make a real difference to so many communities and to the cultural economy. Is this not the moment to level up music education and ensure that children from all backgrounds and all regions can benefit from the power of music?

I am immensely grateful to all those who have welcomed me today, and I look forward to the rest of the speeches in this debate and the many debates to come.

Photo of Lord Vaizey of Didcot Lord Vaizey of Didcot Conservative 4:38, 26 May 2021

My Lords, since I was introduced to your Lordships’ House in September I have been given many opportunities, but I did not realise that I would have the wonderful opportunity to follow my noble friend Lady Fleet and to sing her virtues, although after her maiden speech I feel I should now praise her in 24 different languages on the basis of her distinguished ancestor.

As my noble friend indicated, and as the noble Lord, Lord Adonis, pointed out, she has an immensely distinguished career both in the media and in the arts. She was deputy editor of the Daily Telegraph and the Daily Mail before becoming a campaigning editor of the Evening Standard and helping to secure two great adornments to this country: the London Olympics and our current Prime Minister. When I dabbled in freelance journalism, I occasionally sat at her feet writing the odd editorial under her instruction, but she and I worked most closely together when I was lucky enough to be Minister for Culture when she was taking up prominent roles in the arts, as chair of Arts Council London for almost 10 years and as a senior adviser to the then London mayor, now the Prime Minister. She set up the London Music Fund, which was originally called the mayor’s music fund, but it should really have been called the Wadley music fund. It has delivered more than 500 music scholarships for young musicians in London. Her latest work on the music curriculum has also been incredibly important. I wholeheartedly second what she said about how important music education is for young people, not just to give them a love for and appreciation of music but to give them some of the skills and qualities one needs to succeed in wider life.

My noble friend served as a distinguished board member of the Yehudi Menuhin School and is now on the council of the Royal College of Music, chaired by my noble friend Lord Black of Brentwood. I can say only, as I have said before in this House, that it is a wonderful privilege to serve here with so many experienced and distinguished people, but to have my noble friend join our ranks and bring her expertise in culture is a particular pleasure to me.

I turn to the substance of the Bill. I am grateful to the noble Lord, Lord Blunkett, for reminding the House of the important role played by the noble Lord, Lord Field of Birkenhead—mainly on a personal basis, as I have known him all my life as a close family friend. It is a great testament to the success of the scheme that it has been broadly uncontroversial, very much welcomed and has channelled many hundreds of millions of pounds to good causes. I echo the noble Lord, Lord Adonis: it is hard to think of any reason to oppose the Bill, although there may be opportunities to improve some of its detail. Nobody can oppose the need to extend the remit of the dormant assets scheme to insurance and pension products and potentially to unlock a further £2 billion for good causes.

I take on board the remarks of the noble Baroness, Lady Barker: it would be interesting to know what one could learn from how the dormant assets scheme has been working in the past decade or so and how effectively the money has been used. Partly on a financial basis, I should be intrigued to know—I may be going a bit off piste here—whether we can learn anything about what type of financial assets are unclaimed and why. I think this will become rarer as we move into a digital age. Noble Lords have mentioned the digital dashboard. As more and more of us manage our finances online, there will be no need to write to our insurers to tell them that our address has changed, because our digital address should, broadly speaking, remain the same.

I was also musing, because I am obviously thinking ahead to my speech on public service broadcasting in tomorrow’s debate, that some of the great causes that the dormant assets scheme has supported so far are exactly the kind of programme that the BBC should be making, so I think we can elide the dormant assets scheme with the future of the BBC.

I want to use this opportunity to raise one specific point that has been a hobby-horse of mine for several years, and I think I may have played a tiny role in nudging things along. As I do not tell need to tell your Lordships, because you all know what I am about to say, I am talking about the National Fund, which is on everyone’s lips. The National Fund was started by a man called Gaspard Farrer in 1928. He was a member of the distinguished Farrer family, the solicitors, but he was a partner at Barings Bank, and he gave half a million pounds to the National Fund, intending it to pay off the national debt. That half a million pounds attracted a few other public subscriptions, and it was then promptly forgotten about, although I think it was managed for years by Barings Bank, which probably claimed useful fees from it. It was actually managed extremely well, because in 2019, before the stock market boom, it was worth £519 million.

We have had one dormant assets Bill in the past decade which has unlocked about £700 million or £800 million. We now have a Dormant Assets Bill which might unlock £2 billion, but we do not have a National Fund Bill, which at one stroke could unlock £519 million, which I know that my noble friend Lady Fleet and I would deploy very effectively to support the arts and music.

What on earth are the Government going to do about the National Fund? At the moment, its future is the subject of a modern-day Dickens novel as it grinds slowly through the courts. I lobbied the Attorney-General, he forgot about it. I lobbied him again, he forgot about it. He finally went to court. At a court hearing at the end of last year, the High Court judge decided that the National Fund could potentially be wound up and its funds deployed to causes other than the national debt. He concluded that because the National Fund represents 0.03% of the national debt, despite the excellent management of Barings and others, it was highly unlikely to achieve its purpose of paying off the national debt, which I think is now £2 trillion. It has even been spotted by the Prime Minister’s former private secretary, Danny Kruger, now a distinguished Member of Parliament, who in a recent report on community service asked why we cannot deploy the National Fund.

I am afraid that I have slightly hijacked the debate on the Dormant Assets Bill to once again bring the National Fund to the Government’s attention. I know that there is no more able and effective Minister than my noble friend on the Front Bench this afternoon to grab this issue, run with it and bring forward appropriate government amendments in Committee to unlock the National Fund and, at a stroke, double the assets available to good causes.

Photo of Baroness Watkins of Tavistock Baroness Watkins of Tavistock Deputy Chairman of Committees

My Lords, I am aware that, due to the reduced capacity of the Chamber, many people were not here earlier, when the normal rules for the current situation were read out. I remind Members in the Chamber that all Members are expected to respect social distancing, as everybody is doing, but also to wear face coverings while in the Chamber, except when standing to speak—unless, of course, they are medically exempt.

Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat 4:46, 26 May 2021

My Lords, it is a great pleasure to welcome the noble Baroness, Lady Fleet. She is singing the right tune in everything that she said about the value of music education. I also pay tribute to how she has practised what she just preached to us.

I welcome this Bill as a follow-on to the Dormant Bank and Building Society Accounts Act, and I am aware that it is welcomed by the industry responsible for the assets, as well as the charitable bodies that hope to put the funds to good use. Participation by industry is voluntary, but it is still expected to be significant, more than doubling the volume of the funds released by the original scheme.

The two main aspects to the Bill are enlargement of scope to include dormant insurance, pension, investment, securities and client account assets and to make the approach to distributing the assets more flexible. A contemporaneous matter is that as from 30 March, Reclaim Fund Ltd has transferred its shareholding from Angel Square Investments—formerly the Co-operative Banking Group—to HM Treasury.

The new dormant assets each have their own clause, but the general principle seems to have been to include at this stage only assets that already have contractual mechanisms that can determine a cash reference value or, as in the case of a collective investment, have an established formula for valuing compensation at a subsequent date. That strategy makes sense in terms of managing liability. I was concerned whether seven years was the right length of time for deeming an asset dormant with regard to pension and insurance-type assets, but, on balance, perhaps I can see the benefit of bringing forward the point at which greater attempts are made to reconnect people with their assets. In theory, that should make it less likely that, for example, the notifier on a death certificate has moved, which is one way of tracing connected people.

Regarding the assets that are not included, the Bill includes the ability to expand to further asset classes. That creates an incentive for industry to develop new contractual terms relating to dormancy and “gone away” in these other kinds of investments so that, ultimately, if that was pursued to the extreme, it could apply to everything. What safeguard is there to make sure that there is not a perverse incentive to change future contractual terms to the detriment of asset owners in general?

One matter that does not appear in the Bill is that directors are free of fiduciary duty in respect of decisions to transfer dormant assets. It may be more complicated for some assets than for cash deposits if there are other, possibly unforeseen, consequential effects—for example, of reducing assets under management. Perhaps the Minister can say something about why there is nothing specific other than with regard to the cash liability.

I have an interest around how risk is determined and managed by the authorised reclaim fund. The Explanatory Notes make it clear, as in the 2008 Act, that reclaim funds are responsible for managing reserves to meet customer reclaims. Presently, 40% of the dormant assets received by Reclaim Fund Ltd are reserved for potential reclaim, which is based on actuarial calculations and recommendations from the FCA. Reclaims actually run at a much lower percentage. According to the 2020 accounts, the dormant assets received were some £89 million, £36 million was reserved for reclaims, and actual reclaims were just shy of £13 million. It is more representative to look at the cumulative figures for reclaims, as obviously they relate to a spread of years. The 2020 accounts show a cumulative liability provision of nearly £474 million against total reclaims since inception of just over £105 million, which is for 10 years of operation.

This low level of reclaim was attributed in the response to the consultation as due to the due diligence in trying to unify assets with their owners. It makes me wonder whether the calculations around that 40% rate should be revisited, at least for the bank and building society assets where there is a track record, presumably not just of the reclaims but of the ages and other data surrounding who has reclaimed. I acknowledge that for the new assets the same reclaim rates may not apply, but I am curious to know how the reunification rates are fed into the retention calculations and how far additional prudence was previously built in—for example by the FCA in order to protect the financial services compensation fund.

I would also like to ask what the attitude is of the Treasury towards the current level of prudence, given the provisions of Clause 27 and the new Treasury ability to provide a loan in the event that a reclaim fund is unable to meet its liabilities. I am not suggesting there should be a gung-ho approach, but with the government loan facility, a future stream of dormant assets and no financial services compensation protection to consider, does that also point to lower provisioning and higher release of funds for good works? Even if half of the 40% retention rate is released, it is a lot more money.

Also on this point, although under Schedule 2 to the 2008 Act there is no profit distribution to the shareholders of an authorised reclaim fund that could distort retention incentives, there is a cost to managing the retained assets as well as, if you like, a charitable lost opportunity cost.

I cited just now some 2020 figures. In fact, in 2020 the amount of £89 million of dormant assets represented a remarkably low year for dormant assets received—the lowest since 2013, when it was £87 million. The intervening years averaged £121 million, although I note that the Minister said that a rather lower £42 million steady state is expected. The year 2020 followed a somewhat bumper year of £147 million in 2019. I am wondering where these projections and steady state numbers come from. I can accept, and maybe it is the case, that projections show more digital banking is likely to keep people better attached to their money but, so far, none of the expectations, whether of the reclaim amount or the general level of the fund, seems to follow the projections.

A related question with regard to pensions and projections is: what effect does the Minister think the pensions dashboard will have in terms of reducing the number of accounts that go dormant because of loss of address? When would it be expected for that effect to kick in?

On the distribution of assets, I accept that a more flexible approach has benefits. However, even with consultation—and I think it should probably be in the Bill—surely the underlying strategic objective should be within the legislation. Ten years on from the 2008 Act, the definition could usefully be widened, but I am concerned about repealing Section 18 of the 2008 Act and leaving no structure. Focusing on a few areas, as the 2008 Act did, should potentially enable a game-changing investment that has a multiplier effect, which is an idea worth hanging on to even if realised partly in a different form. There are proposals around, as the noble Lord, Lord Blunkett, mentioned, relating to a community wealth fund, and that might be one such vehicle. Like him, I would be interested to hear about any thinking that the Government have done on the community wealth fund idea and how better to gain multiplier effects.

Photo of The Earl of Devon The Earl of Devon Crossbench 4:57, 26 May 2021

My Lords, it is a pleasure to follow the noble Baroness, Lady Bowles, and, before her, the excellent maiden speech of the noble Baroness, Lady Fleet, who is warmly welcome, particularly for her wisdom and support for music and the arts.

It is a rare treat to contribute to such a positive debate on a piece of legislation that finds widespread support across the House and the country. The dormant assets scheme has clearly been a success, as confirmed by the Dormant Assets Commission some years ago, permitting the distribution of hundreds of millions of pounds towards good causes in the categories of youth projects, financial inclusion and social investment. I understand that the expansion of the scheme to include insurance and pension products will allow potential access to over £2 billion of further dormant funds, so it is a great shot in the arm for the scheme and those good causes. I see that it meets the approval of the Association of British Insurers and that the financial industry more generally is supportive, too.

I note my membership of the All-Party Parliamentary Group for Social Enterprise. Dormant assets have played an invaluable role in the development of social enterprises over the past 10 years, and the sector is keen to ensure that they continue to do so. Social enterprises are critical to the levelling-up agenda; they ensure investment in people and projects across the United Kingdom and are often located in our most deprived communities, creating considerable employment and routes out of poverty. Since 2010, many millions in dormant assets have been invested this way, supporting more than 1,500 organisations, 82% of which are outside London.

The demand for social investment remains strong, particularly given the impact of the pandemic on our most fragile and vulnerable communities. Over the coming months, the social enterprise APPG will be conducting an inquiry, which I am honoured to be chairing, to assess the performance of the sector during the pandemic.

Over 5,000 new community interest companies have been registered since March 2020. Of particular importance to these institutions is access to long-term financing, which is exactly the support that the dormant assets scheme can provide. That is why this legislation is so important and why it is key that the Government consider the role of social enterprise in the context of the dormant assets scheme. To that end, can the Minister please confirm what level of engagement has taken place with the social enterprise sector in developing this updated legislation?

Given the importance of dormant assets to the funding of social enterprise, can the Minister confirm that their use for its development will not be diluted by this legislation? In particular, what assurances can the Minister give that social enterprises will remain a primary beneficiary of the use of dormant assets?

It is of particular concern that, under Clause 29, the Government propose to move the power to change the use of dormant assets from primary to secondary legislation. I know that the Government have committed to consult with the National Lottery Community Fund and hold a public consultation, but this is very different from requiring a change via primary legislation and, thus, debate in this House.

There also appears to be no obligation to consult specifically with the social enterprise sector, which is concerned that it may lose this crucial source of funding without consultation or the ability to voice its concerns. I ask the Minister to do what she can when she responds to put this very important sector’s mind at rest.

Photo of Lord Bates Lord Bates Conservative 5:01, 26 May 2021

My Lords, it is a great privilege to speak in this debate. I very much welcome the Bill and support its Second Reading today. It is a great privilege to hear the maiden speech of my noble friend Lady Fleet; she brings incredible experience to bear on this important issue. I look forward to her future contributions in Committee.

I draw the attention of the House to my non-executive and non-financial charitable interests as listed in the register. I pay tribute to my noble friend Lady Barran for introducing the Bill and for her willingness to meet with us and officials beforehand to consider its contents and answer our questions. That courtesy was very much appreciated and extremely useful.

As has been said, the Bill has support on all sides of the House, and, after the past few Sessions, we need to see more of this type of legislation. It arrives here in excellent shape, building on the proven success of the 2008 Act. I wish all Bills were like it. Of course, that is to be expected when it is prepared by my noble friend Lady Barran, given her experience in the charitable sector and finance, and John Glen, who is simply a brilliant Economic Secretary to the Treasury. Given that preparation, I hope that the Bill can move quickly along its parliamentary journey so that people can be reunited with their forgotten assets.

I note that The Dormant Assets Scheme: A Blueprint for Expansion, a report that the industry champions presented, mentions the difficulty of tracking down the owners of these assets. I am sure that that is an issue, but if they thought that the owners of the assets owed money to them—banks, building societies and insurance companies—they might have a better success rate in tracking them down. This is a difficult issue, and we very much welcome the Bill.

When we have a Bill that is so universally welcomed and so clearly good-news legislation, one of the problems is that Second Reading speeches tend to range a little more widely than the Bill itself, and I tend to follow that theme. I will make four points about how the use of these proceeds could be improved. First, we need to remember that the Queen’s Speech that introduced the Bill had an overarching theme: levelling up. While the Covid pandemic has hit all communities, it has hit the poorest and most marginalised most. Few would deny that because of the pandemic, the challenge of levelling up has become much harder and far greater resources will therefore be required in order to recover.

My second point is that if left-behind communities in Britain have suffered disproportionately, it is the children and young people in those communities who have suffered most. I want to pay tribute to children and young people in this country. They sometimes get a raw deal and a bad press. They have been wrongly described as a “snowflake generation”, but they have shown discipline and resolve throughout this crisis in following the guidance and making sacrifices—more than most—despite being statistically at least risk from the virus. When our children and young people have made such a sacrifice and such a contribution to beating this pandemic, it behoves us to do all we can to level up for them.

Thirdly, we should devote our efforts to increasing the rate of return on these assets to honour the sacrifice of the former owners. I have two suggestions in this regard. The first is that we use the assets not so much as a fund per se but as a catalyst to generate further funds, perhaps through match-funding of projects. The second is that we give people who have been reunited with their dormant assets the option of donating them to the scheme for good causes.

Before people suggest that this would not be taken up, I should remind the House—not that noble Lords need reminding, but I will mention it—that the British people are among the most generous on the planet. The Charities Aid Foundation reported that in the first six months of the pandemic, donations to charities in the UK increased from £4.6 billion to £5.4 billion, a quite extraordinary £800 million increase compared with the same period during the previous year. In passing, I should say that this statistic slightly scuppers the justification for reducing the overseas aid commitment from 0.7% to 0.5% because of the economic crisis. The British taxpayers have demonstrated through their actions that they wanted to be more generous to good causes and those in need in hard times, not less.

Fourthly, volunteering is the greatest dormant asset in the United Kingdom. There have been two notable occasions in the past 10 years when we have called upon people to volunteer. The first was for the London 2012 Olympic and Paralympic Games, when over a quarter of a million people volunteered for 70,000 roles, a response that almost caused the system to collapse. The Games-makers of London 2012 did indeed make the Games. The second time the call went out for volunteers was for 250,000 people to support the NHS during this crisis; 750,000 signed up.

On 28 February this year, the Sun newspaper, which has been running an excellent campaign, “Jabs Army”—the noble Baroness, Lady Fleet, is probably wishing she had thought of that as a headline for a campaign—reported that almost 12 million people had volunteered during the pandemic and that a third, 4.6 million, had done so for the first time. Jill Rutter, who led the Talk/together research, was quoted in its piece:

“With 4.6 million people volunteering for the first time and keen to do so again, there is massive potential to harness this positive legacy. You can achieve a lot with four million people helping out. We know that volunteering helps people feel more connected to their community and offers a chance to meet new people from different backgrounds too—so this surge in volunteering could help to build closer and more connected communities as we come out of lockdown.”

I say amen to that.

My final point is that, having been born and educated in the north-east of England, and having worked and represented left-behind communities there, I have seen that some of the most successful groups in transforming the life chances of our young people have been faith groups, churches, sports clubs and uniformed youth groups such as the Sea Cadets, Scouts, Brownies and Guides. We do not hear a great deal from them because they are too busy getting on with their work, and perhaps they do not have vast comms resources to do that, but there are almost 500,000 Scouts in the UK and 120,000 adults who volunteer with them. Brownies and Girl Guides account for a further 240,000.

Just as we must be careful that government funds do not crowd out private capital in our markets and economy, we should ensure that government schemes do not crowd out charitable initiatives and volunteering in our communities. We must maintain open spaces for our communities, to encourage people to volunteer and invest their time and money. This is not just because it tends to yield better returns but because—to paraphrase Shakespeare—it is twice blest: it blesses both the giver and the receiver alike.

This is an excellent Bill whose impact can be strengthened still further by focusing on levelling up in left-behind communities; having a bias towards children and young people, who have sacrificed so much; adding an opportunity for owners reunited with dormant assets to donate them to the scheme; and, most of all, having a programme to celebrate our outstanding volunteers, who care about their communities and seek only the opportunity to serve them. They are the engines of social capital and we cannot let such an incredible human asset remain dormant any longer.

Photo of Baroness Noakes Baroness Noakes Conservative 5:10, 26 May 2021

My Lords, it is a pleasure to follow my noble friend Lord Bates, because it gives me an opportunity to wish him a very happy 60th birthday.

If my noble friend Lady Fleet will forgive me, I am going to stick with the guidance in the Companion that my noble friend Lord Vaizey’s congratulations to her were made on behalf of the whole House. I have noticed recently that noble Lords seem to have forgotten that this is the way we used to do things.

This is a Bill that the whole House can celebrate. It harms no one and will do much good. When the Dormant Bank and Building Society Accounts Act 2008 was considered in your Lordships’ House, I led for the Opposition. We fully supported the Bill’s principles, but our main critique was that its scope was too restricted, covering only bank and building society accounts. It was known then that there were other significant dormant asset classes, and we wanted to include them. Despite the welcome addition of extra assets with this Bill, the same basic criticism applies.

I particularly single out dormant accounts held with National Savings & Investments. Some 14 or 15 years ago it was estimated that around £1 billion was sitting in dormant National Savings accounts. If that was the correct figure then, it must be very much higher now. Can my noble friend the Minister say how much is now held in dormant National Savings accounts?

The Treasury’s position has been that the money has already been used, in its words, for public benefit—but that is a weaselly formulation. The Treasury borrowed money from you and me and used it to finance public expenditure, some of which will have been of dubious public benefit. If people forget about their savings—which is easy to do, especially for things such as premium bonds and prizes, and certainly before the advent of online accounts and apps—the Government get to keep that money in perpetuity. I believe that the right destination is the good causes supported by the dormant assets scheme.

The Bill includes a power in Clause 19 to widen the scope of the dormant assets scheme, and I welcome that. The Labour Government rejected our modest request for that power in 2008. Will my noble friend the Minister say when the Government next plan to review further dormant assets? It seems to me that the Bill ought to provide for this, to ensure that we can maximise the assets within the scope of the Bill.

As has been pointed out, the asset classes in this Bill are more complex than those to which the 2008 Act applied. That is likely to mean that there will be more disputes about the value an owner will receive if an asset is reclaimed. It is not clear to me that all the assets now coming within the scheme will be covered by the Financial Ombudsman Service. Can my noble friend say how disputes about amounts due to asset owners will be dealt with?

The main issue I want to raise today concerns the structure of the scheme and whether it is unduly restricting the amounts released for good causes. The 2008 Act envisaged that there would be several reclaim funds, all independent of government. In the event, the Government had to rely on the Co-operative Bank to set up the company known as Reclaim Fund Ltd, or the scheme might not even have got off the ground.

After another eight years or so, the Office for National Statistics decided that Reclaim Fund Ltd had to be classified to the public sector, and it is now an NDPB. Since then, the Treasury, as we heard earlier, has become the legal owner of the company and it is now going to be the only officially recognised reclaim fund. Since it is now clear that the body handling the dormant assets is a public sector one, it is not clear to me that the fiction of a separate legal entity needs to be maintained. My question to the Minister is why they are keeping this separate legal entity. The importance of this question lies in the way in which huge sums of money accumulate in Reclaim Fund Ltd and are not transferred for distribution to good causes—my comments echo those of the noble Baroness, Lady Bowles of Berkhamsted. Some £1.4 billion has been transferred from banks and building societies since the scheme got going, but only £800 million has been released for good causes. As we heard from the noble Baroness, Lady Bowles, the difference mainly lies in the reserves that the company maintains against the legal obligation to repay when owners come forward. At the end of 2020, that reserve amounted to £475 million.

In the context of private sector reclaim bodies, it was obviously right that the reclaim reserves were set with prudence. That is how, initially under the supervision of the Financial Services Authority and more recently of the Financial Conduct Authority, highly conservative reserving policies were determined. Despite the fact that only around 7% of the £1.4 billion has been reclaimed to date, for every £1 that is transferred to the reclaim fund, only about 60p gets transferred for good causes—40% gets held back. And due to very conservative investment policies within Reclaim Fund Ltd, the amount earned on those reserves is very small. This is highly inefficient.

If we were starting again, I am not sure that a limited liability company would be the vehicle of choice, given that it is now in the public sector, although obviously some kind of organisation is needed to gather the money in and distribute it. The public sector does not need conservative reserving policies. If the Minister says that, legally, restructuring is off the table, the same result could be achieved if the Treasury issued a formal guarantee to meet any shortfall in the company. In practical terms, now that the Treasury owns Reclaim Fund Ltd, it already stands behind it under normal public sector principles. The sums that could be released are huge. Nearly £500 million is already sitting there and another £800 million is likely to be reserved and could therefore be released under this expanded dormant assets scheme.

While I am on the subject of Reclaim Fund Ltd, will the Government now switch from using private sector auditors to using the Comptroller and Auditor-General, like they do for most other public sector bodies? I believe that several areas of Reclaim Fund Ltd’s operations would benefit from a value-for-money audit from the NAO. It would be the right thing to do now that the company is in the public sector, and it requires only an order under Section 25 of the Government Resources and Accounts Act 2000.

Lastly, I welcome the removal of restrictions on how the released moneys can be spent. The 2008 Act reflected the priorities of the then Labour Government. It was short-sighted to restrict it in that way, and I support the replacement of those restrictions, as proposed in the Bill.

Photo of Baroness Lister of Burtersett Baroness Lister of Burtersett Labour 5:19, 26 May 2021

My Lords, like others, I welcome the Bill and I will focus my remarks on how the funds it will release will be invested. However, first, even if it is not in the traditions of the House, I congratulate the noble Baroness, Lady Fleet, on her maiden speech.

Colleagues may know that I have long been an advocate for a more inclusive society, one that enables those who are most marginalised to thrive, regardless of their race or ethnicity, gender, social class, generation, disability or the place where they live. With at least £880 million of dormant funding being made available, and possibly much more, the question that the Government now have to answer is how to use this funding so as to have the largest impact on the most marginalised people and places, so that the benefits are felt right across the country.

Research and work undertaken in this House testify to the importance of strong communities in responding to the pandemic. As the Biden Administration has recognised, strengthening the social infrastructure is as important as, if not more important than, the physical infrastructure, if we are to build back better, as the Government say that they want to do. Such social investment is also crucial to the Government’s levelling-up agenda, mentioned by the noble Baroness, Lady Fleet, and the noble Lord, Lord Bates. The Legatum Institute, among others, has made the point that, in its words, levelling-up cannot just be about bridges and trains. Just as social infrastructure—the places to meet and the local institutions that bring people together—is a key pillar of community resilience, so too does it underpin much socially beneficial activity that goes on within our communities every day. It is, in essence, the foundation upon which people can thrive.

The All-Party Group for “Left-Behind” Neighbourhoods., of which I am a member—though I dislike “left-behind”, as it can be taken to imply that these neighbourhoods are somehow too slow to keep up, rather than being held back by processes of social and economic marginalisation—has identified 225 places which suffer from both the worst levels of economic deprivation and a severe lack of social infrastructure. Recent research found that just over a quarter of residents in these neighbourhoods are going on to higher education, compared with over 40% nationally and over 30% in those areas that are similarly economically deprived but benefit from a foundation of social infrastructure. This suggests that barriers to educational advancement are greater where social and community support networks are weak.

As my noble friend Lord Blunkett mentioned, much of this is because social infrastructure is vital to developing our social capital, the network of trusted social connections that can play such an important role in improving job prospects and enabling people to pursue their aspirations, as well as improving economic performance and productivity. In a recent letter to the Prime Minister on the proposed levelling-up White Paper, the Public Services Committee emphasised the importance of expenditure on social infrastructure such as childcare services, libraries, youth and community centres, and higher education institutions. Here I echo the point made by the noble Lord, Lord Bates, about children and young people. They have been the main victims of austerity. The facilities available to them have been heavily weakened.

One proposal that is key to building a strong social infrastructure in marginalised neighbourhoods is a community wealth fund, already mentioned by several noble Lords, as proposed by the Local Trust and supported by the Community Wealth Fund Alliance. I am grateful to the trust for its help with this speech. This fund would use a portion of dormant assets funding to invest in the social infrastructure of our most deprived communities over a long-term period. Using learning from previous place-based schemes such as the New Deal for Communities and the Single Regeneration Budget, and charity schemes such as Big Local, would help to ensure that there is a lasting legacy of change in the most deprived neighbourhoods across England.

Importantly, it would ensure that local residents were actively involved in the development of that social infrastructure, with support where necessary, as a key principle of the proposed fund is

“community-based decision-making”.

Again, the Public Services Committee has consistently emphasised the importance of genuine consultation in the development of public services. It suggests that

“the pandemic has shown that designing public services without consulting the people who use them embeds fundamental weaknesses such as inequalities of access … Involving user voice in service design increases the resilience of those services … Co-production can embed service delivery innovations of the kind that have developed since the pandemic began”.

In its letter to the Prime Minister, the committee stated:

“The Government should set out in its ‘Levelling Up’ White Paper how local people in areas receiving ‘levelling up’ investment will be consulted on how that money is spent. It should involve civil society organisations in the design, delivery and evaluation of ‘levelling up’ funds. It should work with the local voluntary sector to consult marginalised groups on how ‘levelling up’ money should be spent in their areas.”

The same principle should apply to the money released from dormant assets.

I am aware that the Government intend to set the mechanisms for distribution of dormant assets funding via secondary legislation and to consult on what this secondary legislation contains. While I have some reservations about reliance on secondary legislation, I welcome the commitment to consultation. Building a better society cannot be a top-down exercise but must involve a public conversation with those who live in that society and, in particular, its most marginalised members, such as those located in these so-called “left-behind neighbourhoods”.

Will the Minister give a commitment that the consultation will include specific reference to the possibility of a community wealth fund as one of the possible recipients of funding? Given the importance of the consultation process, I would be grateful if she could provide some clarity on the detail. In particular, the Bill currently stipulates that the Secretary of State must consult only with

“the Big Lottery Fund, and … such other persons (if any) as the Secretary of State thinks appropriate.”

It is difficult to believe there would not be “any” other appropriate people to consult. Could she give us some idea of who these appropriate people might be? She did mention public consultation in her opening speech, and that was very promising, but could she confirm that it will include public consultation with interested civil society and local community organisations?

Would she also consider adding a duty to consult when powers granted under Clause 29 are deployed in future, as called for by NCVO and others? And what is the proposed timeline for consulting on funding purposes once the Bill has Royal Assent? In addition, when does she foresee funding from the expanded scheme being distributed to new causes?

In conclusion, the Bill offers a golden opportunity to provide resources to the most marginalised neighbourhoods to enable them to start to build back better through the development of social infrastructure in line with their own priorities, through the vehicle of a community wealth fund. I hope and trust the Government will not squander that opportunity.

Photo of Lord Taylor of Holbeach Lord Taylor of Holbeach Conservative 5:27, 26 May 2021

My Lords, I am pleased to have the opportunity to speak in this Second Reading of a Bill that has such widespread support for its purpose. My interests are listed in the register. In common with most noble Lords, I retain an active community involvement, but I believe that at a personal level I am unlikely to be the beneficial owner of dormant assets. If, at some stage, gambling winnings were included, there would still in my case be no chance, I fear.

I approve of the custom whereby people wishing to participate in the passage of a Bill speak on Second Reading. I was drawn to get involved because the Library briefing made me realise that this was a very worthwhile piece of legislation. Not for the first time, I thank our Library—for laying out the Bill’s nature and its origin in building on the Acts of 2008. I am grateful for the contribution of the noble Lord, Lord Blunkett, who reminded us of the origins of the 2008 Acts, and the role of our noble colleague, the noble Lord, Lord Field of Birkenhead. The brief that the Library produced contained much of the department’s clearly expressed Explanatory Memorandum produced for the Delegated Powers and Regulatory Reform Committee.

Compared with many other pieces of legislation that have come before us, this one is particularly free of contention. It does what most Ministers would love to have the opportunity to do: not change the practice of the law or even reinforce it by change, but build on the success of an already existing dormant assets scheme—a scheme that has been described well in documents and by my noble friend the Minister in her introduction and other noble Lords in this debate.

The Explanatory Memorandum repeats that the primary purpose at the heart of the scheme is to reunite customers with their property, but it does this by building on joint action between government, the private sector and civil society, whose collaboration and shared objectives are at the heart of the scheme. As the Minister told us, by expanding and broadening the Bill and the measures flowing from it, a further £1.7 billion could be brought into the scheme, with social and environmental causes across the UK receiving around £880 million.

Like other noble Lords, I therefore do not find it surprising to have received a number of submissions from groups generally welcoming the Bill, even though they differ in their specific interests. The Association of British Insurers makes a very good point: when moving house, many pension holders do not inform providers of their change of address. It points out, as previous speakers have done, that the pensions dashboard exists to mediate this situation but is unlikely to have an immediate effect. It suggests that a step change in reconnection might be achieved through the use of government data. It might be less controversial if conveyancing and rental agreements came with a prompt list of things that parties should do at the time. It would be interesting to hear the Minister’s comments on the ways in which we might be able to map people’s movements more accurately.

The Government have already consulted widely on the pattern of legislation that commits to consultation. It will be a target for amendments to the Bill, I am sure, because most Bills get demands for amendments on consultation. However, there has been a commitment from the Minister to a consultancy process. The National Council for Voluntary Organisations promotes the idea that powers in Clause 29 should bear a legal duty to consult, but we already have the commitment to consult. I would be interested to hear whether my noble friend the Minister feels that this is justified.

Along with other organisations, including the Local Trust, the NCVO supports the idea of a community wealth fund, which has its own alliance of supporters. Again, it would be useful to know my noble friend the Minister’s thoughts on this point.

I cannot buy the suggestion of Social Enterprise UK in its view on distribution that the funds may become, as it calls it, a slush fund for government projects or schemes. This flies in the face of the creation of the RFL, which is a single-claim fund and will, through the Bill, be reconstituted as a non-departmental public body kept separate from the Treasury, with surplus funds going—as now—to the National Lottery Community Fund.

As this Bill looks to the future, the review by the Dormant Assets Commission pointed the way to an expansion of UK-domiciled financial products to be included in the scheme. The advantage is that the Bill provides for an expansion by secondary legislation in Parliament on an affirmative procedure. That is the right way, ensuring that the co-operation that I mentioned before between government, the private sector and civil society is continued.

I have enjoyed the speeches of a more general nature from the noble Lord, Lord Adonis, who is not in his place at the moment, and my noble friend Lord Bates, both looking at a wider view. I agree with them, and indeed the noble Baroness, Lady Lister, that the modern, young generation has done itself credit. I have grandchildren of school age and I know how calm they have been in difficult circumstances and how diligently they have sought to maintain their education through a difficult time. We should be proud of that generation and the way that they have handled the crisis that has come on us.

All in all, I am delighted to have been able to speak in this Second Reading. I was delighted to hear from the noble Baroness who spoke here for the first time—I will not name her because I have been implored not to do so—and I am sure that she will make very valuable contributions to this House. All the contributions that we have heard so far give me reason to look forward to the further consideration of this Bill.

I am a builder of a brighter Britain with small bricks. The noble Lord, Lord Adonis, wanted to build a very big building. This Bill may be a small brick but walls are built with bricks—and we can argue about the colour of the wall. The Bill is worth supporting and I am pleased to be able to do so today.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Chair, Secondary Legislation Scrutiny Committee, Chair, Secondary Legislation Scrutiny Committee 5:37, 26 May 2021

My Lords, it is always a pleasure to follow my noble friend Lord Taylor of Holbeach. I have a long-standing interest in the charity and voluntary sector. I have written a number of reports for the Government on it, so a Bill that proposes to provide just short of another £900 million for the sector obviously has my support, as it does from everybody else around the Chamber.

Before I come to my remarks, may I ask my noble friend, when she comes to wind up, just to pick up a point made by the noble Lord, Lord Adonis? I think he said that this was the only charity piece of legislation planned for this Session. I have a certain proprietorial interest in a Law Commission Bill on charity law which picks up a number of the recommendations in one of my reports. I think—I hope—that she will be able to say that it is in the programme and that, therefore, that point from him is not correct. I look forward to hearing her comments on that.

I have two areas which I wish to probe and on which I hope that my noble friend can reassure me and the rest of the House, both now and in Committee. The first flows from my chairmanship of the Secondary Legislation Scrutiny Committee. The committee has noticed increasing use of skeleton legislation, where you get a broad idea of the direction of travel but the detail—what it really means to people on the ground—is left for secondary legislation from regulations. With great deference to my noble friend Lord Taylor as an ex-Chief Whip, let us be honest: secondary legislation has virtually no effective scrutiny at all—affirmative or negative or whatever. The nuclear nature of the scrutiny means that no party will press the button to blow the thing up. You cannot amend it, so you are left with a situation where you really have to—as my children would say—suck it up. We need to bear that in mind as we consider the provisions of this very worthwhile Bill.

The Bill starts with good will. We all think that it is wonderful. We all know that my noble friend will do her stuff and that the Opposition have good intentions, but we are making primary legislation. This will be on the statute book for years, and who knows what comes after us? We need to make sure that sufficient checks and balances are built into some of the provisions to ensure that less worthy people than currently populate our Front Benches are controlled in the way they may wish to use the proceeds from the Bill.

I am concerned about Clause 19, under which the Secretary of State can extend the scope of the dormant assets scheme both by regulation and by amending the provisions of the 2008 Act. I know that I will get knocked about by my noble friend Lady Noakes, who thinks that we are not being brave enough, but we need to be prepared to look at and examine the dangers of adding categories of assets that might change not only the shape of the scheme but the processes under which it operates, the way that it is managed and the impact it has. That is the point that the noble Baroness, Lady Barker, made in her comments. We need to probe all these things in Committee, not because we want to stop the Bill, but because we want to make sure it remains true to the purposes we are discussing.

My second area of concern is Clause 29, on the distribution of money and the way it can be controlled by regulation, which the noble Earl, Lord Devon, referred to. When all present are gone there can be a danger of the slush fund that my noble friend Lord Taylor referred to, and which is referred to in the briefing sent to us all, because when it is convenient and expedient Governments find ways to say, “We can wriggle our way around this.” Regulations do not provide enough protection from that, unless we find ways to buttress them in some form or another. My noble friend the Minister will be aware of the principle of additionality: that funds should not be made available merely to replace other funding. I cannot clearly see any provisions in the Bill that ensure that the additionality principle cannot be infringed so that the Government cannot say, “Let’s take a bit out of this and the dormant asset boys will fill the gap.”

That is my first area of concern. My second is whether the Bill’s purposes, as laid out in the 2008 Act, are still sufficiently focused on and relevant to the urgent needs of the social conditions prevailing today. Since 2008 we have had the financial crash and the pandemic, and, in the background as we sit here, the inexorable wave of the fourth industrial revolution of artificial intelligence and robotics is sweeping through our society, with all the changes it will make to the way our society lives, operates and collaborates.

I had the privilege of chairing your Lordships’ Select Committee on Citizenship and Civic Engagement. I am pleased to say that a number of its members are participating this afternoon: the noble Lord, Lord Blunkett, the noble Baronesses, Lady Barker and Lady Lister, and my noble friend Lady Eaton, who is to speak. The group of us are not cut from the same political cloth by any manner of means, but we produced a unanimous report. Sadly, there has been pretty limited follow-up on its recommendations to date.

Our evidence sessions and, indeed, our trips around the country, brought home starkly how very unevenly social capital is distributed across the country. The noble Baroness, Lady Lister, may not like the title “‘Left Behind’ Neighbourhoods”—I am a member of the APPG too—but it does carry with it a clear nomenclature of what we are trying to achieve. As we visited these areas, and met people, it was clear that it was not just about money. Money was, of course, important, but it was also about structure. The lack of knowledge and experience and, even more importantly, a lack of self-confidence and self-belief, meant that practical help was needed, often very locally based, along the lines mentioned by my noble friend Lady Wheatcroft. That is a precondition of the long and often painful process of rebuilding local social capital. Like many other noble Lords, I argue that this is an essential plank in the levelling-up process on which the Government are placing such emphasis. I am not yet sure that the Bill, as presently drafted, has enough focus on the deployment of patient, long-term capital to enable the provision of the practical experience and help need to provide remedies for these deep-seated structural challenges.

My final question is about the expanded asset list. I have served as a director of a number of listed companies and the unclaimed dividend register is the most awful administrative pain. I am not clear how private companies, public companies and private shareholders who do not have dividends due to them but have disappeared now fit into the scheme. I have read through the proposals for these unclaimed assets and the expansion of asset management companies. Nominee names may be one way that they could be attracted, but a lot of the people who have held shares for a long time still have them in their own name. They are registered with the company and they remain there. I would like to hear whether companies are joining the scheme, are encouraged to join it, are being told about it, are being told how they can provide or meet the provisions of it, or how they can delegate someone to do that on their behalf. Perhaps my noble friend will devote a word or two to that when she comes to wind up.

I conclude by saying that this Bill has absolutely worthy objectives and it has my support. Without wishing to delay the Bill or destroy its objectives, there are one or two areas where, in Committee, we just need to probe, explain and perhaps, from time to time, tighten it up.

Photo of Lord Triesman Lord Triesman Labour 5:47, 26 May 2021

My Lords, it is a real pleasure to follow the noble Lord, Lord Hodgson of Astley Abbotts, not least because I feel at one with a number of the sentiments that he expressed. I thank the Minister for introducing a very good Bill with such clarity. I also send my good wishes to the noble Lord, Lord Field of Birkenhead, and hope that he recovers from his illness speedily. It may not be convention, but since London generally gets a very bad press and I am an unrepentant Londoner, I welcome the noble Baroness, Lady Fleet, and anybody who has edited the London Evening Standard.

This is a welcome extension, through the Bill, to what has been a very good and useful scheme. The original concept was strong and very careful in what it set out to do. The safeguards for those who, for one reason or another, had left funds dormant, avoided them facing unnecessary mistakes and that has given great confidence to the processes which have been in existence. Confidence increased because everyone in 2008 could understand and applaud the objectives which were set out: the funding of social investment, of youth schemes and of helping people up the first rungs of the financial ladder. The variations of practice in Scotland, Wales and Northern Ireland are, in their way, testimonials to the varied thinking of devolved inspiration that has also added confidence in what we might now do as a result of this Bill. The somewhat broader schemes that they have demonstrated that there was no threat in extending a good idea. I am convinced that the extension will work equally in England.

The concept will reach further into areas of need through access to and use of a wider pool of dormant funds. They will obviously be subject to the same safeguards, although, like the noble Lord, Lord Hodgson, I think the Government should be very careful and could be unwise to change confidence in this bit of the bedrock by, as they put it, laying a new order to vary the restrictions. As we have all observed, orders are typically not subject to the same scrutiny as, for example, this primary legislation, and the changes may be thought to provide wriggle room which we would not intend.

Of course, new circumstances may occur—Covid is demonstrating this on a daily basis—but the restrictions should not become potentially so elastic that they distort the intention of the Bill. Confidence and consent are built around the good sense and cultural appeal of the existing restrictions. Perhaps the Minister could provide some real-life illustrations of the variations that the Bill when enacted would permit and how they would be identified in future.

None the less, I start by welcoming the sequence of prioritising restrictions on funds. The first of course is the restitution of the funds to their owners if they can be identified; and restitution if the owners of assets reappear. I also welcome the exclusively voluntary involvement of the financial industry players. The Explanatory Notes set out the sums that have been released by the scheme, and they are reasonable, but not decisively significant.

My main reason for wanting to see more deployed is that, in any vibrant and modern economy, or in an economy which sometimes can struggle to modernise for all its members, in the face of the greatest need the last thing you want is significant pools of dormant assets. While it is obviously prudent to hold something in reserve for inclement times, idle resources never motor growth and change. That is something we understand broadly in the economy. In general, even assets thought of as being in safe reserve, often in the form of savings, are in fact actively deployed. They may be deployed with great caution and little risk appetite, but the institutions that deploy our savings are actively, if modestly, putting money to work. Idle money helps neither its owners nor anyone else. Unlocking nearly £900 million is a very prudent step, even if it has been the case that relatively small amounts have been given in any one year, but it will be a much more significant step if the sum is larger.

I wonder whether I might suggest two concrete ways, wholly in the spirit of the legislation but possibly requiring modest amendment, through which this could be achieved. I would welcome the Minister’s observations and at least an undertaking that they could be considered. I first draw your Lordships’ attention to my entries in the register, as they bear on some of what I want to say. It follows from the view of my noble friend Lord Blunkett that we are looking for base-up change. For several years, I had the privilege of chairing an organisation developing new social housing for housing associations, which, post 2008, had unusual difficulties in raising new capital for building.

Post 2008, housing was an unpopular and probably oversized asset class in the experience of financial institutions. They had caught a cold from a lot of it, and they did not want to do so again. It was also unpopular for short-term investors. Indeed, there is still a mismatch between their preferred exit timetables and the intrinsic long-term nature of returns in social housing. The cornerstone in the investment of the funds was the quite remarkable financial organisation Big Society Capital, to which I was introduced by the equally remarkable Sir Ronald Cohen. They shared our aspiration for incremental provision rather than simply the replacement of an existing source of money. It was new money for new provision, and therefore very unlikely to be done in the normal markets with the quoted REITs—it needed a new approach.

Big Society Capital, which was largely created to invest dormant funds in incremental social intervention, with some funds from other sources, had exactly the impact you would hope for in a cornerstone investment. It encouraged other investors and in my view was even more dynamic than simple philanthropy, however welcome; it did a great deal more. It potentiated greater private investment in social housing. The scale of social issues will inevitably demand more than £900 million, large as that amount in general will be thought—although maybe not in this day and age. This must mean encouraging impact investors to come hand in hand with organisations such as Big Society Capital, for example. The cornerstone that it provided led to over £172 million of additional social housing—new housing. It rehoused 1,431 families, and 40% of our projects were in 20% of the most deprived areas.

I will give one example from Tottenham, the area I come from. In Tottenham, a class in what is usually a well-run, well-organised school at the beginning of the year will have 30 students in it—not more, not fewer—and you will find by the end of the year that three-quarters of them have gone to another school. As you travel across Tottenham by bus, with every bus stop you can calculate that, roughly speaking, half a year will be knocked off your life expectancy. Many of the issues around schools and health are to do with the really impoverished housing, with people not having settled or firm places to live.

The impact of course means that the impact on people with pressing needs is not met. However, it is also not just the impact on them but the impact on investors, and on their willingness to impact invest over long periods. Some outstanding organisations, such as Philanthropy Impact, without doubt build together charitable giving with the private capital concept of an element of long-term return at very modest levels, rather like bonds. The value created can be reinvested to do still more; even if on occasions a very modest dividend is paid, it encourages more investment.

Impact has to be evidenced, and we found with Big Society Capital that it demanded that—and it was quite right that it did so. We had to measure outcomes. What we did had to be demonstrable: not marking our own homework but showing that you do what you say you will do—a point that the noble Baroness, Lady Barker, made very well. We got an organisation, The Good Economy, to measure, manage and report on the social impact of investments in affordable housing. One of the impacts that we set for ourselves and which was measured by The Good Economy was the formation of tenants’ associations so that people in the houses would be authors of their own futures—in short, building from the base up.

That impact inspires investment, including matching investment, or increases the scale of investment. So I wonder, in the context of this legislation, whether it can consider how partnership between the deployment of dormant assets and impact-led philanthropy could be encouraged? This may need some careful choreography around charity law, but the attraction could be a major inflow of funds for socially critical projects.

Aside from supporting the noble Baroness, Lady Noakes, in her excellent points on National Savings dormant assets, my other proposal concerns the investment demanded of high-net-worth individuals who are seeking the right to remain in this country. Broadly, these incoming funds are sent in the direction of holdings in bonds. That is a very reliable method of logging in funds, and of course these funds are used by the nation for a variety of purposes. However, it lacks the dynamism that is plainly needed for incremental provision in the most challenging social needs, where it is needed the most.

It could be a strong addition to the Bill if a formal mechanism could be introduced with the following characteristics. First, it would permit incoming sums from those seeking the right to remain, who have a requirement to invest in the United Kingdom, if this could be added to the pool created by the dormant assets. Secondly, the Government could guarantee a level of return at an appropriate duration matching a specified government-issue bond, and therefore at no disadvantage to the person coming in and making the investment. Thirdly, in the event that the Government achieve this outcome through a bond itself, it should be a hypothecated bond stating the special purpose for which the bond is issued, so it would be used for the purposes that the Bill wishes to see matured and advanced.

I know that the Treasury does not like hypothecated bonds—but then, the Treasury always feels it knows best, and perhaps on this occasion it does not. If it did, social housing would not be the unresolved, still-growing problem that we see. The Treasury has always failed to resolve these kinds of problems over the decades. If it understood them better, it would see that businesses can grasp how to do these things better and in far more timely ways. A big-society capital methodology has a huge amount to commend it: more focus; more direct social value. It may make this branch of immigration more transparent and attractive, both to the host population and to wealthy immigrants. It is hard to disrespect people contributing to reducing homelessness or keeping kids on the right side of the law. Let us try to build on the opportunity the Bill provides to achieve those social outcomes.

Photo of Baroness Eaton Baroness Eaton Conservative 6:02, 26 May 2021

My Lords, it is a pleasure to follow the noble Lord, Lord Triesman. I welcome the Bill and the Government’s commitment to expanding the dormant assets scheme. Bringing the purposes for which this funding can be distributed in line with those of Scotland, Wales and Northern Ireland is to be welcomed, and I commend the Minister for all the work she has done on the Bill. It represents a vital part of our bold and ambitious agenda to level up the country over the coming years.

I wish to speak briefly today about how I believe the Bill can best be put to use to support some of the most left-behind places in England. The long-term nature of dormant assets funding means that it is well-suited to bold objectives, and one such objective should be to create stronger, more resilient communities through a strengthening of our social infrastructure. This would be an investment in the places for people to meet and the locally rooted organisations that bring vibrancy to our communities. It is essential to create a strong and thriving society. We all know how important local football clubs, scout groups, youth centres, faith groups and knitting circles are to our sense of well-being and our community life. However, these things are not just nice to have; they are fundamental to the strength, resilience and prosperity of our communities.

As a nation, we have a history of uniting in times of great adversity, but our communities require the foundations strong enough to allow us to do so. We saw this during the early outbreak of the Covid-19 pandemic, with many communities across the country coming together to keep each other safe through little more than good will and neighbourliness. Research from the Third Sector Research Centre investigating how grass-roots community groups responded to the pandemic found that having strong social infrastructure was vital to a comprehensive response to the crisis. It allowed these groups not only to ensure that no one fell through the cracks of service provision, but to plan for a future beyond Covid-19.

Comparatively, those areas that lack strong social infrastructure struggle to respond as comprehensively. The APPG for “Left Behind” Neighbourhoods, of which I am a member, advocates on behalf of the 225 areas across England that suffer from significant economic deprivation as well as severely lacking social infrastructure. These areas saw just one-third of the number of mutual aid groups springing up in the first few months of the pandemic compared with the English average, and half compared with areas that are similarly economically disadvantaged and deprived but that benefit from strong foundations of social infrastructure. Similarly, these left-behind neighbourhoods got half the charitable grant funding per head, compared with other deprived neighbourhoods.

It is clear that residents in these areas had to struggle much harder in the early weeks of the pandemic to receive the same basic support as elsewhere. This suggests that community resilience and the ability to respond to crises relies not on economic factors alone but on the strengths of the local networks and organisations that tie us together. If we are to level up opportunity and prosperity across the country, we need to focus some attention on strengthening these networks. Without improving social infrastructure in left-behind neighbourhoods, the brilliant work being done by this Government to improve skills, access to jobs, transport and healthcare will simply not reach those places that need it most. Opportunities will continue to be missed in places where the social fabric is most frayed.

As we have heard from several noble Lords today, the funding set out in this Bill represents our greatest opportunity to address this. One proposal we have heard about this afternoon, supported by a number of colleagues across both Houses, is for a community wealth fund. This would create a permanent endowment capable of fortifying the foundations of our communities, directly improving their social infrastructure and building social capital, while providing the long-term support to enable these areas to make better use of other opportunities being brought forward by this Government. I hope my noble friend considers taking the creation of the community wealth fund forward and I look forward to hearing her response.

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green 6:07, 26 May 2021

My Lords, it is a pleasure to join many others in welcoming a fellow former newspaper editor to your Lordships’ House. I am sure that the noble Baroness, Lady Fleet, will be a great addition to our ranks and I particularly welcome her comments about encouraging the creative industries and, I hope, creative education. I hope that she has considerable influence on the government Front Bench of both your Lordships’ House and the other place. She arrives on the day that we heard the dreadful news that the University of Sheffield plans to close its world-leading, world-renowned archaeology department. I hope that she also picks up advocacy of archaeology as a subject that explores and helps us to understand the creativity of the past, which can inform our lives in the present.

We have had an interesting and wide-ranging debate, but I have to pick up a point made by the noble Lord, Lord Bates, and echo his praise for the volunteers who contribute so much to so many of our communities. However, I am afraid that I do not share his confidence in the capacity of volunteers to pick up more and more responsibilities, when we have an increasing pension age and the pressures of low wages, high rents, long working hours and reduced government services, which leave many with increased care responsibilities within their families and among their friends. From libraries to lunch clubs, volunteers have been asked to do more and more.

I find myself today in the unusual situation of welcoming a government Bill and entirely agreeing with the Minister’s introduction. Proposed here we have a sensible use for money parked in obscure places doing nothing. We are talking about potentially a further £880 million for social and environmental initiatives. We are building on an existing scheme that has provided more than £745 million for charities and social enterprises in the past decade. That is £75 million a year. It sounds nice when you say it like that, but I would like to put that figure in the context of the financial sector, of which we are drawing on a very small part here.

The amount of money lost in corporate tax revenue because of money placed in tax havens is estimated to be between $500 billion and $600 billion a year. It is estimated that lost tax revenues from high net worth individuals are about $200 billion a year around the globe. The Minister spoke about money languishing and sitting around doing nothing. That is what that money is doing in tax havens—not being used to fund the real economy or to circulate in the kind of communities we are looking to enrich. For full clarity, those figures come from a September 2019 article called “Tackling Tax Havens” by Nicholas Shaxson in Finance & Development, a journal published by the IMF. What we are talking about here is not so much peanuts as the crumbs of peanuts. The warmth with which this Bill has been greeted in your Lordships’ House is a measure of the public hunger even for crumbs.

Looking at the detail of the Bill, I will focus particularly on Clause 29, as does the briefing that I am sure many noble Lords received from the National Council for Voluntary Organisations. As many noble Lords have said—I cannot list them all, but they include the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson of Astley Abbotts—it focuses on the way in which we are once again in the Henry VIII territory of Governments being able simply to readjust the direction and change what is happening with very little reference to any kind of democratic structure.

Clause 29 contains a legal duty to consult. I suggest—and I would very much like to talk to other noble Lords who might like to join me in this—that there should be a legal duty to see this money directed towards the most disadvantaged areas of the country, as measured by objective, agreed and academically accepted means and criteria, not something dreamed up by the Government. This is one of the ways in which the European Union was always much more democratic than the UK, in that money explicitly allocated to disadvantaged communities actually had to go to disadvantaged communities, using objective and agreed criteria.

The noble Lord, Lord Taylor of Holbeach, said one campaign group had expressed concern that there was a danger of this becoming a slush fund. I can only agree with that campaign group and thank the noble Lord for highlighting this, because it reflects the concerns in many quarters. What we have seen with other funds originated by the Government are essentially pork barrels dropped by helicopter into chosen places.

The noble Baroness, Lady Lister of Burtersett, focused on the idea of a community wealth fund. She explored that at considerable length, so I will not go to the length I was planning to. I note that 400 community groups have backed that idea. As the noble Baroness stressed, what is really crucial is local decision-making and how these funds are allocated and used. We have the most centralised polity in western Europe. Far too much power and resources are concentrated here in Westminster. We need to transfer the power, resources and decision-making out into communities.

In my final short section, I feel like I probably need to declare my position as a vice-president of the Local Government Association. In her introduction, the Minister said that they were making sure that this could not be used as a substitute for central government funding. I would like to see that as a theory, but I would say that there is absolutely no alternative but that this money will be used in that way, given the level of austerity over the past decade. From 2010 to 2020, we have seen a reduction in funding to local government of £16 billion. I contrast that with the kind of total figures that we are talking about through this Bill. Local councils have lost 60p in the pound of money from Westminster to spend on local services.

What we are seeking to do with the money from these funds is to put a plaster on a gaping wound of deprivation and destruction of community services. None the less, this is a small positive. But if we really want to tackle the issues that affect so many communities on these islands and really want to spread prosperity around our land, what we actually need to do, to circle back to where I started, is to ensure that rich individuals and multinational companies pay their taxes. That requires a Government who want to make rich individuals and multinational companies pay their taxes.

Photo of Lord Patten Lord Patten Conservative 6:15, 26 May 2021

Lots of barbs are sometimes chucked at the House of Lords from different directions, sometimes quite rightly, but there seems to be a consensus among most people when they say that at least it is a House of experts and that they should listen to the experts thrashing out these difficult issues. This debate this afternoon has shown absolutely that this Chamber is a Chamber of experts, with one exception, which is me in this particular area. No one can be more expert than my noble friend Lady Barran, and it is worth remembering just how expert the Minister is in this world of the voluntary sector and of charitable organisations, not from some grandstanding chairing of this or that charity but for setting one up and taking 12 years or more to build up SafeLives, a notable charity devoted to dissemination of more information about domestic violence and harassment. She was there at the workface, recruiting people and trying to scratch around and find money. We are very lucky to have her to lead us in this debate.

I welcome this Bill, which of course builds on a considerable consensus that has developed since the then Labour Administration back in 2008, much encouraged by my noble friend under the political skin, the noble Lord, Lord Field of Birkenhead—one of my parliamentary heroes, although not one of my political heroes. He did so much to get this going, as was said by the noble Lord, Lord Blunkett, who is not in his place. It is always good to see a consensus when it is there.

I have four issues that I would quickly like to raise. First, I greatly approve of the new flexible approach which this legislation wants to introduce to extend the areas where new dormant assets may lie—and may be undiscovered still—using secondary legislation, particularly in England, rather than waiting another 13 years for changes to be made, as we have had to since 2008. None the less, the pressure not to do something and not to shelve, to wait until we have a good selection of things to bring the new secondary legislation into play, must be resisted. One way in which to do that is to publish annually through some Ministerial Statement to both Houses the progress made in identifying new targets in shorthand for this secondary legislation to be applied to.

Secondly—this is not something that I have raised with the Minister before; it just came to me, as things sometimes do—I would like to see all online self-investment platforms included in this Bill. These sometimes hold very substantial amounts of client moneys and levy pretty chunky fees on them. I am told that, during the recent lockdown, the sector saw far more people investing in these platforms than before. I do not know whether they are covered or not—I will not start making a Committee stage speech—and this particular point could well be covered in Clauses 12 and 13, as they deal with client moneys. However, I would like my noble friend, perhaps today or at a later stage, to deal with a straightforward policy point: is it the policy of Her Majesty’s Government to embrace investment platforms and drag them into this legislation?

Thirdly, has my noble friend or her officials come across any notable reluctance on the part of potential new entrants to get involved? Of course, we cannot name and shame because dealing with dormant assets is a voluntary process, and we value the co-operation there has been in these voluntary schemes. However, I wonder whether more can be done to involve active consideration of dormant assets, using the framework of ESG—environmental, social and governance practices of all sorts—in the financial services world and its institutions. In other words, consideration of what we will do about dormant assets this year should be an automatic part not of box-ticking but of the checklist of good ESG policies.

Fourthly and lastly, I hope that, in this territory and the others, when money is realised and distributed by the different bodies, smaller, newer and sometimes innovative outfits will not be overlooked, provided they have strong governance.

It is good to see in the Bill all the provisions that have been set out as part of a full legislative process. It is also good to see this Chamber getting progressively fuller week by week; that is very heartening. We will see more debates with more people able to be here in—to use the Whips’ Office’s phrase—their physical presence, rather than the deathly presence of Zoom, with due respect to the people who cannot get here.

I suppose that we are now edging, little by little, towards a new normality, whatever that turns out to be. However, I know that at least one noble Lord has said that he does not think the new normal will turn into total normality until the Bishops’ Bar is no longer a dormant asset but is brought back into full use.

Photo of Lord Davies of Brixton Lord Davies of Brixton Labour 6:22, 26 May 2021

My Lords, first, I welcome the maiden speech of the noble Baroness, Lady Fleet. I made my maiden speech in what is more like a school language lab than the Chamber, so it must have been particularly intimidating for her. She made a point to which I will return.

My noble friend Lord Adonis set me a challenge to oppose the Bill in principle. Of course, I do not: why should these dormant assets hang around unused or, worse, potentially fall into private hands? However, I do wish to raise two issues—I fall short of calling them concerns. First is the issue of where this money comes from; I feel that insufficient attention has been given to this. I feel some queasiness about the source of it: why have we constructed this system whereby ordinary people end up losing contact with unfeasible amounts of money?

It is all too easy to blame the individuals. One speaker referred to people’s failure to “manage their money effectively”. I question a system that ends up with this sort of result. There is something particularly odd about a system whereby we end up having to use dormant assets to solve the problem of dormant assets, when it might be better not to create the problem in the first place.

I am particularly interested in the provisions of the Bill on pension scheme assets, which we will return to in Committee. I think the Government have got this just about right, at least at the initial stage. The provisions are particularly limited, and I think that is right. Pension scheme money is there to provide pensions, and that should remain the focus. A number of references have been made to the potential impact of the pensions dashboard, which is currently under construction. The initial focus of the dashboard will be to put people in touch with their money; the problem here is money needing to be put in touch with individuals. It will happen in due course, but not particularly soon.

I have expressed my unease about the source of the money. I also have concerns about its destination. I have a problem because, as a proponent of high levels of public provision, I find it very difficult to see examples of where charities should take the leading role. There will always be room for charitable action on the part of individuals and organisations, but regarding the issues raised in this debate for which the money should be used, my question is: why are we not doing it anyway? Why do we have to rely on dormant assets to achieve these public goods? Would it not be better just to achieve them anyway? Strengthening the social structure, which a number of speakers have referred to, is certainly worth doing, but it is worth doing in any event—public action should take the lead.

It is very easy to agree in principle with the aim of always having additionality, but it is perhaps more difficult to agree what things count as additionality and what the public sector should be doing in any event. For example, under the current regime we have financial inclusion and youth employment. The state certainly has an important role in the latter; financial inclusion is slightly different, to the extent that it is not part of the normal curriculum of schools and further education. Perhaps this is an area where the finance industry as a whole should be doing more.

Of course, the Bill raises the possibility of new objectives for the use of dormant assets. I hope the Minister can provide us with more information about what possibilities have been floated—this can probably be done in Committee.

There is also the issue of how the money should be used. The noble Baroness, Lady Fleet, mentioned music education in her maiden speech. I am sure we can all agree that the education we provide in this area should be strengthened but, as a past leader of the Inner London Education Authority, I must say that, back in the day, we took it for granted that this would be done by the local authority. Unfortunately, this has fallen by the wayside, so maybe we do have to rely on the dormant assets. But to me this is most regrettable. My noble friend Lord Triesman gave another example, social housing, which I wonder why the state is not providing, as I would expect it to.

Finally, regarding the use of the term “social capital”, I have been involved over the years in making grants to voluntary organisations for worthwhile objectives, and the problem you always encounter is that the capital expenditure is always a lot more exciting than the routine running expenditure. I want some assurance from the Government that in establishing whatever structure they have for the use of this money, sufficient attention is given to running costs as well as capital funding. Where you have a capital fund, there is this ease of making capital grants, but providing the running costs is always much harder work. Can the Government respond on that issue?

Photo of Lord Bellingham Lord Bellingham Conservative 6:30, 26 May 2021

My Lords, it is a pleasure to follow the noble Lord, Lord Davies, and it was a particular pleasure to hear the quite superb maiden speech of my noble friend Lady Fleet, which was well worth waiting for. I congratulate the Minister on how she presented the arguments and made the case that, although the Dormant Bank and Building Society Accounts Act 2008, which I strongly supported in my role as an Opposition spokesman at the time, unlocked very substantial assets—so far about £750 million—and has been more successful than expected, now is the time to extend the scheme. I support the consultation process that took place and its recommendations, and the Government’s extending the scheme to those other asset classes.

Obviously the potential is huge, and the figure of about £800 million has been mentioned. However, I was looking at some work by Bruce Cane of Monimine, an organisation which tries to reunite individuals with their unclaimed assets. It pointed out that the UK’s insurance and long-term savings industry manages investments of £1.9 trillion. I then looked at the FCA’s thematic review of 2017, which pointed out that up to 10% of customers in the life and pensions market have gone away, meaning that all contact with them has been lost. That is an incredible number, and 10% of £1.9 trillion comes to about £200 billion. Even if that figure is fanciful, at 1% that figure goes up to £2 billion, compared with the £750 million that it has been suggested this could raise, so we are talking about a very large amount of money indeed.

It is obviously very important that this is channelled in the right way, and that the Reclaim Fund works effectively. I am troubled to some extent that there are a lot of people out there who have gone away and are not claiming their money; other noble Lords have raised that point. I certainly expect extra efforts to be made to find them. As my noble friend Lord Vaizey pointed out, perhaps there will be more scope for tracking them down as we move into the digital world. I do not know, but one certainly is left thinking that the banks would be going after them if they were overdrawn. That reminds me of a story of a Norfolk farmer who got calls from his bank manager—in the days when we had bank managers managing local banks—about his £2,000 overdraft every day for a number of weeks. On about the sixth occasion, the farmer asked the bank manager to tell him the exact state of his account on 1 May last year. The manager said that it was £2,000 in credit, and the farmer said, “Well, did I ring you every five minutes?” When the boot is on the other foot, the bank will go after people, but there is a lot of money out there and it is quite right that a significant amount of it will now be captured by this new scheme and by the Bill, which we hope will become an Act of Parliament.

Maybe the Minister can respond to my concern that the Reclaim Fund must keep the vast majority of its money in cash. I understand that when it was set up in 2008, interest rates were 4.5% and there would have been a lot more money accumulated during the course of a year, but now, when you practically have to pay banks to keep money there, why can the funds not be invested in bonds or government-backed instruments of some kind, and bring in a reasonable income? Even it were a very conservative blue-chip portfolio with 80% invested in tracker funds, you would still bring in a very substantial income indeed, and there would still be enough money in the fund to pay out quickly to people who came forward to reclaim those assets.

I would also like to ask the Minister about the fund only being able to hold cash. It cannot hold assets such as shares and bonds; they have to be liquidated. I am slightly troubled by the example of somebody who goes away and does not come back for many years but then comes back to try and reclaim their share portfolio—which they are entitled to do—which would then be in cash. Would it not make sense to keep some of these assets—shares and bonds—in the original format? It is obviously more difficult with products such as insurance products. That would be welcomed by the small number of people—we gather it is only about 5%—who come back to reclaim those assets.

The Minister was very eloquent in explaining how the funds are dispensed, and she spoke warmly of the main bodies doing this. This is a point echoed by the noble Lord, Lord Triesman, who spoke in support of Big Society Capital and the Youth Futures Foundation. Other noble Lords have touched on the work done by these organisations that come under the banner of the National Lottery. I do not doubt that many of them have been doing a really good job but, as a former constituency MP dealing with a lot of small charities and organisations, I can tell the House that trying to access lottery funds is often incredibly bureaucratic. It is intimidating for small charities; it is sometimes a labour of love to achieve what you set out to.

This may not be a popular point, but the Minister could take it away and have a look at it: this could be an opportunity to reset the dial and set up a completely new organisation, because many of these charities have suffered horrendously during the Covid outbreak. Many of them are on their knees; many are small, innovative charities of exactly the sort my noble friend Lord Patten was talking about a moment ago—tiny charities operating below the radar screen, many of which are going to go out of business unless they get urgent help. Can we not use this opportunity to set up a new organisation separate from the lottery and have in place a form of governance to leverage the new guidelines that have been put in place, in terms of the organisations and causes that can be helped? A number of noble Lords have mentioned to me that it would be a good idea to do this, although during the debate other noble Lords have spoken highly of existing arrangements.

The other point I would like the Minister to examine is whether the Bill could be extended on a voluntary basis to the Crown dependencies. Obviously you have the Isle of Man, Jersey, Guernsey and all the major offshore banking centres. It would perhaps be a step too far to take it to overseas territories—places such as the Cayman Islands, the Turks and Caicos Islands or Bermuda—but these competencies are devolved to the Crown dependencies. On the other hand, by a voluntary initiative, I would have thought there would be quite a lot of appetite within them to enter a scheme that could benefit a lot of more vulnerable people. It would be done on a completely voluntary basis and would not in any way compromise their integrity as banking centres. Maybe the Minister could take that away as well and have a look at it in her closing remarks.

This is a phenomenal opportunity for the charitable sector, and I hope we can look forward to the UK being an absolute world leader and setting an example to many other countries.

Photo of Lord Bhatia Lord Bhatia Non-affiliated 6:39, 26 May 2021

My Lords, the UK dormant assets scheme was established by the Dormant Bank and Building Society Accounts Act, and is administered by Reclaim Fund Ltd. The scheme was originally predicted to bring in almost £400 million, but contributions to date have exceeded this by 250%. Over the last decade, more than £745 million has been released for social and environmental initiatives across the UK. The scheme allows responsible businesses to have a positive impact on society in their environmental contributions. The Government have forced systematic change. Expanding the scheme is crucial to maintaining its potential impact in the UK by supporting industries to reunite people with their forgotten assets.

The Bill will deliver the Government’s commitment to enable additional types of dormant assets from the insurance and pensions, investment, wealth management, and securities sectors to be transferred into the scheme. This has the potential to make around £889 million available across the UK as it recovers from Covid-19.

I would like to praise the speeches of the noble Lords, Lord Adonis and Lord Blunkett, who covered the core of the Bill. I too ask the Minister: what will be the cost of administering the scheme, and which Minister will be responsible? Also, should these funds be transferred to a new charity, which could distribute them and be monitored by the Charity Commission?

Photo of Lord Polak Lord Polak Conservative 6:41, 26 May 2021

My Lords, I congratulate my noble friend Lady Fleet on her terrific maiden speech. It reminded me of my school days in Liverpool, at King David High School, where music was key. We had 500 pupils and four orchestras; in fact, when a new pupil arrived and they were not holding a violin case, we knew that they were a pianist.

I also congratulate my noble friend the Minister on her introduction of the Bill this afternoon and refer the House to my interests as set out in the register. I will focus my brief remarks on the benefits that the Bill can bring. Like other noble Lords, I am grateful to the organisations that have sent in information. I commend them all on the work they undertake to keep noble Lords updated and informed.

Like the noble Lord, Lord Blunkett, and the noble Baroness, Lady Wheatcroft, I was particularly struck by the material I received from KickStart Money—a coalition of savings and investment firms with an important mission that I fully support. The goal is simple and clear: to ensure that every primary school-age child leaves school at the age of 11 having received a high-quality and effective financial education. The coalition of supporters of KickStart Money was brought together by the Investing and Saving Alliance in response to research which found that habits and attitudes towards money can be formed in children as young as seven, thus making education at a young age vital to their future financial capability.

Just a few weeks ago, KickStart Money was fortunate to have had a meeting with the right honourable Gavin Williamson MP, the Secretary of State for Education, to discuss how financial education at primary school level helps to form positive attitudes towards money and establish important saving habits for future life. KickStart Money also won the Good Money Award last December, at the 2020 Better Society Awards, for its work in championing early-intervention financial education and funding vital money management lessons for almost 19,000 primary-aged children, delivered by MyBnk.

The Bill, which the Government have brought forward, is to be welcomed and provides an exciting opportunity to educate young people. The Bill will rightly expand the dormant assets scheme across the financial sector to make, as we have heard, potentially just under £900 million available for good causes—and clearly there must be more. What better cause could there be than using some of the funds to ensure that all primary school children receive that high-quality and effective financial education? It seems to me that the lost assets of those who have not managed their money effectively should be used to ensure that the next generation builds strong money-management skills and positive saving habits. In fact, I suggest that it is deeply appropriate.

As a result of the economic impact, more than one in four UK adults has low financial resilience. That comes from the FCA’s Financial Lives survey of February 2021. It also seems that the pandemic has had an impact on the younger generation, where six in 10 young people are saying that Covid-19 has made them more anxious about money issues. Research by the Money and Pensions Service has shown that money habits are formed at the age of seven, as I said, and evaluation of KickStart Money’s financial education programmes has shown how money management lessons can close the gap in financial capability, levelling up the playing field between those who receive some form of financial education at home and those who do not.

I hope that my noble friend the Minister will agree that this type of education is vital and will find a way to ensure that the opportunity is not missed to use the assets of financial mismanagement to create a society where young people can be given tools and skills at an early stage to prevent people falling into debt or financial vulnerability by focusing these dormant assets to ensure that primary schoolchildren develop a positive money mindset as early as possible.

Photo of Baroness Sater Baroness Sater Conservative 6:46, 26 May 2021

My Lords, it gives me great pleasure to follow my noble friend Lord Polak. I thank my noble friend the Minister for bringing forward this Bill, which will enhance and continue to support so many good causes. I pay tribute to her and her colleagues at the Department for Digital, Culture, Media and Sport for all the work they are doing to support the charity sector, particularly in these challenging times. I also add my welcome to my noble friend Lady Fleet and congratulate her on her excellent maiden speech.

We know that, in addition to the unprecedented £750 million package of support specifically for charities, a further £150 million from dormant bank and building society accounts has already been unlocked to help charities, social enterprises and individuals in vulnerable financial circumstances during the coronavirus outbreak. Expanding the scheme through the Bill means that even more people will reconnect with their assets. At the same time, it will provide more money for good causes, helping us to build back stronger in the years to come—a clear win-win.

The dormant assets scheme, established in 2008 and administered by the Reclaim Fund, has distributed assets from bank and building society accounts to good causes, while ensuring that sufficient funds are retained to meet any future claims on them. It has been a great success to date, and has unlocked and contributed more than £800 million for social and environmental causes in the UK. It operates, as we know, on three main principles, which remain unchanged in this expansion: reunification, full restoration and voluntary participation.

We are told that expanding the scheme through this Bill has the potential to unlock a further £880 million over the coming years through enabling additional types of dormant assets, including investments, insurance and pensions. This proposed expansion has also gone through a lengthy consultation, with each of these new types of assets having their own appropriately tailored definition of dormancy. Importantly, the Bill enables the social and environmental focus of the English allocation of the funds to be set through secondary legislation, in line with the model used in the devolved Administrations, which allows the scheme to consult on, and in turn be flexible to, the changing environmental and social needs in England into the future.

I welcome the additional measures in the Bill, which include making reference to the requirement for firms participating in the scheme to make attempts to reunite assets with their owners. It also makes necessary changes to reflect the Reclaim Fund’s recent establishment as a non-departmental public body of Her Majesty’s Treasury.

I am pleased to see through the consultation that there is consensus that tracing, verification and reunification —TVR—should continue to be a cornerstone of the scheme. We know that the evidence demonstrates that TVR has improved over time under the existing scheme. However, I would be grateful to hear more from my noble friend the Minister about the plans to enhance it even further. While we recognise the value of delivering funds to good causes, it is also crucial that more people are reunited with their assets.

We know there is much more to be done to help individuals and good causes across the country, particularly as we recover from the pandemic. This funding is already changing lives for the better, and expanding it further will help more vulnerable people to benefit. Instead of gathering dust, this money, if it cannot be reunited with its rightful owner in the first instance, is, among other good causes, being invested to help our young people into employment and to tackle problem debt. I support the Bill and I hope it obtains a very swift and successful passage through this Parliament.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat Lords Spokesperson (Treasury and Economy) 6:50, 26 May 2021

My Lords, one of the wonderful things about this House is that there is always a way to say what you want and stay within the rules. So I thank the noble Lord, Lord Vaizey, not currently in his place, for welcoming, on behalf of the whole House, the noble Baroness, Lady Fleet, on the occasion of her maiden speech. She joins quite a cabal of noble Lords all across this House who are very focused on the issue of music education; I hope that her addition will help them take that issue over the transom, as it were, and make sure that we get a secure basis for funding music education in the future—though, like some others, I think that it should be less a charity issue and more a fundamental issue of funding from central and local government.

I also thank the noble Baroness, Lady Barran, who was kind enough to provide a briefing to those of us with an interest. It was a thorough and very open briefing, and we on these Benches very much appreciated that opportunity. As she said in her opening comments on that briefing, this is a technical bill. Usually, when I hear those words, I am immediately suspicious—we have just dealt with a Financial Services Bill described as “technical” and it was anything but—but, in this case, I accept that that is an accurate description of the Bill. As the noble Lord, Lord Hodgson, said, it has worthy objectives that none of us could possibly object to, and I have heard no fundamental objection in any of the speeches in this House.

We all understand that there are principles that were established in the original dormant assets Act, and we understand that the intention is that those will remain consistent in this new Bill. The most important of these is almost certainly that reclaim is an absolute priority—the rights of the gone-away are in no way trammelled—but there has to be positive action to try to relink people to their lost assets.

I take some objection to the comments of the noble Lord, Lord Polak, though he is not the only person who said that if people cannot manage their money, let us at least do something useful with it. In the incredibly complex financial world that we deal with, and one that has changed in so many ways—just look at the whole pensions environment—it is not surprising to me that people have lost track of assets that should rightfully be theirs. There needs to be real pressure on the industry to make sure it does a much better job in reconnecting them. As the noble Lord, Lord Bates, said, were the shoe on the other foot, it would be hunting people down to pay their various obligations.

I found it interesting that, in the briefing we had from the AIB, the insurance lobby group, there was a plea for access to government data where that is possible without trammelling privacy regulations, and to make that an easier process. Now, with the addition of new assets, this is becoming more and more important, as well as, frankly, more and more of a challenge. It is also a principle that participation in the scheme by asset holders is entirely voluntary, and it seems to me that that is upheld.

The noble Baroness, Lady Barran, also talked in her briefing about the importance of the additionality principle. I will say a little more on this later, but I am somewhat in the camp of the noble Lords, Lord Hodgson and Lord Davies of Brixton, in asking: what is additionality? It is a rather fuzzy concept, and one of which I think we have to be aware and wary. My noble friend Lady Barker pointed out that during the Covid crisis—Covid became an excuse for many things—that principle was openly breached. I do not think that any of us in the House today want to see that become an underlying pattern. We all know through common sense what additionality is, and let us hope that, by the time the Bill leaves this House, we end up feeling that it is well embedded in this new legislation.

On the expansion of the scheme to new classes of assets, we heard a number of suggestions for additional new classes of assets that have not been dealt with in the Bill. Yet others were cautious about taking the scheme too far, particularly where there is no easy way in which to crystallise the value of the asset and where there is no established principle within the current industry on how gone-away owners will be dealt with and how the value of their assets, if they come to reclaim them, will be set. That will be important, and I hope that we can press the Minister on it a bit, because the Bill essentially gives power to the Minister to make those future decisions; it no longer brings them in front of Parliament. It will be critical that we understand what the principles are that would lead to expansion. I am not saying that it should be an anti-expansion measure; it is just important to understand before we sign off on the Bill exactly how that process will happen and what the underlying principles will be.

I should say on behalf of my party that my noble friend Lord Foster of Bath, who was unable to speak today, will, in Committee, raise the issue of whether unclaimed winnings and dormant betting accounts would be appropriate assets to bring into the pool. The Dormant Assets Commission in 2017 promised that it would look again at that issue in three years’ time—and here we are, four years later. It would be worthwhile.

Almost nobody raised the issue of the Reclaim Fund Ltd entity. It is now, as we know, a non-departmental public body, and that is right; a public interest element should be embedded in whatever organisation handles the reclaim process. But we are also giving powers to the Government to replace that body with additional bodies. As far as I can see, there is little constraint on what the character of that new player might be. Forgive me for being an old cynic, but look, for example, at recent legislation on what happens in bankruptcy. I have watched financial institutions manoeuvring to put themselves into positions where they can maximise commissions and fees that offer a whole variety of opportunities. I am cynical enough to think that, if we do not have some sort of standards or criteria for a group behaving as a reclaim fund, we could certainly see entities coming forward that would find ways in which to exploit the opportunity of managing this.

We must understand better why the current retention rate is so high—the noble Baroness, Lady Noakes, was eloquent on this issue and my noble friend Lady Bowles spoke to it—particularly as the Government stand behind a reclaim fund. A simple guarantee would serve, and that might release a great deal more money. It all becomes much more complex as we go into a more diverse set of assets, and we need much better understanding.

That leads me to the point originally made by my noble friend Lady Bowles and others in this House: the entity is rather opaque. We do not understand quite how it is functioning and making its various decisions. We do not understand the level of efficiency. The noble Baroness, Lady Noakes, said that there should be value for money. Perhaps a private audit firm is the wrong way in which to look at this; we need something with a shape that is much more in the public interest. I very much hope that the Government will explore that.

I shall draw my comments to a close by considering the distribution of funds—an issue that has occupied most of the discussion in this House. I have no intention of repeating the wide range of proposals for ways in which the money should be distributed, but a lot was said about social capital, the need for money for long- term patients, local input and control, and music education. The noble Lord, Lord Vaizey, I think, talked about the BBC as a possible recipient. There was reference to the community wealth fund proposals that we have all received. There are many different ways in which this could go as the distribution of funds is expanded.

I want to pick up a point made by the noble Lord, Lord Triesman. He said that the existing distribution has sitting behind it confidence and consent. That principle must extend into any changes to the way in which the assets are distributed.

I also want to pick up the point made in detail by the noble Baroness, Lady Lister, and many others. The Minister described the consultation process promised in this Bill as a public consultation, whereas that is not what the Bill says. The Bill says that

“the Secretary of State must consult … the Big Lottery Fund, and”— as the noble Baroness, Lady Lister, said—

“such other persons (if any) as the Secretary of State thinks appropriate.”

I do not think that will survive Committee stage, quite frankly. There is too much opportunity for this to become a game of favourites, and we cannot let that happen. That principle of confidence and consent seems absolutely fundamental to all of this.

I welcome this Bill. It has many useful purposes. I accept that it is a technical Bill. We will support it but, again, we will do so in principle. I can see areas that will be explored in Committee. I am delighted that those areas have been identified by speakers on several different Benches across this House, because the fundamental concept of the first dormant assets Bill was cross-party, and I believe that this Bill very much needs that characteristic too.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Shadow Spokesperson (Digital, Culture, Media and Sport) (Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade) 7:01, 26 May 2021

My Lords, first, I start by drawing the House’s attention to my interests as set out in the register. I work as a director for the charity Business in the Community. I am also a trustee on a number of charitable boards that may potentially benefit from funds disbursed from dormant accounts.

Secondly, I thank the Minister for the way in which she introduced the Bill: with care and not a little passion. We truly have a Minister who understands the value of the NGO and charitable sector and draws richly from her own personal experience.

Next, I congratulate the noble Baroness, Lady Fleet, on her maiden speech, which reminded us all of the rich experience that Members bring to this House—in the particular case of the noble Baroness, her championing of the arts with passion and enthusiasm. I must say I liked her call for levelling up in musical education. It only made me wish that my younger, tuneless self had been musically levelled up.

Before I turn to the detail of the Bill, I think that this an opportunity to give our thanks to the thousands of charities and community groups across the country for their amazing work during the Covid pandemic. Much of this has been done in the face of severe financial constraints—as the noble Lord, Lord Bellingham, made clear—and in the face of unprecedented public health restrictions. They have persevered and found creative ways to continue running vital services and supporting local communities. We should express our gratitude to those involved, just as we have saluted the heroic efforts of the National Health Service and our key workers.

As we have heard, the dormant assets scheme was established under the last Labour Government in a moment of cross-party support. Recognition of the crucial role played by civil society and the importance of properly supporting those organisations that do so much to help people and communities across the UK is at its root. We are proud that, to date, hundreds of millions of pounds have been unlocked and passed to good causes. For some charities, extra funding has given a greater sense of financial security, providing greater freedom to focus on service delivery. For others, it has meant expansion either in reach or in the range of services provided.

When designing the original scheme and the list of assets included in it, reunification was a key consideration. If somebody has a rightful claim to assets that become dormant, of course every effort should be made to ensure that the money returns to its rightful owner. If that is not possible, there is a clear moral justification for putting it to good use elsewhere. It may be a simple principle, but we welcome that it remains untouched in this Bill.

On a slightly different note, I was taken by the comments on reunification and reserve rates made by the noble Baronesses, Lady Bowles, Lady Noakes and Lady Kramer. This suggested overprovision, and I ask whether the Minister can explain why.

While we welcome the introduction of the Bill, can the Minister shed any light on its timing? The post-implementation review of the 2008 Act was published in 2014, and the Dormant Assets Commission published its recommendations in early 2017. While we appreciate the need to consult widely and consider civil society finance in the broader political and economic context, we have had to travel an extraordinarily long road to find ourselves here today. Why? Is it, for example, because departmental resource has been focused on other matters, such as preparing for Brexit, perhaps?

It is an interesting time to discuss funding for good causes. Despite some support from the Government, whether through grants or the furlough scheme, the past 14 months have been incredibly tough for the charitable sector, as I said earlier. For many, coronavirus support grants were slow to arrive and insufficient to allow business to continue as usual. While the economy may be gradually reopening, it is important for a degree of government support to remain in place until the charity sector’s ecosystem is fully rebooted.

We must be thankful that, despite the challenges of the past year, fundraising has not ground to a complete halt. Many charities have been creative in hosting virtual events or promoting individual sporting challenges, in the absence of occasions such as the London Marathon. Nevertheless, money has been tight and, despite the characteristic generosity of the British public, with so many people furloughed or losing their jobs as a result of Covid-19, charity income has taken a big hit, just as many organisations have experienced a surge in demand.

On the Labour side, we very much support the Government’s intention to unlock further funds through the measures in this legislation, but we must consider the Bill in context, as I have outlined. Earlier this year, for example, the Chancellor unveiled spending plans reminiscent of the coalition Government’s austerity years. With this in mind, can the Government assure us that the new money derived from the dormant assets listed in the Bill will be in addition to other forms of public support for charities, rather than being used as a rationale to scale back other initiatives?

While we support the thrust of the legislation, can the Minister provide a rationale for the decision to exclude some of the asset classes recommended for inclusion by previous consultations and industry champions? On pensions, for example, the justification seems to be that we need time to take stock of the introduction of pensions dashboards. How long does the Minister believe is needed to assess the changing pensions landscape? If conditions are favourable, is this an area where the Government may wish to utilise the powers in Clause 19?

The dormant assets eligible for this scheme are generally financial products. What consideration are the Government giving to including other asset types? Does the Minister see, for example, a case for including the proceeds from government land disposals? Similarly, is there scope to pass some of the proceeds of crime confiscated under other legislation to community groups, in recognition of the harm that crime has on the area in which it is committed? I am particularly interested to hear the Minister’s response to the bid from the noble Lord, Lord Vaizey, to bring the National Fund into scope and, similarly, to the case made by the noble Baroness, Lady Noakes, for NS&I unclaimed assets and, by the noble Lord, Lord Hodgson, for unclaimed dividends.

These questions lead us to a more fundamental debate: should funds continue to be disbursed by the National Lottery Community Fund, as they have been since the inception of the scheme? Is it time, as others have suggested, to look at alternative models? The Minister is no doubt aware of proposals drawn up by civil society organisations for what they call a community wealth fund, which invests in left-behind areas. A number of Peers, notably the noble Baronesses, Lady Lister and Lady Eaton, refer to the proposition, as did others across the House. What is the Minister’s response to that, given that it is consistent with the Government’s stated aim of levelling up, which the Minister drew attention to in her opening speech?

During the passage of the Bill, we intend to probe the operation of Clause 27 to gain a better understanding of what oversight the Treasury and Parliament have of Reclaim Funds Ltd’s finances and operations. We will also seek to amend proposed new Section 18A, which is inserted into the 2008 Act by Clause 29. The consultation requirements included in the draft appear inadequate and we would therefore welcome the opportunity to discuss this with the Minister and her officials in due course. The case for a broader consultation was well made by my noble friend Lady Lister.

As I said at the outset, we welcome this Bill as it builds on the scheme which Labour launched back in 2008. We think there are some missed opportunities in this new, additional proposal. We hope the Government will recognise this, and we commit to probing the opportunities the Bill could unlock and to constructive engagement throughout the Bill’s passage through both Houses. As the noble Lord, Lord Hodgson, observed, we, as the Opposition, have good intentions in examining the Bill, not least because the Bill has good intentions behind it. We will be its critical but supportive friend, seeking to improve its content and impact.

Photo of Baroness Barran Baroness Barran The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport 7:11, 26 May 2021

My Lords, with the leave of the House, I thank all noble Lords for their valuable contributions today. The debate has indeed been very wide-ranging, and your Lordships have set me a difficult challenge in trying to cover your points in the time allowed. If I may, I will therefore follow up with a letter to noble Lords after this debate.

I join other noble Lords in congratulating my noble friend Lady Fleet on her excellent maiden speech; I look forward to listening to her speak many times in future. I also echo the best wishes expressed by the noble Lord, Lord Blunkett, to the noble Lord, Lord Field, and wish him well. I congratulate the noble Baroness, Lady Bennett, on starting a new trend of supporting, agreeing with and welcoming government legislation.

I shall touch on some of the broader points that went beyond the direct scope of the Bill. The noble Lord, Lord Adonis, challenged the Government on their ambition in relation to levelling up. The Queen’s Speech had a very strong theme of levelling up going through it. I highlight in particular the changes we have already made to the social value legislation and the potential it gives for social enterprises, charities and SMEs more broadly to benefit from £49 billion of government commissioning.

My noble friend Lord Vaizey managed to combine Dickens, the BBC and the National Fund in an incredible bit of knitting. As he is aware, the National Fund is currently subject to court proceedings, so there is no more that I can do to release it, but perhaps when we get there it will be a combination of “Sleeping Beauty” and Hard Times, if that is not too bad a combination.

Finally, and importantly, I thank my noble friend Lord Bates for stressing the incredible generosity of the British people over the past year in donating to charities and in volunteering for the NHS responder scheme to help with the vaccination rollout. I am sure that we will shortly see an incredible outpouring when volunteering options for the Commonwealth Games open in a couple of weeks.

The first area of discussion by your Lordships related to the size of the assets that will be released; that was raised by the noble Lord, Lord Blunkett, and several other noble Lords. To reiterate, industry valuations show that expansion has the potential to make £1.7 billion available to transfer to Reclaim Fund Ltd, which is based on an estimated £3.7 billion of dormant assets in the new asset classes that will be included in the Bill. The industry believes that, with enhanced tracing and verification efforts, £2 billion could be reunited with its rightful owners. The noble Baroness, Lady Wheatcroft, talked about whether we could do more, as did other noble Lords. This represents an important step forward. Obviously, in the regulations we propose to make further expansion of the scheme more flexible and, when that happens, the money will of course increase.

I listened intently to the noble Lord, Lord Triesman, talking about social housing and was writing down all the good things that Big Society Capital had done—but of course that was exactly where he was going with his comments. However, it is also important to recognise the multiplier effect that some of these specialist distribution organisations have had and the additional funds that they have brought into areas such as social housing, where the market is now I think over £800 million. I absolutely agree with him about the potential for both impact investment and impact philanthropy.

My noble friend Lord Bellingham also talked about the greater potential both to reunite people with their assets and to release money for good causes. I reiterate the point that the Bill includes the principles not just of reuniting but of full restitution.

The noble Lord, Lord Blunkett, and my noble friends Lady Sater and Lord Taylor of Holbeach asked about increased efforts in relation to tracing, verification and reunification. The requirement to make efforts to trace, verify and reunite the owner with their asset before transfer is set out in the agency agreements between current participants and the authorised reclaim fund, and that will be mirrored in future. However, the Bill strengthens that position by ensuring that the reclaim fund can accept transfers from a participant only if it has made satisfactory contractual or other arrangements with it.

A newspaper—not my noble friend Lady Fleet’s former employer but another—has a supplement called How to Spend It, and here we come to the “How to spend it” section of the debate. It is absolutely right that we should bring this focus if we are to expand the scheme and review where those funds can be spent. We have had such a rich and knowledgeable debate, and I thank in particular my noble friend Lord Bates, the noble Baroness, Lady Lister of Burtersett, the noble Earl, Lord Devon, and my noble friend Lady Eaton for their contributions here. During the consultation on expanding the scheme, we received multiple calls to change the current restrictions. There was some concern from a number of your Lordships about the restrictions in Section 18 coming to an end and there being a gap before the new restrictions would apply. That is not correct; they will apply until a new order has been made.

There was a lot of discussion about the additionality principle. This is set out in paragraph 9 of Schedule 3 to the 2008 Act and remains unchanged. There was perhaps a misunderstanding on the part of the noble Baroness, Lady Barker, reiterated by the noble Baroness, Lady Kramer, in suggesting that there had been a breach of that principle in the last year. There was absolutely no breach. I am not quite sure where that idea comes from, but it is not correct. The additional £150 million that was given to the dormant asset distribution organisations came from dormant assets themselves. Their mission was absolutely as set out in the legislation. There was no government interference whatever.

The noble Earl, Lord Devon, commented on the valuable role played by social enterprises. I share his support for that sector, with which I engage very regularly. The Act does not currently specify social enterprises as particular beneficiaries of the funds; rather, they will often deliver in the social and environmental areas which are the funds’ focus. Since that broad area of focus will stay unchanged—the restrictions may change beneath it—we would very much expect them to continue to be part of the ecosystem.

There were a number of questions about the consultation, particularly from the noble Baroness, Lady Lister. The position was made clear in the press pack, which noble Lords may be forgiven for not having read. It is absolutely in the public domain that we have committed to a full public consultation with all the groups that the noble Baroness talked about. Regarding the comments made by the noble Baroness, Lady Bennett, it is important to remember that dormant asset funding is entirely dependent on industry participants who voluntarily transfer into the scheme, as well as the general public’s trust in it. It is therefore very important that we listen to those groups as well as the others that were cited.

The noble Lord, Lord Davies of Brixton, asked about capital versus revenue funding. To clarify, it is up to the distribution organisations to decide what they want to make grants to; the Government do not interfere as to whether it is capital or revenue. They will use their expertise to find the best way to have a positive impact on the issues they are seeking to address. On the points raised by my noble friends Lord Patten, Lord Polak, Lord Bellingham and other noble Lords, the distribution to small organisations already happens through those four distribution organisations.

I turn to the expansion of the scheme. My noble friend Lord Patten asked about industry participation and support for the scheme. There has been very strong interest from industry in participating in the expanded scheme. It has, in the nicest possible way, been nudging us along very politely and it backs the swift progression of the Bill. We are continuing to work closely with the dormant assets expansion board, as well as the Reclaim Fund, trade bodies and regulators, as we prepare to operationalise the expanded scheme.

There were a number of specific questions about additional types of assets, including online investment platforms, raised by my noble friend. I will respond in writing to these, including on the proceeds of crime, raised by the noble Lord, Lord Bassam, and gambling proceeds, raised by the noble Baroness, Lady Kramer.

The noble Baroness, Lady Bowles of Berkhamsted, the noble Lord, Lord Davies of Brixton, and others asked about the relationship between the scheme and the pensions dashboard. The consultation cited ongoing changes in the pensions landscape, including the introduction of the dashboard, as needing “time to fully develop”. Many responses asserted that the dashboards would interact positively with the scheme. Both initiatives have the primary aim of reuniting owners with their assets, and the dashboards will make it even more likely that only genuinely dormant pension products that will not be reclaimed will be transferred to the scheme.

The noble Baroness, Lady Bowles, also asked about safeguards against perverse incentives. Legislation may indeed incentivise firms to change their terms in order to participate, but the Bill tightly prescribes the circumstances in which an asset is eligible, including dormancy definitions and reclaim values. If the terms of an asset align with these, it is obviously appropriate for it to be in scope.

My noble friend Lady Noakes asked about dormant national savings accounts. She may be aware that money invested in National Savings and Investment products is passed directly to the Exchequer and used to fund public services, which means that any unclaimed balances are already being used for public benefit. There is also the My Lost Account scheme, which seeks to reunite customers with their money and premium bond winnings. In the past 20 years, £840 million has been reunited in that way.

My noble friend Lord Hodgson of Astley Abbotts asked about the inclusion of shares and dividends. The Government have been engaging with the sector on plans to include them since 2018. More recently, share registrars have joined forces to think about how they will work with companies to operationalise the scheme, which includes thinking about what kind of register would be needed to ensure full restitution.

I turn to the Reclaim Fund and focus on the reserves policy, raised by my noble friend Lady Noakes, the noble Baroness, Lady Bowles, and the noble Lord, Lord Bassam. I absolutely share your Lordships’ wish to see more money distributed. As your Lordships are aware, the Reclaim Fund is legally obliged to retain a portion of the funds that it receives to repay owners. That portion has been declining over time: initially, 60% of assets were reserved, but that has now reduced to 40%. In relation to the point of the noble Baroness, Lady Bowles, that explains the bumper year in 2019, when there was a large release of assets because of a reduction in the reserving policy, which allowed the establishment of Fair4All Finance and the Youth Futures Foundation.

We expect the approach to reserves to evolve over time. It remains the responsibility of the Reclaim Fund to set the reserves at the right level. My noble friend Lady Noakes asked about whether the guarantee from the Treasury affects this. There is a balance to be struck here, but the principle of additionality and separation of the assets means that the current structure is sound.

I turn to the issues of secondary legislation raised by my noble friend Lord Hodgson and the noble Baronesses, Lady Barker, Lady Kramer and Lady Bennett. We have kept the provisions and the number of delegated powers in the Bill to a minimum and have only included those powers that are necessary for a successful operation of an expanded scheme. Where it is possible and practical, we have implemented future changes in the Bill. However, in a way, the answer to the question from the noble Lord, Lord Bassam, about timing and why it has taken such a long time to get to this point lies in the need for secondary legislation to make this more flexible. It has been about five years since the industry started to encourage us to expand the asset classe,s and obviously through the consultation recently, we heard the calls for more flexibility in deployment of those assets. The secondary legislation will give us that flexibility.

I have appreciated enormously the tone of a generous but critical friend in this debate and I look forward very much to working with your Lordships as we pass this important piece of legislation. I am also able to put my noble friend Lord Hodgson out of his suspense as I look forward to introducing the Charities Bill. With that, I beg to move.

Bill read a second time and committed to a Grand Committee.