Moved by Baroness Kramer
6: Clause 29, page 22, line 20, at end insert—“(3A) An order under this section may not be made unless the Secretary of State has certified that dormant account money will be used to fund projects, or aspects of project, for which funds would be unlikely to be made available by a Government department.”Member’s explanatory statementThis amendment would require the Secretary of State to certify that dormant assets money would be additional to, and not replacing, Government spending.
My Lords, this amendment deals with additionality. It was the intent of the original Bill, which placed a responsibility on the Big Lottery Fund alone to ensure that the moneys were additional to expenditures that one would expect a government department to make; I assume that means any level of department, including local authorities. That seems to be a fundamental concept which sits behind the dormant assets fund. In our early discussions, the Government constantly confirmed that the principle of additionality was an immovable one for this Act.
One should always spend some time looking at government websites. I was slightly surprised to find a government announcement from June 2021 of financial support for voluntary community and social enterprises, to enable them to respond to the coronavirus. This was a very good thing which I have no criticism of; however, according to the announcement:
“The government has pledged £750 million to ensure VCSE can continue their vital work supporting the country during the coronavirus (COVID-19) outbreak, including £200 million for the Coronavirus Community Support Fund, along with an additional £150 million from dormant bank and building society accounts”.
In other words, that means dormant asset funds. Technically, this does not say that the Government have said to the folks at the dormant asset funds, “We want £150 million from you to support this activity, because we don’t really want to put in more than £750 million”, but it is a very grey area. Anyone reading this would assume that the Government were announcing what they would regard as the use of funds under their control.
I am very concerned, because additionality can be a very grey area. What should be the responsibility of the local authority of a particular government department? What should be the add-on which comes from the dormant assets fund, with its focus on supporting the additionality that is provided by the charity and social enterprise sectors? Therefore, I have very quickly drafted an amendment requiring the Secretary of State to certify that as far as he knows, the additionality principle is in play. I am slightly surprised that the Government have not said, “The Secretary of State only wants this to be additionality and is delighted to sign a piece of paper confirming that this is how the money will be used.”
That is the rationale behind this important amendment. From the announcement I read a moment ago, it is not difficult to see that the creep across the boundary is relatively easy. The initial dormant assets fund was under £1 billion. The new assets that will be brought into scope as a consequence of this Bill amount to a minimum of an additional £2 billion. As expansion goes beyond that, that number will keep increasing, so we are talking about very large amounts of money. The Treasury could view this as an opportunity to constrain public sector debt or to enhance particular spending programmes.
It is very important that we get an assurance from the Minister that this amendment is not needed, otherwise, it will be necessary for me to press it. I have been listening to the response from the Minister, but my noble friend Lady Barker, who is a specialist in this field and far more expert than I, will be the person who is really listening. I will see whether she is satisfied—if not, I will ask the House to pronounce on something that I believe is fundamental.
My Lords, this is an important topic. It took quite a bit of our time in Committee, has been raised again today and runs as a thread through our concerns. We have had some discussion with the Minister between stages, and useful discussion it was.
We acknowledge that additionality has been built into Amendment 7 in the next group, but we are very sympathetic to the call from the noble Baronesses, Lady Kramer and Lady Barker, for the Secretary of State to certify as part of the regulation-making process that funds will indeed be on top of existing government commitments. The noble Baroness, Lady Kramer, has made quite a compelling argument. Dormant assets are going to grow. There are many other sources of dormant assets not included within the current scheme. I could see a hungry Treasury, worried about the supply of funds in the future, seeking to make use of substitute funding from dormant assets. I think we will need to be thoroughly convinced by the words of the Minister this afternoon if he is to avoid us having a further Division.
If the Government have no plans to pull accounting tricks, I would have thought that there was no issue with accepting this amendment or perhaps introducing a new text either at Third Reading or when the Bill moves to the House of Commons to put this issue beyond doubt. That is what I am listening for this afternoon and hoping to hear from the noble Lord.
My Lords, I wish to add two points to those made by my noble friend Lady Kramer. It is right that in the next government amendment there is reference to a report and the additionality principle being included in that report. The reason why we drafted this amendment in the way we did was the requirement for the Secretary of State to certify the matter. One of the criticisms that was initially made of this Bill by the Delegated Powers Committee was the number of Henry VIII powers being assumed by the Minister.
The second reason is that the next government amendment refers to:
“Periodic review and report to Parliament”.
It does not say what those periods should be. Therefore, we are trying to deal with exactly the sort of scenario outlined by my noble friend Lady Kramer, where the Government suddenly dip into this back pocket of money and start to use it. That is the reason why it is there and why we think it is so important.
I am grateful to the noble Baronesses, Lady Kramer and Lady Barker, for tabling Amendment 6 on the additionality principle. I also thank the noble Baronesses for their time in the productive discussion that we had on this issue. I hope that during the course of my remarks I can reassure them and other noble Lords that the intentions of this amendment are sufficiently covered both in the 2008 Act and through the Government’s Amendment 7, to which the noble Baroness, Lady Barker, just alluded.
The principle of additionality has successfully under- pinned the scheme since its inception and will continue to be a core principle of its distribution across the UK. In line with the proposed wording in Amendment 6, the 2008 Act already describes additionality as the
“principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by … a Government department” or devolved Administration. Therefore, the principle as defined by this amendment is already enshrined in legislation.
Without having the 2008 Act in front of me as well as the Bill, I am afraid that I may not be able to give the noble Baroness the speedy response that she seeks.
I shall address the point that she also raised—while seeking an answer, if I can give her a definitive answer now—about the £150 million that was released last June. As she noted, the scheme released £150 million of dormant assets funding to support the response to the Covid-19 pandemic and recovery across England. That was distributed by the four spend organisations in line with the 2008 Act. In this instance, it is important to note that the funding was entirely separate from the UK-wide charity support package of £750 million, which was announced in April 2020.
“The report shall set out the Fund’s policy and practice in relation to the principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by”— and then it lists
That does not appear to apply to anything other than the Big Lottery Fund. When the 2008 Act went through, the only distribution entity was the Big Lottery Fund. There are now three others, and the new Bill anticipates potentially creating more distributors, whose responsibilities will be directed by the Secretary of State.
I fully accept that, in the original concept and structure of the Act, additionality was a fundamental underlying principle. That does not appear to have carried over into the expansion that is embedded in the new Bill. That is my concern.
I am grateful to the noble Baroness for that, and I hope that what I go on to say will address that point. If there is a change in distributor or an additional distributor is established, there are already powers in the 2008 Act to amend the legislation to ensure that any new or additional distributor must similarly report on their policy and practice in relation to the additionality principle. The noble Baroness is very welcome to intervene again, if I have not addressed her point.
The question to consider is not about the definition of additionality but where the accountability for that principle should lie. We fully support all the points raised in Committee regarding the fundamental importance of ensuring that the principle is adhered to, but we believe that how the 2008 Act positions the additionality principle, plus the new provisions in government Amendment 7, is the right approach to ensuring this and I welcome the opportunity to clarify why.
The Labour Government which brought in the 2008 legislation ensured that the accountability for the additionality principle lies with the named distributor responsible for all the funds across the UK, rather than the Secretary of State. This Government agree that it remains the most appropriate place for its inclusion in primary legislation. As we outlined in Committee, Schedule 3 to the 2008 Act requires the National Lottery Community Fund, the current distributor of dormant assets funding across the UK, to set out in its annual report its policy and practice in relation to the additionality principle. These reports must be laid before Parliament, and this Bill does not change that requirement. In fact, Amendment 7, to which we will come in a moment, seeks to bolster this further by requiring additionality to be included in periodic reports of the scheme’s effectiveness, as the noble Baroness, Lady Barker, noted. Your Lordships’ House will continue to have the opportunity to scrutinise how the National Lottery Community Fund approaches this in practice. This will ensure that funding continues to be directed to causes which fulfil the scheme’s objectives while being additional to central or devolved government funds.
As has been noted, the principle as it stands is critical to the scheme’s success, and our partners in industry have made it clear that their participation is reliant on it. As this is not central government funding, and as the Government have limited control over only the English portion, it is appropriate that the primary accountability for the principle should sit with the UK-wide distributor of the funding and its accounting officer—namely, the National Lottery Community Fund. Indeed, the fund is well versed in making this assessment, as an additionality principle also applies to its other portfolio of funds. To date, there has never been a breach of this principle of which the Government are aware.
We feel there is no evidence that the principle needs to be altered, and we believe the current approach is serving the scheme well. It has been upheld for 10 years, and we do not think it necessary or desirable to significantly change a demonstrably successful approach.
The commitment is already made in the 2008 Act. If there is a change in distributor, or if an additional distributor is established— and I should stress that there are currently no plans for that—there are already powers in the 2008 Act to amend the legislation to ensure that any new or additional distributor must similarly report on their policy and practice in relation to the additionality principle.
However, we have responded to the noble Baroness’s desire to see the Secretary of State more specifically held accountable to the principle, and we have reinforced its importance even further by including it within Amendment 7, which we will come on to shortly, on reviewing the scheme and reporting to Parliament. The noble Baroness, Lady Barker, said in Committee:
“We must also be able to work out from all the reporting that we do get to see that the principle of additionality is being adhered to.”—[
We thoroughly agree, which is why our Amendment 7 will ensure that the report must include any policies and practices of the principle by the Secretary of State as well as the National Lottery Community Fund. This provision responds to requests made by noble Lords that the Secretary of State should be held more expressly accountable for ensuring that and explaining how dormant assets funding is used in ways that are genuinely additional to central Government expenditure. This demonstrates our ongoing commitment to ensuring that the principle continues to be honoured, including the ways in which funding flows to distributing bodies and on to beneficiaries.
That is why we cannot accept the amendment. I hope I have reassured the noble Baronesses that we understand their concerns, and that is why we have brought forward the additionality provision in our review and reporting amendment, Amendment 7. I can see the noble Baroness is rightly consulting the 2008 Act for the references to it. I hope on that basis she will be content with what we have proposed and content to withdraw her amendment.
My Lords, I thank the Minister for the attention he has given to this, but I will pick him up on one issue. A power to do something is only a power; it is not an undertaking that the thing will be done. I do not think he has spelled out, as I hoped he would, how exactly the Secretary of State would be reviewing the additionality and demonstrating the additionality. It may be that he is going to come on to that under Amendment 7. But it seems to me that it is only the Secretary of State who can determine whether something is additional or not, because only the Secretary of State can have full knowledge of what the Government’s overall intentions were. I think this is important. I think we have had the example my noble friend talked about, and I would therefore like to test the opinion of the House.
Ayes 164, Noes 192.