Clause 19

Dormant Bank and Building Society Accounts Bill [Lords] – in a Public Bill Committee at 4:30 pm on 15 October 2008.

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Distribution of money for meeting English expenditure

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I beg to move amendment No. 5, in clause 19, page 10, line 28, at end insert—

‘(1A) The Secretary of State may, by order, amend the distribution areas listed in subsection (1).

(1B) An order made under subsection (1A) may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.’.

Photo of William McCrea William McCrea Shadow Spokesperson (Environment, Food and Rural Affairs)

With this it will be convenient to discuss amendment No. 32, in clause 19, page 10, line 34, at end add—

‘(3) For the purposes of making a distribution under subsection (1), each of (1)(a), (1)(b) and (1)(c) should rank equally.’.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

This is a sad moment for me, because this is the last amendment that I have tabled to the Bill, although I shall no doubt find some remarks to make on other items before business is concluded. Amendment No. 5 is untypical of my other amendments, because in an amazing spirit of charity, I am seeking to give the  Government a little more flexibility by allowing the Secretary of State—the Government have appointed the Secretary of State for Children, Schools and Families as the responsible Minister, rather than a Treasury Minister, which some members of the Committee might find curious—to amend the three areas in which the dormant accounts money can be distributed by the BLF. Those three areas relate to young people, financial management and financial inclusion. I see merit in having the scope to modify the largesse, if public demand so warrants and Ministers feel that it is appropriate. That is the purpose of amendment No. 5, but the Minister might feel that I am being unduly generous.

Amendment No. 32, which was tabled by the hon. Member for Fareham, makes a reasonable point. Unless I have missed something, throughout the debates on the Bill, the Government have been rather vague about the amount of money to be allocated to each of the three areas identified as priorities. We have been led to believe, not only because the lead Government Minister is the Secretary of State for Children, Schools and Families but because of the emphasis in the comments made by Treasury Ministers, that the primary area that will benefit relates to young people.

Of course, young people may benefit under financial management and financial inclusion provisions too, but projects specifically aimed at young people appear to be the main thrust of what is being proposed by Ministers. However, I understand that nothing in the legislation specifies that. Of course, that makes quite a big difference; people who are involved in an organisation that is solely concerned with advancing the interests of young people might be enthusiastic about the Bill because they think that 90 per cent. of the money will go to young people and only 5 per cent. to financial management and 5 per cent. to financial inclusion. They will celebrate if the Bill is passed. If the Government then turn round and say, “Actually, we are only envisaging 1 per cent. going to young people, 1 per cent. to financial management and 98 per cent. to financial inclusion,” those people may feel that they were sold something slightly different to what they thought was the case when the legislation went through all its stages in both Houses of Parliament.

Therefore, although I think that my amendment is a charitable one, I am big enough to say that the more important and interesting amendment of the two is amendment No. 32. I do not necessarily follow the argument that the two amendments should be equally weighted, so I would not necessarily support amendment No. 32. Nevertheless, I think that the issues that it raises are—

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I leave hedging entirely to the people of expertise in the City and the Conservative party.

I would not necessarily support an equal distribution—one third, one third, one third—but the onus is on the Minister to try to indicate, preferably in legislation but at least orally to the Committee, what he sees the division being.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

May I first address my remarks to amendment No. 5? There is a very clear logic to that amendment, which was tabled by the hon. Member for Taunton. Clause 12 was removed from the Bill because the Government did not want a triennial review in perpetuity, yet we are casting in stone for perpetuity—until time ends—that these are the three priorities for that money. A point may arise at some time in the future when the Government wish to change those three priorities, but they would then have to introduce primary legislation to change them, so the hon. Member for Taunton may have done the Government a service by pointing out this gap in the Bill.

Regarding amendment No. 32, I am not sure that I would support it either, if it went to a vote. I tabled it for the very reason that the hon. Member for Taunton gave; there is nothing in the Bill that tells us how the money will be spent, or what priorities will be given to the various projects. I assume that the order in the Bill reflects the order of spending and that more will be spent on A than on C. However, what I do not know is how much more? Is it just a fraction more? I also do not know how the Government will determine the priorities.

A very clear signal has been given by the fact that, in our debates, the lead Secretary of State has been referred to as the Secretary of State for Children, Schools and Families, who, in an earlier incarnation, gave evidence to the Treasury Committee’s inquiry into unclaimed assets—I will come back to that inquiry in a minute, because I think that we can see where the order of priorities comes from, judging by the Secretary of State’s evidence to the Committee. That suggests that the main area of expenditure will be, as the clause puts it, on

“the provision of services, facilities or opportunities to meet the needs of young people”.

However, it would be helpful for the Committee and outside bodies to understand just what weighting will be given to that priority in comparison to the other two. Some people out there will be interested in knowing that. They may wonder if they can apply for funding under those streams. The Minister may reply that we will have to await the strategy produced by the Big Lottery Fund for England to know what the priorities are, but it would be helpful to signal the order at an earlier stage.

The third priority will be left in quite a difficult position. The Treasury Committee’s report on unclaimed assets gives a very clear steer that the social investment wholesaler will need a significant endowment to function properly. The conclusion to the report states:

“We find the concept of using gearing to multiply the potential impact of unclaimed assets attractive when compared to more traditional grant-giving distribution methods. We have been told that the Social Investment Bank needs minimum funding of £330 million over five years for it to be viable, but we do not, at present, see any sign of the Government committing resources to social investment of this scale. We believe that the Government cannot will the ends if it does not will the means. We want the Government to allocate sufficient resources to a Social Investment Bank funded in part through unclaimed assets.”

The Treasury Committee gave a clear signal. The then Economic Secretary, who is now Secretary of State for Children, Schools and Families, also touched upon the issue in the debate.

Sir Ronald Cohen, the chairman of the Commission on Unclaimed Assets, said that it would be

“very difficult to get an allocation from Government for a purpose such as this if the unclaimed assets were not available”.

The sense was given that unclaimed assets would be the source of funding for the establishment of a social investment bank. The suggestion is that if the priorities are as set out in the Bill, there will not be enough money available from unclaimed assets to provide a sufficient endowment.

I am not arguing for the benefits of one cause against those of another. If we had the time or inclination to do so, we could make cogent arguments for the proportion being divided in particular ways. We might be able to put percentages on youth services, financial inclusion and the social investment wholesaler.

From the way that the Bill has been drafted and the mood music around it, I think the problem is that most of the money will go to facilities for young people and the third priority will get the small change. That may not be sufficient to produce the benefit that people who support a social investment bank believe it should have. Lord Davies of Oldham said of this issue in another place:

“We want to go ahead with the top two priorities but the third concept in the clause is dependent on resources being available.”—[Official Report, House of Lords, 15 January 2008; Vol. 697, c. GC493-494.]

That sends a clear signal about the priorities.

There is a lot of interest from the third sector not just in the first two priorities, but also in the third. This debate is an opportunity to air those issues and for the Minister to give more clarity on what he believes might be the distribution between the three causes.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury 4:45, 15 October 2008

I will be delighted to bring as much clarity as I can to this issue. There are two very different amendments. Amendment No. 5 would insert an order-making power to amend English spending areas by affirmative resolution. In reply to the hon. Member for Taunton, we believe that the areas we have identified are important and enduring. We have consulted on the areas and do not feel that there is a need to change them, even in the long term. One of the reasons why there is no need to change them is that youth services are an important area now and for the future. I confirm that we regard youth provision as a priority. Financial inclusion and financial capability are rightfully areas in which the Big Lottery Fund could make a significant difference. We clearly put it on the record in the other place and on Second Reading that, if resources permit, we would consider funding for a social investment wholesaler. That remains our position.

There is still great uncertainty about the quantum of resources available to the Big Lottery Fund in the first instance and on an ongoing basis. We have yet to see how it will work out. We have discussed estimates of the amount of genuine dormant assets, and it will be up to the reclaim fund through its business plans to decide how much of those assets are to be transferred to the Big Lottery Fund for distribution. At the moment, there is a lot of uncertainty about the areas, and putting rigid percentages in place would not make sense. It is right, too, that the balance of priorities within the three  areas might need to be changed over time. I explained that the process of making directions on spending decisions will involve a range of Departments, with overall direction coming from the Department for Children, Schools and Families, which reflects the priority that we give to youth service provision. It seems a sensible way in which to give direction and guidance to enable the Big Lottery Fund to do its work, yet still retaining some flexibility as circumstances change.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I can understand the Minister’s reluctance to commit himself to rigid percentages and in fact, despite wanting the amendment to achieve that, both the hon. Member for Fareham and I have conceded the point. However, by not committing himself to any percentages or even any indication, the Minister seems to be going right to the other end of the scale. Were I a representative of a youth services organisation, my attitude towards the Bill would be different if I thought that my organisation would be the beneficiary of 10 per cent. of the funds rather than 90 per cent. of the funds. That makes a substantial difference to what we want to achieve by the Bill. I accept that the hon. Gentleman will not say 47 per cent., 33 per cent. and 20 per cent., but he could say that he envisages that youth services would receive more than half the total money. People would then know roughly where they stand in relation to the Government’s ambitions.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury

It is premature to specify percentages to individual areas but, when it comes to spending directions, we will give guidance to the Big Lottery Fund on such matters. I appreciate that organisations out there see what we are proposing to do and are already anxious to bid into the Big Lottery Fund for exciting new projects, but throughout the Government we must have a detailed look at our overall priorities within such areas so that we can make sufficient funds available that will be complementary to the Government’s current activities and genuinely additional. Discussions have taken place with a range of organisations on how potential sums might be put together most effectively, and it is right that those discussions have been held.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

Is there in the Minister’s mind a case for looking at the money that comes through in two different ways? There will be a big lump at the start, after which amounts will drip through annually. Clearly, to go back to the social investment wholesaler argument, it would be easier to meet its needs from the big lump at the beginning, rather than that coming through on an annual basis, given its estimate of how much it needs. For youth services it may be easier to fund a building project from that big lump at the start, rather than from the annual amounts coming through. If the money is to be used to help capitalise credit unions, for example, that initial release of money from dormant accounts might be the best way to do it. Will the money that is available at the start be looked at strategically and will it be looked at differently from the money that comes through on an annual basis?

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury

We certainly want to take a properly strategic approach to decisions on spending directions to the Big Lottery Fund. I explained earlier that one of the reasons why we wanted some of the larger building  societies to be in the fund was that we wanted it to have sufficient critical mass so that a genuinely strategic approach could be taken. The sorts of consideration to which the hon. Gentleman refers are things that we are thinking about as a Government at the moment. Clearly, he is right to probe on those matters, but they are not part of the Bill.

We still do not believe that there needs to be the order-making power that amendment No. 5 would give us because we think that these priorities will be enduring. We still do not think that amendment No. 32, which rigidly specifies equal amounts for the three areas, makes sense, although I appreciate its probing nature. Finally, stocks and flows are still unknown. An interdepartmental working group is looking at the issues  and trying to work out what a sensible strategic programme would look like over a period of time. We will obviously want to consult outside Government too, not necessarily on a formal basis to delay things, but to ensure that we work closely with the Big Lottery Fund, which already does lots of work in these areas.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

That was a useful conversation. It would have been nice if it had gone further. We await developments with interest. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 19 ordered to stand part of the Bill.

Clauses20 to 22 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Blizzard.]

Adjourned accordingly at two minutes to Five o’clock till Thursday 16 October at Nine o’clock.