Dormant Bank and Building Society Accounts Bill [Lords]

Public Bill Committee, 15 October 2008.

Ian Pearson (Labour, Dudley South)

I beg to move amendment No. 17, in clause 11, page 7, line 13, at end insert—

‘( ) The Treasury may by order amend the figure in subsection (1)(a).

( ) An order under this section is subject to annulment in pursuance of a resolution of either House of Parliament.’.

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment No. 28, in clause 11, page 7, line 13, at end insert—

‘(6) The Treasury may by order reduce the period of dormancy referred to in subsection (1)(a).

(7) An order made under subsection (6) may not be made unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.’.

Ian Pearson (Labour, Dudley South)

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

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

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

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

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

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

Mark Hoban (Conservative, Fareham)

It is a pleasure to serve under your chairmanship, Dr. McCrea, for what is probably the first time.

The Minister highlights one difference between the two amendments and the approach that we have adopted—going down the positive route. We think that, because this is affecting customer assets, and we are all here to help to safeguard the interests of our constituents, there should be a debate over this matter. He says that it would be an inappropriate use of parliamentary time to go down the affirmative route, but we could pray against the measure and still take up the same amount of time.

One of the Minister’s predecessors, the hon. Member for Wentworth (John Healey), was very keen when he was a Treasury Minister on introducing the affirmative resolution procedure at every opportunity, because he felt it was so important that parliamentary scrutiny was seen to be working. That is an example that I encourage the Minister, 11 days into his new brief, to follow.

I would like to raise the issue of the period of dormancy, because both amendments offer the power to vary the period from the 15 years specified in the Bill. In a way, that is probably the more substantive issue. The Government amendment will enable the period of dormancy to be increased, while ours is a one-way bet downwards. It is quite important to get the period of dormancy right. The approach that the British Bankers Association has adopted is to achieve reasonable certainty that an account is dormant where there has been no customer-initiated activity for 15 years. It believes that after 15 years, 80 per cent. of accounts will genuinely be dormant, and about 20 per cent. might be subject to a repayment claim.

If the period of dormancy is reduced, the risk will be that the proportion of accounts subject to reclaim will increase, which could reduce the certainty in the reclaim fund’s business plan and affect the fund’s ability to ensure that it adopts a prudent view on transfers to the Big Lottery Fund.

The BBA has said:

“We would not consider the setting of a shorter maturity period to be compatible with the objective of releasing genuinely lost monies.”

The BBA, the Commission on Unclaimed Assets and Grant Thornton all agree, as does the Building Societies Association, with the principle of a 15-year maturity period. However, the Treasury Committee—we have not referred to it so far in the proceedings—suggested in its report, “Unclaimed assets within the financial system”, that the period of dormancy could be reduced from 15 to 10 years.

When one of the Minister’s predecessors—I think it was the right hon. Member for Normanton (Ed Balls), not the hon. Member for Burnley (Kitty Ussher)—gave evidence to the Treasury Committee, he drew a parallel with the Irish scheme, in which the period of dormancy is 15 years. The Committee took issue with that, as the definition used in the Irish scheme is much narrower than that used in the UK scheme, and in Ireland the scheme takes no account of customer activity, whereas in the UK it does.

It is clear from the Committee’s evidence that the UK is an outlier regarding the period of dormancy, compared to other jurisdictions. The table in the Committee’s report shows that Switzerland has a 10-year period, Australia seven years and New Zealand six. Nevada and California have periods of just three years. Interestingly, over the summer, I read reports that some US states are reducing the period to enable them to reap the proceeds and plug the hole in their coffers by declaring more accounts dormant. I do not know how desperate the Treasury feels about plugging holes—it may go down that route.

Martyn Jones (Labour, Clwyd South)

Is the hon. Gentleman aware that before this legislation was proposed most banks also used a three-year dormancy period?

Mark Hoban (Conservative, Fareham)

That is useful information. I had heard—in the context of building societies, I think—that a five-year period was being used. The hon. Gentleman is very knowledgeable about these subjects, but it is not clear to me what difference extending the period from five to 15 years would make to the banks. While one does not necessarily want to be driven by practices in other countries, it is instructive that a wide range of dormancy periods is used elsewhere. We need to retain an open mind about the period, and our amendment and the Government’s indicate a willingness to do that.

The period will also depend on experience, because we may find that as the reclaim fund does its work, the proportion of reclaims from accounts is perhaps only 10 per cent., rather than there being an 80:20 split. If we believe that the rule should be more or less 80:20, that might encourage a shorter period of dormancy to be set. I am not sure whether the Government have expressed a view on the appropriateness of that split, but we should keep it in mind.

While I would prefer a downward-only, rather than an upward-only, revision, I do not think that anyone has suggested that the period be longer. The Government’s amendment will achieve an objective that we share on both sides of the Committee, which is that we should be able to reduce the period in the light of experience.

Jeremy Browne (Liberal Democrat, Taunton)

I, too, welcome you to the Chair, Dr. McCrea. On the substantial point just discussed by the Conservative spokesman, 15 years is inevitably an arbitrary figure—one could pick, 14, 16 or 10 years. I have no strong views. There seems to be a reasonable consensus that 15 years is a good starting point—as good as any—and that it could be reviewed at some point. I agree that the consensus seems to be that the figure is likely be made lower rather than higher following such a review.

More importantly, I support amendment No. 28, which stands in the name of the hon. Member for Fareham and which I suspect I support with greater fervour than he does himself. I think that an important distinction is being made by the Conservative party, as distinct from the Government. This is fundamental.

I know that the Minister gets given all kinds of rubbish to read out and he has to do his job, but I cannot believe he is telling us that changing the year is incidental. It is not like putting up prescription charges by the rate of inflation. As I understand it, he is saying—he should correct me if I am wrong—that the figure could be changed from 15 years to, say, one year in a way that fundamentally alters the legislation and that that would not be deemed sufficiently important in the context of the Act, if that is what it becomes, for it automatically to be discussed in the House of Commons. That seems an extraordinary position for the Minister to take.

This is not incremental fiddling. I can understand that if the Minister changed the figure from 15 to 14 years it might feel incremental, but we are giving the Government the power, without reference to Parliament, fundamentally to alter the legislation in a way that would affect millions of people. On that basis, if he chose to reflect on these matters, he would feel it entirely reasonable to agree to amendment No. 28, even without a vote of the Committee.

Ian Pearson (Labour, Dudley South)

I have indeed reflected and consulted my officials, and I remain of the opinion that the negative procedure is appropriate. However, I stress that there is not much difference between us. We are all clear that we broadly accept that 15 years is the figure to go for at the moment. We want to build an evidence base and see how the scheme works. If the evidence points to the need for the scheme to have a lesser period, we will commit ourselves to consult widely on either a reduced or a higher figure. I think it highly likely that the figure would be lower.

We would have a public consultation exercise. If there were serious concerns in Parliament about the outcome of the public consultation and any real dispute, I have no doubt that after we had laid a proposal before Parliament it would be prayed against and we would have a debate. However, I think it likely that we will build a body of evidence, review it and reach a consensus that there may be a reduction. That is why I still think that the negative procedure is the appropriate course to adopt. We should not say that parliamentary time must be allocated when it is highly likely that it would be unnecessary.

Ian Pearson (Labour, Dudley South)

It is not my normal practice to speak in stand part debates, because a lot of legislation speaks for itself and is straightforward. However, following the debate on earlier amendments to the clause and comments made by the hon. Members for Fareham and for Cities of London and Westminster, I asked my officials to check the scope of the clause with legal advisers to ensure that it meets what we share as its objectives.

I would like to make the following points of clarification, which have been agreed by Treasury legal advisers and parliamentary counsel. Following the request that we check whether clause 11 will achieve our shared objectives, we want to confirm that it will. Clause 11(2) makes it clear that, for the purpose of calculating the 15-year period of no customer-initiated activity, the period must be continuous and any time when an account falls within either of the exclusions in subsections (2)(a) and (b) cannot be included, thus setting the clock back to zero.

Subsection (2)(a) excludes no-contact accounts, which are more commonly known as no-mail accounts, so if an instruction of no communication is given during a period of inactivity, that sets the clock back to zero. A new period of 15 years only starts to run when that instruction no longer applies. Subsection (2)(b) excludes accounts that restrict or penalise withdrawals in all circumstances. That would cover an account that has a penalty for making any withdrawal, such as a fixed-term account, but not an account—notice accounts are an example—in which withdrawal is penalised only in certain circumstances, such as without giving a period of notice. Again, any period during which an account has a fixed-term restriction or penalty is not included for the purpose of calculating dormancy and sets the clock back to zero. The debated— and now withdrawn—amendment proposed deleting the words, “during that period”, but that language is necessary to give effect to the intention outlined above, as it makes it clear that the restriction is not an absolute one.

To summarise, an account that was at one time a no-contact or fixed-term account is not permanently excluded from the scheme, but the 15 years of inactivity that qualify the account for dormancy can begin only once the fixed term or the no-contact restrictions have ended. In the case of notice accounts, since the restrictions do not apply in all circumstances, there is nothing to prevent them from qualifying for dormancy after 15 years of inactivity. I hope that that clarifies the point made by the hon. Member for Fareham and others.

Martyn Jones (Labour, Clwyd South)

The Minister will be aware that I have problems with the definition of dormancy. One possible problem concerns how the start date of dormancy is interpreted by the banks. He said that the notion of a dormant bank account was established in 1992, under the banking code changes. However, I am suspicious that some banks may be using 1992 as the start date for the dormant bank accounts period, and that all their consideration of whether an account is dormant or not starts from 1992. Has the Minister made any inquiries about that? Would he accept a limited interpretation of that nature? I informed his predecessor of a bank that claimed that it had £400 million in dormant bank accounts, but which is now claiming only £50 million. I told his predecessor the name of that bank, in confidence—have any inquiries been made in that respect? A further problem with the interpretation of dormancy is that some banks may consider certain accounts to be dormant only if they contain a minimum amount. That excludes a great deal of small moneys in accounts, which could add up to significant sums.

Mark Hoban (Conservative, Fareham)

Taking the hon. Gentleman back to his comment about the banking code, is he saying that accounts opened before to 1992 would not count as dormant? Clearly, accounts opened in 1992 and after—1992 particularly—would now be deemed dormant under the Bill. Is it the pre-1992 accounts that he believes are being excluded from the definition?

Martyn Jones (Labour, Clwyd South)

That is indeed my suspicion. The hon. Gentleman has hit the nail on the head. I have a great deal of suspicion that the number of accounts—particularly those mentioned by me and by other Members on Second Reading—volunteered by the banks has decreased significantly from the figures that I obtained in 2004. I suspect that 1992 may be a factor. It may not be, but I would be interested to know whether the Minister has looked into that. To get back to the minimum amount definition, does the Minister agree that there should be no minimum amount standard when banks set their definition of dormancy?

Ian Pearson (Labour, Dudley South)

On my hon. Friend’s first point, about banks using 1992 as their start point, I am happy to say that that is not the case and that dormancy may begin under the legislation at any point. It is helpful to make that clear. With regard to banks participating in the scheme, we have widespread support from the banking industry—they want to participate and there is no evidence that they will hold back accounts. As my hon. Friend will be aware, banks will publish their policies on dormancy as part of the normal banking code. At the moment, different banks have different interpretations of dormancy. One of the strengths of the voluntary approach, and of the flexibility that we are allowing for banks to determine what is dormant, is that it will lead to an efficient way of operating the reclaim fund.

As we made plain in earlier debates, we want a clear legal definition of dormancy for banks to have certainty and to enable them to use their judgment on whether accounts are genuinely dormant, rather than putting words in the Bill that will detract from the overall clarity that we are seeking. We have been very clear about the principles on which we want the scheme to operate. I appreciate my hon. Friend’s concerns about banks possibly not wanting to transfer all the funds over. The system will be transparent, so we will know from each institution how much they are transferring into the reclaimed fund on a regular basis, because it will be recorded.

Mark Hoban (Conservative, Fareham)

I want to pick up on a point that the hon. Member for Clwyd, South made, which arose on several occasions on Second Reading, about the amounts involved. There were estimates when the process started, of significant sums of money, and over time those estimates have reduced. There are two interpretations of that. One is that the banks are holding back and the other, which I hold, is that there has been a lot of “finger in the air” estimation. As banks have focused much more on dormancy and have gone through their accounts more rigorously, they have been able to produce a more accurate estimate than hitherto. Does the Minister share his hon. Friend’s view or my view as to why the estimates have changed?

Ian Pearson (Labour, Dudley South)

I do not want to pick sides. Both my hon. Friend and the hon. Member for Fareham have made valid points. We have no evidence that banks want to stash away accounts that they think are dormant, and do not want to put them into the reclaim fund. Recently there has been substantial activity by banks and building societies wanting to reunite customers with their accounts through www.mylostaccount.org.uk and other institutions. There has been a stronger focus on, and assessment of, the issue of whether accounts are dormant or not. The definition of 15 years for dormancy has affected that. Banks and building societies have undertaken a pretty rigorous exercise, looking at the savings on their books and concluding whether those accounts are genuinely dormant or not. The figure has become more accurate and is the best estimate available at the moment.

Martyn Jones (Labour, Clwyd South)

I am grateful to the Minister for giving way again; he is very patient. The truth is probably somewhere between the hon. Member for Fareham’s position and mine, but I have still had hard evidence from one particular high street bank, which told me that it had £400 million in 2004. We are now talking about a figure of £450 million for all high street banks. The bank that I was talking about told me that it now has £50 million, so, somewhere, somehow, there has been a change in definition. Does my hon. Friend think that the proposed change to 15 years—the bank in question was probably using three years—would make much of a difference? If so, that may be the reason.

Ian Pearson (Labour, Dudley South)

I strongly suspect that that is the case. Before these discussions on the Bill, banks would have had a particular view of dormancy, and it is unlikely to have been 15 years. I strongly suspect that the figures vary widely and that that is the explanation in this case, but I am more than happy to discuss this matter offline with my hon. Friend.

Clause 12

Jeremy Browne (Liberal Democrat, Taunton)

I beg to move amendment No. 48, in clause 12, page 8, line 2, after first ‘of’, insert ‘or who are affected by’.

May I ask for your guidance, Dr. McCrea? All three proposed amendments to clause 12 were tabled in my name, but the most substantial is amendment No. 7. Although amendments Nos. 48 and 49 are important, they are secondary to amendment No. 7. Will you permit me, Dr. McCrea, to discuss all three or would you rather I made a cursory nod at amendment No. 48, then sat down and started again on amendments Nos. 7 and 49 in a moment?

William McCrea (DUP, South Antrim)

It would be advisable to remain with amendment No. 48.

Jeremy Browne (Liberal Democrat, Taunton)

In that case, I will touch briefly on that amendment. Clause 12 requires a report to go before Parliament every three years, and the amendment requires consultation to be expanded to include those affected by the dormant account scheme. The particular group that I have in mind is charities. Perhaps when I speak to amendment No. 7, I will expand on that point.

Mark Hoban (Conservative, Fareham)

If I had realised that the hon. Gentleman was going to be so brief, I might have been sharper on my feet while he was speaking. I understand the point that he made. Looking at his amendment, I guessed that that was the group to which he was referring. Is this amendment not rather broad in its wording? The words, “who are affected by”, could cover all sorts of groups. I am all in favour of consultation, but I wonder whether the hon. Gentleman has drawn his amendment so broadly that we will have a consultation process that will be quite difficult to complete when considering the triennial review.

Ian Pearson (Labour, Dudley South)

Briefly, I invite the Committee to oppose amendment No. 7, which would give the Government powers to establish a central register.

William McCrea (DUP, South Antrim)

Order. We are talking to amendment No. 48.

Ian Pearson (Labour, Dudley South)

I also invite Committee members to oppose amendment No. 48. Along with amendment No. 49, which we cannot discuss, it would add to the reports that the Treasury is required to make under this clause. I will invite hon. Members to oppose clause 12 standing part of the Bill, but I want to say that we recognise the fundamental requirement, both for a review and for thorough transparency in the reporting on the operations and working of the reclaim fund. We do not believe that the amendment is necessary or, as I will explain later, that the clause is appropriate.

Jeremy Browne (Liberal Democrat, Taunton)

I am happy to withdraw amendment No. 48, because it overlaps amendments Nos. 49 and 7. I can touch on some of the themes again if I am called to speak to those amendments. I beg to ask leave to withdraw the amendment.

Jeremy Browne (Liberal Democrat, Taunton)

I beg to move amendment No. 49, in clause 12, page 8, line 3, at end insert

‘and the operation of the register of dormant account funds.’.

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss amendment No. 7, in clause 12, page 8, line 5, at end add—

‘(6) Where the report recommends the establishment and maintenance of a register of dormant account funds, the Secretary of State may make such regulations as are necessary for the establishment and maintenance of a register of dormant account funds (“the register”).

(7) The regulations made under subsection (6) shall provide for—

(a) particulars relating to the dormant account to be entered into the register;

(b) arrangements to allow any registered charity to enquire of the Registrar whether the register includes an account in the name of an individual from whom the charity might expect to benefit; and

(c) other particulars as may be prescribed by the Secretary of State.

(8) Before making any regulations under subsection (6), the Secretary of State shall consult—

(a) such persons as are likely to be affected by those regulations; and

(b) such persons appearing to him to be representatives of persons likely to be so affected.

(9) Regulations under subsection (6)—

(a) may make different provision for different cases; and

(b) may contain such incidental, supplemental, consequential and transitional provision as the Secretary of State thinks fit.

(10) The power to make regulations under subsection (6) is exercisable by statutory instrument.

(11) No regulations may be made under subsection (6) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.’.

Jeremy Browne (Liberal Democrat, Taunton)

What a build-up. I had better be worth listening to, but I fear that I may disappoint.

The important point covered by the amendment has been made by several representative parties interested in the Bill, especially charities, which is why the grouping of the amendments is not as I would have anticipated. Amendment No. 7 is of the greatest import, as it would create a reserve power for a register of dormant accounts, while amendment No. 49 would require those affected by knowledge of the scheme and its operation, such as charities, to be consulted. It would provide affected charities with greater ability to trace the accounts.

I wish to make a slightly more substantial speech about such matters, because they are of importance to those people who raised them with me. Legacies are a vital source of income for charities. The BBA and the Building Societies Association estimate that up to £500 million is sitting in dormant accounts—a point that we discussed a moment ago with regard to the previous clause. The Commission on Unclaimed Assets estimates that that is about £3 billion to £5 billion. It is a substantial amount, but legacies are a particularly significant form of income and the ability to trace that money is most important for the charitable sector. One in seven people leaves legacy gifts to charity that average 5 per cent. of their total estate.

The Institute of Fundraising estimates that legacies account for 36.3 per cent. of its money, and more than one third of the voluntary income received by charities in 2007 totalled £1.6 billion. By way of illustration, last year, 46 per cent. of the British Heart Foundation’s voluntary income came from legacies, and 33 per cent. of Cancer Research UK’s voluntary income totalling well over £100 million came from legacies. I have the honour of serving as a vice-president of the Parkinson’s Disease Society, and I take a close interest in that cause. I attended a meeting with its trustees earlier this week, and I was told that its income from inherited money, gifts and legacies was about half of its total income as a charity. Legacies are extremely important to part of the voluntary sector that everyone in the House wishes to see assisted.

At present, charities are unable to locate legacies adequately that are left in dormant accounts. I welcome the setting up of the industry’s main initiative, the website “mylostaccount.org.uk”, which allows any person or charity to go online and search using basic information. It is part of the recent reuniting scheme undertaken by the sector, but it has several shortcomings. Searches can be conducted only if the charity knows what bank or building the unclaimed assets are in. The Minister shakes his head. If he can reassure me on that point, I would be grateful.

I suppose that people must have to put in a certain amount of information and that it would be helpful to have some idea of where to search. A person might have a better sense of the starting point if he were looking for his own account than trying to find the unclaimed or dormant assets of someone who has died. I do not assert what I have to say with absolute confidence, but raise it as a cause of concern. I do not believe that I am necessarily in the right and that the Government are wrong, but there might be some accounts—internet bank accounts, for example—where searching is harder to achieve. I do not know how far back records go and the degree to which individual banks would co-operate to make the system as efficient as possible.

Amendment No. 7 deals with an enabling power that could be invoked if the triennial report found that arrangements for reuniting owners with their assets were insufficient. An amendment introduced in the other place with a reserve power to create a register was narrowly defeated in a Division. The Government claimed that current initiatives were enough to ensure strong take-up of the scheme by the financial institutions and that success, although it cannot be guaranteed, should be sufficient to reunite charities with the funds, but concerns remain.

I am given to understand that other countries operate practices that allow charities to locate money more efficiently and effectively. That is the motivation behind amendment No. 7. Although it is in the distant past and the Committee has already rejected it, I accept that amendment No. 48 was rather broadly worded.

Tom Levitt (Labour, High Peak)

Amendment No. 48 was indeed widely worded, given the nature of the phrase, “who are affected by”. However, similar wording appears in proposed new subsection (8) in amendment No. 7. Is the hon. Gentleman suggesting that any potential beneficiary from any charity that might at some time benefit from funds in dormant accounts should be able to question that issue? That seems to be a recipe for disaster.

Jeremy Browne (Liberal Democrat, Taunton)

I err on the side of caution, but it is sometimes difficult to define a category for consultation. One could try to list every single group that one wished to see as the beneficiaries of a consultative process, but that would be flawed in other ways.

The wider point I am trying to make is about the charitable sector’s concern. When talking about relocating money, the first instance that tends to come to mind is an individual who has left a certain amount of money, perhaps a few hundred pounds, in an account that was given to them as a teenager to help set them up. Twenty years later, they have completely forgotten about it and think, “Gosh, that’s nice, I’ve discovered a few hundred pounds that I did not realise I had.” There is an onus on the banks to reunite such an individual with the money. It is a nice bonus for them, but in most cases it will be fairly incidental to their well-being. After all, in most cases, the person has forgotten that they ever had that money in the first place.

The charitable sector has raised the difficulty of tracking down money that was intended for a charity. Inevitably, the person concerned has died, otherwise the money would not be in the form of a legacy. Such funds are not incidental bonuses, but absolutely crucial income streams for charitable organisations. Every effort should be made to ensure that charities have the maximum possible access to the means for searching for the legacies that are intended for them. The Government must consult those organisations on how that might best be achieved. That is all I want to say, but if Members wish to intervene on me, I am happy for them to do so.

John Howell (Conservative, Henley)

I want to press the hon. Gentleman a little further on why he thinks the website cannot be improved to undertake those searches. I went on to the website myself, purely to see how it worked, rather than because I thought I had a large number of unclaimed accounts that I had somehow mislaid. There is a lot of scope to improve the website and take on just this sort of function. I do not see the need for the provision, as we have not yet explored the potential of the website to deliver this function.

Jeremy Browne (Liberal Democrat, Taunton)

I will make two brief points in response to that intervention. First, I urge the Government to consult widely on how the money may best be accessed by the people for whom it is intended. They may well come to the conclusion that improving the website is a good way to do that. I am not coming up with a prescription, but a means by which the Government may come to a more satisfactory end point.

Secondly, and slightly off the beaten track of the point that I was making, we should be careful lest we assume that everyone person who has a dormant account feels comfortable using the internet to track down that information. I accept that a large charity would have access to the internet, and would feel comfortable using this sort of device. There may be a number of people who have forgotten about an account who do not routinely use the internet. I do not wish to stereotype those individuals, but that could be particularly true of older people. If the Government asked for my opinion as part of their three-year review, I would say that such an internet site would be a useful device, but insufficient on its own, even if it were improved.

Mark Hoban (Conservative, Fareham)

The hon. Gentleman has clearly thought about this carefully. He and I have received the same representations, and I will touch on that shortly. We are talking about information that belongs to the bank. We had a debate yesterday about the confidentiality of data, who owned the data and what data should be transferred between the bank and the reclaim fund. Has he given any thought to the issue of data confidentiality, how that would be dealt with in setting up a central asset of unclaimed bank accounts and how the scheme would provide protection against identity theft and fraud?

Jeremy Browne (Liberal Democrat, Taunton)

The hon. Gentleman makes an extremely good point, and it is difficult to reconcile those two objectives. If one is trying to track down information, it is helpful if as few barriers as possible are put in one’s way. Confidentiality is inevitably a barrier. The Government and the Committee may think that additional safeguards need to be put in place. I gave the example of the Parkinson’s Disease Society. About 120,000 people in the United Kingdom suffer from that disease. The society has about 30,000 members, only about half of whom have the disease, thus only about one in 10 people who suffer from the disease belong to the society, and even that figure is not necessarily a good starting point to try to make an educated guess about the type of people who leave money in a legacy to a charity or a similar organisation.

It is quite hard for the charitable sector, given that it is heavily reliant on those donations, to make informed or semi-educated guesses about the people who choose to leave money to them. There may be people who are sympathetic to their cause, but who have previously shown no direct interest in the work of that charity, but choose to leave it a substantial amount in a legacy. I appreciate that there are concerns about confidentiality and practicalities, but I want to put in place a system, so that instead of a series of shots in the dark, those charitable organisations can have the information gathered together in a way that makes it easier for them to locate the money that was intended for them and which they need to carry out their duties.

Mark Hoban (Conservative, Fareham)

I have some sympathy with the arguments advanced by the various charity groups that are concerned about this issue, and the Unclaimed Assets Charity Coalition and the National Council for Voluntary Organisations have made representations about it. Committee members have received representations over the past week advocating this reserve power, and it was debated on Third Reading in the House of Lords. We all start from the position of wanting to see as many of these accounts as possible united with their owners. That has been the spirit of the debate in Committee and on Second Reading. We want the banks to co-operate as fully as possible with the rightful owners of these accounts so that they are reunited.

I have spoken to the BBA myself about this issue, and I suspect that the Minister and his officials have done so, too. We want to encourage it to be as flexible as possible in the way in which it deals with this, subject to its duties to its customers. I understand that the BBA has written to the Unclaimed Assets Charity Coalition to try to explain how it can benefit from the method of searching that is currently available and also to work with it to establish whether there are substantial legacy moneys sitting in unclaimed bank accounts, particularly in those instances where it is the executor to the will.

Part of the challenge in considering whether the solution suggested by the hon. Member for Taunton is proportionate concerns the amount of money involved, and we touched on that topic in a previous clause. How much money are we talking about?

We touched on that topic in a previous clause. How much money are we talking about? The cost of setting up a central register would be borne, I suppose , by those accounts identified as dormant. The reclaim fund allows the expense of running the fund to be offset or defrayed by that money, and that expense would ultimately reduce the amount of money available for the good causes identified in the Bill.

Although I have some sympathy with the case argued by the hon. Gentleman and with the various charities involved, we need to see how the scheme operates. Setting up a compulsory register would go against the grain of the voluntary scheme for which we are legislating. I am not sure that the Bill contains sufficient safeguards to make that transition from a voluntary to a compulsory scheme, and if the Government are to accept the measure, I suspect that it will need significant amendment on Report.

We must keep the area under review, and that is why clause 12(2)(a), which sets out the triennial report to Parliament, states that the report shall include

“the effectiveness of arrangements that exist to enable those with rights, including those whose rights are established by way of a will...to trace those accounts and to be paid money held in those accounts”.

That is a good way of maintaining pressure on the banks and ensuring that they do all that they can with the charities. That is my fall-back position—it puts the banks under a spotlight and requires them to continue working carefully, not only during the passage of the Bill through the other place and the Commons, but also over the triennial review period. That is an important safeguard in the interests of those organisations, but there are some practical issues about the reserve power that have not yet been fully explored or discussed, and therefore it is not appropriate to support the measure.

Ian Pearson (Labour, Dudley South)

I share in the thrust of the hon. Gentleman’s analysis, and I invite the hon. Member for Taunton to withdraw his amendment. I, too, have a great deal of sympathy with charities for the situation that they face, and the potential problems that they have, such as tracing lost accounts that might benefit their work.

The hon. Member for Taunton caught me shaking my head, and I want to be clear why I did that. It is my understanding that multiple institution searches can currently be conducted on the “mylostaccount” website. It is supported by a telephone system for those who have difficulties using the website, and it permits individuals to nominate a representative to complete the claim on their behalf. Account holders and their legal heirs are legally entitled to claim money owed to them in dormant accounts; they can do that now. The website also allows executors or nominated representatives to conduct searches for lost accounts, and it provides guidance for those searching for information in respect of wills and legacies.

The Government welcome constructive suggestions about how industry reuniting arrangements might be further improved. I think that all parties in the House share a strong desire to do more if possible to reunite customers with money that is rightfully theirs. The hon. Member for Henley made a point about improving the functionality of the website, and I encourage him—and anyone else who has positive suggestions—to put forward his ideas about how the site could be improved to those who maintain and operate it.

We remain of the view that a central register would be a relatively expensive exercise and would place a large administrative burden on the scheme. Mandating a register through legislation is therefore not necessary or proportionate. More importantly, unlike “mylostaccount”, it would also involve a significant transfer of personal data from banks to the register operator. We have debated that issue previously, but we do not believe that it is necessary or proportionate to undertake to have a central register.

We are aware that there is a group of historic accounts for which the estates have been wound up, with lost accounts being identified. To tackle those accounts we have encouraged a dialogue between financial institutions and the charity coalition. It is my understanding that the industry has offered to explore ways in which such accounts can be identified and Cancer Research has also indicated a willingness to take the matter forward. I hope that, through increased dialogue between the industry and the charities, and through the Government using their good offices, we can try to make it simpler and more straightforward for charities to increase their legacy income by tracing lost accounts and that such work can continue. It is inappropriate, however, to include in the Bill a register scheme that we believe is currently unnecessary, so I invite the hon. Member for Taunton to withdraw his amendment.

Jeremy Browne (Liberal Democrat, Taunton)

I know that hon. Members of all parties will agree that we have a particularly impressive charitable sector in the United Kingdom. I cited the Parkinson’s Disease Society because I have a particular affiliation with it. I understand that it is roughly as big as all the Parkinson’s disease societies in every other EU country put together, which is indicative of how well established and impressive the sector is in the United Kingdom.

I understand all the points that were raised and I have some sympathy with them. There are issues of cost, the administrative burden, and the point raised by the hon. Member for Fareham about confidentiality. More is being done, and perhaps more could be done, to improve the existing arrangements. I hope that at least by tabling the amendment I have given the issues an airing, allowed the Committee to absorb them and ensured that they will remain at the front of the Government’s mind as and when the Bill is eventually passed into law. Given that I accept the points that have been made and that the subject has been aired, I beg to ask leave to withdraw the amendment.

Ian Pearson (Labour, Dudley South)

As I explained earlier, I invite hon. Members to oppose clause 12, but at the outset I want to say how much I agree with the principle that underpins it. The transfer of money into the scheme will be managed by a private sector-run reclaim fund, under private arrangements that will be put in place by the fund and the banks, in compliance with the requirements and consumer protections set out in legislation such as the banking code and regulation by the Financial Services Authority.

After the Bill has received Royal Assent and the scheme has been launched, the Government should not lose sight of the scheme, and nor do we intend to. I have listened to the arguments setting out the importance of the triennial review, which was introduced following the debates in the other place. I agree that it is right that the Government should return at an appropriate time to review whether the scheme is effective and delivering the right outcomes for consumers. I still have difficulty, however, in committing the Government to hold triennial reviews in perpetuity for the reclaim fund and the proposed scheme. The Government will commit to undertaking a post-implementation review when the scheme is up and running, and I would like to set out how I see that review being conducted.

We propose to review the scheme three years after the Bill takes effect, and of course the review should be undertaken on the basis of robust data about customer reclaim and the transfer of money to the Big Lottery Fund. Precise decisions on the timing will depend on the evidence available.

I think it premature at this stage to describe all the elements of the review. Clearly, its terms will depend on how the scheme performs over that period. However, I understand the desire for some agreement now on the principles of any review, and I want to be as positive and constructive as possible. Although I invite members of the Committee to oppose clause 12 standing part of the Bill, I make it clear that we will have a review, and that it will cover the effectiveness of the money in the scheme, including the industry’s arrangements for reuniting customers with accounts before they become dormant, industry participation in the scheme and the arrangements for repaying customers whose assets have been transferred to the scheme. It will be based on consultation with all relevant parties.

I simply do not accept that a triennial review, which would be conducted in perpetuity, is a sensible way forward. There should be a review, and we accept that three years after the Bill takes effect is about the right time for it, but we do not think it necessary to have in the Bill a requirement for a triennial review. I therefore invite hon. Members to oppose clause 12.

Mark Hoban (Conservative, Fareham)

I confess to being disappointed with the Economic Secretary’s remarks. I understand the Government’s objection to the requirement to have a triennial review in perpetuity. The Chief Secretary made that objection clear on Second Reading, and she admitted, as indeed did the hon. Gentleman, that

“we must ensure that the scheme is working simply and fairly, and we think it right to review it once it is up and running”.—[Official Report, 6 October 2008; Vol. 480, c. 45.]

Having heard those words on Second Reading, I rather assumed that, rather than debating whether to reject the clause completely, we would be considering whether to amend it so that there was still a statutory requirement to undertake a review three years after setting up the scheme. We could have argued with the Minister whether one triennial review was enough or whether we should have more than one, but I did expect the principle of having a triennial review to remain in the Bill.

It is worth the Committee remembering that when the Bill was first discussed in the House of Lords, there was no reference whatever to a review, so we have got the Government to shift their position. The Economic Secretary made a statement about what the review will entail. Lord Davies of Oldham had said that he would make a statement to that effect on Third Reading in the Lords, but he did not do so. At least now we have a little more clarification about what the review may take into account.

The Economic Secretary says again for the record that this is a voluntary scheme run by a private company, but it is being set up under an Act of Parliament, and given the public interest in the matter it is important to have continued scrutiny of the scheme. In the debate on clause 11 he said that the dormancy period in the clause is a minimum and that banks will be required to publish in the banking code how they are defining and implementing that. The triennial review set out in the Bill would have required a careful look at those arrangements in the hope that shining a spotlight on them would encourage the banks to move to best practice. That would have been an important outcome of the triennial review.

There are other important aspects to the clause on which the Minister has given no assurances. Dormant bank accounts are a very narrow set of assets, but we know from the Young report on the financial assistance scheme, from the report of the Select Committee on the Treasury and from the lobbying of the charitable sector that a huge range of other unclaimed assets could be subject to the same type of procedure.

Clause 12(2)(f) refers to those types of asset and whether a similar scheme should be established. Experience suggests that National Savings & Investments is a glaring omission involving significant unclaimed assets. It is part of the reunification scheme, for which we should be grateful, but not part of the process of transferring money from NS&I to good causes. We touched on that, and on the flimsiness of the Government’s arguments against it, on Second Reading.

The statutory requirement strengthens Parliament’s role in scrutinising the scheme and requires those involved in it to recognise that, once it is up and running, there will be a statutory review rather than just an expression of the intention to hold a review.

What will happen at the triennial review? The Government are saying that there will be one review. While I accept that there is a good argument for not having a review every three years until the end of time, what will be the mechanism for taking forward any significant issues that arise during the triennial review? At least our proposals provide for such a mechanism, because there would be another review in three years. It would be a rolling process.

The best amendment for the Government to introduce would be an order-making power to enable them to terminate the three-yearly reviews when they were satisfied that the scheme was working efficiently and in the interests of consumers and the bodies that are to receive the money. That would be far more acceptable than deleting clause 12 entirely, which would mean losing an opportunity to keep the scheme under review until Parliament was comfortable that it was operating properly and in the best interests of all the stakeholders. The Minister put us on notice on Second Reading that we would come back to the matter, but the way that has been done is unsatisfactory. I would rather that clause 12 remained.

Martyn Jones (Labour, Clwyd South)

I am happy that the Minister intends to review the Bill’s proposals in three years and that he agrees that the adequate functioning of the voluntary scheme requires transparency. Will he therefore explain whether all the information that would be collated in the triennial report will be available from other sources? What information requirements will fall on banks and building societies when they make dormant bank account contributions? How much information will they be required to give to the public or to the BBA or the BSA?

Jeremy Browne (Liberal Democrat, Taunton)

I concur with everything that the Conservative spokesman said, so I shall not repeat it. He laid out the case for the continuation of clause 12 very well and made a valid criticism of the Minister when he said that the Government could have been more imaginative in their approach to the clause rather than ordering their troops to vote it down without coming up with a more satisfactory compromise. Both Opposition parties understand that a commitment to review the legislation every three years for the rest of time, as the hon. Member for Fareham put it, would be unduly onerous, but some recognition of the concerns raised in the Lords beyond the commitment to the initial review would have been more constructive.

I must make one further point, which I raised on Second Reading but have yet to hear a satisfactory answer on. There will inevitably be a hit at the beginning, when all the money in accounts that have been dormant for 15 years or more will accrue to the central fund, and there will need to be some sort of review of how efficiently that is being done. Some of the money may not shake out of the system as quickly as it might. However, after that initial hit, in the second year we shall be talking only about bank accounts that have currently been dormant for 14 years, so there will be far less money in the second year.

With the initial hit of publicity in the media and elsewhere for the 15 years and more, quite a few people whose accounts have lain dormant for 14 years may wake up to the concept of the dormant account and suddenly remember a deposit that they put in the bank 14 years ago. The following year, there will be only those whose accounts have currently been dormant for 13 years—when that feeds through two years down the line.

We are talking about legislation whose effects will evolve, may change quite substantially—not just in the first three years, but as they work through the system—and might have an impact on customer behaviour and awareness. Nine or 10 years down the line, the people involved will be people whose bank accounts had been dormant for only five or six years when the legislation was enacted. A case can be made, which the Government could engage with a bit more constructively, that there is benefit to having more than an initial review, just to ensure that the legislation is up, running and functioning—its effect will change over time. Periodic reviews at different points down the line might reach different conclusions and find out different information from just one review.

Tom Levitt (Labour, High Peak)

It is a pleasure to serve under your chairmanship, Dr. McCrea. I share the bemusement of the hon. Member for Fareham that the Government have chosen to delete the clause rather than to amend it. My hon. Friend the Minister gave a speech a moment ago that he would have given had he been moving amendment No. 18, which has not been selected but which would have deleted the whole clause. I have some sympathy with his argument, but not for removing the question of a review from the legislation completely.

For example, in subsection (1), the words

“and not more than every three years thereafter”

could have been deleted. That would have allowed one review three years after implementation, without a commitment to such a thorough review later on, thereby meeting one of his major objections.

I also accept that clause 12 is incredibly detailed—probably more than is necessary for carrying out the review—but it is an awful lot less detailed and convoluted than it would have been had we accepted amendment No. 7. Therefore, it is not as bad as it might have been. The clause could be amended to improve it, but the Bill not providing for a review would be a mistake.

I hope I deduce from the Minister that we shall be able to put things right, in the sense of being able to make changes to such a scheme, when we come to new clause 2, which stands in the name of my hon. Friend the Member for Clwyd, South.

What would be the purpose of a review if it was not specified in the Bill? If banks and building societies joined the scheme only on a voluntary basis, they could opt out if they did not like what a review came up with. If the detailed rules of the scheme were those that banks and building societies had drawn up, what would the review be able to achieve? If the review was not carried out by those who were implementing the scheme, the point of the review would not be very strong.

In addition, could the banks and building societies taking part in the scheme not carry out their own reviews and change the scheme rules without referring back to the Government? All those issues will become real questions once the need to have a review of some kind is taken out of the Bill.

I take the Minister’s word that a review will happen, but if we take this approach and if the review cannot make a fundamental decision three years down the line—that decision might be, “This voluntary approach is not working and we need a mandatory approach,” and I feel that a review not specified in the Bill could not say such a thing—I think we are missing a trick.

I am happy to take the Minister’s word that such a review will take place, and I understand why he wants to delete the clause, but we need something stronger from him at some point on what his review will be capable of doing, especially if it concludes that the scheme is not working as well as it might.

Mark Field (Conservative, Cities of London and Westminster)

I hope that the Minister, in justifying his stance on the matter, will be spouting only his own rubbish rather than anything presented by his civil servants. I entirely agree with the comments made by my hon. Friend the Member for Fareham and with many of those made by the hon. Member for High Peak.

I have one other consideration to offer. Given that the Government are now, in large proportion, the owner of two of the big four banks—presumably there will be many dormant accounts in HBOS, Lloyds TSB and RBS—it is incumbent upon them to give stronger justification as to why a triennial review going some way into the future should be struck out in this way.

I appreciate that the Minister has some concerns with elements of the clause, but simply to do away with all the safeguards here—safeguards for Parliament, on behalf of all our constituents, but also to ensure that the system works correctly in the years ahead, not least when the Government are such an important bank owner—would be entirely undesirable.

Ian Pearson (Labour, Dudley South)

I have listened carefully to the debate and a number of perfectly valid points have been made. When we came to the clause as a team, we had a closer look at it and felt that it would be difficult to produce effective amendments that enabled us to have a review, but not the onerous requirement to review for all time, as the hon. Member for Fareham says and which I think is accepted on all sides.

On the amount of information that will be available for the review—a point raised by my hon. Friend the Member for Clwyd, South—there are already, elsewhere in the Bill, quite substantial requirements to produce information. When we debated previous clauses and amendments, we considered the fact that the private company that operates the reclaim fund must produce accounts on a timely basis. I am therefore confident that there is sufficient information there for a review to be conducted and for it to be an effective one.

Issues were raised about the scope of the review by my hon. Friend the Member for High Peak and the hon. Member for Fareham. When conducting the review, we would want to look at the overall operational effectiveness of the scheme. The issue of whether it should transfer from voluntary to mandatory is different. Similarly, the point made by the hon. Member for Fareham about whether we should consider other assets, such as insurance assets and so forth, raises a range of issues that are not legitimately within the scope of this legislation. Both the mandatory elements and looking to extend the scope of the scheme would require additional primary legislation. It would not be appropriate in a review of effectiveness to include areas that were completely outside the scope of the Bill.

Mark Hoban (Conservative, Fareham)

The subsection in clause 12 that relates to other assets does not talk about using this legislation to set up a fresh scheme. It just ensures that the issue of other categories of assets does not drop off the radar screen. It says that the report should look at

“the desirability and practicality of establishing similar schemes”.

It does not say anything about creating a framework for setting up such schemes. It just says that we should keep our eye on the ball and make sure that we do not forget that there are other classes of assets that people might want to look at carefully.

Ian Pearson (Labour, Dudley South)

I do not want things to drop off the radar screen either. Of course, as a Government we want to keep legislation under review, but we have no current plans to extend the scope of the scheme, and we think it premature to commit to a specific review of other assets. It might be appropriate in the future.

I commented on how we propose to conduct a review of the effectiveness of the scheme after three years. I do not think that one should doubt the word of Government when they say they will conduct a review after three years but, if it is helpful, I am prepared to reflect on that and produce an amendment on Report which would commit to a review being held after three years.

Mark Hoban (Conservative, Fareham)

It may be helpful to the Minister and officials to look at the Financial Services and Markets Act 2000 because that includes provision for a statutory review of the FSA and the financial ombudsman service two years after they were set up. The framework for an amendment might be found there. One of the issues that arose from those statutory reviews was that once they had taken place there was no formal mechanism to go back and review either the FSA or the FOS, and they were just kept under review. That has led in the case of FOS to quite a lot of discontent among industry members. That legislation is helpful in so far as it says that there is a mechanism to do this, but it also suggests that saying once is enough may not be appropriate.

Ian Pearson (Labour, Dudley South)

As I have said, I am happy to talk to officials and to commit to introducing on Report an amendment that we will conduct a review. We need to be clear about the scope of the review that I am considering. As I said, I do not think that, when we have no current plans, we should be committing to a review of other specific assets at a particular time, but I agree that we should scan the horizon. Nor do I think that we should commit in three years’ time to review whether the scheme should be mandatory because, again, we have no plans to do so and we have no reason to doubt that the voluntary scheme will be successful. However, we will continue to monitor policy developments.

Tom Levitt (Labour, High Peak)

I am grateful to my hon. Friend, who has made a significant announcement. I hope that he will answer the other point that I raised earlier: the review must be able to achieve something. If it is dealing with a voluntary code established by a group of volunteers who are running the scheme, it is difficult to see what teeth the review might have to change the direction if necessary. I would not exclude giving the review the power to recommend that the scheme be made mandatory. I do, however, share his concern that we would not want to go back to primary legislation to implement whatever was recommended by the review. I welcome what he has said but it needs to be a review that can make changes that are necessary. I accept that a sledgehammer is not an appropriate tool to crack a nut; neither is a feather.

Ian Pearson (Labour, Dudley South)

I agree with my hon. Friend. We should not commit to reviews and mention them in Bills, when they will be just exercises that take up administrative time and do not produce anything positive. I would expect the review to be a thoroughgoing analysis that would lead to action that produced change, within the confines of the legislative framework and the powers available to the Government through what will by then, hopefully, be the dormant bank and building society accounts Act. With that and the commitment that I have made in mind, I hope that hon. Members can support me in agreeing that clause 12 should not stand part of the Bill.

None

William McCrea (DUP, South Antrim)

With this it will be convenient to discuss new clause 1—Building societies making transfers under section 2: information in directors’ reports—

‘(1) Where—

(a) the directors of a building society are required by section 75 of the Buildings Societies Act 1986 (c. 53) (Directors’ report) to prepare a report for a particular year, and

(b) in that year the building society made transfers in relation to which section 2 applied,

the report must identify each of the charities concerned and specify the amount transferred to each of them.

(2) The requirements of subsection (1) are to be treated for the purposes of the Building Societies Act 1986 as requirements of that Act.’.

Mark Hoban (Conservative, Fareham)

New clause 1 stands in my name. Having further considered the new clause and the explanatory notes to the Bill, I feel that the new clause is sadly redundant, although it was very well drafted. What I do not understand—the Minister may be able to help me out—is why the provisions referring to building societies are not in the Bill, whereas those relating to banks are.

Ian Pearson (Labour, Dudley South)

The situation is as the hon. Member for Fareham suggests. We believe that the new clause is unnecessary. The explanatory note on clause 15 states that the Treasury intends to amend the regulations—made under the Building Societies Act 1986—that deal with building society accounts and reports, so that they include the same requirement to report on participation in the smaller institution scheme. The answer to the hon. Gentleman’s question is that where a regulation-making power, under which the relevant provisions can be made, already exists, it is normal practice for that power to be used, rather than making a new power with primary legislation. That is why we are explaining what we are doing using that power, and that is why that detail is in the explanatory note rather than in the legislation.

Clause 17

Mark Hoban (Conservative, Fareham)

I beg to move amendment No. 29, in clause 17, page 9, line 17, at end insert—

‘(4A) Any grant or loan made under subsection (1) must not—

(a) replace or substitute for government or local authority expenditure;

(b) subsidise or provide part of the costs for a service that is provided on a contract basis for a statutory body;

(c) replace statutory funding that has been withdrawn or is in danger of being withdrawn; or

(d) duplicate services that a statutory body currently provides.’.

The amendment tries to establish, in a not very elegant fashion, the principle that the money from the reclaim fund is in addition to Government spending. That is important. People whose money will be transferred from their dormant accounts to the reclaim fund and then to the Big Lottery Fund will want to know that that is not a substitute for Government expenditure, that it is increasing the resources available for youth services or for financial inclusion. There is no guarantee of that in the Bill. If the choice of the three causes in England had been different, the concern might not be relevant. The problem arises because there is Government expenditure on the provision of youth services, and councils already spend money on it. Financial inclusion is a significant priority not only for the Minister’s Department, but for the Department for Children, Schools and Families and the Department for Work and Pensions. I have looked at Government output and know that money is spent on this area.

I do not believe that any Member of this House would want to see the money that taxpayers contribute to financial inclusion drop from £12 million this year to £10 million next year because the Government know that £2 million will come in from dormant accounts. If an additional £2 million comes in, we want to see £14 million spent on that cause so that there is a boost in spending. I have not touched on the social investment fund in the context of additionality because I do not believe that the Government are currently providing that capital to a social investment wholesaler.

I hope that the Minister understands our concerns. Our argument is that, if this funding comes on stream part way through a comprehensive spending review period, it will be easier to check the additionality because the spending plans will be set out in the CSR. Given that the current CSR will expire at about the time this money comes on stream, it would be very easy for the Government to set their spending priorities taking into account the money that will flow from the scheme. With the amendment, we are looking for confirmation from the Government of the mechanism that they will use to ensure that the money is genuinely additional.

Another problem relates to the Big Lottery Fund, which will be the distributor. It does not give money only to voluntary organisations. That would be one way of ensuring that there were additionality. Having said that, there are even difficulties in that area because on the financial inclusion front some Government money goes to Citizens Advice, which is a voluntary body.

At the start of the CSR period, the Government could decide to reduce the amount of money that is spent in the affected areas in the knowledge that the business plan of the reclaim fund suggests that £10 million or £20 million a year may go to the three causes, as stipulated in the Bill. There is a concern about the additionality of this money and it was not satisfactorily addressed in the other place. Lord Howard tabled an amendment to try to achieve an end of this sort.

Kerry McCarthy (Labour, Bristol East)

I entirely understand where the hon. Gentleman is coming from and I appreciate the intention behind the amendment. I am keen to ensure that there is no such element of substitution. Local authorities rightly make decisions on whether to fund new projects or carry on funding existing projects. It would be difficult to implement the amendment without tying the hands of local authorities and saying that they must continue to fund existing projects. If they withdrew the funding for an existing project, they would not be able to use the new money to replace it. I am concerned by the practicalities.

Mark Hoban (Conservative, Fareham)

I do not dispute the challenges behind this proposal. However, I do not want a situation in which a local authority decides to withdraw funding because it knows that money will come. That is why new subsection (4A)(c) in the amendment states that the money must not

“replace statutory funding that has been withdrawn or is in danger of being withdrawn”.

It would be easy for a local authority to decide not to fund a youth club, a youth group or a financial inclusion project in its area in the knowledge that it will be bailed out by the Big Lottery Fund. That is a challenge. The Big Lottery Fund currently gives money to local authorities that might in a way be substituted by some of the money that will come through the scheme. Additionality is critical to the Bill because people want us to spend more money on these priorities, not to substitute the money from dormant accounts for Government money.

One of the original objectives of the national lottery was to try to increase the money available to community organisations and voluntary groups. That purpose has been diminished somewhat because money from the Big Lottery Fund goes to meet some Government priorities. There is a sense that if this creeps into the allocation of money from the reclaim fund, there will be no augmentation of the resources available: the same money will be spent but will be funded from different sources. We want some assurance from the Minister about how he believes the scheme will work in practice to ensure that additional money is found and this is not a substitute.

Mark Field (Conservative, Cities of London and Westminster)

My hon. Friend has got is absolutely right but I fear that the pass has already been well lost on this matter. Immediately after my hon. Friend succeeded me as the shadow Financial Secretary to the Treasury I had the joy of spending a year on the arts and culture brief, one of the elements of which was the National Lottery Act 2006. As my hon. Friend rightly points out, at the outset the national lottery was designed with four heads in mind: arts, charities, heritage and sports, as well as the millennium fund in the run-up to and immediately after the turn of the century.

The 2006 Act set up the Big Lottery Fund. There are some very good people working there. I cast no aspersions on their work, but there is little doubt that the whole issue of additionality and substitution was cast to one side by the Government at that time. Time and again we warned that setting up the Big Lottery Fund would move away from the initial heads for lottery funding. I fear that is precisely what will happen with the Big Lottery Fund taking over the issue of dormant accounts. It will inevitably be assumed that a certain amount of money will come from these dormant accounts each year and there is a worry that it will not therefore be additional. There will be an element of substitution, particularly when Government spending at local or national level is likely to be tight in the years to come.

The Big Lottery Fund, which now spends over half of the lottery funds that are distributed, does so according to one or two of the original objectives when the lottery was set up nearly a decade and a half ago. It also spends, as the Minister will be well aware, significant sums in areas such as health, education and other promotional elements, which would usually be expected to come from general Exchequer funding. The worry here is that there will not be that sense of additionality in some of the funding and some of the proposals that the Big Lottery Fund will have in mind in its distribution policies. I fear that by passing it on to the Big Lottery Fund, we will not be in any position to monitor it properly.

Tom Levitt (Labour, High Peak)

The hon. Gentleman will be aware that the Big Lottery Fund has always denied the Conservative party’s allegations of breaches of the additionality rules. However, there is an acceptance that a lot of Big Lottery Fund funding goes into partnerships that may involve statutory bodies, but that does not mean that the funding itself is not additional to that being provided through statutory measures. I believe that Conservative party policy would be to reduce that part of Big Lottery Fund funding which does not go directly into the so-called good causes—the charities. That would reduce by about 16 per cent. the money that it puts out. It would damage the partnership funding. I accept that on paper that may be a grey area, but does the hon. Gentleman not accept the undertakings and the assurances that the Big Lottery Fund has given that additionality is maintained in its actions?

Mark Field (Conservative, Cities of London and Westminster)

I do not entirely accept those undertakings. It is extremely difficult. The hon. Gentleman used the phrase “grey area”. I would use the phrase “muddying the waters”. It comes to the same thing. Clearly there is a level of uncertainty about whether funds will be additional. Given the difficulties we will face in relation to public expenditure and the difficulties at local government level with the various partnerships to which the hon. Gentleman refers, there will clearly be confusion. It is therefore important that we have this debate.

Mark Hoban (Conservative, Fareham)

I shall give my hon. Friend an example of that confusion. The Big Lottery Fund recently took me on a tour of projects in my constituency. One project was to provide funding to the borough council for play opportunities, which is a good example of the potential for problems. Would the borough council have spent money from its own resources on play opportunities or was it additional? That is where the problem comes from; once one starts to fund what could be seen as a statutory or a Government priority, one starts to lose the clarity about whether the funds are additional.

Mark Field (Conservative, Cities of London and Westminster)

My hon. Friend gets it absolutely right. The concern is simply that the local authority often has obligations, and it may start a new programme, part of which supersedes an existing programme, in partnership with the Big Lottery Fund. For example, I was in my constituency yesterday visiting a Home-Start UK programme—a part voluntary project with young mothers in the community. There is little doubt that an equivalent programme had been in place in the past, but it had been rebranded as Home-Start and had benefited from Big Lottery Fund funding. Our concern is that there are grey areas, which is why this debate is worthwhile.

Tom Levitt (Labour, High Peak)

I do not know of an equivalent body to Home-Start UK. It is a magnificent organisation for the families that it helps. I conceded that there was a grey area, but I think that it is a small one and it is inevitable in partnerships with statutory funding and non-statutory funding. Does the hon. Gentleman accept that those partnerships and joined-up funding can be more effective in delivering socially advantageous programmes than they could be if the two were funded completely separately and never the twain should meet? Conservative party policy, by not funding partnerships, would make the Big Lottery Fund less effective in the way that it helps our communities.

Mark Field (Conservative, Cities of London and Westminster)

I do not accept that, although I do accept what he said before. Clearly, joint funding is often the most beneficial method for our constituents. The question is where that public funding should come from. The initial idea was that the national lottery would be a ring-fenced fund. I trust that there is a hope that the dormant funds will not simply be used to substitute funding from cash-strapped local or national Government, but will provide additional funding in the way envisaged in the clauses that we will come to shortly. I hope that the Minister will give some credence to what my hon. Friend has said. It has been worthwhile to put on the record that we have expressed some very deep concerns, not least because there is likely to be some confusion as the waters are a little muddied.

Ian Pearson (Labour, Dudley South)

It is right and important that we have this debate on additionality. I recognise the intention of the amendment, but suggest to the hon. Member for Fareham that it is defective and would be damaging. I want to be clear about the principles that underlie the Bill. We are very clear that additionality is fundamental to the distribution of dormant account assets. I do not take a Manichean view of the world—life is a lot more complicated. I shall simply observe that hon. Members and noble Lords rehearsed arguments about additionality for a great amount of time when debating the national lottery legislation, and they had enormous technical difficulties in trying to produce a workable legal definition for primary legislation. Therefore, they came up with a different approach, which is why the National Lottery Act now requires lottery distributors to report annually on reporting practice with regard to additionality. That reporting is informed by an understanding of additionality agreed between the distributors and the Department for Culture, Media and Sport in that

“Lottery funding is distinct from Government funding and adds value. Although it does not substitute for Exchequer expenditure, where appropriate it complements Government and other programmes, policies and funding.”

The point about partnership funding was made by my hon. Friend the Member for High Peak. The practice is now well established. We are committed to the principle that lottery money will not be allowed to become a substitute for funding that would usually fall to mainstream Government spending. Distributors are well aware of that, and the Government expect them to abide by that principle.

In summary, I wish to restate that spending from dormant account money must be additional to the Government’s provision. We recognise that unclaimed assets are, in effect, community resources and it is right that they are spent for the benefit of communities. They are not, and must not be, a substitute for Government funding, but they can rightfully complement and add value to the Government’s funding streams and strategies, whether at central or local level. The hon. Member for Fareham gave an example of when that might be the case.

Lottery funding allows things to happen that would not take place if they depended on Government funding alone. No one would argue that, just because the Government already spend money on the arts, our cultural heritage and sport, the lottery should not do so. The same is true of health, education and environmental projects, which the hon. Member for Cities of London and Westminster said were popular causes that were added back in 1998. By and large, the current system works well. The practice is pretty well established, and we intend to follow that model in the Bill.

Prescribing additionality is not only incredibly difficult to do—I do not think too much of the attempt made at that by the hon. Member for Fareham—but it could have the unintended consequence of restricting the types of projects to which the Big Lottery Fund could award funds. Organisations and innovative projects that would otherwise meet the purposes for distribution could be hindered in their application simply because they might not meet the strict interpretation and legal definition of what is additional if it were specified in the Bill. A definition of additionality could stymie the Big Lottery Fund’s ability to give dormant account money to worthy causes. It could also significantly increase bureaucracy and it would open distribution policy up to further legal challenge. For those further reasons, a definition would be undesirable.

We have adopted the right approach. We should not have a definition of additionality because we cannot find one that is agreeable. However, we have agreed on an understanding of additionality through the National Lottery Act between the distributors and the DCMS, which we shall replicate through our approach. That is why paragraph 9(3) of schedule 3 requires the Big Lottery Fund to report annually on its

“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”

the Government. That mirrors the provisions to which I referred earlier in respect of the DCMS. It is the most appropriate way in which to ensure that additionality is delivered in a clear and transparent manner, so we invite members of the Committee to reject the amendment.

However, it is important to debate additionality because we appreciate the concerns that have been expressed about such matters. We want to stress the Government’s commitment to the fact that the money will be genuinely additional.

Mark Hoban (Conservative, Fareham)

I am grateful for the Minister’s comments on how he will seek through the Bill and schedule 3 to ensure transparency in the way that the money is distributed by the Big Lottery Fund. As the schedule makes it clear, there will be a separate set of accounts for that. It is an important principle—particularly as we are talking about a voluntary scheme—that people should know that this is not a substitute for Government expenditure. If people thought that it was, it would increase their cynicism. It would be seen as another way of fleecing people and as a ruse to find a substitute for tax revenues by raiding dormant accounts. It is important to have transparency in the way that money is used, and as much effort as possible must be made to ensure clear blue water between the Government’s own spending priorities and the uses to which the money will be put. That would lend credibility to the assertion that the funding is additional, and it would provide a helpful backdrop against which we could debate the avenues to which other assets could be directed. The scheme would be seen to be working for the benefit of the wider community and not as a substitute.

There are many reasons why additionality is an important feature of the debate and of how the fund will operate in the future. I take on board the comments that the wording may be defective, but parliamentary draftsmen are available to the Government and if they were really keen, I am sure that they could polish it up. It sounds as if the national lottery debate and the National Lottery Act went through the same process without much success, but perhaps Treasury draftsmen would be more efficient and effective. In view of the Minister’s assurances, and my recognition that he takes the issue very seriously, I beg to ask leave to withdraw the amendment.

Schedule 3

John Howell (Conservative, Henley)

I am looking for some reassurance about the process that will be used—how the money will be delivered and how the grants will be given—and whether that will be entrenched in the strategic plan. The reason for seeking such a reassurance is because the experiences that I and my constituents have had on specific projects funded by the Big Lottery Fund, have not been particularly happy ones. It has been a bureaucratic and long-winded process. I appreciate the need to be careful and to undertake the necessary diligence where public money is involved, but on one occasion the process got close to breaking the project on grounds that proved unfounded in the end. The Big Lottery Fund has a reputation for a bureaucratic approach, and I wonder whether, in the strategic plans for the process, we can see some step change in the way that it deals with the people to whom it gives money.

Ian Pearson (Labour, Dudley South)

As I understand, the process is this. The reclaim fund will transfer moneys to the Big Lottery Fund. Strategic direction will be given by the Secretary of State for the Department for Children, Schools and Families as the lead Department, based on cross-Government advice. The Big Lottery Fund will operate its normal approval procedures and processes.

We can debate the Big Lottery Fund. We believe that it has proved its worth over the years, and that it is the most appropriate body to have reclaim funds and to distribute them to worthy causes.

Clause 18

Mark Hoban (Conservative, Fareham)

I beg to move amendment No. 31, in clause 18, page 9, line 26, leave out from ‘apportioned’ to end of line 33 and insert

‘on a per capita basis between England, Wales, Scotland and Northern Ireland’.

I am bemused about why the Bill states that the money will be allocated between England, Wales, Scotland and Northern Ireland in accordance with prescribed percentages that must add up to 100 per cent. That sounds fine, and it is good that the percentages will add up to 100 per cent.—I am not sure what we would say if they did not—but why does the Bill not state what the prescribed percentages will be or how the money will be allocated to the four countries of the United Kingdom? I do not understand why that is not made clear. The explanatory notes refer to the Barnett formula, but that is the Government’s position today and they may change their mind. All I am looking for is some certainty and clarity.

The Minister might argue that the amendment is not particularly well drafted. I am sure that I could have probably added more bells and whistles to it, but simply allocating money pro rata in accordance to the populations of England, Scotland, Wales and Northern Ireland would be the most obvious method. I do not understand why the Bill permits some uncertainty about what the prescribed percentages might be. [Interruption.]

William McCrea (DUP, South Antrim)

Could we ensure that mobile phones are switched off?

Jeremy Browne (Liberal Democrat, Taunton)

I promise that it was not my phone—it is like being a teacher in a classroom. I rise briefly to share the bewilderment expressed by the hon. Member for Fareham about the fact that, although the Government have concluded that the total amount allocated to the four constituent parts of the United Kingdom should come to 100 per cent., which seems an entirely sensible percentage to arrive at, no formula is indicated for how that should be divided between the four component parts.

One could come up with many different formulae and make a case for them all. A formula could be based on population, the number of bank accounts held in each country or the dormant revenues within the bank accounts in those countries. The latter would give Scotland a higher proportion than if the allocation were made purely on the basis of population. One could argue for each of those different formulae, but it is strange that the Government appear not to specify any of them.

I have some reservations about the amendment. If I had to pick a formula, it would be based not on the population of each country, but on the formula used for the lottery funds, which attempts to make some assessment of social need that goes beyond a straightforward head count. I suspect that it would come quite close to being a per capita formula, but it would perhaps be more satisfactory for assessing which communities would most benefit from the allocation of funds.

Although I have reservations about the amendment and would not be inclined to support it in a Division, the motivation behind it seems entirely reasonable.

Ian Pearson (Labour, Dudley South)

This is not complicated, although it could be if hon. Members want it to be. Any number of allocation formulae could be used in these circumstances. I appreciate the concern to ensure that the distribution of unclaimed assets is fair and transparent across the United Kingdom, and that is the Government’s intention and the basis on which we consulted. Having designed the scheme in such a way as to enable spending decisions to be devolved, it follows that we should use Barnett principles for dividing the available money, as that is the normal way of proportioning spending between UK Administrations. It simply is not established practice or policy to put the Barnett formula into legislation, and I am aware of no other circumstances in which we have done so.

Mark Hoban (Conservative, Fareham)

The Treasury commissioned a factual review of the Barnett formula that was due to be published in the summer, but the summer has been and gone and we are still waiting for its publication. What would happen if the Government changed the Barnett formula, as that might end up creating a distribution that was different to the straightforward per capita basis?

Ian Pearson (Labour, Dudley South)

I will not indulge in speculation, but we have had a consultation exercise on that and are devolving expenditure. It is right to use the Barnett principles, and it is a convention that we do not put them into Bills. That is the basis on which we will operate in the future.

Mark Hoban (Conservative, Fareham)

Having received clarification that the formula is not in the Bill simply because that has not been done before and therefore will not been done now—precedence and tradition always appeal to Conservative Members—I beg to ask leave to withdraw the amendment.

Mark Hoban (Conservative, Fareham)

I beg to move amendment No. 30, in clause 18, page 10, line 5, at end insert—

‘(3A) For the purposes of this section, B should not be more than 5 per cent. of A’.

This straightforward amendment addresses a concern about the costs attached to the allocation of the funds. The formula to which the amendment refers is set out in subsection (3) and stipulates that

“the apportionable income of the Big Lottery Fund for a given financial year is—

A - B - C—

where A is the amount of dormant account money received by the Fund in the year; B is the amount of the expenses defrayed in the year under subsections (1) and (2) of section 27; C is the amount paid in the year under subsection (3)(b) of that section.”

Clause 27 does refer to the expenses that can be defrayed: subsections (1) and (2) deal with the costs incurred by the Big Lottery Fund and; subsection (3) deals with

“expenses...and...any other expenses incurred by the Secretary of State”.

As has been a feature of our consideration of the Bill, we want as much money as possible to be used in pursuit of the three quarters identified in the Bill for England and the approaches that will be taken in Scotland, Wales and Northern Ireland. We want to spend as little as possible on administration, so that we can maximise the amount of money spent on good causes, particularly after the year 1 bulge of money from dormant accounts comes through, as that will give a big amount to be spent. When we reach more normal circumstances, the amounts being spent on an annual basis through the BLF will be relatively small by comparison, so we want to ensure that as little as possible is spent on administrative costs.

This is a probing amendment, and we will not push it to a vote, as I am trying to encourage the BLF to minimise its costs with regard to the distribution of the money. It is worth pointing out that the BLF has had significant operating expenses in the past. Its expenses rose from £72 million in 2005-06 to £77 million in 2006-07. Historically, its operating costs seem to be about 10 per cent. of the amount it distributes by way of funds and grants. We want some reassurance that the BLF will spend as little as possible on operating costs. The amendment is also an incentive to the Government.

One issue that I have been made aware of when talking about the cost of distribution is that the more specific the Secretary of State’s directions to the BLF are, the more expensive the fund will be to administer. Indeed, the Minister alluded to that in response to my earlier amendment on additionality. The more detailed the restrictions and the more cumbersome the conditions to be satisfied, the more expensive it will be to allocate that money. There is a pressure on the Government to keep administrative costs down by giving the BLF more freedom in how it uses the money. Given the priorities that have been set, that is a good way of keeping the cost of lottery distribution down. The message from this debate is that it is important to keep those costs down to a minimum, so that we can maximise the amount of money that goes to good causes.

Ian Pearson (Labour, Dudley South)

I appreciate the probing nature of the amendment, which would impose a cap on the costs that the BLF can defray to limit its administration charges to 5 per cent. of the dormant account funding transferred to it. Although I appreciate and share the concern about the effective use of public funds that no doubt motivated the amendment, I hope that hon. Members will recognise why it is important that the scheme’s ability to operate is not constrained by a rigid and arbitrary cap.

I do not think that the issue is as straightforward as the hon. Member for Fareham suggests. I want the BLF to be as effective and efficient as possible at delivering money to the good causes to which it has been allocated through the dormant account funding mechanism. I do not want money to be delivered at the lowest possible cost, because in areas such as working with young people, I want the BLF to talk to young people and discuss their needs, rather than simply concentrate on throwing money out the door in as simple a process as possible, with limited checks. I do not think that anyone really wants that.

We want to ensure that the BLF’s costs are properly controlled and that it is held accountable for them. Its costs have come down across its activities. As set out in its 2007-08 annual report, it currently spends about 9.1 per cent. of its income on operating costs. It operates a portfolio approach to funding, with commitments being made over three years and payments being made over five years or more. As a consequence, it requires some flexibility to administer its budget over a longer-term cycle. That is a practical reason why an annual cap on its costs would inhibit that activity. I reiterate that I appreciate the probing nature of the amendment.

We want the BLF to approach its distribution of dormant account funds with a similar thoroughness to the way in which it assesses individual grant applications and to its work in developing partner relationships with the projects that it funds and supports. That applies to small-scale projects as much as to larger ones, which often involve more administration costs to support them in getting up and running. We expect the BLF to consult young people, so that they are actively engaged in shaping bids for community resources. That is a worthwhile activity, but intensive effort and sensitive handling are required to manage it appropriately.

I agree that it is important that the BLF is able to operate with effective scrutiny and that its ability to assess and support bids is not constrained. I am aware that, in the other place, the lords drew comparisons between the BLF and other organisations. I am sure that the Committee would be interested in this year’s National Audit Office report, “Making grants efficiently in the culture, media and sport sector”, which shows that the BLF’s costs compared favourably with public sector funders and other funders in the voluntary sector. Nevertheless, there is no room for complacency, and we expect it to work effectively and efficiently and to ensure that as much of its available resources as possible are distributed to front-line organisations. The hon. Gentleman and I share that commitment.

Under the National Lottery etc. Act 1993, the BLF is legally required to comply with provisions for a statement of financial requirements issued by the Government. That makes clear its responsibility to ensure its finances are managed appropriately. However, it is properly the responsibility of the accounting officer for the relevant Department—in this case the Department for Children, Schools and Families—to be sure that the administrative costs incurred were appropriate, as part of the overall duty to make effective use of public funds. It is also the responsibility of the accounting officers of the devolved Administrations to do the same in respect of their relevant functions.

I assure hon. Members that an accountability framework is in place and that we are satisfied that the requirements and responsibilities under that framework will be sufficient to ensure efficient and effective allocation of resources. If there is any doubt about the BLF’s future efficiency and effectiveness, I would draw hon. Members attention to the power in clause 25 that will enable the Government to add or remove distributors of dormant assets. On that basis, we think that the Bill already allows for sufficient checks to ensure the efficiency and effectiveness of distribution. I hope that the hon. Gentleman agrees and will withdraw his amendment.

Mark Hoban (Conservative, Fareham)

I am grateful for the Minister’s thoughts on the matter. I suspect that the Secretary of State’s powers under clause 23(5) to give directions on

“the management and control of money received by the Fund”

might also be used where the Government do not want to take the nuclear option of changing the distributor and to give some guidance to the BLF on how it spends the money allocated to it and how it uses it to pay its administrative costs.

The BLF has always indicated to me that it came out very favourably from the NAO report on the efficient use of money and that it compares well with other grant-making bodies. It is important to ensure that the BLF and the Government recognise the importance of keeping costs to a minimum to ensure that as much money as possible gets through to the causes; otherwise we might not see quite as much money as expected coming through. However, on the basis of the Minister’s comments, I beg to ask leave to withdraw the amendment.

Clause 19

Jeremy Browne (Liberal Democrat, Taunton)

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.’.

William McCrea (DUP, South Antrim)

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.’.

Jeremy Browne (Liberal Democrat, Taunton)

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—

Mark Field (Conservative, Cities of London and Westminster)

Hedging, as usual.

Jeremy Browne (Liberal Democrat, Taunton)

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.

Mark Hoban (Conservative, Fareham)

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.

Ian Pearson (Labour, Dudley South)

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.

Jeremy Browne (Liberal Democrat, Taunton)

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.

Ian Pearson (Labour, Dudley South)

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.

Mark Hoban (Conservative, Fareham)

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?

Ian Pearson (Labour, Dudley South)

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.

Jeremy Browne (Liberal Democrat, Taunton)

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.