Dormant Assets Bill [Lords]

(Limited Text - Ministerial Extracts only)

2nd reading
Monday 6th December 2021 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

I beg to move, That the Bill be now read a Second time.

Over the past decade, the dormant assets scheme has released more than £800 million to tackle systemic social challenges and to support the communities that need help most. This Bill is estimated to unlock £880 million of additional funding to ensure that the dormant assets scheme can continue to support innovative, long-term programmes addressing some of our most pressing social and environmental challenges. The scheme is led by industry and backed by the Government. Its aim is to reunite owners with their financial assets; where that is not possible, the money supports vital social and environmental initiatives across the UK.

Consumer protection is at the heart of the scheme. Dormant assets remain the property of their owners, who can reclaim any money owed to them in full at any time. However, only a small percentage do so, meaning that the rest of the money lies dormant. The scheme responds to the imperative to put the money to better use.

The Bill marks the completion of a five-year review in collaboration with industry leaders, including an independent commission and a public consultation. The scheme’s success is down in no small part to the commitment and drive of the banks and building societies that have led the charge on unlocking dormant assets for the public good. However, it is only right that the scheme continues to grow and evolve.

Currently, only assets from dormant bank or building society accounts are eligible to be transferred into the dormant assets scheme. The Bill will enable Reclaim Fund Ltd, the scheme’s administrator, to accept a broader range of asset classes in the sectors of insurance and pensions, investment and wealth management, and securities. Of course, there could be even more dormant assets to unlock in future. The Bill will therefore introduce a new power to provide the flexibility to expand the scheme through regulations.

I stress that the four core principles that underpin the scheme—voluntary participation, reunification first, full restitution and the additionality principle—will remain unchanged by the Bill. The Bill will require the Secretary of State to

“carry out periodic reviews of…the operation of the dormant assets scheme and…any use made of the powers”

to extend the scheme.

[Jim Shannon (Strangford) (DUP)]

There are many worthwhile projects that local communities would like to bring forward. How can they feel that they are part of this project and gain advantage from dormant bank accounts?

[John Glen]

I thank the hon. Gentleman for his intervention. There will be a consultation; I or the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), will come to it later.

The Bill makes provision to reflect Reclaim Fund Ltd’s establishment as a Treasury non-departmental public body and names it as the scheme’s only authorised reclaim fund. In addition, the Bill includes a new power for the Treasury to designate additional authorised reclaim funds in future. To guarantee consumer protection, the Bill’s money resolution will enable the Government to cover the liability, in the form of a loan, for reclaims should any authorised reclaim fund face insolvency.

The Bill will amend the approach to distributing dormant assets funding in England, aligning it with the model used in the devolved Administrations, who have powers to focus funding through secondary legislation, provided that it is within the parameters of social or environmental purpose. In England, the Dormant Bank and Building Society Accounts Act 2008 restricts the English portion of funding to youth financial inclusion and social investment. The Bill will enable the current restrictions to be removed from primary legislation and put into secondary legislation so that the scheme can respond to changing needs over time. The Bill will require the Secretary of State, before making an order, to publicly consult on the social and environmental focus of the English portion of funds. No changes to the existing restrictions can be made until and unless a new order is laid.

After 10 years of operation, it is right that we carefully consider how the scheme can deliver the greatest impact once it has been expanded.

[Julian Knight (Solihull) (Con)]

With the expansion in the amount of money and the number of areas subject to the scheme, there is a danger that we could end up swamping the economy in those areas. We therefore need to broaden out the scope of the good causes towards which the scheme can work.

[John Glen]

I thank my hon. Friend for that point—a legitimate point that will be raised in different ways across the country during the consultation, and one on which the Secretary of State will need to reflect in due course before an order is laid.

It is vital that we afford everyone a fair and open opportunity to have their say, so the Government plan to launch the first public consultation, which will last for at least 12 weeks after the Bill receives Royal Assent. Until we have launched the consultation and fully considered the responses, the Government are not prepared to make decisions or commitments on the ways in which future funds will be used in England. To do so would clearly undermine the validity and transparency of the consultation exercise.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Under the current legislation—the Charities Act 2011—urban regeneration is one of the areas that distributions are allowed to go into, but it is not clear whether they can go to, for example, a regional mutual bank. As my hon. Friend knows, the all-party parliamentary group on fair business banking is strongly in favour of that. Could the point be clarified in the Bill to facilitate a quicker move to fund those regional mutuals?

[John Glen]

In short, no; that will not feature on the face of the Bill. However, my hon. Friend is a doughty advocate for that cause, and I am sure he will make a hearty contribution to the consultation which will inform the Government’s response in respect of those future parameters.

Mindful of time and the need for contributions from so many Members on both sides of the House, I will end by reiterating that the Government are committed to supporting industry efforts to reunite more owners with lost money, and to provide a practical way for unclaimed and unwanted funds to be put to good use. The dormant assets scheme has achieved that, and we are determined to ensure that it continues to be a success. I hope that the Bill will command cross-party support this evening, and that we will be able to work together on expanding the scheme to unlock hundreds of millions of pounds more for good causes throughout the country in the years to come. I commend the Bill to the House.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)]

I thank all hon. and right hon. Members for their valuable contributions in the debate today, many giving examples of the huge impact that dormant assets funding has had in their constituencies, and we see that right across the country. I am pleased that the Bill has such obvious support across the House and in the other place. It is clear that we all share the ambition to ensure the scheme’s continued success in unlocking dormant assets for public goods.

I would like to address some of the points raised today. Time will not allow me to give full details, and we will be debating the issues and details of this Bill in its later stages. I am also happy to discuss with colleagues across the House issues raised today ahead of the Committee stage, should there be an appetite to do so.

Members have raised a wide range of issues, in particular regarding future spend considerations. Clause 29, as mentioned by the hon. Member for York Central (Rachael Maskell), enables the Secretary of State to launch a public consultation on the social or environmental purposes of the English portion of the dormant assets funding, as the hon. Member for—[Interruption.]—as the hon. Member for Ochil and South Perthshire (John Nicolson) pointed out. Sorry, this is what happens when Members change constituencies. We do not have the flexibility in England that they have in the devolved Administrations, and that is something we would like to correct, as my hon. Friend the Member for Solihull (Julian Knight) mentioned.

The Government plan to launch a consultation that will last for 12 weeks after the Bill receives Royal Assent and clause 29 is commenced. We anticipate that summer 2020 is the earliest that that will be possible. The consultation will enable the public to have their say on how the impact of the scheme can continue to be felt by the people and communities who need it most. We are committed to ensuring that the process is broad and inclusive.

As the consultation is dependent on the Bill passing with the measure included, it is too early to speculate on the causes that may be included, and I would not want to pre-empt the conclusions of the recommendations. As we have heard this evening, however, many suggestions are being put forward by hon. Members in this place and the other place about vehicles or future causes that could be included, and we are certainly open to hearing them.

We are not opposed to considering, for example, community wealth funds, as articulated by several hon. Members. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) mentioned alternative measures involving mutuals and credit unions. My hon. Friend the Member for Grantham and Stamford (Gareth Davies) mentioned alternative measures too. We will consider them all in the consultation.

As outlined by the Economic Secretary to the Treasury in his opening remarks, the Bill is designed to ensure that we continue to have the core principles in mind, such as additionality, as raised by several hon. Members. It is important that that underpins the success of the scheme, as it has for the last decade. The 2008 Act describes additionality as

“the principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by…a Government department”

or devolved Administration. I reassure hon. Members that that principle will remain, which will ensure that funding is directed to causes that fulfil the scheme’s objectives while being additional to central or devolved Government funds.

I reassure the hon. Member for Bethnal Green and Bow (Rushanara Ali), my hon. Friend the Member for Devizes (Danny Kruger) and others that that means that the Government do not have direct access to dormant asset funding and cannot influence it. The money must go to the appropriate causes, as defined in legislation, which have a continuing focus on social and environmental purposes, which is pivotal. As I said, several hon. Members have mentioned alternative measures and we look forward to continuing the dialogue with them about where the funding should go, but the core principles will continue to apply.

We will continue the debate in the future stages of the Bill, but I reiterate that its key purpose is to present the opportunity to significantly expand the scheme—we are talking about hundreds of millions of pounds of additional funding—while protecting participating institutions and rightful owners. We want to continue to make sure that, where possible, money goes back to those who own the funds or are rightful owners of the money.

As a result of the Bill, we hope to release hundreds of millions of pounds of additional funds for social and environmental causes across the nation. I look forward to working together to pass this important piece of legislation, so we can proceed with that expansion as soon as possible to ensure that the UK remains a world leader in deploying dormant assets at scale to society’s benefit across the country.

Question put and agreed to.

Bill accordingly read a Second time.

Dormant Assets Bill [Lords] (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Dormant Assets Bill [Lords]:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 13 January 2022.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill may be programmed.—(Steve Double.)

Question agreed to.

Dormant Assets Bill [Lords] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Dormant Assets Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of sums required by the Treasury for the purpose of making loans to, or in respect of, an authorised reclaim fund.—(Steve Double.)

Question agreed to.

Business of the House (Today)

Ordered,

That, at this day’s sitting, the Speaker shall put the Questions necessary to bring to a conclusion proceedings on the Motion in the name of Mr Jacob Rees-Mogg relating to the Parliamentary Partnership Assembly not later than one hour after the commencement of proceedings on the motion for this Order; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; proceedings on the motion relating to the Parliamentary Partnership Assembly may be entered upon and continue, though opposed, after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Steve Double.)