Draft Dormant Assets (Distribution of Money) (England) Order 2023
(Limited Text - Ministerial Extracts only)
Read Full debate
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
I beg to move,
That the Committee has considered the draft Dormant Assets (Distribution of Money) (England) Order 2023.
It is a pleasure to open the debate under your chairmanship, Mr Sharma.
The dormant assets scheme is a world-leading example of how powerful and impactful partnerships between the public, private and civil society sectors can be. Money that was previously lying unused and forgotten is unlocked by the scheme for good causes, while consumers are protected and always able to claim back what they are owed.
Led by the financial services industry and backed by Government, the dormant assets scheme is underpinned by the voluntary participation of financial services firms. I put on the record my thanks to those responsible businesses, and in particular I express a warm welcome to Aviva and Legal & General as the first participants from the insurance and pensions sector. They are blazing a trail for others to follow, and I encourage all eligible firms to consider following in their footsteps.
In a little more than a decade, the dormant assets scheme has unlocked almost £1 billion to be spent across the United Kingdom. In England, that has helped scale up the social investment market tenfold: 5,000 organisations such as charities and social enterprises have the investment that they need to keep serving the communities and people who need it most.
Dormant assets have also enabled 22,000 young people from deprived and disadvantaged communities to find meaningful work. The scheme has supported the building of the world’s first youth employment toolkit, making clear the measures and interventions that really work to get young people into good jobs. It has supported financially excluded people with access to affordable credit. That has helped thousands of people when they really need it—people such as single mothers who needed to cover up-front nursery fees so that they could start a new job, or families living in appliance poverty who needed to afford a washing machine and basic furniture. Only last year, in my constituency, dormant assets funding provided 91 responsible and affordable loans worth more than £46,000 to financially vulnerable people.
Soon, the dormant assets scheme in England will be about putting decision-making power into the hands of communities to spend funding on what matters to them, in a way that works best for their area, through community wealth funds. Last year, thanks to the passage of the Dormant Assets Act 2022, the Government were able to give people and the scheme participants a say in how the English portion of the funding should be used. With more than 3,300 responses to the consultation, it is clear that the scheme enjoys significant public support.
The draft order makes good on the Government’s commitment that the scheme should support the four causes that people told us mean the most to them: youth, financial inclusion and education, social investment wholesalers, and community wealth funds. With those four causes, we can continue to make meaningful, long-term change across the country and provide support to those who need it most. I therefore commend the order to the Committee.
Stuart Andrew
It is a pleasure to conclude this debate. I am grateful for the contributions we have had. It was remiss of me right at the beginning not to welcome the hon. Member for Nottingham South to her position. I notice that she said she was glad to offer her support, and I look forward to that being the continual theme in everything that we do from here on in. I also pay tribute to those four organisations that she mentioned. They have worked incredibly hard to distribute the funding so far, and I want to put on record my thanks to them.
The hon. Lady raised a number of points. First, we have been looking at the ratio at which the reserving is monitored. The organisation is regulated by the Financial Conduct Authority and is therefore required to hold sufficient funds to support base reclaims, additional funds for stress events, and funds to operate the business over the lifetime of the balances. The Reclaim Fund Ltd board remains comfortable that the 40% rate is appropriate, given its legal obligations to customers. Obviously, we will ensure we are constantly reviewing that. On that reviewing of the reserving ratio, it is continually looking at the Financial Conduct Authority guidance to ensure it is meeting its obligations.
On the scheme expansion, the hon. Lady is absolutely right to mention the opportunities that exist. Many of the dormant assets that are now transferring to the scheme will include things such as insurance and pensions, investment and wealth management, and security sectors. Section 19 of the Dormant Assets Act 2022 provides a way to bring additional assets classes into scope at a later date. Further work, however, needs to be done to identify these assets and to facilitate their inclusion. I share the hon. Lady’s ambition that we expand this fund as much as we can, so that we can maximise the opportunities.
I hear the points that have been made, and I thank my hon. Friend the Member for Stoke-on-Trent South for his questions, too, and particularly for his thanks to the Local Trust and the Community Wealth Fund Alliance, which have been very good at articulating the opportunities. We want this to be targeted, and we want it to be working to support those deprived small towns of fewer than 20,000 residents experiencing a high level of deprivation or low social capital. But that is part of the consultation. Today, we are purely adding in a fourth cause, but I absolutely recognise the need to look through the results of that consultation. We really want to reach communities that need investment in social infrastructure, and many points have been made about the need to ensure that they are able to stand on their own two feet. That is equally important. I cannot pre-empt that at this stage, but I can assure my hon. Friend and the hon. Member for Nottingham South that I have heard their points.
Question put and agreed to.