Channel 4: Funding and Governance

Baroness Barran Excerpts

Thursday 1st July 2021 Lords Chamber

[Baroness Bonham-Carter of Yarnbury]

To ask Her Majesty’s Government what plans they have for the future (1) funding, and (2) governance, of Channel 4.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, I am tempted to invite the noble Lord, Lord Watson, to respond. As part of their ongoing strategic review of the UK system of public service broadcasting, the Government will be consulting on the future of Channel 4, including its ownership model and remit. A fast-evolving media landscape, increasing competition and changing audience habits pose imminent challenges. Moving Channel 4 into private ownership and changing its remit could help secure its future as a successful and sustainable public service broadcaster.

[Baroness Bonham-Carter of Yarnbury (LD)]

Does the Minister accept that for the sale of Channel 4 to bring in the amount of money that the Government are talking about, the remit will have to change? At the very least it would have to be watered down, with disastrous consequences for our public service broadcasting sector and the wider creative economy. No change to the remit means no real profit for the Government, so why do it? Could this be ideologically driven rather than economically—something to do with a melting ice sculpture?

[Baroness Barran (Con)]

I do not think it is anything to do with a melting ice sculpture. The Government are committed to having a thriving PSB sector. I know the noble Baroness understands full well what the trends are in advertising revenues for linear television. We are trying to address that and make sure that Channel 4 has a secure, sustainable and thriving future.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, in earlier eras, matters of important public policy such as this would have been preceded by Green Papers and White Papers before Parliament considered any primary legislation that it felt necessary. On broadcasting, this Government take a rather different approach, preferring to set up ad hoc advisory committees, such as the one looking at public service broadcasting. So what is it to be this time? Can the Minister spell out what the Government will do here and explain how Parliament is going to be involved?

[Baroness Barran (Con)]

The noble Lord refers to the expert advice that Ministers will receive from the independent PSB panel but he overlooks the digital radio and audio review that we will be publishing this summer, the Ofcom review of PSBs that will be published in mid-July, and the consultation that we are carrying out on Channel 4 and video on demand, which will result in a White Paper and legislative proposals. I do not think that looks like taking decisions in secret.

[Lord Taylor of Warwick (Non-Afl) [V]]

My Lords, the Government are on record as praising the unique public service remit that Channel 4 has, especially for serving underrepresented communities and its strong partnership with our diversity of independent production companies. Channel 4 made its debut in 1982, 39 years ago, with an episode of the excellent “Countdown”. Please will the Government not simply “count down” to a rushed sale of Channel 4 to the highest bidder but instead help protect Channel 4 from unfair regulatory competition from the likes of Netflix and Amazon, which operate with less regulation?

[Baroness Barran (Con)]

We are addressing the noble Lord’s final point through our consultation on regulation for video-on-demand providers. The noble Lord is right that Channel 4 has a strong reputation for its innovative and diverse content, and we think that could mean that it appeals to a number of different purchasers should we decide to pursue a sale.

[Baroness Rawlings (Con) [V]]

My Lords, how long do Her Majesty’s Government calculate that Channel 4, in its present public and private independent structure, can survive as a going concern?

[Baroness Barran (Con)]

There is no doubt that Channel 4 has performed very well recently but, as I mentioned in an earlier answer, all linear broadcasters are facing significant challenges from developments and disruption in the sector, including from international players. The consultation will give us the time and the information to consider how Channel 4’s future is best served.

[Lord McNally (LD)]

My Lords, is it not quite clear that the Secretary of State and Mr Whittingdale support public service broadcasting like the rope supports the hanging man? Is it not time that the one-nation Tories stood up for one of the great creations of Willie Whitelaw, an organisation that has fulfilled its remit in spades?

[Baroness Barran (Con)]

The noble Lord will be aware that I have often quoted both my right honourable friend the Secretary of State and the Minister for Media and Data, who have both been absolutely clear about wanting to see a thriving PSB sector, which is particularly important in a time of misinformation and disinformation.

[Lord McColl of Dulwich (Con) [V]]

My Lords, what means are open to the public and the authorities to encourage Channel 4 to report the news in an accurate and unbiased way and thereby triumph over the present, frequently prejudiced environment of the media?

[Baroness Barran (Con)]

If my noble friend or any members of the public have concerns about the accuracy of any broadcaster, including Channel 4, they can send those concerns to Ofcom.

[Viscount Colville of Culross (CB) [V]]

The digital streaming television world depends heavily on access to archive. At the moment Channel 4 has no archives since terms of trade agreements with content suppliers mean that IP is kept by independent production companies and is seen as a crucial means by which they can grow their businesses. Do the Government intend to maintain the present terms of trade agreement between any new owner of Channel 4 and its content suppliers?

[Baroness Barran (Con)]

The noble Viscount raises an important issue. There is a tension between ownership by the independents and the PSBs. We will be setting out more on this in the White Paper.

[Lord Bassam of Brighton (Lab) [V]]

My Lords, one of the big fears about privatising Channel 4 is that the current statutory requirement for it to invest profits back into independent programming through commissioning —the very thing that makes it unique—will be dropped in order to make the channel sellable. What guarantees can the Minister give that the requirement to reinvest will be assured and that Channel 4’s innovative edginess will not be sacrificed? Will she also list the material restrictions that are allegedly holding Channel 4 back? Does she really believe in this policy?

[Baroness Barran (Con)]

I think the policy of consulting and getting an understanding of what would create a strong strategic future for a key public service broadcaster is entirely valid. The noble Lord is right that Channel 4 has been hugely successful in supporting our independent production sector. The Government are committed to seeing that continue, and we will take into account any impacts on that sector as we move forward.

[Lord Moylan (Con)]

My Lords, the Reuters Institute for the Study of Journalism at the University of Oxford has found that the UK has the lowest average local news topic access of any of the countries measured in its recent survey. If there were any reason for not privatising Channel 4, it would be to use the platform as the basis of a new local and regional television service. Has my noble friend considered that?

[Baroness Barran (Con)]

I agree with my noble friend that locally relevant television and, in particular, local news is a very important part of the UK’s public service broadcasting, which has been highlighted by the pandemic. These are issues which will form part of our strategic review of PSBs.

[Lord Singh of Wimbledon (CB)]

Can the Minister inform the House on whether BBC editorial policy trumps the law of the land regarding the legal rights of presenters and contributors? If so, should there not be safeguards in governance against the danger of individual producer prejudices being portrayed as BBC policy?

[Baroness Barran (Con)]

It is clear that BBC editorial policy does not trump the law of the land. The noble Lord will be aware that the BBC is undertaking a review of its editorial policy, which will report later this year.

[Lord Flight (Con)]

In what specific ways does the Minister think Channel 4 might benefit from private ownership? What changes in its remit, if any, might government propose?

[Baroness Barran (Con)]

We hope through the consultation to discern two particular areas among others. One is access to additional capital; Channel 4 is reliant on advertising for 90% of its revenue. The other is potentially greater agility to respond to market developments as we move forward.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked. We now move to the next Question.

Birmingham Commonwealth Games (Compensation for Enforcement Action) Regulations 2021

Baroness Barran Excerpts

Wednesday 30th June 2021 Grand Committee

Moved by

[Baroness Barran]

That the Grand Committee do consider the Birmingham Commonwealth Games (Compensation for Enforcement Action) Regulations 2021.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

I beg to move that the Committee approves the Birmingham Commonwealth Games (Compensation for Enforcement Action) Regulations 2021, which were laid in draft before the House on 17 May. With less than 13 months to go until Games time, preparations are ramping up to deliver the Birmingham 2022 Commonwealth Games—the biggest sporting and cultural event ever staged in the West Midlands.

Before turning to the regulations that we are here to debate today, I remind the Committee of the context in which this instrument has been brought forward. Measures in the Birmingham Commonwealth Games Act, which many in this House scrutinised and shaped, include those which restrict the resale of Games tickets and prevent unauthorised advertising and trading in and around specified Games locations. We are working closely with the organising committee and enforcement authorities to ensure a consistent, co-ordinated and proportionate approach to enforcing these elements of the Act.

None the less, as a safeguard in the enforcement framework, the Act provides a person with a right to compensation in the event of property damage arising from unlawful enforcement or the use of unreasonable force in enforcement action. The draft regulations before us today set out the administrative process by which a claim for compensation can be made, considered and appealed. This ensures the process is clear, consistent and proportionate for both potential claimants and the enforcement authorities involved. I will now set out in a little more detail what the regulations contain.

I am sure I do not need to remind noble Lords that the Delegated Powers and Regulatory Reform Committee raised two particular points in its report. I am pleased to be able to provide clarity on these matters today. The first was in relation to the person or body responsible for determining claims for compensation. Where someone believes they have experienced damage to their property as a result of enforcement action being unlawful or unreasonable, they will be able to submit a claim to the local trading standards authority where the damage occurred, or to the Department for the Economy in Northern Ireland. This is known as the relevant authority.

Claimants should submit a claim, in writing, with the necessary information, within 90 days of the end of the Games; this should include the date and location that the enforcement action took place, the nature of any damage and any supporting evidence. Within 14 days of a claim being received, the relevant authority should determine whether it has sufficient information and evidence to make a decision on the claim. If so, it will have 28 days to decide whether the claimant is entitled to compensation and the amount due, and to communicate this outcome, alongside information about how to seek a review.

It is important to note that, under the Games Act, local trading standards authorities are responsible for authorising officers to undertake enforcement in relation to Games offences. This is consistent with the Consumer Rights Act 2015. In the past, such as for London 2012, there was a role for the organising committee in designating enforcement officers, and therefore in considering claims for compensation. However, in tandem with arrangements in the Consumer Rights Act, these regulations provide for claims to be considered by the authority which authorises an enforcement officer—in this instance, a local trading standards authority or the Department for the Economy in Northern Ireland.

It is worth noting that the Act provides that a person is entitled to compensation for the cost of repairing the property that was damaged during the enforcement action, or, if it is not possible to repair it, the cost of replacing it and the amount of any other loss that is the direct result of the damage to the property.

The second point raised by the DPRRC was whether there is to be a right of review or appeal and, if so, to whom the review or appeal may be made and what grounds for appeal would be available. As set out in Regulations 6 and 7, if a claimant is unhappy with a relevant authority’s decision, such as the amount of compensation offered, they will have 14 days to request a review of the decision. The relevant authority will then have a further 14 days to consider this and provide a response. If the claimant remains unsatisfied with the outcome of the review, they will be able to submit an appeal within 21 days to the county court or, in Scotland, to the sheriff. The regulations do not specify or limit the grounds for appeal. The court, or the sheriff in Scotland, will be able to rehear the case and examine both the facts of the case and the law.

As restrictions on advertising and trading can be in place only for a maximum of 38 days, and in most instances a much shorter period, we expect any compensation claims arising from enforcement to be minimal. Indeed, we are not aware of any arising from similar regulations that supported the London 2012 Olympic and Paralympic Games or the Glasgow 2014 Commonwealth Games.

To summarise, these regulations plug a gap in the enforcement framework and provide the necessary clarity around the procedure for compensation claims, including the right to appeal any decision made by an enforcement authority. They are a small but nevertheless important part of the ongoing preparations to deliver a fantastic Games next year—a Games that will showcase Birmingham, the West Midlands and the entire country to the rest of the world as a place to live, work, study and do business. I look forward to continuing to update the House on this. I commend the regulations to the Grand Committee.

--- Later in debate ---

[Baroness Barran (Con)]

My Lords, I thank all members of the Committee for their consideration of the regulations today and their incredibly warm and enthusiastic welcome—I am not sure whether it was a gold or diamond medal performance, or many medals—for the Games in general and the regulations in particular. I will try to address the many points raised by your Lordships and, if I run out of time, I will of course write.

The noble Lords, Lord Hunt and Lord Bassam, both asked about progress on the implementation of the Games and funding, particularly in relation to Birmingham City Council. I am pleased to confirm that, despite an extraordinarily difficult period with the impact of the Covid-19 pandemic, the Games remain on time and on budget. There has been a constant dialogue between the Government and the city council on all aspects of the Games, including the budget, and the Government have full visibility of all the financial plans.

I must apologise to the noble Lord, Lord Bassam; the connection was slightly coming in and out, so I did not catch exactly his question on the athletes’ village in Perry Barr. The decision to move away from a single athletes’ village was obviously made as a result of the impact of the pandemic. The Perry Barr regeneration scheme is bringing more than 1,400 new homes to this part of the city and will still be delivered as planned by Birmingham City Council. We believe we have an excellent solution which will provide the 6,500 athletes and team officials coming to the Games with best-in-class facilities at three sites: the University of Birmingham, the NEC and the University of Warwick.

The noble Lord, Lord Hunt, and my noble friend Lord Moynihan talked about the importance of there being an ongoing legacy of physical activity and well-being. That portion of the legacy programme rests with my department, the DCMS, and is a real priority. Our focus is to use the momentum of the Games to tackle some of the stubborn inequalities which noble Lords referred to, and which the noble Lord, Lord McNally, linked to levels of crime. We will tackle those inequalities, focus on underrepresented groups and promote wider well-being across the region. As the noble Lord, Lord Hunt, set out so clearly, inactivity is a particularly acute problem in the West Midlands, which is classified by Sport England as the least active region in England. We have been working very closely with Sport England and it is bringing to the table £4 million to address this legacy.

The noble Lords, Lord Hunt and Lord McNally—I gather that Jack Grealish is known as the “McNally” of the English team, so the feeling is mutual—raised issues of accessibility, including the signage at Birmingham New Street. I remember sending the noble Lord, Lord Hunt, a photograph of the signage when I was in Birmingham New Street station during the passage of the Bill, having been to visit the works at Sandwell to build the aquatics centre, so I share his pain about the signage. More seriously, the organising committee is committed to delivering a highly accessible and inclusive Games. Your Lordships may be aware that there is an accessibility advisory forum, which includes representatives from the disabled community across the region, to make sure that we can deliver on this commitment.

The noble Lord, Lord Bilimoria, spoke about the opportunity and the challenge presented by the Games. I think the Government would absolutely agree with him about the importance of a positive legacy for local communities. He listed some of the major economic benefits, both for Birmingham and the West Midlands and the wider UK. We also see this as a huge opportunity for local and regional suppliers to makes sure that they can really benefit from some of the expenditure that is going into the Games.

The noble Lord, Lord Bhatia, asked about tourism. An investment of £21.3 million for a business and tourism programme has been secured, which will help to ensure that the city, the region and the nation can take advantage of the economic opportunities that hosting the Games will provide. An additional £2.6 million of funding has been provided from the West Midlands Combined Authority.

The noble Lord, Lord Bassam, and my noble friend Lord Moynihan raised concerns about the impact on local authorities’ resources and their capacity to fulfil the role given to them in these regulations. Local authorities are working very closely with the organising committee to make sure they have the necessary plans and resources in place so that they can enforce these measures if needed. We are working with all partners within my department on the development of the advertising and trading provisions and the approach to enforcement to take resource pressures into consideration but, as I mentioned in my opening remarks, we expect claims for compensation to be minimal.

On the wider issues of ticket touting, raised by the noble Lord, Lord Bassam, and my noble friend Lord Moynihan, we are absolutely committed to cracking down on unacceptable behaviour in the ticketing market and making sure that people can buy a ticket at a reasonable price. We have strengthened the law on ticketing information requirements and introduced a criminal offence of using automated software to buy more tickets online than is allowed. We are also working with the enforcement agencies in this area to make sure that these measures are effective.

I thank my noble friend Lord Moynihan for his very generous comments about the sustainability plans for the Games. We debated them at length, rightly, during the passage of the Bill and I am delighted that he, the noble Lord, Lord Bilimoria, and others recognise the work that has gone into this.

The noble Lord, Lord McNally, asked about sponsorship. The Government have made it clear that sporting bodies and events organisers must consider their wider responsibilities to fans and the wider community when entering into commercial arrangements. In the case of Birmingham 2022, any such arrangements should support the vision and mission of the Games. We will continue to work closely with the organising committee and the Commonwealth Games Federation to support that.

The noble Lord, Lord Bassam, asked me to confirm that the Government support the cultural events that accompany the Games and see their value. I have great pleasure in absolutely confirming that.

To close, I reiterate the procedural but important nature of these regulations, which are yet another milestone in the preparation for delivery of the Games next year. If your Lordships have any further questions about the progress being made to deliver the Games, I know that the officials in my department and the Games organising committee would be very happy to discuss them. With that, I commend these regulations to the Committee.

Motion agreed.

Choirs: Restrictions

Baroness Barran Excerpts

Wednesday 30th June 2021 Lords Chamber

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what plans they have to review the guidance restricting the performance of indoor amateur choirs to no more than six people.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, I know that the restrictions on singing are frustrating to large numbers of amateur choirs and performance groups across the country. Following the move to step 3 of the road map on 17 May, non-professional groups of up to six people can now sing indoors, while multiple groups of 30 can sing outdoors. We will continue to keep guidance and restrictions under review. Further details of step 4 will be set out as soon as possible.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I declare an interest as a supporter patron of the City of Birmingham Symphony Orchestra, which has more than 400 adults in its various amateur choirs. I can see no specific evidence to support the restriction on choirs. Indoor choirs are limited to six people, whereas last night at Wembley 40,000 people were singing, and the night before at Wimbledon the court was covered and people were cheering to the rafters. That apparently is allowed but indoor choirs, which can exercise proper social distancing, are not allowed. This is nonsense. The Government should reverse it immediately.

[Baroness Barran (Con)]

I am sure the noble Lord is aware that the events to which he refers are part of the events research programme, and particular public health measures are taken for all those attending. The evidence is clear that, sadly, singing increases the risks of transmission. Hence, we have the guidance we have been given.

[The Lord Bishop of Gloucester]

My Lords, bearing in mind that on Monday in the other place the new Health Secretary said he hoped that church congregations would soon be able to sing together, could the Minister please give us some clarity on this and say what plans the Government have now to review the research on congregational singing with the use of face coverings, given that singing is not an add-on to worship but integral to it?

[Baroness Barran (Con)]

I absolutely recognise the right reverend Prelate’s final remarks about singing being integral to worship. We continue to be led by the science and the experts, and to follow the public health advice. As soon as that changes, we will of course update the guidance.

[Lord Lexden (Con)]

My Lords, the Chelmsford Singers, a flourishing group not far from Lexden in Essex, would like to know why the current guidance with its totally unexpected restrictions, promised by the Government on 27 April

“in advance of step 3”,

was in fact published after step 3, causing them and so many choirs throughout the country to cancel their first rehearsals for over a year at short notice and, in some cases, with severe financial penalties.

[Baroness Barran (Con)]

I can only apologise to my noble friend and the choir in Chelmsford for the disruption to their plans. As my noble friend is aware, guidance is now available on the GOV.UK website. It will be updated in time for step 4. When it is updated, it will be clear, practical and simply set out.

[Lord Berkeley of Knighton (CB) [V]]

My Lords, it is completely illogical to say that a group of more than six professional singers can meet and sing but a group of amateurs cannot. It makes no sense at all. What does the Minister think people feel when they sit at home, as the noble Lord, Lord Hunt, said, and watch all these people getting together, singing, kissing, hugging and chanting?

[Baroness Barran (Con)]

The noble Lord’s tone expressed very well what many people feel. We absolutely hear that frustration. He will be aware that all ministerial and MPs’ inboxes are full of correspondence on this issue, so we are aware. We are also aware that some amateur groups perform in a professional context, as the noble Lord set out. As a department we cannot advise on individual events or activities. It is up to the organisers to operate in accordance with the published guidance.

[Lord Stevenson of Balmacara (Lab)]

I think all of us share considerable dismay about the answers we have just heard. Although we feel sorry for the Minister for her attempts to try to add a veneer of respectability to her responses, neither the science nor the reality of common sense back her up. As a member of the Parliament Choir, I want to meet with other members in a socially respectable way to sing the music that inspires us and to lead our lives as close to normality as we can. What we want is a road map and a timescale.

[Baroness Barran (Con)]

I can only repeat what I said in response to an earlier question: we will provide that road map as soon as possible and in time for step 4.

[Lord German (LD)]

My Lords, I declare my interest as chair of the board of governors and trustees of the Parliament Choir. Last year, the evidence that came to the Government said that singing was no different from speaking loudly or taking physical exercise indoors. With both of those now permitted—your Lordships will know that I can speak loudly, as can many other noble Lords—what is the evidence that says that speaking loudly in this Chamber is permitted but singing together in a Covid-compliant way is not permitted? Where is the evidence for that and will the Minister publish it?

[Baroness Barran (Con)]

There are references in recent research done, for the events research pilots in particular, that links to the evidence, but the decision has been based on three scientific studies: the NERVTAG Assessment of Transmission of Covid-19 through Musical Events study, the Public Health England paper Aerosol and Droplet Generation from Singing, Wind Instruments and Performance Activities, and the PERFORM study.

[Lord Pickles (Con) [V]]

In both the county of my birth, Yorkshire, and the county of my home, Essex, there are great choral traditions. My noble friend will realise that these amateur choirs go beyond just singing; they are an important part of what makes the community tick. Given that she said that amateur choirs can rehearse indoors in a professional capacity, why not follow the science? If members of the choir have been double-jabbed and it is in a well-ventilated room, why should that not be permissible?

[Baroness Barran (Con)]

I absolutely agree with my noble friend that amateur choirs are an important part of communities. Indeed, I do not want to diminish in any way the frustration expressed by your Lordships, but we have seen remarkable performances by Zoom choirs and others. I can only repeat that we are following the Public Health England guidance.

[Baroness Merron (Lab)]

My Lords, as we have heard today and on many other occasions, members of choirs and communities across the country are feeling both fed up and overlooked. Does the Minister personally feel comfortable with the fact—and can she offer an explanation for it—that so-called business VIPs are exempted from the range of Covid-19 restrictions while choirs, singers, actors and other artists who have endured over a year of hardship remain subject to a set of rules that, unlike in other areas of life, have remained absolutely static?

[Baroness Barran (Con)]

I know that the noble Baroness recognises the difference in the public health risks between the two activities to which she refers. I also acknowledge that she might be expressing broader sentiments in relation to this.

[Baroness Wheatcroft (CB)]

My Lords, the Royal Choral Society is a brilliant choir, but it is an amateur one. On 30 May it performed Handel’s “Messiah” at the Royal Albert Hall, with 117 singers producing a brilliant performance. I applaud its decision to go ahead, but could the Minister tell us what sanctions there are for those who break the regulations? I am sure the House and the country would like to know what sanctions there are.

[Baroness Barran (Con)]

I will need to write to the noble Baroness with details on sanctions, but I assume that they are available on GOV.UK.

[Lord Cormack (Con)]

My Lords, does not my noble friend understand that she has been trying valiantly to defend the totally indefensible? Does she not accept that the cultural life of this country rests to some degree on the continuance of amateur choirs? If she goes on repeating these answers and the Government do not show a proper degree of flexibility, many of these choirs will cease to exist.

[Baroness Barran (Con)]

The Government have acted incredibly powerfully to support the cultural life of this country. We absolutely recognise its importance in relation to amateur choirs and the whole spectrum of performing arts, which is why we are progressing with phase 3 of the more than £2 billion Culture Recovery Fund.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, the time allowed for this Question has elapsed. We now come to the third Oral Question.

Telecommunications (Security) Bill

Baroness Barran Excerpts

2nd reading
Tuesday 29th June 2021 Lords Chamber

Moved by

[Baroness Barran]

That the Bill be now read a second time.

Relevant documents: 5th Report from the Constitution Committee and 4th Report from the Delegated Powers Committee

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, this past year has put into sharp focus the importance of digital connectivity, which has been vital in keeping both people and industries going in these challenging times. In the other place, my right honourable friend the Secretary of State spoke about the potential for 5G and gigabit broadband to transform our lives. The Government are investing billions of pounds into these cutting-edge technologies. However, we can be confident in the technology only if we know that it is secure.

That is why we have introduced the Telecommunications (Security) Bill. The Bill will create one of the toughest telecoms security regimes in the world. It will protect our telecoms networks even as technologies grow and evolve, shielding our critical national infrastructure both now and for the future. I will briefly outline the context for the Bill and why it is necessary, before turning to the intent of its clauses and delegated powers.

The security and resilience of 5G and full-fibre networks is not just in the national security interests of the UK. It is also crucial to the UK’s economic interests and future prosperity. The House will recall that this Government published the UK Telecoms Supply Chain Review Report in July 2019. It found that telecoms providers lack incentives to apply security best practices and recommended a new framework for the UK’s public telecoms providers that will respond to new and emerging threats to the security of our networks. The review also recommended new national security powers for the Government to control the presence of high-risk vendors in UK networks. The Bill is our response to those recommendations.

I will now outline the intent of the Bill’s clauses, which can be broadly separated into two groups. Clauses 1 to 14 introduce a stronger telecoms security framework, placing new security duties on public telecoms providers. Clauses 15 to 23 introduce new national security powers to address the risks posed by high-risk vendors.

I turn first to Clauses 1 to 14. The Bill amends the Communications Act to create a tough new telecoms security framework, which consists of three layers. First, the Bill places strengthened overarching telecoms security duties on public telecoms providers in primary legislation. Secondly, specific security requirements will be set out in secondary legislation. Thirdly, guidance on the detailed technical measures that providers could take to comply with their legal obligations will be set out in a code of practice. The new legal duties in the Bill and the measures in the secondary legislation will apply to public telecoms providers operating within the UK.

To illustrate the specific measures that providers may be expected to adopt, we published an illustrative first draft of the security framework regulations on GOV.UK in January. We have been, and continue to be, in close contact with industry following the publication of the draft regulations. Comments received as part of this engagement are being considered in the drafting of the final version. We will launch a public consultation on the draft code of practice once the Bill achieves Royal Assent. This will ensure that views from all impacted groups are heard ahead of the new framework coming into force.

The Bill provides Ofcom with a new general duty to seek to ensure that telecoms providers comply with their new security duties and builds on Ofcom’s existing security duties. Ofcom will have new powers to assess providers’ compliance. In cases of non-compliance, Ofcom will be able to issue a notification of contravention and, ultimately, financial penalties of up to 10% of turnover. Recognising that Ofcom will have expanded duties, DCMS is working with it to ensure that it has the necessary capability and capacity to deliver those vital functions. We have already increased Ofcom’s security budget for this financial year by £4.6 million to reflect its enhanced security role, in addition to its existing funding. Ofcom will also continue to work closely with the National Cyber Security Centre in the delivery of its security functions. The two organisations have published a statement, available on Ofcom’s website, which sets out how they plan to work together.

Clauses 15 to 23 introduce new national security powers to manage the risks posed by high-risk vendors in our telecoms networks. The Bill includes new powers for the Secretary of State to designate specific vendors in the interests of national security and issue directions to public communications providers. Those directions will place controls on a provider’s use of goods, services and facilities supplied by a designated vendor. Once a designated vendor direction is issued, the Secretary of State can direct Ofcom to collect information from providers and report back so that the Secretary of State can determine whether a provider is complying with a direction. Government amendments were passed in Committee in the other place to bring the powers in Clauses 15 to 23 into force immediately upon Royal Assent.

The Government have announced that UK telecoms providers should cease to install Huawei equipment in 5G networks after September 2021 and remove all Huawei 5G equipment by the end of 2027. We published an illustrative direction and designation notice in November 2020 to demonstrate how the powers in the Bill could be used in relation to Huawei in line with these announcements. Once the Bill receives Royal Assent, any proposed designated vendor directions and notices will be subject to the relevant consultation requirements set out in the Bill.

I will now turn to the delegated powers in the Bill. It contains nine delegated legislative powers to make secondary legislation and two administrative powers. Six of the delegated legislative powers are to amend the maximum penalties specified in the Bill. These are Henry VIII powers and are subject to the draft affirmative resolution procedure. A further two are powers to create regulations setting out specific measures to be taken to comply with the new security duties and are subject to the negative resolution procedure. Finally, one power is to make regulations commencing certain provisions in the Bill and is not subject to any procedure. The two administrative powers are the power to issue codes of practice and the power to give designated vendor directions to providers.

Our approach to the delegated legislative powers is in keeping with precedent. The powers to amend maximum penalties in the Bill are consistent with those in the Communications Act 2003. I appreciate the need for Parliament to have the right mechanisms to scrutinise the powers that we are taking in the Bill. I am confident that the approach we have taken finds the appropriate balance. As the House would expect, we have submitted the delegated powers memorandum to the Delegated Powers and Regulatory Reform Committee. I thank it very much for its prompt report on the memorandum, which I read with interest. The Government will consider the committee’s recommendation concerning the power to issue codes of practice about security measures and aim to respond to the report fully in due course.

To conclude, the Bill has not been designed around one company, one country or one threat. Its strength is that it will create an enduring and effective telecoms security regime that will be flexible enough to keep pace with changing technology and changing threats. I hope that noble Lords on all sides of the House will welcome it. I beg to move.

--- Later in debate ---

[Baroness Barran (Con)]

My Lords, I thank all noble Lords who contributed to this rich debate for their contributions, for the warm welcome they offered the Bill, and for the way in which, in very different ways, they highlighted the importance of the issues which the Bill seeks to address.

Today’s debate has been wide-ranging. We have debated the principles and the practice of the Bill and we have touched on a number of issues that are beyond its scope. I shall start my closing remarks by focusing on those matters that speak directly to the Bill, as well as those that are closely adjacent to it, such as diversification, before moving on, if, as I hope, time permits, to other matters raised in the debate. Some of the issues raised sit beyond my department’s remit, but I will do my best to respond to them and will write to all noble Lords on any matters that time does not permit me to address today. I stress that I and my officials are very open to continuing these discussions in more detail ahead of Committee.

As my right honourable friend the Secretary of State said at Second Reading in the other place, the Bill raises the security bar across the board and protects us against a whole range of threats. Although there may be disagreement on some points in the Bill, I welcome the fact that it clearly has strong support in this House and, as we saw, the other place. We are all committed to putting the UK’s national security interests first.

Before I go into the detail of the Bill, the noble Baroness, Lady Merron, rightly asked how it fits with wider regulation of critical national infrastructure. This is indeed one of a number of measures that the Government are taking to protect the security and integrity of that infrastructure. So, while this Bill focuses on telecoms security, there is already a range of regulations governing the security of other critical sectors, each tailored to different risks. The Bill will complement those pre-existing regulations by ensuring the security and resilience of the public telecoms networks on which our critical sectors rely.

The recently enacted National Security and Investment Act, to which the noble Baroness referred, empowers the Government to scrutinise, impose conditions on or, as a last resort, block foreign investment wherever there is an unacceptable risk to Britain’s national security. Rather than addressing investment, the Bill would enable the Government to protect our networks from risks posed by vendors who supply, provide or make available goods, services or facilities to public telecommunications providers. Once it is passed, the Bill will work alongside the National Security and Investment Act to protect our networks from threats, both now and in the future. My noble friend Lord Young of Cookham also asked how different government departments were co-ordinating their policy responses in this area. I will take up his kind invitation to write to him, and will of course copy other noble Lords into my response.

A number of your Lordships, including the noble Lord, Lord Clement-Jones, my noble friends Lord Vaizey and Lady Stroud, the noble Lord, Lord Alton, and the noble Baroness, Lady Merron, all asked how we were managing the risk posed by Huawei in the interim, ahead of the Bill becoming law. The Government have always considered Huawei to pose a relatively high risk to the UK’s telecom networks compared with other vendors. There has been a risk mitigation strategy in place since Huawei first began to supply equipment to the UK’s public telecoms providers.

The Government have announced extensive advice to manage the security risk posed by Huawei, based on the analysis of our world-leading experts at the National Cyber Security Centre. The Secretary of State has announced advice that providers should remove all Huawei equipment from 5G networks by the end of 2027 and, in order to clearly set out the pathway to zero, he also announced advice that providers should stop procuring new 5G equipment from Huawei after 31 December 2020 and stop installing Huawei equipment in 5G networks after September 2021. Together, all this advice will protect our networks from the risks posed by Huawei. Once passed, and subject to the relevant consultation requirements, the Bill will enable the Government to give legal effect to all this advice.

My noble friend Lady Stroud asked about other high-risk vendors. The Bill responds to the threats and risks that we outlined in the telecoms supply chain review. It gives us the ability to manage any high-risk vendor, both now and in future. We have named Huawei and ZTE as high-risk vendors, but we will continue to keep the presence of high-risk vendors under review.

A number of your Lordships, including the noble Baroness, Lady Merron, my noble friends Lord Vaizey and Lord Young of Cookham, and the noble Lord, Lord Fox, talked about the role, resources and capacity of Ofcom. We are confident that Ofcom will have the capability and resources to undertake its expanded role, although we recognise the competitive market for recruitment in this area. As I mentioned in my opening remarks, the Bill places a new, general duty on Ofcom to ensure that providers comply with their new security duties. We are working closely with Ofcom to ensure that it has the required resources to meet its new responsibilities, and we will keep that under review.

I shall now cover the issues relating to scrutiny in the Bill. The first of these relates to the Secretary of State’s ability to issue designation notices and designated vendor directions. This issue was discussed at length in the other place throughout the passage of the Bill, and more recently was referred to by the Constitution Committee, and I will address the remarks of both that committee and the Intelligence and Security Committee.

The noble Lord, Lord Clement-Jones, raised the recommendation from the Constitution Committee to increase oversight of the Bill’s powers by making them fall within the remit of the Investigatory Powers Commissioner. I can reassure noble Lords that the Secretary of State will use the power to issue designation notices and designated vendor directions only when it is necessary to do so in the interests of national security and where the requirements to be imposed are proportionate. The Bill already contains effective mechanisms for oversight of the Secretary of State’s use of the powers to give a designated vendor direction or designation notice.

The Bill requires the Secretary of State to lay copies of designation notices and designated vendor directions before Parliament. This will provide Parliament with the opportunity to scrutinise the use of these powers. On very rare occasions, the Secretary of State may choose not to lay a designation notice or direction before Parliament, because to do so would be contrary to the interests of national security. Where this is the case, the DCMS Select Committee will be able to view such directions and notices.

The Investigatory Powers Commissioner has responsibility for reviewing the use by public authorities, such as intelligence agencies, police and local authorities, of the powers in the Investigatory Powers Act. However, the Investigatory Powers Act regime is not directly comparable with the new powers and framework set out by the Bill. Oversight of the Investigatory Powers Act regime by the Investigatory Powers Commissioner is considered appropriate because of the potential intrusion into the private lives of individuals as a result of the use of covert powers. The national security powers in this Bill are very different from those in the Investigatory Powers Act: they are focused on protecting public telecoms networks and services from the threats posed by high-risk vendors.

The noble Lord, Lord West, the noble Baronesses, Lady Merron and Lady Northover, the noble Earl, Lord Erroll, and others raised the issue of scrutiny by the Intelligence and Security Committee. I pay tribute to the noble Lord, Lord West, and all other members of the Intelligence and Security Committee for the important work they do. We recognise the importance of effective scrutiny of the use of the Bill’s powers, and I am happy to correct the impression that the noble Lord, Lord West, suggested—that the Government want to avoid scrutiny in the Bill. That is why, as I said, the Bill requires the Secretary of State to lay copies of designation notices and designated vendor directions before Parliament, unless doing so would be contrary to the interests of national security. I referred to circumstances where this might be possible in my remarks on the advice of the Constitution Committee.

As noble Lords are aware, the activities of DCMS are not within the remit of the Intelligence and Security Committee. That committee’s remit extends to the intelligence agencies and other government activities related to intelligence or security matters, as set out in its memorandum of understanding. But the advice of the intelligence agencies will not be the only factor that the Secretary of State will take into account when deciding what is proportionate to include in a designated vendor direction. As well as the advice of the National Cyber Security Centre, the Secretary of State will consider, among others, the economic impact, cost to industry and impact on connectivity of the requirements in any designated vendor direction.

The ISC does not have a remit to consider non-security issues, such as the economic and connectivity implications of the requirements in designated vendor directions, but the DCMS Select Committee can consider those wider impacts. That is why, despite my noble friend Lord Balfe’s caution in this regard, we believe the DCMS Select Committee is the correct and appropriate body to see copies of designation notices and designated vendor directions that are not laid before Parliament.

My noble friend Lord Young of Cookham asked whether a designation notice or designated vendor direction is justiciable. Designated vendor directions and designation notices are subject to ordinary judicial review principles. However, the Secretary of State will issue designation notices and designated vendor directions only where they are necessary in the interests of national security and where the requirements in the direction are proportionate. As I mentioned, there are exceptions, which we expect to be rare, where it could be harmful to national security to lay a direction before Parliament, for example where doing so would expose particular security vulnerabilities.

The noble Lord, Lord Clement-Jones, asked about the delegated powers in the Bill and the recommendations of the Delegated Powers and Regulatory Reform Committee, as did my noble friend Lord Young of Cookham. The committee has made one recommendation relating to the power to issue codes of practice about security measures. I am sure that the House will appreciate that we need some time to consider the recommendation. We will respond once we have done that.

A number of noble Lords, including the noble Earl, Lord Erroll, the noble Lord, Lord Fox, and my noble friends Lady Morgan and Lord Vaizey, raised issues about the Government’s work on diversification. Although this is not a matter that the Bill speaks to directly, as your Lordships pointed out, I am delighted to address it. The Government recognise the importance of a diverse supply chain for creating a resilient national telecoms network, which is why we published the 5G diversification strategy alongside this Bill. That takes forward the Government’s commitment in the telecoms supply chain review to respond to the lack of diversity in the supply chain. We are leading the way in solving this through our ambitious diversification strategy.

The diversification task force, led by my noble friend Lord Livingston of Parkhead, has now concluded its initial work. Its findings and recommendations were published on 20 April. As my noble friend Lord Young pointed out, they raise the opportunity for our businesses in this area to win new markets through the creation of shared standards. The Government will respond to the task force’s findings and set out our next steps in this ambitious programme this summer. My noble friend Lord Holmes asked for an update on our UK telecoms lab. We will be able to say more on that later this year, but we plan to respond to all of the priorities raised in the very helpful report from the diversification task force.

The noble Lord, Lord Fox, asked for a definition of “incumbent suppliers”. The diversification strategy defines them as those present in the network that are not high-risk vendors, which therefore would include non-UK businesses such as Nokia and Ericsson.

The noble Baroness, Lady Northover, and the noble Lord, Lord Clement-Jones, asked about our engagement with business. We continue to engage regularly and closely with public telecom providers, including the largest companies, such as BT, and the trade bodies representing small businesses. Their feedback has been invaluable in our policy development. We will consult with them further on the draft code of practice after Royal Assent to ensure that all those affected can make their voices heard.

The noble Lord, Lord Maxton, asked about our international engagement. We have engaged with partner countries throughout the drafting of this Bill and will continue to do so once it has passed. As he rightly pointed out, our networks face similar challenges to those of networks in other countries. It therefore makes absolute sense to find international solutions to them.

The noble Lord, Lord Vaux of Harrowden, obviously has a similar social life to mine. I definitely get more fraudulent calls than I do any other type of communication. As I wrote to him, this Bill is not intended to address the extremely important issues that he raised. The Government are exploring a range of different measures aimed at tackling criminal abuse of the telecommunications network, including fraud. This work is led by the Home Office. I am happy to meet with him to discuss it further if that is helpful or co-ordinates him being in touch with the right colleagues at the Home Office.

Turning to the issues of human rights, the noble Lord, Lord Alton, asked about the compliance of the ministerial statement on the face of the Bill with the Human Rights Act. As printed, I made a statement under Section 19 of that Act that:

“In my view the provisions of the Telecommunications (Security) Bill are compatible with the Convention rights”


as defined by Section 1 of the Act. I stand by my statement. I do not think there are any provisions in this Bill that are incompatible with the convention rights. The statement is about the content of the Bill. The noble Lord has implied that actions of another country might bring the Bill’s compatibility into question, but I think that is a misunderstanding of the purpose of the statement.

Many of your Lordships rightly raised issues of human rights in China, including the noble Baronesses, Lady Northover and Lady Merron, the noble Lord, Lord Fox, and my noble friends Lady Stroud and Lord Balfe. I start by paying tribute to the noble Lord, Lord Alton, for his ongoing commitment to standing up for human rights around the world, including in Xinjiang. The Government stand in complete solidarity with him and the eight others who were sanctioned by China. This House has debated these issues at length and rightly so, as they are important. The Government share the noble Lord’s serious concern about the human rights situation in Xinjiang. Indeed, he recently secured a Question for Short Debate on this topic, to which my noble friend the Minister of State for South Asia and the Commonwealth responded.

It is because this issue is so important that we have, as a Government, taken a wide range of actions this year and I cannot accept his suggestion of complacency on the part of the Government. The UK Government have led international efforts to hold China to account for its human rights violations in Xinjiang. We led the first two statements on Xinjiang at the UN and have utilised our diplomatic network to raise the issue up the international agenda. Most recently, on 22 June, the UK joined 43 other countries at the UN Human Rights Council to condemn China’s human rights violations in Xinjiang and Tibet, as well as the deterioration of fundamental freedoms in Hong Kong referred to by the noble Baroness, Lady Bennett, and others. On 13 June, the G7 leaders’ communiqué called on China to

“respect human rights and fundamental freedoms, especially in relation to Xinjiang”.

Noble Lords will be aware that in January the Foreign Secretary announced a package of measures to help ensure UK businesses and the public sector are not complicit in human rights violations or abuses in Xinjiang. Those measures include robust and detailed new guidance to businesses, a review of export controls as they apply to China, a commitment to introduce financial penalties under the Modern Slavery Act and increasing support for UK government bodies to exclude suppliers complicit in violations.

I know the noble Lord is particularly interested in hearing more about the review of export controls. He will be aware that export controls are already applied to a range of goods which may be used for internal repression or to breach human rights, as set out in the Export Control Act 2002 and accompanying secondary legislation. The review announced by the Foreign Secretary in January will ensure that we have captured the full range of goods as applicable to the current situation in Xinjiang and will determine which additional specific products will in future be subject to export controls. The Government will report back to Parliament on the outcome of the review in due course.

I also note the Private Member’s Bill introduced by the noble Lord, Lord Alton, regarding the duty on businesses to produce modern slavery statements. The Government have already committed to strengthening Section 54 of the Modern Slavery Act 2015 and I know that the noble Lord engages regularly with the Home Office on this matter. I can reassure all your Lordships that tackling modern slavery continues to be a priority for this Government. This is why the Government announced a review of our modern slavery strategy earlier this year.

A new strategy will cover our cross-government response, including how business and government can effect change through their supply chains. In September 2020, the Government committed to take forward an ambitious package of measures to strengthen the Act. As I have mentioned, this was followed in January 2021 by a commitment to introduce financial penalties for organisations that fail to meet their statutory obligations to publish modern slavery statements under the Act. Legislation to take these reforms forward will be introduced when parliamentary time allows.

The amendment tabled and adopted during the passage of the Trade Act further highlights that the Government take these issues seriously. The amendment ensures that a debate and vote in Parliament can happen in response to credible reports, expressed by a responsible Committee, about genocide in a country with which we are proposing a new free trade agreement. I can now confirm that the Foreign Affairs Select Committee in the other place has agreed to be charged with this role, subject to agreement by the House. Discussions are still ongoing in the other place and will begin in this House when there is a willing Committee.

This Bill, however, is focused on the security of the UK public telecoms network and services. It is not the right legislative vehicle to address concerns about human rights and modern slavery. Clause 16 makes it clear that designation notices can be issued to vendors only where the Secretary of State considers that it is necessary to do so in the interests of national security. The Government consider that the Secretary of State should be required to assess national security as strictly about the security of our nations.

I apologise to noble Lords: I know that I have overrun but it was a rich debate. I hope noble Lords will accept that it was worth addressing some of the important points raised. I look forward very much to working with your Lordships across the House to pass this important legislation. As I have said, the Bill will create one of the toughest regimes for telecoms security in the world. It will enable us to protect our critical national infrastructure and shield our networks for years to come. The noble and gallant Lord, Lord Stirrup, gave the Government a helpful and powerful challenge: to be forward-looking as we think through this legislation; to recognise the need for a balance between cost, resilience and risk; and to adopt an approach that combines agility and adaptability. Again, I invite noble Lords who wish to talk about any particular issues related to the Bill to contact me or my officials, and I look forward to debating this further in Committee.

Bill read a second time and committed to a Grand Committee.

Charities Bill [HL]

Baroness Barran Excerpts

Tuesday 29th June 2021 Lords Chamber

Moved by

[Baroness Barran]

That the Bill be referred to a Second Reading Committee.

Motion agreed.

Gambling Reform

Baroness Barran Excerpts

Tuesday 29th June 2021 Lords Chamber

[The Lord Bishop of St Albans [V]]

I beg leave to ask the Question standing in my name on the Order Paper and declare my interest as a vice-chair of Peers for Gambling Reform.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, we are carefully considering the report by NERA Economic Consulting, along with the large amount of evidence we have received in connection with our review. There are clearly difficulties in making precise predictions, but we welcome this analysis. We aim to publish a White Paper by the end of the year, setting out our conclusions and the next steps for the gambling review.

[The Lord Bishop of St Albans [V]]

[Inaudible]—the IPPR estimates for the cost of problem gambling are between £270 million and £1.17 billion per annum, but there is evidence to suggest these are underestimates. Extrapolating problem gambling costs from studies in other jurisdictions suggests it could be as much as £6.5 billion—far beyond the £3 billion in annual tax contributions provided by the gambling industry. Will the Government commit to researching the costs of problem gambling, so we can determine whether the contributions from the gambling industry are offset by the damage caused by it?

[Baroness Barran (Con)]

I apologise; we slightly missed the beginning of the right reverend Prelate’s comments, in the Chamber. If I have missed anything, I will write to him, but I think I got the essence of his question. We are of course looking at the economic costs. I do not recognise the £6.5 billion figure that the right reverend Prelate cites, but he is aware that one of the complexities of looking at this is the comorbidity between gambling and other forms of harm, which we need to take into consideration.

[Lord Smith of Hindhead (Con)]

My Lords, I declare my interests, as set out in the register. Can my noble friend the Minister assure me that, when her department develops these crucial reforms to the gambling industry, she will ensure that this review is not just evidence-based but grounded on a wide range of opinion that takes into account both the NERA report and the most recent research from a variety of organisations and groups, including the industry itself?

[Baroness Barran (Con)]

I reassure my noble friend that we are considering a very wide range of evidence. Our call for evidence received over 16,000 submissions from a wide range of organisations—from charities, academics and the gambling industry, but also broadcasters, local government and sports organisations. We are considering it all carefully.

[Lord Butler of Brockwell (CB)]

My Lords, in their response to the Select Committee report, the Government said,

“The Committee is also right to say that further progress to make gambling safer does not need to wait for the outcome of the Act Review.”


Can the noble Baroness update the House on what action has been taken so far?

[Baroness Barran (Con)]

I would be breaching the Lord Speaker’s guidance if I were to give the noble Lord the full list, but his point is important. We have not waited for the end of the review to take action where it is needed. To give a couple of examples, in the past 18 months, we have banned gambling on credit cards and introduced new rules to limit the intensity of online slot games.

[Lord Sikka (Lab) [V]]

My Lords, the public health policies applied to tobacco and alcohol addiction are not being applied to gambling. The Government can easily modify Section 328 of the Gambling Act 2005 to control gambling advertising. Can the Minister please explain why the gambling industry and addiction are treated differently?

--- Later in debate ---

[Baroness Barran (Con)]

We cannot prejudge the outcome of the Gambling Act review, but the essence of a public health response, which looks at the products, players and environment, are included within it.

[Lord Foster of Bath (LD) [V]]

My Lords, I declare my interest as chair of Peers for Gambling Reform. The NERA report shows that measures to reduce gambling harm, such as banning gambling sponsorship of football, would also help the UK economy. Such sponsorship links football and gambling in the minds of children. Just one edition of the BBC’s Match of the Day magazine, advertised as for “footy-mad youngsters”, had 52 gambling logos. Does the Minister think this is acceptable?

[Baroness Barran (Con)]

The noble Lord is right to raise these issues. As he knows, we are looking at this as part of the review of the Act. We have seen the conclusions from the NERA report on sports sponsorship, but we need to test them with sports bodies themselves.

[Lord Bassam of Brighton (Lab) [V]]

Reform is needed sooner rather than later, if we are to get to grips with gambling-related harms. Can the Minister tell us when the Government expect to publish the review findings and associated legislation, and also whether loot boxes, which are currently unregulated, will be drawn into a system of regulation?

[Baroness Barran (Con)]

On the noble Lord’s second point, he will be aware that our call for evidence on loot boxes closed on 22 November. We had over 30,000 responses; we are reviewing that evidence and will set out our response in the coming months. I cannot give the noble Lord an idea of timing for legislation, but we will be publishing our response to the Gambling Act consultation later this year, and we also intend to publish a White Paper.

[Baroness McIntosh of Pickering (Con)]

I refer to my interest on the register, as the chair of the Proof of Age Standards Scheme board. My noble friend will be aware that there are positive economic benefits from betting shops in market towns and on high streets. Are the Government looking particularly at how to balance the contribution that these shops make, in employing local people and to the local economy, while safeguarding the health and welfare of those who gamble?

[Baroness Barran (Con)]

My noble friend puts it very well. We are trying to balance the harm that gambling can cause in certain instances, while looking also at the economic impact—including in market towns.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, the problems of juvenile gambling are changing. Seaside arcades are being overtaken by online gambling, and there is a threat it can soon become an addiction that destroys lives. The Government have a duty to protect young people from destroying their future, particularly during lockdown. Does the Minister agree with me that targeted advertising to vulnerable people is one of the main drivers? Will the Government make this one of the priorities for reform?

--- Later in debate ---

[Baroness Barran (Con)]

The noble Lord is right, and we have made it a priority. He will be pleased to know that the biggest category of responses to the consultation was in relation to protecting children. He will be aware that we recently held consultations on the appeal of gambling adverts to children and vulnerable people in particular.

[Lord Jones of Cheltenham (LD) [V]]

When my noble friend Lord Foster and I were elected to another place on the same night in 1992, I suspect neither of us imagined we would come across so many lives devastated by gambling. I switched on the TV today at 9.30 am, not to a programme but to a betting advert. Can we have a watershed, so those adverts are not shown on TV before, say, 9 pm?

[Baroness Barran (Con)]

The aim of the current regulation around gambling advertising focuses particularly on making sure that adverts are not attractive to children and vulnerable people, but, as I mentioned in answer to an earlier question, that is being consulted on at the moment.

[Lord Bhatia (Non-Afl) [V]]

Does the Minister agree that gambling destroys families, both their income and their lives?

[Baroness Barran (Con)]

Gambling can destroy families. Our aim with the Gambling Act review is to make sure that the majority of gamblers, whose lives are not destroyed as a result, can continue to gamble safely, but we protect vulnerable people from the harm the noble Lord talks about.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked, and we now move to the next Question.

BBC: Freedom of Information Legislation

Baroness Barran Excerpts

Thursday 24th June 2021 Lords Chamber

[Baroness Hoey]

To ask Her Majesty’s Government what plans they have, if any, to amend Freedom of Information legislation to ensure that the British Broadcasting Corporation is more transparent.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, the BBC is a public authority for the purposes of the Freedom of Information Act. As with other public service broadcasters under the Act, the right of access extends to all information held other than that held for the purposes of journalism, art or literature. There are no plans to amend this provision.

[Baroness Hoey (Non-Afl)]

My Lords, the BBC is a huge institution that took £3.5 billion from the public last year, yet it is the least transparent in its attitude toward freedom of information requests, using, as the Minister has just said, journalism as a broad way of getting out of FoI. BBC Northern Ireland is particularly bad: it even refused an FoI request to tell us what it paid the polling company LucidTalk, which it employed when it could have used other existing polls. The BBC is unaccountable, and now that GB News is established and it has some rivalry, when will the Government change the FoI rules to ensure that the BBC becomes more transparent and more accountable for our money?

[Baroness Barran (Con)]

As I said in my initial Answer, there are no current plans to amend the rules. As I am sure the noble Baroness is aware, requesters have the right to complain to the Information Commissioner if they believe that a public authority has not complied with the Act. However, my understanding is that in no recent decisions has the Information Commissioner upheld any appeals against the BBC based on journalistic and other exclusions.

[Baroness Bonham-Carter of Yarnbury (LD)]

My Lords, I think the Minister agrees that FoI exemptions are afforded to the BBC and other PSBs so that they can correctly maintain editorial control. Does she also agree that nothing should be done that might prejudice journalistic integrity, and that BBC journalists should have exactly the same protection of their sources as those working, for instance, for the Daily Mail?

[Baroness Barran (Con)]

I hear the noble Baroness’s point. What is perhaps behind the Question from the noble Baroness, Lady Hoey, is perceptions of impartiality concerning the BBC. The noble Baroness will be aware that both the new chairman and the new director-general have made addressing those perceptions a priority.

[Baroness Redfern (Con) [V]]

My Lords, the BBC has to be held to account and to deliver high standards, particularly because of the unique way in which it is funded. Although there is a requirement for the BBC to publish information on salaries of more than £150,000, should the threshold not be further reduced to, say, £100,000 in order to further inform and provide even greater transparency and clarity, which would help to satisfy the general public that more is being done?

[Baroness Barran (Con)]

A very clear objective in the last charter review was to deliver greater transparency on the part of the BBC. The first step to which my noble friend refers, in terms of those paid above £150,000, was part of that. As she knows, there will be a mid-charter review starting next year, which will look at whether the governance mechanisms are indeed fit for purpose.

[Viscount Colville of Culross (CB) [V]]

Ministers have repeatedly said that the BBC’s mid-charter review into the corporation’s governance and regulation will be a transparent process. Can the Minister tell the House whether the review will be a health check on how the new Ofcom regime is operating, or something more fundamental?

[Baroness Barran (Con)]

I can only repeat what my right honourable friend the Secretary of State has said about this, which is that the review will focus on the governance and regulatory arrangements of the BBC. I know that my right honourable friend has gone further and said that there will be no knee-jerk reforms and the mid-charter review will be used to determine whether further reforms are needed.

[Lord Bassam of Brighton (Lab) [V]]

My Lords, I am all in favour of transparency with regard to the BBC, but transparency surely has to be applied across the broadcasting sector as a whole—and to the Government. Can the Minister assure the House that there will be transparency in the decision-making process relating to Channel 4 as a public service broadcaster and any moves to privatise the channel? When will the Government publish the rationale behind any changes they wish to make to its status, given how successful it is in its current form?

--- Later in debate ---

[Baroness Barran (Con)]

The consultation we recently announced on the ownership structure of Channel 4 and the potential regulation of video on demand services is forward-looking and aims to ensure the long-term success of Channel 4 into the future. As for transparency, we will of course publish the government response to the consultation.

[Lord McNally (LD)]

My Lords, I welcome the Minister’s emphasis on, and welcome for, the initiatives taken by the new chairman and director-general to increase transparency and freedom of information within the BBC. I wish her well in resisting knee-jerk reactions from her own Benches, and from strange places on this side, in reviewing the future of the BBC.

[Baroness Barran (Con)]

I think the majority of my colleagues on these Benches have echoed the sentiments of the Secretary of State and my right honourable friend the Minister for Media and Data when they have said, again and again, that the need for a strong PSB system and trusted journalism has never been stronger.

[The Lord Bishop of Lincoln]

My Lords, does the Minister agree that the success of global Britain requires support and celebration of those things that the rest of the world most values in the UK, which provide soft power and promote bonds of affection and trust? Will she then congratulate BBC News on the finding in the most recent Reuters Institute Digital News Report that it is among the most trusted news brands in the United States, Canada, India and South Africa? In most cases, it is more trusted than domestic news providers.

[Baroness Barran (Con)]

I am delighted to echo the right reverend Prelate’s congratulations to BBC News on that recognition.

[Lord Polak (Con)]

My Lords, if the new team at the BBC want to return it to the British Broadcasting Corporation we have been so proud of, and are sincere in their wish to draw a line under the past, does the Minister agree that they should also apologise for spending hundreds of thousands of pounds of public funds keeping the Balen report secret? This report was commissioned to investigate biased BBC reporting of the Israeli-Palestinian conflict. What are they hiding and what are they afraid of? Will she urge the BBC to be completely transparent and honest and publish the findings?

[Baroness Barran (Con)]

I absolutely acknowledge my noble friend’s wish to see transparency in all regards. The Government absolutely agree that the BBC should be a beacon in setting standards and that the recent Dyson report, in particular, showed that in some instances it has fallen far short.

[Lord Singh of Wimbledon (CB)]

Does the Minister agree that misunderstanding and misuse of religion is one of the greatest causes of conflict in the world today? When a BBC fundamentalist Christian producer tries to stop a Sikh presenter on “Thought for the Day” speaking about Guru Nanak, the founder of the Sikh faith, or Guru Tegh Bahadur, who gave his life standing up for the right of freedom of belief of those of another faith, such arrogance should be open to challenge and scrutiny.

[Baroness Barran (Con)]

Sadly, I think religion has been a source of misunderstanding over many centuries. The noble Lord will be aware that the BBC is editorially independent so I cannot comment on the rest of his question.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked and we now move to the third Oral Question.

Events Research Programme

Baroness Barran Excerpts

Wednesday 23rd June 2021 Lords Chamber

[Lord Bassam of Brighton (Lab) [V]]

My Lords, I thank the Minister for the Answer on the events research programme, which shows the devastating impact that Covid restrictions are having on events programmes and the hospitality sector. Public health and personal security must remain as priorities, but this is not helped by the lack of transparency surrounding the publication of the ERP findings. Will the Minister commit to the full disclosure of the report and what it means for the road map? Will she also commit to tackling some of the current ridiculous inconsistencies applied to events that enable Wimbledon, race meetings and Euro 2020 matches to have spectators but prevent Brighton Consort choir even holding rehearsals?

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

The Government have always said that we will publish the findings of the events research programme ahead of step 4 of the road map, and we are committed to that. I assure the noble Lord that the results will be published very soon. In relation to inconsistency, I think that we can all understand the difference between rigorously set up and implemented pilots to test the impact of larger crowds coming together and the wider lifting of lockdown, and how one will inform the other.

[Lord Addington (LD)]

My Lords, will the Minister undertake to look at how information is disseminated on this? The fact that there have been leaks before it has come out officially does not help anything. Also, can the Minister comment on the position of the Government underwriting insurance for future events? At the moment, if it is thought that things might be extended, or possibly that there might be another lockdown, how can we plan for the future? This is totally strangling the events industry.

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[Baroness Barran (Con)]

I share the noble Lord’s concern about leaks in this area. In relation to insurance, the Government are of course aware of wider concerns about securing indemnity insurance for live events. We are continuing to assess a range of options to provide further support to the sector in the public health context.

[Baroness Altmann (Con) [V]]

My Lords, I urge my noble friend to take back to the department the concerns I hear expressed time and again about the lack of transparency around data from the events research programme, which we are led to believe suggests that there are no serious risks of Covid during events. Even before the delta variant—I recognise that—events were not superspreaders in the way they would have been last year. These draconian restrictions on our everyday lives seem to most people to be difficult to justify in light of the current low levels of infection and, in particular, deaths, as well as the extensive success of our vaccine programme, on which I hugely congratulate the Government.

[Baroness Barran (Con)]

I hear my noble friend’s frustration on this, but there really is no lack of transparency. This is a very rigorous set of pilots. The complex data needs to be analysed, and I am sure my noble friend agrees with me that it would be really unhelpful to put it in the public domain until that has been completed.

[Baroness Bull (CB)]

My Lords, following repeated requests to see the full ERP 1 research protocols, a brief science statement was finally issued on 4 June. It says the ERP 1 will provide evidence on effectiveness of ventilation, organisation, venue design and attendee behaviour but will not

“generate any direct evidence based on transmission data on how … events might be done to mitigate risks of transmission”.

Does the Minister agree that this falls far short of sector expectations and the original aim, which GOV.UK still says is examination of the “risk of transmission”? Can she explain why the Government have not followed best-practice open science and released full protocols and findings to allow the valuable scrutiny of the wider research community?

[Baroness Barran (Con)]

I cannot judge other people’s opinion on this, but we have certainly been transparent, as the noble Baroness sets out clearly, in what is possible and achievable in these trials. We have been very clear that the purpose of these pilots is to release the data when it has been fully analysed, which I hope will be very shortly, so that organisations working in the live events area can plan and reopen as quickly and safely as possible.

[The Lord Bishop of St Albans [V]]

My Lords, the Church of England has adopted a clear policy on encouraging people to be vaccinated. However, at the same time, like many organisations, we cater for a variety of people, some with strongly held ethical convictions and objections to the vaccine, covering issues from animal testing to the use of aborted foetal cells. What plans do Her Majesty’s Government have to uphold freedom of religion and belief and offer an alternative to vaccine certification for religious events?

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[Baroness Barran (Con)]

As I am sure the right reverend Prelate is aware, the Government are very concerned about, and keen to uphold, freedom of religion and expression. I will take back the specific question on religious events and write to him.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I declare an interest as a member of the parliamentary choir. Research into disease transmission is obviously very important, and I am sure that the results will be helpful for future planning. However, common sense should not be ignored. Can the noble Baroness now answer the question posed by the noble Lord, Lord Berkeley:

“is it not utterly ridiculous that shouting, chanting and drinking fans can congregate and hug each other”—

and be seen on television doing that—

“but a small, amateur, vaccinated and socially distanced choir cannot meet to rehearse?”—[Official Report, 21/6/21; col. 18.]

[Baroness Barran (Con)]

Obviously, the scenes that were broadcast of people singing in pubs around the events outside the scope of the pilot events are governed by step 3 of the road map, which is absolutely clear that such behaviour is not permitted.

[Lord Scriven (LD)]

My Lords, thanks to Politico this morning, we now know that the events research programme has internal polling which shows that, if face masks were to continue after 19 July, 28% of people will be less likely to attend an event; a ban on food and drink would mean that 43% of people would be less likely to attend an event; and only with mandatory Covid testing would 15% would be more likely to attend. In light of that data, what are the long-term implications for testing at such events?

[Baroness Barran (Con)]

I thank the noble Lord for his question. One of the things that we are seeking to understand better in the third phase of the events research pilots will be the use of testing and certification and how that may or may not be applied in future, although I stress that no decision has been taken on that.

[Lord St John of Bletso (CB)]

My Lords, given the importance of the wedding industry in this country, which employs 400,000 people and accounting for £15 billion in annual revenue, why did the Government not see it necessary to have a wedding-specific ERP? Can the Minister give an assurance that the Government will embrace the wedding industry’s offer to use its unique experience and expertise in providing a reliable database of evidence that shows that it operates in a Covid-safe environment?

[Baroness Barran (Con)]

The events that were chosen for the events research programme were very carefully selected based on scientific advice for the data and the insights that they can provide. As the noble Lord is aware, we are limited in the number of events that can be included in the programme, but all learning will be shared with the all-important wedding sector, as he suggests.

[The Earl of Devon (CB) [V]]

My Lords, the events industry has been decimated by Covid and is now facing its second lost summer, which will prove terminal to many small local events providers and the independent contractors that serve them. I note my interest as proprietor of an open-air venue that hosts a variety of small events, including one that tried but failed to become an ERP pilot. It appears that only large events companies were granted pilots, while small ones—those least able to survive another fallow summer—were not. Will the Government be providing specific support and/or skills training to the many independent contractors facing a very bleak future? Otherwise, we will lose vital skills for good.

[Baroness Barran (Con)]

As the noble Earl is aware, some events are of course allowed under step 3 of the road map, both indoors and outdoors, in some cases with audiences of up to 10,000 people.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, the time allocated for this Question has elapsed. I apologise to the noble Earl, Lord Clancarty.

Dormant Assets Bill [HL]

Baroness Barran Excerpts

Committee stage
Wednesday 23rd June 2021 Grand Committee

As I have said, I am concerned about the fundamental change implied by Clause 29. I suspect that we are not going to oppose it, but the Government have failed to make the case. The only case they have ever made is, “This is how the devolved Administrations work and we ought to look like them”. I have never heard the UK Government make that argument before in any area. There needs to be a much more substantial argument for taking these obligations out of the Bill. We will come to discuss the consultation that will shape the new obligations in a few moments.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

I start by thanking all noble Lords who spoke for their reflections and remarks on the amendments in this group. My noble friend Lord Hodgson put forward Amendments 54 and 55; the noble Lord, Lord Bassam, put forward Amendment 56; and the noble Lord, Lord Blunkett, put forward Amendment 56A. As we have heard, these amendments seek to enable specific causes to be supported through the Bill—namely the establishment of community wealth funds or provisions for primary financial education—and, in the case of Amendment 56, to clarify that the National Lottery Community Fund could not deliver a community wealth fund itself.

I shall start by responding to my noble friend Lord Hodgson and the noble Baroness, Lady Kramer, regarding Amendment 54. I assure your Lordships that any future restrictions on spending in England would be contained in secondary legislation.

I recognise that many of these amendments have been tabled with the purpose of sparking a conversation on these initiatives; it is without question a conversation worth having. My noble friend Lord Hodgson expressed very eloquently, as did the noble Baroness, Lady Lister, the value of local community organisations and the needs of those communities. I have certainly seen, on my own visits, similar examples of the value that they can bring. Indeed, more broadly—and clearly beyond the scope of this legislation—we are hoping very much that both the levelling up fund and the UK shared prosperity fund will invest in what I think we described as the infrastructure of everyday life, much of which we have talked about this afternoon.

I also echo the comments of the noble Lord, Lord Blunkett, about South Yorkshire’s Community Foundation and the great work it does, mirrored across the country by many other local community foundations.

While we think that this is a conversation worth having, we are clear that a consultation, as set out in Clause 29, is the best way to agree future spending priorities for England. The noble Lord, Lord Bassam, suggested that I would argue that we need more evidence before we can support a single cause. In one way, I agree with him, but there is a question before that. The point of the consultation is not just to identify the causes and restrictions that will be placed on future moneys; it is also to understand which of these should take priority in future and why. To do so, we need to identify the principles on which we would make such a prioritisation. Attempting to arrive directly at the answer by including specific causes in the Bill would limit and potentially distort the scope of the consultation and compromise its transparency, inclusivity and impact. Work on preparing the consultation will begin following Royal Assent, provided that the Bill passes with this measure. We will need to determine what these principles should be.

I hope it is helpful if I give a few examples of the kinds of issues that I think are important to discern through the consultation. For example, we might consider the benefits of focusing thematically at scale across England. We could take the example of the work Fair4All Finance is doing in trying to put an end to high-cost credit in this country—something I am sure we can all agree would be a great achievement. Contrast that with locally driven initiatives, such as the community wealth fund; we have heard much about their merits. I am not trying to argue that one is right or wrong; I just think that we need the discussion between competing priorities.

We could also think about the size of the problem that we are aiming to tackle. The noble Baroness, Lady Kramer, also helpfully pointed out that this is not an endless flow of money. These should be problems that can be addressed within a certain timescale, so that the quantum and duration of the money released from the scheme in future would make a material difference—on Monday, noble Lords raised points about the ability to attribute and measure the impact achieved with the funding—as well as unlocking other funds using it. That point was raised by the noble Lord, Lord Triesman, and others at Second Reading. The work that the Youth Futures Foundation is currently doing, for example, focuses on expanding the evidence base on what works and has the potential to influence the way an entire sector approaches programme delivery. In another example, Big Society Capital has had a clear success in levering more funds in to the social investment sector.

I have heard that your Lordships care about impact. I am also keen to ensure that the impact of the existing causes, as highlighted by the noble Baroness, Lady Kramer, and how far into their journey of achieving their missions the current organisations are, are taken into account. I stress that I raise these as illustrative examples of the types of conversations that should be had before determining which causes are not just good ones to support but the best causes for this unique type of funding. We need to get as much clarity as possible on how best to define future funding restrictions, to ensure that these funds achieve the greatest possible impact. It is, therefore, vital that we enable a public consultation to take place before making any changes or additions to the current uses of dormant assets funding in England.

We cannot commit at this stage to changing the recipients of this funding in primary legislation. This includes by referencing community wealth funds or financial education, as well as whether or not the National Lottery Community Fund should deliver them, as the amendment in the name of the noble Lord, Lord Bassam, proposes. Given this, it is also not the time to prescribe the distribution mechanism for how future funding might best be administered. While the Secretary of State already has the power to add or remove distribution bodies, the National Lottery Community Fund has fulfilled this role for the past decade and there are no plans to change this. It has access to an extensive network of delivery partners, and has well-established systems of governance, accountability and assurance in place. For these reasons, I am not able to accept these amendments.

I now turn to why Clause 29 should stand part of the Bill. This clause amends part of the mechanism for distributing dormant assets funding in England so that it aligns with the model used in the devolved Administrations. As the noble Lord, Lord Bassam, highlighted, it will provide the scheme with greater flexibility to respond to changing social and environmental needs in the future by enabling the Secretary of State to make an order restricting the purposes of dormant assets funding in England. The Committee has heard this afternoon about the genuine tension that exists between flexibility of funding and the longevity and visibility of it. We believe that the consultation will help us understand this.

The noble Baroness, Lady Kramer, asked me to specify the “winners and losers”. I hope very much that the winners of a consultation will be those that have the greatest impact from the use of the funds and which address issues that communities care about. Expansion of the scheme could unlock around £880 million more for good causes across the UK. In light of this sizeable amount, a changing social and environmental context in the wake of Covid-19, and public calls for input, it is right that we consider how to use this funding most effectively. Clause 29 enables us to do this while ensuring that these decisions have an appropriate degree of scrutiny.

As I have outlined further, the Government have committed to launching a public consultation on the social or environmental causes in England, provided this measure passes. The current restrictions will continue to apply until this consultation has been processed and an order is made. Any new restrictions will have to be approved by both Houses through the draft affirmative procedure.

This power will not affect the additionality principle: the distribution of dormant assets funds cannot be a substitute for government spending programmes. We will discuss this further as part of the debate on Amendment 60 from the noble Baronesses, Lady Kramer and Lady Bowles of Berkhamsted. With that, I ask noble Lords not to press their amendments and I commend that Clause 29 continues to stand part of the Bill.

[The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)]

I have received a request to speak after the Minister from the noble Lord, Lord Knight of Weymouth.

[Lord Knight of Weymouth (Lab) [V]]

My Lords, I want to speak relatively briefly in support of my noble friend Lord Blunkett’s Amendment 56A. I find the procedure slightly odd—I am still trying to influence the Minister after she has asked for it to be withdrawn—but I will give it a good go.

The importance of financial education and financial literacy in primary education does not need too much arguing. I recall a friend of mine, Emily, who finished secondary with four A-levels about three or four years ago. She chose to become a successful actress rather than go to university. About six months after she started work—she got work very quickly—she was furious that her education system had not told her about taxation and that suddenly she had to put money aside to pay her taxes as a self-employed actress.

That reinforced for me that we have an education system that is really passive on this. I was delighted a couple of years ago, when I was working for a company called TES, to be involved with the Bank of England and the Beano on producing some financial literacy resources for primary schools, which were very well received. I also endorse the work of KickStart Money.

It has become particularly acute that we must do more in primary education because of the cashless nature of our transactions. According to a survey this month published by, I think, Yahoo, fewer than a quarter of transactions in this country are now paid with cash. Children no longer see and feel money exchanging hands. They are no longer adding it up and making sense of 1p, 2p, 5p, 20p, 50p, £1, £10 and so on because it is not part of what most of us handle any more. There are apps. My stepdaughter will be 10 tomorrow. We use an app for her called RoosterMoney, which helps her with some of these things. But there has been an impact for primary schoolchildren on their numeracy, their understanding of debt, and of how their school is paid for and how their teachers are paid, because it is taxation and public money. These are really important parts of citizenship.

While the noble Baroness, Lady Kramer, was talking I thought that, although the amendment is about resourcing financial literacy in primary schools, I had better quickly check the primary curriculum to see what is in it. There are two mentions of “financial”. One is in respect of what the curriculum requires years 5 and 6 to do in terms of spelling. The noble Baroness asked whether there is something horribly wrong in the Department for Education. It is so obsessed with things such as spelling in English that you have to learn how endings that sound like “shall” are spelled, as in “official”, “artificial” and “financial”. The only other mention is in the context of maths. It says that studying maths is a good idea and “necessary for financial literacy”, so it gets a slight mention but that is it. There is no real requirement, but there is a little bit of a nudge that there is a good reason for studying maths. We have to do better.

This amendment, and putting something in statute, would give some priority and send a positive signal from government that we should do more on this. It would be able to fund some of the teacher training that is important to give primary school teachers better confidence and competence around how to link this in to various parts of the curriculum, because it is not just in maths that you can teach financial literacy. Of course, it could fund more of those resources so that it is not just down to the Beano, the Bank of England, KickStart and others and we have some properly evidence-based resources that help teachers to link across the curriculum in an engaging and interesting way for primary school students.

I urge the Minister to reflect and perhaps have a chat with some of her colleagues in the Department for Education—particularly the Schools Minister, who is obsessed with spelling, punctuation, grammar and maths but, frankly, is not really that interested in very much else in terms of what is specified in the national curriculum. We could do better.

[Baroness Barran (Con)]

I thank the noble Lord for his remarks. I absolutely do not deny in any way the importance of financial education, but the issue here is not the importance of any individual cause. The challenge we are faced with—or the privilege that we will all have—is to contribute to a conversation about the right cause for this particular stream of money, with its unique features, and that includes the existing causes that are funded. We will be putting the cart before the horse if we focus too much on causes to go into the Bill; rather, we should put the combined intellect of your Lordships and others into making sure that we spend future moneys in the best way possible.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I am grateful to all noble Lords who have taken part in this debate. I had better begin with an apology to the noble Baroness, Lady Barker, for not having name-checked her as a member of the committee. The truth is that I saw who signed their name to the amendment, but I did not see who was going to speak to it. That is an explanation, not an excuse. I know her as a doughty fighter, and I hope that she will accept this apology for not expressing my thanks to her.

She rightly drew attention to concerns about duplication and what we discussed in our committee about what we call “new initiative-itis”, where ideas are started by a Minister wishing to make a mark but they are abandoned after six months, whether they are good or bad is not followed through with and the institutional memory is never properly adjusted. I accept that. Indeed, I accept the caution from the noble Baroness, Lady Kramer, about future funds flow. She pointed out that this is not an endowment fund but a flow that stops flowing when the money is spent.

I share the point made by the noble Baroness, Lady Lister, that we need continuity. There is sufficient visibility over the next five or 10 years to be able to provide the financial continuity that both she and I see as an important part of the community wealth fund concept.

In response to the point made by the noble Baroness, Lady Barker, about duplication, some of the plan methodologies that we have seen from the Community Wealth Fund Alliance are distinctive and will provide a different approach that is not duplicated elsewhere. However, I accept the strictures of both noble Baronesses.

I am grateful to the noble Lord, Lord Bassam of Brighton, for his support. His suggestion of pilot studies as a means of beginning to build institutional memory was interesting.

I am also grateful for the support of the noble Lord, Lord Blunkett. Of course I accept his remarks about financial education. He and I have discussed many times the narrowness of the national curriculum, which fails to provide education in many of the most important parts of what makes a citizen an effective and worthwhile person knowing their rights and their responsibilities. Financial education surely must be a part of that.

Finally, the response of the Minister was, as ever, smooth and beguiling, and I am trying hard not to be beguiled. I think she said that the current drafting already implies what is made explicit by Amendment 54. Well, if the amendment makes it explicit, let us have the amendment, so that that is explicit, as opposed to relying on the interpretation of the words “at some date in the future”. I hope that my noble friend will come back to that and think a bit more about it, and also about the points that the noble Baroness, Lady Kramer, made.

On Amendment 55, the Minister said that consultation would begin as soon as the Bill becomes law. She referred later to the cart and the horse, and I have to say that that sounds like cart and horse to me because, essentially, Clause 29 throws all the cards up in the air, they will come down where they may, and the only way that your Lordships’ House, or indeed Parliament, will have to influence what happens after that will be by means of regulations. I fully accept that we will have a chance to look at them, but as has been said this afternoon, and as Members of the Committee know, they represent a lower level of scrutiny and of being able to amend what is proposed.

I understand the Minister’s reluctance to accept the amendment, and the weaknesses of the community wealth fund concept at this point in its history, but I hope that she will find time to reassure the people who are working hard in the Community Wealth Fund Alliance that the fact that the Government are reluctant to accept the amendments does not mean that they do not think it is a worthwhile concept. It is a worthwhile concept, and the Government ought to be finding ways—pilot schemes, as the noble Lord, Lord Bassam, suggested, and other ways—to encourage institutional memory and practice to develop in this area. Unlike the noble Baroness, Lady Barker, I think that the idea is distinctive, offers something that no other groups will offer and will be able to do so over a sufficiently long time to make it an attractive prospect in helping to rebuild our social capital. I hope that the Minister will think again about her remarks on Amendment 54. Let us make sure that we have absolute clarity about what can and cannot happen. In the meantime, I beg leave to withdraw the amendment.

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[Baroness Barran (Con)]

My Lords, Amendments 57, 58 and 59 put forward respectively in the names of the noble Lord, Lord Bassam, the noble Baronesses, Lady Kramer and Lady Barker, and the noble Baroness, Lady Lister, seek further commitment and clarity regarding Clause 29 and the statutory duty to consult. I thank the noble Baroness, Lady Merron, for setting out so clearly the importance of the consultation process: we concur absolutely with the spirit of her remarks and I hope that my remarks on the earlier group show quite how critical we see the consultation as being as part of the Bill.

The noble Baroness, Lady Lister, asked me to commit that a question about a community wealth fund will be in the consultation. We need a collective agreement on what goes into any consultation document, so I am unable to give her that reassurance today. Similarly, I hesitate to make any comment in relation to the specific community wealth fund initiative, however caveated in the way she suggests, because I do not want to give the impression that any decisions have been made before they have been. We are genuinely going into this consultation with the aim that I outlined on the earlier group; I hope she will accept that.

As noble Lords have noted, Clause 29 mirrors the approach for distributing funding that is already used in the devolved Administrations. In line with their process, the Secretary of State will consider who it is appropriate to consult and has committed to launching a full public consultation on the social and environmental causes in England, provided this measure passes. This will give the public and sector participants the opportunity to contribute their views before any change may be made to the current English causes. The devolved Administrations have similarly undertaken public consultations on the distribution of their portions before laying orders.

I will respond to the points raised by the noble Lord, Lord Bassam, and the noble Baronesses, Lady Kramer and Lady Merron. Making further specifications in this clause could imply that these stakeholders are more important than other groups which it might be equally appropriate to consult.

I turn to the amendment of the noble Baroness, Lady Lister, on the length of the consultation. It will be open for a proportionate amount of time to allow for considered and good-quality responses, and will be in line with Cabinet Office guidance. She will be aware that, in response to the challenges faced by many groups, but including small community organisations, we have extended the time period of consultations where necessary, particularly, most recently, during the pandemic. For the reasons I have set out, I am not able to accept these amendments and I ask that noble Lords do not press them.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I have had one request to speak after the Minister, from the noble Baroness, Lady Lister of Burtersett.

[Baroness Lister of Burtersett (Lab)]

I thank the Minister for, as usual, responding very fairly, but I have a number of questions. She said, and I understand why, that she cannot commit to including the community wealth funds in the consultation document, but will she at the very least commit to considering it when discussing what will go into the consultation after the Bill becomes law?

The Minister did not respond to my fundamental question—it was raised also by the noble Baroness, Lady Kramer—about the difference between what the Bill says about consultation and what she herself has said about it. I asked specifically whether she would take the matter away and have another look at it before Report. If the Government are committed to consulting community groups and so forth, why does the Bill not say so? It is sending out a very bad message if it stays like it is. I want to push her on that. Will she at least look at what has been said today and see whether the drafting of the Bill could not be improved? As has been pointed out, there has already been quite a large number of government amendments. This amendment would not change what the Government plan to do, but it would give a clear signal to the outside world that the consultation would, to use my noble friend’s word, be “meaningful”.

On the timescale, the Cabinet Office gives very little guidance now. Can the Minister at least confirm that she accepts that, given the kind of groups we want to hear from, “proportionate” points towards a longer rather than a shorter timescale for consultation?

[Baroness Barran (Con)]

I am happy to commit to consider the community wealth fund proposal as we review the range of questions that go into the consultation. I apologise to the noble Baroness: I thought I had answered her questions. The framing in the Bill mirrors that of the devolved Administrations, which is why it is drafted in the way that it is. The Secretary of State has said in public that there will be a full public consultation on the social and environmental causes—I have said it several times at the Dispatch Box—so that is a matter of record.

[Baroness Merron (Lab)]

I thank the Minister for her response to the debate. I note that she acknowledged the importance of consultation and indicated that she concurred with the spirit of my remarks, which I welcome. However, I want to press the point raised by my noble friend Lady Lister about the need for the consultation to be meaningful, not just in how it is but in how it looks, how it feels and how it will work. My noble friend referred earlier to matters in the Bill being “not a good look”. I hope that the discussion today will support any changes the Minister might seek to make as we move along in the process to make the Bill, which is intrinsically good, “a good look” rather than to lose out by being in certain cases less than a good look. The quality of consultation is particularly important in that regard.

The Minister reiterated the point that the Secretary of State will decide who will be consulted and that a “proportionate amount of time” would be spent on the consultation. I believe that is all understood. However, the discussion today seeks to move us beyond that. The Minister’s argument sounds basically to be along the lines of we must trust the Secretary of State and be content with what is known as a “proportionate amount of time”. The point made so well by various noble Lords today is that perhaps it would be a better Bill if we were to be rather more focused and explicit about what we are offering, in terms both of timescale and of those who will be consulted.

I hope that the Minister will reflect on the thinking and consideration that has been given today. I thank noble Lords who have taken part in the discussion on this group, which has shone a light on the ways we could improve matters. I am sure that we will revisit this as we continue to consider the legislation. With that in mind, I beg leave to withdraw the amendment.

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[Lord Bassam of Brighton (Lab) [V]]

My Lords, we are grateful to the noble Baroness, Lady Kramer, for tabling Amendment 60, which touches on an issue raised by many on Second Reading. I thought I heard the Minister, who has been extremely courteous throughout these proceedings, mention the Government’s intention to treat funds from dormant assets as additional to what is distributed through the other distributing bodies fed from the National Lottery.

The inclusion and identification of new dormant asset proceeds is welcome. I acknowledge the earlier commitment that these funds will remain additional, rather than replacing other types of financial help; that is extremely important. The noble Baroness, Lady Kramer, has laid out the case well. There is consensus that we do not want funding of this nature to be replacement funding for mainstream government financing programmes.

If it is really the Government’s intention that this money should be used on top of other funding sources, I ask the basic, simple and fundamental question: where is the harm in the Government accepting this amendment? If they did, there would be a clear statement of policy intent, giving a clear direction on the face of the Bill. If the Minister says that the Government cannot do so, I shall be extraordinarily disappointed. However, I would be more than happy to work with colleagues across the House on this—and with the Government themselves, if they are not content to accept the amendment—to bring forward an alternative to the text in this amendment on Report. There probably is consensus that that would be the right thing to do.

Another important factor to bear in mind is that dormant asset funding will grow only as we find new dormant assets that can be used for charitable purposes. In no way should they be seen as an alternative source of funding, replacing government mainstream funding. For that reason, it would be right to put a commitment in the Bill, as a statement of principle, so I am more than happy to support the noble Baroness’s amendment.

[Baroness Barran (Con)]

My Lords, as we have heard, Amendment 60 in the names of the noble Baronesses, Lady Kramer and Lady Bowles of Berkhamsted, seeks to confirm the principle of additionality. As I noted at Second Reading and during Monday’s debate, and as the noble Baroness, Lady Kramer, also noted, the principle of additionality is set out in Schedule 3 to the 2008 Act and will continue to be a core principle of the scheme. The 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. The Bill does not alter the part of the 2008 Act in which the principle is defined, which affects all of the UK as opposed to just England.

The noble Baroness, Lady Kramer, asked to whom the principle applies. It applies to the National Lottery Community Fund, as she rightly said, not the Secretary of State in DCMS. That is because the National Lottery Community Fund is the main distributor of the funding and the accounting officer for the dormant asset funds, so there is also a read-through to the spend organisations on additionality, which I think was implicit in her remarks.

I absolutely respect the noble Baronesses’ and other noble Lords’ wish to get real clarity on what we mean by this principle but I hope that noble Lords will, on reflection, agree that the current definition gives a useful degree of flexibility. At one end of the spectrum, there are social and environmental causes that are clearly for government to fund, but, as the Covid pandemic has shown, there are areas in the economy that most of us would never have expected to receive government funding that have now received it, for example the furlough scheme. So we have flexibility depending on pandemics and other economic circumstances on where government funds, and that is well captured in the definition as we have it.

I propose to provide a couple of example of how the additionality principle has worked to date. I do not intend to be comprehensive but to show how it has worked in practice because I think that concern that it could in some way be departed from was behind a number of your Lordships’ comments, and I hope to reassure them that that is absolutely not the case.

The most obvious example of the principle is that it allows the scheme to fund something that would normally be seen as outside the scope of government intervention. A good example of that was the creation of the world’s first social investment wholesaler, Big Society Capital, which used a combination of dormant assets and leveraged private co-investment to make it happen. As another example, the principle of additionality could enable dormant assets funding to test interventions and gather evidence that could then be used as a model for other funders. For example, Big Society Capital and its associated fund managers have worked for a long time on homelessness using innovative social investment.

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[Baroness Barran (Con)]

My Lords, Amendment 64, in the name of the noble Baroness, Lady Barker, proposes that all dormant assets funding must be distributed to registered charities or social enterprises. If I may, I will remind the Committee that there are two parts to the process of distributing dormant assets funding in England. First, the National Lottery Community Fund distributes funding to four independent, specialist spend organisations, which focus on one of the three causes currently specified in the 2008 Act. Secondly, the spend organisations themselves distribute funding to beneficiaries to deliver initiatives, in line with their respective objectives.

As your Lordships are aware, as independent organisations, the spend organisations are empowered to determine the best way to deliver long-term interventions to tackle youth unemployment, to increase the financial well-being of people in vulnerable circumstances and to grow the UK’s social investment market. This focus on creating systems change at scale is a major driver behind the scheme’s success to date. The unique flexibility that the scheme offers enables the money to be deployed innovatively and, as a result of this innovation, some of the bodies that distribute the funding do not happen to be registered charities or social enterprises themselves.

I have heard the emphasis that your Lordships have placed on ensuring the maximum impact of the scheme. Given the social and environmental focus required of the funding, as I have said in previous debates and in evidence to the committee which the noble Baroness, Lady Barker, referred to, it is hard to imagine that charities and social enterprises will not continue to be key partners in maximising this impact. I echo the comments of all the noble Baronesses who spoke on this group: I, too, absolutely recognise the important value of social enterprises. I have been working with a number of them, particularly in relation to implementing the social value Act and the important role that they can play in delivering government contracts in future.

However, organisations deliver impact on a spectrum. Impact-driven charities and social enterprises are an integral and important part of this spectrum, but we should not exclude mission-locked and mission-focused organisations that may differ in legal status. This is particularly so in light of the diversity of mission-locked organisations—many of which are led by individuals from black or other minority communities, which I know is an issue that the noble Baroness, Lady Barker, referred to and sees as important.

Organisations that can deliver impacts which meet the objectives of the scheme should be able to do so; this should not be limited in terms of legal form or status, through primary legislation or otherwise. As I noted earlier this afternoon, it is imperative that we afford the public and our voluntary industry participants the opportunity to have a say in how future funding in England is distributed. Making changes to the recipients of this funding without first consulting would risk the legacy of the scheme that I know we all wish to see expanded and thriving. For these reasons, I am not able to accept this amendment and therefore hope that the noble Baroness will see fit to withdraw it.

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Moved by

[Baroness Barran]

66: Schedule 1, page 24, line 7, at end insert—
“Financial Services and Markets Act 2000 (c. 8)
1A_(1) Part 24 of FSMA 2000 (insolvency) is amended as follows.(2) In section 359 (administration order), in the definition of “authorised reclaim fund” in subsection (4), for the words from “means” to the end substitute “has the same meaning as in the Dormant Assets Acts 2008 to 2021 (see section 26 of the Dormant Assets Act 2021);”.(3) In section 369A (reclaim funds: service of petition etc on FCA and PRA), in subsection (3) for the words from “means” to the end substitute “has the same meaning as in the Dormant Assets Acts 2008 to 2021 (see section 26 of the Dormant Assets Act 2021)”. Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)
1B_(1) Article 63N of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (activities of reclaim funds) is amended as follows.(2) In paragraph (1)—(a) in sub-paragraph (b) for “account” substitute “assets”, and(b) after sub-paragraph (b) insert “;(c) dealing with unwanted asset money.”(3) In paragraph (2)—(a) omit the first entry;(b) after that entry insert—““dealing with unwanted asset money” means—(a) the acceptance of transfers of amounts as mentioned in section 21(2)(b) of the Dormant Assets Act 2021, and(b) dealing with those funds (so far as they are not needed for either of the purposes mentioned in section 5(1)(c)(ii) or (iii) of the Dormant Bank and Building Society Accounts Act 2008) with a view to their transfer to the body or bodies for the time being specified in section 16 of the Dormant Bank and Building Society Accounts Act 2008;”;(c) in the second entry, for ““dormant account funds”” substitute ““dormant assets funds”, “reclaim fund””;(d) in the third entry for the words from the beginning to “the management” substitute—““management of dormant assets funds” means—(a) the acceptance of transfers of amounts as mentioned in section 1(1)(a) or 2(1)(a) of the Dormant Bank and Building Society Accounts Act 2008 or 2(1)(a), 5(1)(a), 8(1)(a), 12(1)(a) or 14(1)(a) of the Dormant Assets Act 2021,(b) ”;(e) at the end of that entry insert “, and(c) dealing with those funds with a view to the transfer of amounts to the body or bodies for the time being specified in section 16 of the Dormant Bank and Building Society Accounts Act 2008.””Member’s explanatory statement
This amendment would insert a paragraph 1A (making two consequential amendments to references in the Financial Services and Markets Act 2000 to an authorised reclaim fund) and a paragraph 1B (amending the Regulated Activities Order to ensure it reflects the wider activities of a reclaim fund provided for by the Bill).

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Moved by

[Baroness Barran]

73: Schedule 2, page 28, line 27, leave out “10(6)” and insert “9(5)”
Member’s explanatory statement
This would correct an erroneous cross-reference.

Dormant Assets Bill [HL]

Baroness Barran Excerpts

Committee stage
Monday 21st June 2021 Grand Committee

Moved by

[Baroness Barran]

1: Clause 1, page 2, line 2, at end insert—
“(3A) In subsection (3)(a) “amount owing” includes an amount available to be paid as benefits under a personal pension scheme (see section 6(1)(c) and (3)).”Member’s explanatory statement
This would ensure that the overview of the dormant assets scheme in Clause 1 reflects Clause 6, which covers amounts available to be paid as pension benefits even though the owner has not made an election as to how the benefits are to be received.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, on 14 June I tabled minor and technical amendments to the Bill, which are needed to ensure that it works properly. These included changes for clarity and consistency, and updates to references and consequential amendments. I set these amendments out in my letter to your Lordships on the same day.

The changes, for clarity, can be grouped into three categories. The first group includes Amendments 1, 2, 3, 5, 21, 22, 23, 24, 28, 29, 30, 31, 42 and 46. These amendments clarify that amounts owing or payable to a person include those which are not immediately owing or payable until some action is taken. The second group includes Amendments 16 to 20, as well as Amendments 75 and 77. These amendments clarify that orphan moneys would arise in the context of a sub-fund of an umbrella structure. This is because an umbrella structure is effectively a shell structure, and it is the sub-fund of it that would be authorised under the Financial Services and Markets Act. The third group includes Amendments 7, 8, 9, 13, 14, 15, 25, 26, 27, 33, 35, 36 and 44. These amendments clarify that lifetime ISA provisions apply in the context of access restrictions and to client moneys; in other words, restrictions on assets held within lifetime ISAs apply when their transfer to the Reclaim Fund Ltd would trigger a withdrawal charge payable to HMRC. With that, I beg to move.

[Lord Davies of Brixton (Lab)]

My Lords, I was going to crave the indulgence of the Grand Committee in trying to hang on to my fast-disappearing status as a new, inexperienced Member: I wanted to provide an opportunity for a debate on Clause 1, on the overview of the scheme, and I was going to do that by stand part or by putting down an amendment—but I got the timetable wrong and I failed to do so. However, other people have come to my aid, in that there will be sufficient opportunities later in the Bill’s progress to raise the issues that I would have raised here had I got my act together.

I will mention the main issues that I have in mind. Of course, I mentioned them at Second Reading, but the ability to repeat points seems to be one of the great assets of this process that we go through. The first issue that I will come back to at an appropriate time is the whole structure that leads to this situation. We can have a lot of discussion about the process of the dormant assets scheme, but we need to address the question of why dormant assets appear in the first place. It would be wrong to have a full debate on the scheme without at least reflecting, to some extent, on that issue.

In the government consultation and in preceding debates that led to the Bill there has been a lot of discussion by various people about what the financial institutions are doing to make sure that this issue does not arise. In general terms, there has been a lot of discussion of that issue—well, perhaps not a lot—but I am not sure that it really gets anywhere. Everyone expresses intentions, but how detailed the planning is to avoid it happening is a separate issue.

However, I think there is a stage before that. Why do we have a structure that leads to this sort of end result? The fact that this can happen is something that bears investigation—not just because it has happened but what we can do about it—as does the extent to which the financial institutions seem, in one way or another, to try to shift the blame to individuals. There are questions about what we can we do so that it does not happen in the first place, and I will come back to that at a later stage, possibly this afternoon—and I will try not to repeat myself too much.

The other issue is additionality. There has not been nearly enough discussion of what exactly is meant by additionality; there is no clear structure as to how it is defined. I will take the opportunity at a later stage to raise and discuss that issue as well. So I am really just putting these issues on the table and saying that, at the appropriate time, I will raise them at a later stage of the process.

Since I am here and speaking, I will ask something. The Bill was published effectively only a few days ago, yet we end up with this extensive raft of minor technical amendments, which makes the job of understanding what the Bill is doing extremely difficult—twice or three times as difficult. The grid that we have been supplied with for today’s session is extremely useful, but getting it only an hour before the meeting reduces its value. If I had been quick, I would have ticked off which amendments fall into which of the groups that the Minister has identified. It would have been helpful if we had had it earlier and the different groups had been identified on that list. Perhaps we could have that in arrears, as it were.

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[Baroness Barran (Con)]

My Lords, I start by thanking noble Lords for their interventions. Like the noble Lord, Lord Davies of Brixton, I still feel like a newbie here, so I hope on that basis that we will both be given a little leeway.

I think that the central point of all of your Lordships’ comments was about the number of technical amendments, and a request for greater clarification—particularly, in the case of the noble Baroness, Lady Kramer, in relation to lifetime ISAs. I will say three things in that regard. The first, as I said in my letter of 14 June, is that in no way do these amendments change the policy intent of the Bill. In some ways this Bill is not complicated, but in other ways it cuts across a number of policy areas, and that is apparent in the number of government amendments.

The second point on which the noble Lord, Lord Bassam, asked for reassurance was that we would not be having another slew of government amendments on Report. I cannot that there will not be any more: I think there may be a very small number—but it will be a very small number. Thirdly, I undertake to write to your Lordships between now and Report and address in a bit more detail the impact of these amendments.

Amendment 1 agreed.

Moved by

[Baroness Barran]

2: Clause 1, page 2, line 17, after “of” insert “(or to elect how to receive)”
Member’s explanatory statement
This would ensure that the description of pension assets in Clause 1(5)(c) includes the right to elect how to receive pension benefits.

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[Baroness Barran (Con)]

My Lords, I thank your Lordships for your proposals on reviewing various aspects of the dormant assets scheme, and for raising the important issue of transparency. Like the noble Baroness, Lady Kramer, I will try to organise the amendments into different groups, because I believe that they cover three aspects of reporting. The first relates to regular reporting to Parliament on the operation of the scheme. The second relates to the role of reporting as a mechanism for encouraging further expansion of the asset classes that are eligible for inclusion in the scheme. The third relates to reporting in relation to the impact of the scheme.

On the first aspect, I turn to Amendments 61, 62 and 65, in the names of the noble Lord, Lord Bassam, the noble and learned Lord, Lord Etherton, and the noble Baronesses, Lady Bowles and Lady Kramer, which call for a regular government report on the scheme’s operations, including, for example, the amounts transferred into the scheme, by whom they were transferred, how they have been applied and the amounts reclaimed from RFL. I am grateful to your Lordships for raising these issues, and certainly agree on the importance of such transparency.

We believe that there are a number of mechanisms already in place for reporting on the scheme’s operations. Some of them are well established. For example, as the scheme administrator, RFL publishes annual reports that set out, among other metrics, the amounts it receives from participants and the value of reclaims. Other mechanisms have only recently been set up with RFL’s establishment as an arm’s-length body of the Treasury. For example, the Government will now be monitoring RFL’s delivery against the scheme’s objectives on a quarterly basis. In addition, the relevant Select Committee can always probe the working of the scheme at any point, and the Bill may be subject to post-legislative scrutiny, which takes place between three and five years after Royal Assent. In addition, starting in the current financial year, RFL will be audited by the Comptroller and Auditor-General, who will be able to report to the House of Commons the result of any value-for-money assessment it carries out. This will enhance Parliament’s oversight of RFL’s delivery of the scheme.

The noble and learned Lord, Lord Etherton, asked about the transposition of Section 14 from the original Act into this Bill. As he noted, the original Act required the Treasury to undertake a review of the legislation and lay it before Parliament within three years of the date that the reclaim fund was first authorised—and this review was indeed published in 2014.

I have tried to set out a number of the mechanisms that are now in place for reporting on the scheme’s operations, and we believe that these combined efforts do provide a greater level of transparency on the scheme’s operations and allow for flexibility in monitoring RFL’s delivery of the scheme as it works on the phased introduction and implementation of these new and more complex assets. By tightly prescribing the timing for carrying out such a review, an equivalent to Section 14 would, we believe, have a potentially limiting impact.

However, the basic principle that I have heard from your Lordships this afternoon is the importance of transparency and robust reporting—how much money, where is it coming from, what is the asset type, what is the purpose and what is the reclaim experience? We believe that all these points are covered, but we are anxious that your Lordships should agree that they are transparent and easy to access. So I am very happy to meet your Lordships ahead of Report to go through this in more detail and make sure that our understanding of the transparency that we believe the current reporting mechanisms offer indeed aligns with what your Lordships seek.

I will now turn to Amendments 4, 45 and 61, in the names of the noble Lord, Lord Bassam, and my noble friend Lady Noakes, relating to the role of reporting in encouraging further expansion of the scheme. Over the past five years, the Government and the reclaim fund have worked closely with industry on the scope and design of an expanded scheme, and I am extremely grateful for their hard work and dedication in helping to realise these very ambitious plans. While our industry stakeholders are keen to maintain momentum, they have consistently recommended a phased approach to expansion. This will allow participants to deepen their understanding of the scheme and to implement new processes progressively. This also enables RFL to build experience managing these new and more complex assets.

Decisions on which assets should be included in the future will depend on a number of factors, including identifying asset classes with high instances of dormancy and then setting the dormancy definitions for, and quantifying the value of, such assets. Consideration may also be given to whether other mechanisms for dealing with dormancy already exist and how these could interact with the scheme. Any further expansion will require the same close collaboration between the Government, the reclaim fund and industry, which has supported this phase of expansion.

The noble Lord, Lord Bassam, asked about the inclusion of additional asset classes, and my noble friend Lady Noakes strayed into the territory of state larceny—on which, obviously, I could not possibly comment. To be clear, at this stage the Government are not considering widening the net to include non-financial services assets. My noble friend talked about Oyster cards; the Bill contains a power to extend the scheme in future by way of regulations, and this obviously offers a more flexible avenue to reconsider whether some types of non-financial assets should be included in future. The noble Lord, Lord Bassam, also asked about the potential to expand to other forms of pension. Occupational pensions are excluded under the scheme as they are trust based, belonging to a fund or a group of investors rather than a specific identifiable individual. Only contract-based pension schemes are within the scope of the Bill.

To date, bringing new assets into the scheme has required primary legislation. As I just mentioned, Clause 19 provides a power to extend the scheme without need for this. In future it will be subject to the draft affirmative procedure, rightfully allowing Parliament the opportunity to scrutinise such regulations before they are made. It is natural that we will continue to review which assets may be suitable for further expansion. I will consider the best mechanism and timing to achieve this, taking into account the implementation of this phase and RFL’s quarterly reporting to the Government.

Further to this, the UK Government remain committed to engaging with the devolved Administrations on any legislative proposals or statutory changes that could have an impact on transferred or devolved matters of competence. This is in line with the principles set out in the devolution memorandum of understanding between the UK Government and the devolved Administrations. We will consult with the Northern Ireland Executive where the provision of any statutory instrument laid under Clause 19 will have an impact on transferred areas of competence in Northern Ireland—for example, the regulation of credit unions—with a view to obtaining mutual agreement on any approach before taking it forward.

Before I turn to Amendment 63 in the name of the noble Baroness, Lady Barker, I would like to make sure that we are on the same page about the £750 million and the £150 million. The £750 million was funding from the Treasury for the charitable sector, including social enterprises. The £150 million was in addition to that; it came from dormant assets and was distributed to the existing organisations.

Amendment 63 considers the impact of the scheme. I reiterate my thanks to the noble Baroness for placing emphasis on having transparency and clarity in reporting on this issue. If I followed her question correctly, she asked why this was not in the Bill. As she knows, this is something that we proposed putting into secondary legislation, with the purposes being specified through a public consultation.

As your Lordships know, the scheme provides long-term flexible funding that enables expert organisations to focus on creating positive and systemic change. It is essential that this funding has a positive impact by contributing to the social and environmental initiatives for which it is designed. The independent spend organisations are regularly reviewed by the Oversight Trust, which is their parent body, to examine their effectiveness in delivering against their objectives. They are also subject to standard annual reporting requirements.

My noble friend Lord Hodgson asked a number of specific questions about the role of the Oversight Trust. He will be aware that it was set up relatively recently in its current form. I will cite the example of Fair4All Finance, which was established in February 2019 following widespread consultation with almost 100 organisations, and I am sure that, had the Oversight Trust existed at that time, it would have been part of that. I do believe that it has the powers necessary to look at the impact of the different distribution organisations. As my noble friend knows, the issue of measuring impact in this area—attribution versus contribution and all the other complexities—is genuinely very difficult, but we are extremely encouraged by some of the early reports from the Oversight Trust on the way that it has approached that. I will briefly comment on that now.

As I mentioned, the independent spend organisations are regularly reviewed by the Oversight Trust on their effectiveness in delivering against their objectives—that happens every four years—and they are also subject to standard annual reporting requirements. The Oversight Trust’s review of Big Society Capital was published in 2020. It reported that Big Society Capital had made substantial progress in catalysing development of the UK social investment marketplace, which was one of its primary original objectives. For example, social property funds, which did not exist at all in 2012, are now worth more than £2 billion.

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[Lord Davies of Brixton (Lab)]

I naively had it in my mind when I spoke that I was speaking only to Amendment 4. I cannot come back on the substance of the amendments, but I have a couple of specific questions. First, in the formal consultation, and in the previous reviews, the Government said that they recognised

“the strong interest in the ways that funds can best be spent”,

even though it was outside the consultation, and that:

“Accordingly, we will consider whether this is an area that should be reviewed”—


in other words, other ways of spending the money. Is this what the Minister just referred to or is it a separate exercise that is being considered?

In the Second Reading debate, the Minister referred to the additionality principle in her introduction. She said:

“Money must fulfil the additionality principle, so it cannot be used as a substitute for central government funding.”—[Official Report, 26/5/21; cols. 1035.]


In response to the debate, she said:

“There was a lot of discussion about the additionality principle. This is set out in paragraph 9 of Schedule 3 to the 2008 Act and remains unchanged.”—[Official Report, 26/5/21; cols. 1084.]


Of course, I turned to the 2008 Act. It is far from explicitly set out; it is actually set out only at one remove. It refers to the need for the Big Lottery Fund to cover the issue in the annual report and to say how it complied with that requirement. It does not set out explicitly what is meant by additionality, so my second question is would it not be better to have a clear and specific definition of what is meant by additionality, given the emphasis the Government place on it as a pillar of the scheme?

[Baroness Barran (Con)]

I thank the noble Lord for his additional questions. He talked about other ways of spending the funds. I was talking about other causes; I am not sure whether we are using different words for the same thing. In the consultation that we are proposing, we will invite the public to name the issues they care about on which these funds should be used—the aim being to have that in secondary rather than primary legislation to make it a bit more flexible—as opposed to using different types of spend organisations. I was referring to the causes on which that will be spent.

I think that issues of additionality are likely to come up quite frequently, particularly on Wednesday, when we debate some of the other amendments. Perhaps we can take that issue in the round then, if the noble Lord is agreeable.

[Lord Bassam of Brighton (Lab) [V]]

My Lords, the noble Baroness, Lady Kramer, said it all, in the sense that this has been an extremely wide-ranging debate covering many topics, even though, as I said at the outset, we are fishing in the same pool here looking for a form of review. I thank the Minister for her very full, detailed and thorough response. I will have to read it carefully before deciding what to do about this subject area on Report.

I also thank her for the opportunity she has afforded us through her response of meeting and considering what other ways there may be to look at the impact of the dormant assets review and how we can best formulate it. I think she was inviting us to subscribe to an amendment that covers that point, but I am not sure yet. I look forward to having that discussion with her.

It is perhaps worth reflecting on comments that colleagues made. The noble Baroness, Lady Noakes, knows that I agree with her that there is not much point bringing forward amendments that lead to pointless reports unless those reports have an action at the end of them. That is why my amendment in particular calls for a review with the purpose of leading to something. That is why it is important that we have an early review. The noble Baroness, Lady Bowles, asked for a review now. “Now” may be in two years’ time after the Bill has passed—that would be about right—and periodic reviews thereafter.

The good thing about this legislation is that flexibility is brought into it. Although at the moment it is limited to financial products, in her response the Minister did not seem to rule out entirely that it might be extended to cover non-financial products. I liked the noble Baroness, Lady Noakes, looking at things such as Oyster cards, gambling winnings and utility accounts. At Second Reading I raised that assets from criminal activity might be brought into the scheme. That is perhaps going a bit far at this stage, but we are all looking at ways in which we can expand dormant assets so that they can be used for a broader social purpose.

The noble Lord, Lord Hodgson, was right to ask whether the powers are sufficient at the moment. I want to be confident that is right. As the Minister acknowledged, the Oversight Trust is very much in its early phase of development, though clearly it has done some important and valuable work so far.

The Minister said that transparency could be guaranteed through a number of routes: the RFL, Select Committees and post-legislative scrutiny. That is true—there is no doubt that those routes are available—but one of the reasons I am keen to see a review process built into the legislation is that we need to have that review in one place so that we can look across the piece in a more coherent and cohesive way, decide whether the dormant assets are having impact, determine whether there are other financial and non-financial assets that could be brought within its scope and see that there is a degree of transparency about the way in which the legislation is operating. That is why I am keen to see a review process.

The noble and learned Lord, Lord Etherton, made a good point about the need to look at the derivation and application of funds: where from and why? That is really part of the thinking behind my amendment and, I think, other amendments in this group.

We have had a very good discussion on this. It is an important part of the legislation. I welcome the Minister’s offer of some discussions and restate my intent to bring back an amendment that captures the best of the other amendments and brings them to bear on how we move forward in reviewing how this legislation works. I am grateful to everybody for their interest and support on this. I beg leave to withdraw my amendment.

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Moved by

[Baroness Barran]

5: Clause 1, page 2, line 45, at end insert—
“(9) In this Part—(a) any reference to an amount owing (or payable) to a person includes a reference to an amount which is not immediately payable to the person only because it is necessary for a request for payment to be made or for the person’s entitlement to payment to be verified, and(b) any reference to the right to payment of an amount owing (or payable) includes, in the case of an amount described in paragraph (a), the right to request payment of the amount.”Member’s explanatory statement
This would ensure that the provisions of Part 1 relating to transfers of dormant assets to an authorised reclaim fund cover not only cases where an amount is payable immediately (i.e. as a debt) but also cases where the person entitled to an amount needs to request payment, or that person’s entitlement needs to be verified, before the amount becomes payable immediately.

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Moved by

[Baroness Barran]

7: Clause 3, page 3, line 27, after “are” insert “(subject to subsections (2) and (2A))”
Member’s explanatory statement
This amendment is consequential on the government amendment at page 3, line 35.

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Moved by

[Baroness Barran]

10: Clause 5, page 5, line 9, leave out “were” and insert “are”
Member’s explanatory statement
This would correct an inconsistency of expression between Clause 5(2)(a) and corresponding provisions elsewhere in Part 1, such as Clause 8(2)(a).

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Moved by

[Baroness Barran]

12: Clause 7, page 7, line 14, leave out “proceeds” and insert “benefits”
Member’s explanatory statement
This would correct a minor verbal error in Clause 7(5)(c), which should refer to “the benefits” i.e. the pension benefits mentioned in the opening words of Clause 7(5).

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Moved by

[Baroness Barran]

13: Clause 9, page 8, leave out line 17
Member’s explanatory statement
This amendment is consequential on the government amendment at page 8, line 30.

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Moved by

[Baroness Barran]

21: Clause 12, page 11, line 2, after “money” insert “owing to a person”
Member’s explanatory statement
This is a drafting amendment to secure consistency of expression across Part 1 of the Bill in consequence of the proposed removal of subsection (3) of Clause 12 by the government amendment to page 11, line 14.

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Moved by

[Baroness Barran]

28: Clause 13, page 11, line 37, leave out “relevant person” and insert “person to whom the amount is payable”
Member’s explanatory statement
This amendment is consequential on the government amendment to leave out subsection (3) of Clause 12.

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Moved by

[Baroness Barran]

31: Clause 14, page 12, line 16, leave out “are owed” and insert “is payable”
Member’s explanatory statement
This would correct an inconsistency of expression between Clause 14(2)(a) and corresponding provisions elsewhere in Part 1, such as Clause 8(2)(a).

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Moved by

[Baroness Barran]

34: Clause 15, page 12, line 38, leave out “held” and insert “registered”
Member’s explanatory statement
This would make the language in Clause 15(1) consistent with Clause 14(1)(a).

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Moved by

[Baroness Barran]

37: Clause 16, page 13, line 25, leave out “held” and insert “registered”
Member’s explanatory statement
This would make the language in Clause 16(3)(a) consistent with Clause 14(1)(a).

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Moved by

[Baroness Barran]

38: Clause 17, page 14, line 4, leave out from beginning of line to “does” and insert “a transfer provision”
Member’s explanatory statement
This amendment, with the government amendments at lines 9, 11, 14, 17 and 19 on page 14, would ensure that Clause 17 refers to the correct provisions of Part 1.

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Moved by

[Baroness Barran]

44: Clause 18, page 14, line 43, at end insert—
““withdrawal charge payable to HMRC” means a charge payable under paragraph 8 of Schedule 1 to the Savings (Government Contributions) Act 2017.”Member’s explanatory statement
This would define “withdrawal charge payable to HMRC” by reference to the primary legislation governing Lifetime ISAs.

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Moved by

[Baroness Barran]

46: Clause 19, page 15, line 18, after “to” insert “payment of”
Member’s explanatory statement
This is a drafting amendment to secure greater consistency of expression in references to a person’s right to payment of a dormant amount owing.

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Moved by

[Baroness Barran]

47: Clause 22, page 18, line 19, after “5(2)(b)” insert “or (3)(b)”
Member’s explanatory statement
This would amend the definition of “third party” in Clause 22(2) so that it refers to claims arising by virtue of Clause 5(3)(b), as well as those arising by virtue of Clause 5(2)(b).

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Moved by

[Baroness Barran]

48: Clause 24, page 19, line 22, after “5(2)(b)” insert “or (3)(b)”
Member’s explanatory statement
This amendment would ensure that Clause 24(1) refers to claims arising by virtue of Clause 5(3)(b), as well as those arising by virtue of Clause 5(2)(b).

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Moved by

[Baroness Barran]

49: Clause 25, page 20, line 9, after “5(2)(b)” insert “or (3)(b)”
Member’s explanatory statement
This would amend the definition of “repayment claims” in Clause 25(3) so that it covers claims arising by virtue of Clause 5(3)(b), as well as those arising by virtue of Clause 5(2)(b).

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[Lord Bassam of Brighton (Lab) [V]]

My Lords, it is always nice to be able to agree with the noble Baroness, Lady Noakes. We have crossed swords many times, but I very much share one thing in common with her, and that is a desire to have an absolutely laser focus on getting value for money. So I am very supportive of her amendment; it certainly goes to the right place. The noble Baroness, Lady Kramer, touched on the importance of that in drawing our attention to remuneration levels within Reclaim Fund Ltd.

We need to be assured that we are getting value for money. Getting the Comptroller and Auditor-General involved in looking at the Reclaim Fund Ltd is a valuable use of the time of that body, because we need to better understand how funds are being used and be reassured that the best possible value for money is being secured. After all, this is a very significant funding mechanism and we need to ensure that, as part of it, the Reclaim Fund Ltd operates to the best and highest of standards. My noble friend Lord Davies is right that we need to focus on issues such as efficiency and effectiveness of spend, so I am very supportive of the amendment moved by the noble Baroness, Lady Noakes.

[Baroness Barran (Con)]

My Lords, Amendment 50 seeks to provide a power for the Comptroller and Auditor-General, the C&AG, to examine the Reclaim Fund Ltd for its economy, efficiency and effectiveness in using its resources to carry out its functions—also known as a value-for-money assessment—and to lay the result of the examination before Parliament.

I will first address the question on RFL’s auditors that my noble friend Lady Noakes asked at Second Reading. As set out in the Government’s framework agreement with RFL, which has been published in the Libraries of both Houses, the C&AG will audit the company’s accounts. This will be possible because of the explicit agreement made between RFL and the Treasury for such an arrangement. I hope that my noble friend will feel that that is sufficiently clear.

I know that my noble friend was also anxious to confirm that both the value-for-money assessment and the audit would be carried out by the same body, so, to continue in that vein, the C&AG may also carry out value-for-money assessments of the Reclaim Fund Ltd in the way proposed in subsection (1) in my noble friend’s amendment. The C&AG can carry out value-for-money assessments of public bodies under the National Audit Act 1983. The Act enables the C&AG to carry out value-for-money assessments of a body if there is an agreement between the body and a Minister of the Crown that requires the body’s accounts to be examined and certified by the C&AG and that enables value-for-money assessments to take place. This is set out in Section 6(3)(d) and 6(5) of the National Audit Act. An agreement has been made between the Treasury and RFL that meets these conditions of the Act, and this arrangement is outlined in the RFL/Treasury framework agreement.

Value-for-money assessments can be undertaken under Section 6 of the National Audit Act in relation to many public bodies, including UK Asset Resolution, the British Business Bank and S4C, the Welsh language broadcaster, to name but a few. In future, the Comptroller and Auditor-General will be able to undertake value-for-money assessments in relation to RFL.

Section 9 of the National Audit Act 1983 enables the Comptroller and Auditor- General to report to the House of Commons the result of any value-for-money assessment carried out under Section 6 of the Act. So, the provisions in the Act, which as I have already explained are applicable to RFL, also make provision for the Comptroller and Auditor- General to bring the results of the value-for-money assessments to the attention of the House of Commons.

My noble friend picked up on the location of RFL’s offices in St James’s. My understanding is that this is the registered address of the company secretary and that RFL is actually based in Crewe. I hope my noble friend sees that as a more cost-effective, dare I say levelling-up, option.

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[Lord Bassam of Brighton (Lab) [V]]

My Lords, this useful set of amendments will help us to tease out the relationship between Reclaim Fund Ltd, Parliament, the Treasury, and the Government. My probing amendment is in a slightly different direction from those of the noble Baronesses, Lady Bowles and Lady Noakes, but they sit comfortably next to each other.

I want to understand what the oversight mechanism is and what will be available to Parliament in the event of Reclaim Fund Ltd requiring money from the Treasury. We have heard that this will never happen, which I am sure is quite right—with the reserve level set at 40% it is extremely unlikely—but I too believe in prudence in the management of funds, and I would like to understand what oversight Parliament will be given. We need a position where we can discuss and debate how it is working. Will that be through some kind of annual report to Parliament? Would oversight by Parliament be triggered in the circumstances of a particular use of funds? Can we perhaps see a situation where there is an annual debate about Reclaim Fund Ltd and how the money has been distributed so that we could test whether the 40% reserve is right?

Parliament needs to be in a stronger position here. These amendments take us in that general direction, particularly the clever one tabled by the noble Baroness, Lady Noakes, which would put the Treasury in the hot seat and ensure that we have a level of accountability enabling a regular look at how Reclaim Fund Ltd operates. I am looking forward to the Minister giving us not only some assurance but a guarantee that we will be able to see how the mechanism is working through a regular oversight session.

[Baroness Barran (Con)]

My Lords, before I turn to the detail of the amendments, I will respond to the question from the noble Baroness, Lady Kramer, about how Reclaim Fund Ltd invests its assets. The reserves are a mix between cash held at the Bank of England and an externally managed bond portfolio managed by Goldman Sachs asset management. All the assets are held to maturity. The portfolio is not actively traded to save on management fees and the portfolio follows environmental, social and governance principles. I hope that this comforts her or otherwise regarding the fund’s approach.

I turn now to the amendments. Amendments 51, 52 and 53 relate to Clause 27 of the Bill. These amendments seek to understand the oversight that Parliament will have over any loan that the Treasury provides to RFL, and intend to allow RFL to take into account the loan when considering its reserving policy. I will address the amendments together.

In recognition of RFL’s establishment as a Treasury non-departmental public body, the Bill introduces a new provision to provide that, in the event that an authorised reclaim fund is, or looks likely to be, unable to meet its reclaim liabilities, the Treasury would provide a loan to cover these liabilities.

On Amendment 52, from the noble Lord, Lord Bassam of Brighton, the Government agree that Parliament should have oversight of the Treasury loan. Parliament will already be sighted in respect of the loans made from the Treasury by virtue of this being recorded in its annual reports and accounts, which are laid before Parliament on a yearly basis. The terms and conditions of the loan will be set in line with usual Treasury practice, as set out in Managing Public Money. It would not be usual practice to provide the full terms of the loan, which may contain commercially sensitive information. Further transparency to Parliament is provided in the reclaim fund’s annual report and accounts, which, as we discussed earlier, are audited by the Comptroller and Auditor-General.

Amendments 51 and 53, tabled by the noble Baroness, Lady Bowles of Berkhamsted, and my noble friend Lady Noakes respectively, seek to understand the impact on RFL of a potential Treasury loan when setting its reserving policy. I will respond, first, by summarising the particular features that govern RFL’s reserving policy, and then turn to the implications on these of the Treasury loan. While the Government agree that as many dormant funds as possible should be channelled to good causes, we also fully recognise that the decision on how much money should be retained to meet reclaims should sit with RFL and not the Government. The RFL board is responsible for overseeing the process for changing the level of reserves, and RFL has confirmed that this is regularly revisited by the board.

I met recently with RFL. Following that meeting, I am satisfied that it follows diligent processes with respect to its reserving policy, which is based on an analysis of the relevant risk factors, actuarial modelling using both internal and independent actuarial advice, and Financial Conduct Authority guidance. This ensures that RFL can achieve its primary objective of meeting reclaims from owners at any time in the future. The fundamental principle that underpins RFL’s current approach to its reserving rates and investing policy is that it is required to meet reclaims in perpetuity. As your Lordships well understand, that makes it very different from, say, an insurance company. Therefore, it has to plan both for any normal trends in the reclaim experience and for any future stress scenarios that may occur, and model those accordingly.

Examples of such stress scenarios include developments in artificial intelligence that help to reunite more customers with their lost assets and, as we discussed in an earlier amendment, future changes in government data access, which could affect participant’s tracing efforts. Any stress scenario could result in a sudden increase in reclaims, and a combination of these scenarios would, of course, have a significant impact on RFL’s reserves. This is reflected in RFL’s regulatory permission and activities under which it is authorised to operate, with the purpose of ensuring that RFL has adequate financial resources to meet its ongoing reclaim obligations without placing it into undue financial distress or business failure.

While I recognise your Lordships’ interest in the current level of reclaim rates compared with money reserved, RFL has informed me that the cumulative reclaim rate is increasing and looks set to increase further in future years. RFL has reviewed and will continue to review its reserving policy regularly, using both internal and independent actuarial advice and modelling, to ensure that it is appropriately prudent and will continue to release as much money as responsibly possible to good causes across the UK, while retaining sufficient funds to meet reclaims. RFL’s remit is expanding to include previously unheld asset classes. I therefore understand why RFL has chosen not to amend its reserving policy at this time, although that decision remains solely with the company.

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[Baroness Noakes (Con)]

My Lords, I hear what my noble friend the Minister has said—that she was speaking to my amendment and that of the noble Baroness, Lady Bowles, which both rely on the loans to reduce the amount of reserving. That is not what my amendment said at all. Mine was based on more explicitly recognising that the Treasury de facto now stands behind the company and that anything else is a complete fiction.

My noble friend talked about industry needing confidence in the scheme being independent of government. Frankly, the whole world has changed: the Treasury now owns 100% of the capital and it has been reclassified as public sector. The fact of life is that this is a public body and its “separate legal entity” nature is just a fiction.

If the Treasury wanted to release more for good causes, it could. That is at the heart of the issue; anything else is some form of dissembling. So I personally am not satisfied with the Minister’s response today. I do not think meeting the chief executive of the Reclaim Fund Ltd will get us any closer to the heart of the matter. The issue is: why will the Treasury not step up to the plate and recognise that it now carries responsibility for the amounts released, and that in public sector terms there is no good reason to withhold significant sums for tail risk?

[Baroness Barran (Con)]

I accept that I am not going to convince my noble friend this afternoon. Although she may see the fact that Reclaim Fund Ltd is a separate legal entity regulated by the FCA as a fiction, I respectfully disagree. She will decide whether she wishes to meet those from Reclaim Fund Ltd. The reason I felt that it might be helpful is that it may clarify to what extent the current level of reserving is “excessive”, as it was described in the debate this afternoon.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, this has been an interesting debate; it has brought forward shared concerns and different ways of expressing much the same thing. The way in which the noble Baroness, Lady Noakes, explained it has been very informative, in particular the comparison with the original suggestion that maybe you need a 10% reserve and that that approach is the reality. Although I expressed it in a different way—I am sure that her amendment is probably crafted better than mine—we share the view about the tail risk and the role of government meaning that you do not have to provide for that in the ultra-cautious way. This also reflects my noble friend Lady Kramer’s comments that it is not being run as an endowment whereby you have to hang on to money. However, I suppose you can argue that there is a perpetual risk because there is an in-perpetuity claim.

It has been interesting to hear the Minister outline some of the concerns about AI tracing and using government data. If the 40% level will be retained as new assets come along, maybe I am not quite so alarmed. I shared the fear of my noble friend Lady Kramer that when these new assets came in, it was going to shoot back up to 60% or beyond.

We have this strange arrangement whereby limited liability companies that are on the public books but have to run under the Companies Act have the possibility of going into liquidation, which is how the directors can protect themselves, but the fact is that the Government will have to pick up the tab. It seems a bit wrong, somehow, not to use what is, in effect, a de facto “extreme circumstance” reinsurance provision that will be triggered come what may. We have to reflect the reality of that, and it is probably rather an excuse to say, “We will have to have it at arm’s length from the Treasury so that it is not interfering in the way the funds will be used.” We will get on to that when we begin to talk about additionality and some of the ways that the money has been deployed.

It may be interesting to have a bit more information on the figures; there are noble Lords who can get their heads around some of this. I am open to having more information and Parliament needs to see this level of it, but I am not entirely certain that I am satisfied at this point—particularly as the section regarding the loan turned out to be really rather meaningless, as the noble Baroness, Lady Noakes, outlined. We need some kind of explanation and reassurance either that that is not the case or that it can be made into something meaningful. Otherwise, what is the point of it being there?

This has been a very useful debate, which will continue. I too may consider returning to it on Report. I feel I know more—I have had a little comfort but maybe not yet enough—but, for now, I beg leave to withdraw my amendment.