Dormant Assets Bill [Lords]

Alex Davies-Jones Excerpts

Report stage
Monday 31st January 2022 Commons Chamber

[Alex Davies-Jones (Pontypridd) (Lab)]

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

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to consider Government amendments 1 and 2.

[Alex Davies-Jones]

I rise to speak to new clause 1 in my name and that of my hon. Friend the Member for Manchester, Withington (Jeff Smith). As the Bill has moved through this House and the other place, I have been pleased by the progress that has been made, although there is still work to be done to ensure that dormant assets are distributed and governed effectively. Colleagues will be aware that the Bill will expand the current dormant assets scheme, which was first introduced by a Labour Government in 2008. The Government define dormant assets as a financial product, such as a bank account, that has not been used for many years and which the provider has been unable to reunite with its owner, despite efforts aligned with industry best practice.

In 2008, the Dormant Bank and Building Society Accounts Act was passed to provide a system to distribute dormant assets to good causes. Currently, 24 banks and building societies participate in the reclaim fund scheme, but Labour has always intended that the dormant assets scheme would broaden the financial products to which that legislation applies.

Although the Bill makes some progress and Labour supports the need for consultation, we urge that the scheme go much further. With the right safeguards in place to find the owners of assets, unclaimed winnings from gambling, pension assets and physical assets could be considered in the future, too. While I am grateful to the Minister for his frankness throughout the passage of this Bill, I must once again put on record that while Labour is generally supportive of the Bill, we urge that further consideration be given to incorporating pension assets into the scheme. While I recognise that the Minister has highlighted that occupational pension schemes and personal pension schemes whose owners were automatically enrolled are excluded, or out of scope of the Bill, I hope that in the future those assets will receive further consideration.

The core principles of any scheme must remain clear. Attempts should first be made to reunite assets with their rightful owners before transferring them. Owners should always be able to reclaim their funds, and participation must ultimately be voluntary. Labour is also clear that any funds released to the dormant assets scheme must not be used as a substitute for Government spending. We know that the increasing cost of living is impacting so many people across the country, and this Bill presents an important opportunity to release further funding and to put right some of the wrongs. On that point, I pay particular tribute to colleagues on the all-party parliamentary group for “left behind” neighbourhoods, who have been closely focused on the importance of dormant asset funding for vital community projects in the most left-behind parts of the country.

With that in mind, I place on record Labour’s thoughts on community wealth funds, which the Minister knows I feel passionately about. In the other place, Labour secured an amendment that would have allowed the Secretary of State to include community wealth funds as recipients of funding. That amendment had cross-party support and was generally welcomed by the sector. The aim of including community wealth funds as recipients of funding is clear. The designated money would be designed to go towards social infrastructure to further the wellbeing of communities suffering from high levels of deprivation. I was disappointed and also surprised that the Government chose to remove a measure aimed at empowering communities, which is also at the heart of the Government’s well-rehearsed levelling-up agenda. That said, I welcome the Minister’s collaborative and candid approach throughout the latter stages of this Bill, and Labour welcomes the Government’s commitment to including community wealth funds as part of the first round of consultations, as outlined in the Government’s amendment 2.

We must now make sure that momentum is not lost on that important development, as community wealth funds are central to reviving so many communities up and down the country. With that in mind, central to any spend is the importance of governance and sustainability in ensuring that funds of this nature are maintained and in good health.

The Minister knows, and I believe agrees, that scrutiny of the reclaim fund is vital. That is why we have tabled new clause 1. Recent events have highlighted the need for a transparent approach to decisions made in this place and the other place, and it is therefore vital that the Government are held to account on the health and governance of reclaim funds, especially in relation to the potential for insolvency.

[Mr Toby Perkins (Chesterfield) (Lab)]

I endorse entirely what my hon. Friend is saying. Does she agree, given the lack of confidence in some of the decision-making processes that the Government have undertaken before allocating funds, that it is all the more reason why new clause 1 would have real public confidence?

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[Alex Davies-Jones]

I wholeheartedly agree with my hon. Friend. Part of the reason we tabled new clause 1 is for openness and transparency, so that the public and this House can scrutinise exactly where this funding is being placed. Scrutiny is at the very heart of our jobs here in this place, and an annual report brought forward to Parliament, as new clause 1 stipulates, would be a crucial step forward.

Lastly, on Government amendment 1, I am pleased to see the clarification around collective scheme investments. It is vital that such investments remain eligible for incorporation into the reclaim fund. I hope to see further assets incorporated in the future, as I stipulated earlier.

Ultimately, Labour supports the Bill as our priority remains expanding the dormant assets scheme in line with our commitments first made in 2008. The programme so far has been extremely successful, and predictions suggest that expanding the scheme in such a way would identify about £3.7 billion of unclaimed assets, of which about £1.7 billion would be eligible for transfer to the reclaim fund. From that, £880 million would be repurposed for good causes across the UK. Labour supports that extremely welcome step, and I look forward to continuing to work with the Minister to tackle the challenges around extending the scheme to other assets. I hope that he will take on board our concerns about future governance of the fund, too.

[Danny Kruger (Devizes) (Con)]

I congratulate the Government on bringing forward the Bill. I recognise that, as the hon. Member for Pontypridd (Alex Davies-Jones) said, the release of dormant assets started with Labour and has been a cross-party achievement. My thanks, congratulations and appreciation also go to the financial institutions that have made the money available.

I am pleased with the Government’s proposals, including the consultation on the potential introduction of a community wealth fund. My congratulations and appreciation to the Minister for including that as a possibility, and to my hon. Friend the Member for Sedgefield (Paul Howell) and the right hon. Member for Kingston upon Hull North (Dame Diana Johnson) for their work in bringing that idea forward.

There are other great ideas—we could abolish personal debt by capitalising credit unions with this money or distribute it direct to community foundations in our constituencies—but I think that the community wealth fund is the best idea. I hope that we will see the money going into civil society and social infrastructure and into supporting the great levelling-up agenda to which the Government are committed. This is a tremendous Bill, and I very much support what the Government are doing.

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Once again, I thank colleagues on both sides of the House for the constructive and collaborative debate today. For the reasons I have outlined, I ask that the House does not support new clause 1 and supports the Government amendments.

[Alex Davies-Jones]

I wish to put on the record my thanks to hon. Members. I am encouraged by our collegiate debate, in stark contrast to the scenes on the Floor of the House earlier today. This evening’s debate shows that Parliament is at its best when we all work together across parties to deliver for our communities. More needs to be made of what we can do when we choose to work together.

As I mentioned, it was a Labour Government who first advanced legislation to place dormant assets from bank and building society accounts into the reclaim fund after significant efforts were made to contact the owners of those assets. For this reason, we are broadly supportive of the Bill and its main aims to expand the scheme. We therefore continue to welcome attempts to incorporate a commitment to community wealth funds, which have the potential to support communities across the nation that have been left behind in recent years.

The Minister knows that Labour Members outlined our concerns at length in Committee and on Report, and my colleagues and I made particular reference to some of the flaws in the Bill that we ultimately sought to correct. It is therefore somewhat disappointing that our concerns on the health and governance of the reclaim fund have not been taken on board, particularly as transparency and scrutiny are such essential facets of our work in this place.

In Committee, the Minister argued that Reclaim Fund Ltd is

“responsible for determining the appropriate proportion of funding that it can prudently release… The amount that RFL reserves for future repayment claims is…based on actuarial modelling and assessment of…risk factors, following guidance from the Financial Conduct Authority.”––[Official Report, Dormant Assets Public Bill Committee, 11 January 2022; c. 34-35.]

Of course, independence from the Government is vital but it is also important that the Secretary of State makes a regular assessment if this fund is to be available for future generations. I sincerely hope the Minister will take on board our concerns and discuss with the Secretary of State, who is in her place, and departmental colleagues the potential for an annual report, which would be extremely beneficial for those who rely on funds from this important scheme.

Although Labour supports the Bill, we believe the Government have missed several opportunities. I urge the Secretary of State to speed up the timetable to allow for these much-needed funds to reach the communities that need them most. I look forward to closely following the development of the first public consultation. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Clause 12

Transfer of eligible client money to reclaim fund

Amendment made: 1, page 12, line 9, at end insert—

“(4A) The reference in subsection (4)(b) to money that could be transferred as mentioned in section 8(1)(a) includes money held by an investment institution that is not within the definition in section 8(3) which—

(a) is proceeds of the conversion by the investment institution of a collective scheme investment into a right to payment of an amount, and

(b) could, if it were held by an investment institution falling within section 8(3), be transferred as mentioned in section 8(1)(a).”—(Craig Mackinlay.)

This amendment clarifies that money held by an investment institution not within clause 8(3) is not client money if it is the proceeds of a conversion to cash of a collective scheme investment and would be capable of being transferred to a reclaim fund if the holder was an investment institution within clause 8(3).

Clause 29

Distribution of dormant assets money for meeting English expenditure

Amendment made: 2, page 22, line 21, at end insert—

“(3A) In carrying out the first public consultation under subsection (3)(a) the Secretary of State must invite views as to whether the permitted distributions should be, or include, any one or more of the following—

(a) distributions for the purpose of the provision of services, facilities or opportunities to meet the needs of young people;

(b) distributions for the purpose of the development of individuals’ ability to manage their finances or the improvement of access to personal financial services;

(c) distributions to social investment wholesalers (within the meaning of section 18);

(d) distributions to community wealth funds.

(3B) For the purposes of subsection (3A) “community wealth fund” means a fund which gives long term financial support (whether directly or indirectly) for the provision of local amenities or other social infrastructure.”—(Craig Mackinlay.)

This amendment requires the first public consultation under section 18A to include the options of permitting the English dormant asset money distributions currently permitted by section 18(1) and distributions to community wealth funds, whether or not in addition to other permitted purposes or recipients.

Bill read the Third time and passed, with amendments.

Business of the House

Ordered,

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