Dormant Assets Bill [HL]

Baroness Barran Excerpts

2nd reading
Wednesday 26th May 2021 Lords Chamber

Moved by

[Baroness Barran]

That the Bill be read a second time.

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

My Lords, this Bill delivers on the Government’s commitment to expand the dormant assets scheme. Not only does the scheme provide a great opportunity to support industry’s work to reunite more people with their assets but it also has the potential to unlock hundreds of millions of pounds for good causes.

The dormant assets scheme takes a pragmatic approach to forgotten money. Rather than leaving funds to languish in dormant accounts, money can instead be channelled into long-term initiatives that address some of the UK’s greatest challenges. Since the scheme was established a decade ago, more than £1.4 billion has been transferred voluntarily into the system by banks and building societies. Of the total transferred, £106 million has been reunited with owners. The scheme responds to the imperative to put any money that is not reclaimed or reserved to good use. So far, £800 million has been released, including £150 million for coronavirus response and recovery.

I hope noble Lords will indulge me for a few minutes as I reflect on the impact of the original scheme. In England, funding is distributed via expert organisations. The first, Big Society Capital, was established in 2012. It received £425 million of dormant assets funding with the explicit aim of growing the social investment market. Since then, with partners, it has been able to invest more than £2 billion in social impact organisations. This includes around £200 million directly targeted at place-based investments, supporting left-behind communities to develop vibrant, local, social economies that reduce poverty and inequality.

The second, Access—The Foundation for Social Investment, seeks to support the development of enterprise activity and improve access to social investment. It has developed a £21 million programme of flexible recovery finance for the social sector and has made £7 million available for emergency Covid support through social lenders. Together, these organisations have grown the social impact investment market from £830 million in 2011 to more than £5 billion today.

More recently in 2019, the scheme supported the establishment of Fair4All Finance and the Youth Futures Foundation. By 2025, Fair4All Finance will have supported community finance providers to increase their lending capacity from £300 million a year to over £900 million, enabling more than 800,000 people to access affordable loans and escape high-cost credit. It is also working to grow the financial services market to support 14 million people in vulnerable financial circumstances. The Youth Futures Foundation is targeting support to young people from marginalised backgrounds facing barriers to work. By the end of this year, it will have directed £40 million towards funding and evaluating the largest range of youth employment interventions ever initiated in England.

Scotland and Wales use dormant assets funding for projects focusing on young people, climate change and sustainability, while Northern Ireland has worked with the National Lottery Community Fund to establish a £20.5 million Dormant Accounts Fund NI for the voluntary, community and social enterprise sector.

I thank in particular all those involved in the development, passage and implementation of the 2008 Act, several of whom are in the Chamber today; without their vision of what could be achieved, this would not have been possible. I am proud of what the current scheme has achieved to date and I hope that the Bill will continue to build on its notable successes.

With 34 banks and building societies now participating in the scheme, including all major high street banks, the current scheme is reaching a mature state, with significantly fewer funds flowing into the system each year. Over £300 million was transferred in 2011, but this will decrease to around £42 million per year in future. Expansion means that the flow of funds is not only maintained but will be increased substantially.

Consumer protection remains at the heart of the expanded scheme, with the continued priority being to locate and reunite people with their financial assets. Where that is not possible, expansion will enable more responsible businesses to redirect money to some of the nation’s priority issues. Full restitution will also continue to be a core principle. Asset owners will always be entitled to reclaim what they would have been owed, had their assets never been transferred into the scheme.

Industry expects that around £1.7 billion-worth of dormant assets could be eligible for transfer after expansion. Once transferred, a proportion is held back to satisfy any future reclaims and around £880 million could then be released. Money must fulfil the additionality principle, so it cannot be used as a substitute for central government funding. We have worked closely with industry leaders on how best to design expansion. I record my warm thanks for the support we have received throughout this process. I also thank everyone who responded to the public consultation, whose contributions have informed the shape of the Bill.

I shall now outline the main contents of the Bill. Currently, the dormant assets scheme accepts transfers only from dormant bank or building society accounts. The Bill expands the scope of eligible assets, so certain assets from the insurance and pensions, investment and wealth management, and securities sectors will be eligible for transfer. Our consultation response committed to considering how legislation could best provide the flexibility to expand the scheme further in the future. In reply, the Bill introduces a new power to broaden further the pool of eligible assets through future regulations.

The Bill also enables the specific focus of the English portion of funds to be set through secondary legislation, subject to statutory consultation. This harmonises the mechanism in England with the devolved Administrations and will allow the scheme to respond more flexibly to changing needs over time.

After 10 years of operation, we are at a critical juncture in considering the scheme’s overall operation, and now is the right time to think about how the scheme can deliver the greatest impact once it has been expanded. Therefore, subject to the Bill passing, we will launch a public consultation on the use of funds in England. The current restrictions of youth, financial inclusion and social investment will continue until any new arrangements come into force.

The Bill also includes provisions to improve the operation of the scheme: for example, by making owner reunification efforts a requirement before funds are transferred, with the exception of situations where efforts are considered disproportionate or unnecessary.

The Bill also reflects Reclaim Fund Ltd’s recent establishment as a Treasury non-departmental public body. It names Reclaim Fund Ltd as the scheme’s only authorised reclaim fund, and as a result the Government are seeking a power to enable the Treasury to add, substitute or remove an authorised reclaim fund in future through secondary legislation. The Bill also enables the Government to cover the liability for reclaims should any authorised reclaim fund face insolvency, in the form of a loan. Such a liability will be established following the usual parliamentary process.

In closing, I emphasise our mission to support industry efforts to reunite owners with lost money and to provide a practical way for unclaimed and unwanted funds to be put to good use. I hope that the Bill receives strong support from your Lordships so that we can proceed swiftly with its passage and continue to build on the scheme’s success. I look forward to all noble Lords’ contributions to this debate but in particular to the maiden speech of my noble friend Lady Fleet. I beg to move.

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[Baroness Barran (Con)]

My Lords, with the leave of the House, I thank all noble Lords for their valuable contributions today. The debate has indeed been very wide-ranging, and your Lordships have set me a difficult challenge in trying to cover your points in the time allowed. If I may, I will therefore follow up with a letter to noble Lords after this debate.

I join other noble Lords in congratulating my noble friend Lady Fleet on her excellent maiden speech; I look forward to listening to her speak many times in future. I also echo the best wishes expressed by the noble Lord, Lord Blunkett, to the noble Lord, Lord Field, and wish him well. I congratulate the noble Baroness, Lady Bennett, on starting a new trend of supporting, agreeing with and welcoming government legislation.

I shall touch on some of the broader points that went beyond the direct scope of the Bill. The noble Lord, Lord Adonis, challenged the Government on their ambition in relation to levelling up. The Queen’s Speech had a very strong theme of levelling up going through it. I highlight in particular the changes we have already made to the social value legislation and the potential it gives for social enterprises, charities and SMEs more broadly to benefit from £49 billion of government commissioning.

My noble friend Lord Vaizey managed to combine Dickens, the BBC and the National Fund in an incredible bit of knitting. As he is aware, the National Fund is currently subject to court proceedings, so there is no more that I can do to release it, but perhaps when we get there it will be a combination of “Sleeping Beauty” and Hard Times, if that is not too bad a combination.

Finally, and importantly, I thank my noble friend Lord Bates for stressing the incredible generosity of the British people over the past year in donating to charities and in volunteering for the NHS responder scheme to help with the vaccination rollout. I am sure that we will shortly see an incredible outpouring when volunteering options for the Commonwealth Games open in a couple of weeks.

The first area of discussion by your Lordships related to the size of the assets that will be released; that was raised by the noble Lord, Lord Blunkett, and several other noble Lords. To reiterate, industry valuations show that expansion has the potential to make £1.7 billion available to transfer to Reclaim Fund Ltd, which is based on an estimated £3.7 billion of dormant assets in the new asset classes that will be included in the Bill. The industry believes that, with enhanced tracing and verification efforts, £2 billion could be reunited with its rightful owners. The noble Baroness, Lady Wheatcroft, talked about whether we could do more, as did other noble Lords. This represents an important step forward. Obviously, in the regulations we propose to make further expansion of the scheme more flexible and, when that happens, the money will of course increase.

I listened intently to the noble Lord, Lord Triesman, talking about social housing and was writing down all the good things that Big Society Capital had done—but of course that was exactly where he was going with his comments. However, it is also important to recognise the multiplier effect that some of these specialist distribution organisations have had and the additional funds that they have brought into areas such as social housing, where the market is now I think over £800 million. I absolutely agree with him about the potential for both impact investment and impact philanthropy.

My noble friend Lord Bellingham also talked about the greater potential both to reunite people with their assets and to release money for good causes. I reiterate the point that the Bill includes the principles not just of reuniting but of full restitution.

The noble Lord, Lord Blunkett, and my noble friends Lady Sater and Lord Taylor of Holbeach asked about increased efforts in relation to tracing, verification and reunification. The requirement to make efforts to trace, verify and reunite the owner with their asset before transfer is set out in the agency agreements between current participants and the authorised reclaim fund, and that will be mirrored in future. However, the Bill strengthens that position by ensuring that the reclaim fund can accept transfers from a participant only if it has made satisfactory contractual or other arrangements with it.

A newspaper—not my noble friend Lady Fleet’s former employer but another—has a supplement called How to Spend It, and here we come to the “How to spend it” section of the debate. It is absolutely right that we should bring this focus if we are to expand the scheme and review where those funds can be spent. We have had such a rich and knowledgeable debate, and I thank in particular my noble friend Lord Bates, the noble Baroness, Lady Lister of Burtersett, the noble Earl, Lord Devon, and my noble friend Lady Eaton for their contributions here. During the consultation on expanding the scheme, we received multiple calls to change the current restrictions. There was some concern from a number of your Lordships about the restrictions in Section 18 coming to an end and there being a gap before the new restrictions would apply. That is not correct; they will apply until a new order has been made.

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. There was perhaps a misunderstanding on the part of the noble Baroness, Lady Barker, reiterated by the noble Baroness, Lady Kramer, in suggesting that there had been a breach of that principle in the last year. There was absolutely no breach. I am not quite sure where that idea comes from, but it is not correct. The additional £150 million that was given to the dormant asset distribution organisations came from dormant assets themselves. Their mission was absolutely as set out in the legislation. There was no government interference whatever.

The noble Earl, Lord Devon, commented on the valuable role played by social enterprises. I share his support for that sector, with which I engage very regularly. The Act does not currently specify social enterprises as particular beneficiaries of the funds; rather, they will often deliver in the social and environmental areas which are the funds’ focus. Since that broad area of focus will stay unchanged—the restrictions may change beneath it—we would very much expect them to continue to be part of the ecosystem.

There were a number of questions about the consultation, particularly from the noble Baroness, Lady Lister. The position was made clear in the press pack, which noble Lords may be forgiven for not having read. It is absolutely in the public domain that we have committed to a full public consultation with all the groups that the noble Baroness talked about. Regarding the comments made by the noble Baroness, Lady Bennett, it is important to remember that dormant asset funding is entirely dependent on industry participants who voluntarily transfer into the scheme, as well as the general public’s trust in it. It is therefore very important that we listen to those groups as well as the others that were cited.

The noble Lord, Lord Davies of Brixton, asked about capital versus revenue funding. To clarify, it is up to the distribution organisations to decide what they want to make grants to; the Government do not interfere as to whether it is capital or revenue. They will use their expertise to find the best way to have a positive impact on the issues they are seeking to address. On the points raised by my noble friends Lord Patten, Lord Polak, Lord Bellingham and other noble Lords, the distribution to small organisations already happens through those four distribution organisations.

I turn to the expansion of the scheme. My noble friend Lord Patten asked about industry participation and support for the scheme. There has been very strong interest from industry in participating in the expanded scheme. It has, in the nicest possible way, been nudging us along very politely and it backs the swift progression of the Bill. We are continuing to work closely with the dormant assets expansion board, as well as the Reclaim Fund, trade bodies and regulators, as we prepare to operationalise the expanded scheme.

There were a number of specific questions about additional types of assets, including online investment platforms, raised by my noble friend. I will respond in writing to these, including on the proceeds of crime, raised by the noble Lord, Lord Bassam, and gambling proceeds, raised by the noble Baroness, Lady Kramer.

The noble Baroness, Lady Bowles of Berkhamsted, the noble Lord, Lord Davies of Brixton, and others asked about the relationship between the scheme and the pensions dashboard. The consultation cited ongoing changes in the pensions landscape, including the introduction of the dashboard, as needing “time to fully develop”. Many responses asserted that the dashboards would interact positively with the scheme. Both initiatives have the primary aim of reuniting owners with their assets, and the dashboards will make it even more likely that only genuinely dormant pension products that will not be reclaimed will be transferred to the scheme.

The noble Baroness, Lady Bowles, also asked about safeguards against perverse incentives. Legislation may indeed incentivise firms to change their terms in order to participate, but the Bill tightly prescribes the circumstances in which an asset is eligible, including dormancy definitions and reclaim values. If the terms of an asset align with these, it is obviously appropriate for it to be in scope.

My noble friend Lady Noakes asked about dormant national savings accounts. She may be aware that money invested in National Savings and Investment products is passed directly to the Exchequer and used to fund public services, which means that any unclaimed balances are already being used for public benefit. There is also the My Lost Account scheme, which seeks to reunite customers with their money and premium bond winnings. In the past 20 years, £840 million has been reunited in that way.

My noble friend Lord Hodgson of Astley Abbotts asked about the inclusion of shares and dividends. The Government have been engaging with the sector on plans to include them since 2018. More recently, share registrars have joined forces to think about how they will work with companies to operationalise the scheme, which includes thinking about what kind of register would be needed to ensure full restitution.

I turn to the Reclaim Fund and focus on the reserves policy, raised by my noble friend Lady Noakes, the noble Baroness, Lady Bowles, and the noble Lord, Lord Bassam. I absolutely share your Lordships’ wish to see more money distributed. As your Lordships are aware, the Reclaim Fund is legally obliged to retain a portion of the funds that it receives to repay owners. That portion has been declining over time: initially, 60% of assets were reserved, but that has now reduced to 40%. In relation to the point of the noble Baroness, Lady Bowles, that explains the bumper year in 2019, when there was a large release of assets because of a reduction in the reserving policy, which allowed the establishment of Fair4All Finance and the Youth Futures Foundation.

We expect the approach to reserves to evolve over time. It remains the responsibility of the Reclaim Fund to set the reserves at the right level. My noble friend Lady Noakes asked about whether the guarantee from the Treasury affects this. There is a balance to be struck here, but the principle of additionality and separation of the assets means that the current structure is sound.

I turn to the issues of secondary legislation raised by my noble friend Lord Hodgson and the noble Baronesses, Lady Barker, Lady Kramer and Lady Bennett. We have kept the provisions and the number of delegated powers in the Bill to a minimum and have only included those powers that are necessary for a successful operation of an expanded scheme. Where it is possible and practical, we have implemented future changes in the Bill. However, in a way, the answer to the question from the noble Lord, Lord Bassam, about timing and why it has taken such a long time to get to this point lies in the need for secondary legislation to make this more flexible. It has been about five years since the industry started to encourage us to expand the asset classe,s and obviously through the consultation recently, we heard the calls for more flexibility in deployment of those assets. The secondary legislation will give us that flexibility.

I have appreciated enormously the tone of a generous but critical friend in this debate and I look forward very much to working with your Lordships as we pass this important piece of legislation. I am also able to put my noble friend Lord Hodgson out of his suspense as I look forward to introducing the Charities Bill. With that, I beg to move.

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

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.

--- Later in debate ---

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).

--- Later in debate ---

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.

--- Later in debate ---

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).

--- Later in debate ---

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.

--- Later in debate ---

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.

--- Later in debate ---

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.

--- Later in debate ---

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).

--- Later in debate ---

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).

--- Later in debate ---

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).

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

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.