Transfer of Functions (Dormant Accounts) Order 2010

Baroness Pitkeathley Excerpts

Tuesday 15th March 2011 Lords Chamber

[Lord Newby]

My Lords, it is a great pleasure to return to the joys of the Dormant Bank and Building Society Accounts Act 2008. I may be the only person in your Lordships’ House who sat through the entire proceedings of that Bill.

That was a fascinating process because the original purpose of the Bill was to do what the Government plan to do, namely to make the funding available from bank accounts to a new social investment bank—the brain-child of the current leader of the Labour Party. When it became clear that some new funding was available, other members of the Cabinet thought it might be a good idea if they had a share. Therefore, a new purpose was added to the Bill to make expenditure available for the provision of services for young people—Ed Balls’ proposal that every community should have a new youth club. This was the second purpose inserted after the first purpose. The third purpose about financial literacy was inserted by the Treasury because it was fed up that it was not getting a look-in. So we ended up with an Act which was a muddle. It had started with a simple purpose and ended up with three purposes.

The relevance of that to the report of the Merits Committee is that it explains why the Big Lottery Fund has a role in the Act as it is currently set out. If you were going to have, as was originally envisaged, part of the funding going to establish a national network of youth clubs, somebody had to be in charge of allocating the money for those youth clubs. And if you were going to make money available for financial literacy, somebody had to decide where the money went. It was agreed that the Big Lottery Fund was a logical home for that. It was never intended that the Big Lottery Fund would have any role to play in terms of the social investment wholesaler because that is not what it does. I suspect that the only role of the Big Lottery Fund now, given that the first two purposes have fallen by the wayside and we have got back to the original intent of the Bill, is to decide who the social investment wholesaler will be. Someone has to do that, so it has to be either a civil servant or the Big Lottery Fund. I doubt very much whether there will be any additional cost involved with that.

Regarding the original purpose of the Bill, I believe it is extremely important that the big society bank is established. Whether you agree with the cuts or not, it is undoubtedly the case that many public services are being better delivered today than they were yesterday because they are being delivered by social enterprises. I have referred in previous debates in your Lordships’ House to Sandwell healthcare services, which provide facilities in the West Midlands for half the price previously provided by the local authority. I know this because the chief executive came before the All-Party Parliamentary Group on Social Enterprise, which I chair. When asked how Sandwell was able to do that for half the price, he said that nobody is paid any less but some simple things have been done such as reducing the average number of days’ sick leave from 32, when the services were administered by the local authority, to two. He has made huge efficiency savings by motivating staff and freeing them from a bureaucratic environment.

The problem with the social enterprise sector is that it is full of organisations such as Sandwell healthcare services doing tremendous things but on a small scale. One of the main reasons they are not doing things on a large scale is that it is very difficult to get access to finance. Very often social enterprises do not have the business record because a lot of them are relatively new, nor do they have assets against which a loan can be secured. Therefore, the mainstream banks do not lend to them. The big society bank, with the combination of funding from this Act and from the high-street banks, will for the first time provide a significant pool of capital for social enterprises.

As I say, whatever you think about the cuts, having more social enterprises will enable public services to be delivered more efficiently and more effectively than is often done at present. Therefore, I strongly welcome the establishment of the bank. This is a minor order that helps clear the way for that and it has my full support.

[Baroness Pitkeathley]

I want to speak in favour of the Motion proposed by my noble friend Lord Hunt. I declare two interests. Until 31 March 2011, I am the chair of the advisory body to the Office for Civil Society, which has responsibility for the big society bank. I was also a member of the original Commission on Unclaimed Assets, chaired by Sir Ronald Cohen, so in that sense I go even further back than the noble Lord, Lord Newby.

I want to remind your Lordships of what Sir Ronald said at the time of the launch of the Commission on Unclaimed Assets, which was set up originally in 2005 and launched in 2007. He said:

“As for the money that remains unclaimed, we must never forget that this is neither the Government's nor the banks' property - but the people's money … the money should be spent in order to have the biggest impact possible on deprived communities in Britain”.

Further, it was pointed out that,

“the unclaimed asset funds could help to create new and profitable investment opportunities within local communities”.

That was the spirit of the Commission on Unclaimed Assets and its purpose was that it would support the local voluntary and community sector. If that was the purpose then, how much more important is that purpose now when, as we all know, the voluntary and community sector is somewhat in difficulties because of the withdrawal of funding?