Dormant Assets (Distribution of Money) (England) Order 2023

Baroness Ritchie of Downpatrick Excerpts

Tuesday 24th October 2023 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

My Lords, I am pleased to move this order, which was laid before the House in draft on 11 September. The order names community wealth funds as a cause to receive dormant assets money, in addition to the existing three causes in the dormant assets scheme: youth, financial inclusion and social investment wholesalers.

To explain why the order is being made and a new cause is being included in the scheme, it may be helpful if I outline the background. Led by the financial services industry and backed by the Government, the dormant assets scheme is a brilliant example of what can be achieved when the public and private sectors come together to address some of the biggest challenges facing people in this country. The scheme’s priority is always to ensure that customers are protected and able to reclaim what they are owed. Where the asset owner cannot be found, the scheme has allowed hundreds of millions of pounds that have been lying idle to be used to support important social and environmental causes across the UK.

Since it began over a decade ago, the scheme has unlocked almost £1 billion to be spent across the United Kingdom. In England, this has sought to address the barriers that young people from deprived and disadvantaged backgrounds face when trying to gain employment. I am pleased to say that over 22,000 young people across the country have been supported to find meaningful work, thanks to the scheme. It has also supported 150,000 people with no-interest loans totalling over £150 million. This has kept honest and hard-working people out of the clutches of dangerous and manipulative loan sharks and saved them over £50 million in interest payments, ensuring that those who are financially excluded are given a hand up to get back on track.

The scheme has also helped to scale up the social investment market by more than tenfold, giving 5,000 organisations such as charities and social enterprises the investment needed to ensure they can continue to serve the communities and people who need it most. Soon dormant assets funding will also be about supporting communities across the country, placing decision-making into the hands of local residents to enable them to invest in what matters most to them and in a way that works best for their community.

Last year, I had the pleasure of leading what is now the Dormant Assets Act through your Lordships’ House in its final stages. It is thanks to the passage of this legislation that the Government were able to give people and participants in the scheme a voice in deciding how we should use dormant assets funding in England. Last year’s public consultation made it clear that the scheme enjoys widespread support from the public, and it is wonderful to see how this unique policy is bringing people and organisations together.

This order makes good on the Government’s commitment that the scheme will support the four causes that people told us matter most to them. By supporting youth, financial inclusion and education, social investment wholesalers and community wealth funds, we can ensure that the scheme is capable of delivering meaningful change for the next decade and beyond, providing support for those who need it most across the country. I commend the order to the Grand Committee and beg to move.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, I thank the Minister for presenting this instrument, which is subject to affirmative approval. I declare an interest as a member of your Lordships’ Secondary Legislation Scrutiny Committee.

I welcome the use of dormant funds, particularly being ploughed back into local communities for the benefit of those communities. When I was a Minister in the Northern Ireland Executive several years ago, we set up an arrangement for dormant funds there. It took about 12 years to be realised for investment in local communities, but there is no doubt that they provide that added resource when other resources may not be available to underpin community initiatives.

Thanks to the pioneering investment of dormant assets over the last decade and the work of organisations such as Big Society Capital, Access—the Foundation for Social Investment—and many others, social investment in the UK has grown more than tenfold in 10 years, with £9.4 billion invested into charities and social enterprises. This includes £1.8 billion committed to social enterprises and charities in 2022 alone, which has gone into over 1,310 projects delivering measurable social impact such as affordable homes, community food banks and tech start-ups tackling mental health.

There is no doubt, and we have all seen examples, that social investment has had a transformative effect on communities most in need. Around 43% of social investment deals have gone to levelling up priority 1 areas. Perhaps that is one area where levelling up has worked. But the next wave of dormant assets—I think the Minister was referring to that in talking about the initial legislation and this subsequent legislation on community wealth funds—will build on these foundations and take social investment further. A group of leading social enterprise, voluntary sector and social investment organisations have mapped out a plan for how best to do it. Known as the community enterprise growth plan, it proposes using dormant assets to deliver three proven interventions. Only yesterday, I talked to one of those organisations, and they have exciting initiatives for local communities through the investment of this resource.

There is no doubt that this plan has a number of benefits. It is a proposal to create jobs, boost growth and address regional inequalities, targeting communities affected by long-term economic decline. The plan uses existing systems, which would allow capital to begin flowing quickly and deliver results. Crucially, through social investment, the money invested is repaid and recycled, enabling funds to be used again and again to grow future support.

I am well aware that the Minister brought the initial legislation through your Lordships’ House, but I would like to be assured, as I am sure other noble Lords present would, that the dormant assets fund can continue into perpetuity for whatever that perpetuity means, because it brings much-needed benefits alongside government and other community resources. I would like to see it continue and to receive assurances to that effect.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I congratulate the Government on bringing this proposal forward. As my noble friend pointed out, we discussed it in the final knockings of the Dormant Assets Bill on 9 February 2022, nearly two years ago. I thank my noble friend for adding community wealth funds to the list of bodies which can receive distributions from the dormant assets fund.

I will add a quick word on why I think community wealth funds are so important. Some noble Lords may recall that about 10 years ago I was asked by the Government to undertake an official review of the Charities Act 2006. That Act was the biggest change in charity law since the Elizabethan statute of 1601, so 400 years of history were wrapped up in a new Bill. There was concern on all sides of the House and in the sector as to how matters would work out, so we needed a review to see how the new system was settling down.

Assisted by a terrific team from the Cabinet Office, we undertook visits around the country, which were interesting in two senses. First, you saw just how much could be done by really small groups of men and women dedicated to their community and the area where they lived; they were small, passionate, hard-working and deserving of support. Secondly, you saw the very different levels of social capital around the country. After we had a session in the south-east of England, we had to have a second, because so many people wanted to come to the first, but we could not fit them all in—but it was not quite the same in Newcastle, where there were much smaller numbers. It seemed to me then that community wealth funds could hit both those targets: they could help to level up social capital in different parts and they could reach in and get to those small groups of men and women who are doing interesting things in tune with their communities.

Those two factors bring their challenges. The first is the distance between the distributor of the funds and the recipient. I shall use an aeronautical analogy: the distributors of the funds are flying at 30,000 feet, while the people I am talking about are hedge-hopping at 100 feet, because they have to be right down at the grass roots. So Big Society Capital is brilliant—I have not a word of criticism about it—but its handouts are in the tens of millions and its access grants are in the tens of thousands. We will have to find a way to make sure that there are plenty of intermediate layers so that what leaves the big groups at the top trickles all the way down and reaches the really small organisations in this new regime—because, with community wealth funds, they will be really small organisations. We must also find new little acorns, which may grow well, and not fall back, as is too often the case, on the usual suspects. That will be the challenge for the structure going forward for this important decision.

There are some challenges for the sector, which are worthwhile putting on the record today. There is now a pot of money—as David Jason used to say in “Only Fools and Horses”, “lovely jubbly”—but there will be some hard decisions to be made on what to support and what not to support and, even more painfully and hard, when to stop supporting something because it is not providing the answer to the question or demand for which it was set up. That, in turn, will mean a second challenge to the sector. The weather in the charity sector is too often made not by the thousands of men and women doing their stuff and being successful but by the outliers—the crass, the illegal and the stupid who end up on the front page of the newspapers and therefore begin to bring the sector into less good odour. Therefore, on behalf of those Members of your Lordships’ House, most of whom are not here today but who spoke in favour of this from across all parties, I say: we are looking to the sector not to let us down. There was a degree of cynicism at times about whether these small organisations would be able to deliver, and I hope that they will prove those of us who went in to bat for them that our confidence was well placed.

That takes me to the next important point. Because you are small, it does not mean that you do not need to have your impact measured. Every charity has a public benefit objective, and the Charity Commission is supposed to ensure that you are meeting that and that you have a proper impact. It will be very important, with these small bodies, that we do not forget that, because the dormant assets fund and all the other providers of funding are entitled to have a level of confidence about what is going on. I hope that the Oversight Trust may have a role here. It is chaired by Sir Stuart Etherington, who was for many years chairman of the NCVO. I hate to say it like this, because Stuart Etherington is a good fellow, but he is—I say this as a compliment—a wily old fox, so he will be able to find out what is going on. I hope that he and his board will be able to dig into these sorts of things to make sure that we can have all confidence in what going on in this new sector.