Dormant Assets Bill [Lords]

Danny Kruger Excerpts

2nd reading
Monday 6th December 2021 Commons Chamber

[Rachael Maskell (York Central) (Lab/Co-op)]

In 2008, Labour set out a new principle in the House: to put dormant assets from bank and building society accounts to work, first by trying to reunite owners with their accounts but then, when connections failed to materialise, by moving assets to address social and environmental good causes. Labour’s vision has since released nearly £8 million to infrastructure bodies which, in turn, have multiplied the investment and expanded the work of civil society. I continue to argue that the pounds spent by civil society organisations stretch much further than those spent elsewhere in the economy.

This is a success to celebrate, but the last two years have been tough. As the sector's campaign slogan in response to the pandemic says, charities have been “#NeverMoreNeeded”. Demand went up and funding down as shops were shut and fundraising dried up. That is why this legislation is really “never more needed”, but it also furthers Labour’s ambition to introduce other assets into the reclaim fund, now that the principle has been established and the scheme has proved successful.

The three-year review should have taken place a decade ago, and the legislation before us today should have already released millions of pounds. If it had, the sector might have survived the last two years more securely rather than ending up where it is today. Today we are urging the Government to press on while also ensuring that the Bill is in good shape.

Charities have been tested throughout the last decade as the state failed to give the sector the back-up that it needed. Charities and Labour have shared values and a shared sense of purpose. We want to do all we can to transform our society, and that is why we value charities so highly. Bursting with dedication and expertise, civil society really is the heartbeat of all our communities.

[Danny Kruger (Devizes) (Con)]

Does the hon. Lady acknowledge that the Government put more than £150 million into the charity sector last year, and does she think that that was welcome, not enough or too much?

[Rachael Maskell]

As I was going on to say, that money reached only 14,000 charities out of 169,000. As we see demand spiralling, we are seeing charities struggling. The Government could have been far more generous, as they have been to many other sectors during the pandemic.

Every organisation has had to reinvent itself, digging deeper into its reserves, borrowing where possible, and appealing to the ever-generous public for help. We saw charities and mutual aid groups spring up in every corner of every community. Where the state stopped, charities took their service ever more deeply into our communities. That is why this legislation really matters, and why Labour will support its passage through the Commons today. It arrives in a better state thanks to the extensive work undertaken in the other place, and I particularly thank Lord Bassam of Brighton for his skilful handling of it, to help it to reflect the priorities of civil society.

In looking at the detail of the Bill, we are pleased to see that the principles that Labour set out in 2008 remain, including that of reuniting assets with their owners through extensive tracing processes and ensuring that the owner will always be able to claim the value of their asset in full if they seek to do so. The principle of this being a voluntary scheme will remain, whereby participants can opt in, and I encourage everyone to do so. When dormant assets have been through thorough tracing processes, the asset then transfers to the reclaim fund, which is responsible for any reclaim that might occur, moving surplus into the hands of identified organisations. Labour is most grateful to Big Society Capital, Access, the Youth Futures Foundation and Fair4All Finance for the way in which they have multiplied the value of these assets and invested them wisely to help people in our communities. Likewise, we are grateful to organisations in the devolved countries.

Part 1 of the Bill expands the opportunity for the inclusion of other financial dormant assets. The consultations to get to this point have been thorough, and each new product carries its own racing mechanisms and timescales to reduce risk. We welcome the inclusion of all the named assets, but I want to press the Minister further on pension schemes. While there is some inclusion, I know that he is making the case that until the pensions dashboard has been thoroughly tested, he is reluctant to expand in this area. I appreciate that there has been significant delay in the introduction of the dashboard, which has caused the Government significant embarrassment. This delay is denying good causes the assets that they want to put to work.

Perhaps the Minister could set out a timeline for further widening the scheme to these kinds of products. It would be good to hear from him what other assets he is considering for later inclusion, whether they are direct cash or non-cash assets. Charities cannot wait to benefit, and nor can the public. The powerful testimonies from current beneficiaries demand that the Government seek to expand. I know that the Second Reading of the Bill in the other place raised many helpful suggestions as to how that could happen. Wherever funds can be identified, Labour wants to see them put to work for social and environmental good causes.

Part 2 of the Bill focuses on a number of themes, the first of which is the reclaim fund. Moving it under the auspices of the Treasury is a positive move, placing it independently but with lines into the Treasury. However, it is Labour’s consideration that, 13 years since the scheme’s passage through this place, it should be reviewed. Each reclaim product should be assessed separately according to the levels of real risk to the reclaim fund. If data from the first phase is observed, the scheme could be more generous in its support to beneficiaries. The sector agrees with that. A regular review would also help to identify any risk in the scheme. The Government will now be responsible for underwriting any deficit that might occur with a loan to the scheme, but it is far better to avoid such risk in the first place. My broader question is therefore: is the balance right?

Before I address the matter of where the money is spent, I also want to raise the question of the next stage of the Bill. After such detailed consultation over many years, we need to ensure that there is no further significant delay in preparing and instituting secondary legislation. Labour wants to see this process commence on the heels of this legislation, for it to be thorough and allow sufficient time for response and for it then to be expedited through secondary legislation.

I am most grateful for the addition of clause 29 to this legislation. It was added on Report in the other place and it highlights a deficiency in the distribution of the reclaim fund. That is impeding civil society from thriving across many communities and impeding the social levelling-up agenda. Imagine doing a jigsaw and finding one piece missing: it mars the whole picture. The reconstruction of civil society is the same. All the schemes need to be in place, but the exemption of the community wealth fund has meant that whole swathes of communities have been robbed of the opportunity to build the very partnerships that could tackle the deepest of challenges.

In my own constituency, we have a thriving and growing voluntary sector under the superb leadership of York CVS. However, we have areas of real deep entrenched deprivation. Tang Hall Big Local, a local trust, has now developed micro-level infrastructure to start tackling social injustice in the Tang Hall area. It is utterly amazing to see the multi-agency approach and the multiple offers, alongside community engagement—225 such areas have been mapped out.

Imagine areas where there is no thriving CVS or a well-developed civil society sector, on which the new integrated care systems in the Health and Care Bill depend. Imagine this loss in the most deprived and challenged areas, as they often are. The amazing things that charities do just would not happen; the vital partnerships and social infrastructure would not be built. This is at the core of what the community wealth fund does. It empowers communities to develop the partnerships needed to transform themselves. Its inclusion will mean greater equality, which is surely what levelling up is all about.

That is why the inclusion of the community wealth fund in the Bill to build social infrastructure is so vital. The principles of the Bill and the 2008 Act are too broad to provide such a framework without clause 29, and the principle needs to be framed in primary legislation. Without it the funds could go elsewhere and will not meet the ambition that I trust the Government share with Labour.

The Government do not need further pilots, as there are 150 projects at various stages of development. Those projects have been evaluated and will continue to prove their value. When it comes to the civil society sector, the Government always seem to have the knack of overcomplicating things and missing the opportunity it presents. If they really wanted to build back better, they would have poured investment into community wealth funds and seized this moment to bring about social transformation. That is why Labour has pushed so hard so see it included in the Bill, and the Lords supported it. I trust for the sake of its impact that the Government will not lose the opportunity to reaffirm the principle of a community wealth fund in primary legislation to complete that picture.

In closing, I put on the record my thanks to the thousands of organisations that have shown their support for taking the reclaim fund forward, and to the participants in the dormant assets scheme to date for their co-operation and engagement. Across our communities, staff and volunteers are building civil society, fighting inequality and injustice, and supporting people with every need. Their contribution is outstanding and their support is utterly amazing. It gives us all such pride to reflect on all they do. Putting money to good work for them to multiply its benefits has always been a principle that Labour has advanced, and we will again throughout the passage of this Bill.

--- Later in debate ---

[Danny Kruger (Devizes) (Con)]

The whole programme of dormant assets and the social investment that it has mobilised has been a great success story. I pay tribute to Sir Harvey McGrath, the outgoing chairman of Big Society Capital, and to his team; and also to Nick Hurd, formerly of this place, who chairs the Access foundation, his colleague Seb Elsworth, and others there. They have done an absolutely tremendous job. Mobilising £8 billion of private money for £800 million of dormant assets is not bad.

I recognise the points made by my hon. Friend the Member for Grantham and Stamford (Gareth Davies). The fact is that some programmes do fail. The whole point of investment is that they do not always work. We have to keep an eye on the overall returns that funds like this generate. However, there are some tremendous success stories, including in social outcome contracts. I declare an interest regarding the one I founded—the West London Zone for Children and Young People, which has leveraged public money through social outcome contracts very successfully, bringing in significant private investment and delivering great outcomes for young people.

I recognise that, as the hon. Member for Bethnal Green and Bow (Rushanara Ali) said, it is not appropriate for us, as MPs or Ministers, to be dictating the objects for these sorts of funds. Nevertheless, I hope she will not mind if I make some suggestions of the sorts of projects that would be useful for this. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) is absolutely right that there is a massive gap in our finance sector in this country where we need small regional banks lending particularly to family businesses. That is absolutely crucial. If this money could support that, I would absolutely welcome it.

Then there is the opportunity for investment in personal debt projects. I particularly reference the suggestion by Fair4All Finance of creating a jubilee debt fund to tackle problem debt. We could do that. Community foundations and existing charities can and should be used as objects for significant capital injections. They distribute money very effectively to small local charities and causes.

Finally, there is the idea of a community wealth fund mentioned by the hon. Member for York Central (Rachael Maskell). I absolutely agree with her suggestion. I pay tribute to Matt Leach and Margaret Bolton of Local Trust, who seem to have got those on both sides of this House pretty much in their pocket when it comes to lobbying for this brilliant idea, which I endorse too. A community wealth fund could do all the things that we are describing to get money to all these projects, whether commercial, charitable or social enterprise. That is the sort of economy we need— a mixed economy that includes all these different and great innovations.

[Several hon. Members rose—]

Dormant Assets Bill [Lords]

Danny Kruger Excerpts

Report stage
Monday 31st January 2022 Commons Chamber

[Alex Davies-Jones]

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

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

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

[Danny Kruger (Devizes) (Con)]

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

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

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

[Jim Shannon (Strangford) (DUP)]

It is always a pleasure to speak in these debates. I thank the Government and the Minister for all they have done to make this Bill happen. Clauses 12 and 29, to which the Minister’s amendments refer, indicate things that the Democratic Unionist party wish to see, and I let him know that our party will support the Government tonight. However, I now wish to speak to new clause 1.

I agree that there must be further provision for dormant assets. Why not make good use of funds that would ultimately lie dormant unless further action was taken? The Bill aims to expand the current criteria, which will come with some great benefits, so it is great to speak on an important issue such as this. I welcome the Bill and look forward to the debate’s conclusion.

The Bill’s core purpose is to extend the dormant assets scheme to other financial assets, which could generate an additional £880 million of contributions. The figures are gigantic when we think on them, and they indicate where the Bill is going and what it can achieve. The Bill has three main functions: to track dormant account owners and reunite them with their account; to allow account owners to reclaim any amount they would have been eligible for; and to allow firms to partake as a voluntary process. The Bill will expand the assets involved further, creating a more sustainable economic success rate, make it a requirement for firms to get involved, and remove further financial restrictions. It is a win-win for the Government and for the Minister in particular.

The dormant assets scheme currently supports and boosts, by some £800 million, innovative, long-term programmes that aim to address some of the most pressing social and environmental issues. As I said, its expansion through the Bill will unlock an additional £880 million. It is stated that the Bill’s benefits will be felt across the whole of the United Kingdom of Great Britain and Northern Ireland. I for one would like reassurances from the Minister that it will extend to Northern Ireland and that we will benefit as well. The potential for benefit in the UK mainland is great, but we also want to see it, if we can, in Northern Ireland.

Thus far, the scheme has benefited many foundations. The Youth Futures Foundation, which has undertaken significant work to tackle youth unemployment, got some £90 million, and Big Society Capital got over £400 million to tackle homelessness. These are great projects. The Bill makes money available to address social issues; how could anyone not say that that is great?

Also at the heart of this scheme is securing protections for those who own any of the financial assets involved. Dormant assets remain the property of their owners, who can reclaim any money owed to them in full at any time. In Northern Ireland, the Dormant Accounts Fund NI works to support the voluntary, community and social enterprise sector, and we can see the benefits immediately. In Northern Ireland more than 44,000 staff are employed in the sector, which accounts for 6% of the total Northern Ireland workforce. I would encourage all organisations to contact the National Lottery Community Fund to take advantage of the wonderful scheme that Northern Ireland has to offer.

I thank Members who have already contributed, and those who will contribute later, to a debate that has made clear the potential for a great economic impact following this expansion. I want to ensure that the devolved institutions can take advantage of this scheme as well, and that the funds generated in England are greater than those generated in Scotland and Northern Ireland. There must also be further engagement with local communities and smaller organisations to ensure that they are not left behind.

I acknowledge the benefits that the Bill has introduced so far, and I shall welcome further discussion and expansion to ensure that financial assets are not wasted and the money is put to good use. We have seen what the scheme can do; it can do more.