Dormant Assets Bill [Lords]

Gareth Davies Excerpts

2nd reading
Monday 6th December 2021 Commons Chamber

[Gareth Davies (Grantham and Stamford) (Con)]

Thank you Madam Deputy Speaker; I will keep my remarks brief.

This fantastic Bill will unlock literally hundreds of millions of pounds to support communities and community businesses throughout the country. The Bill is clear about where the money is coming from, so let me talk briefly about where the money could go to. The Dormant Bank and Building Society Accounts Act 2008 unlocked funding to support our UK social investment sector, and I very much hope that this Bill will do the same. The UK social investment market has tremendous potential to transform communities up and down the country, and to support businesses that have a social benefit and charities that have specific, targeted interventions. While discussing this Bill, it is important that we reflect on the time since the 2008 Bill. In the brief time that I have, I will highlight three points.

First, as has been mentioned by the hon. Member for Bethnal Green and Bow (Rushanara Ali), in 2012 £425 million was taken from the dormant assets pool to form Big Society Capital, which was the world’s first social investment organisation. As she quite rightly pointed out, it has done significant and brilliant work to mobilise social investment capital, and has helped to fund a lot of businesses and charities around the country. However, it is important to point out, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) did, that it is constrained by the very specific, ringfenced scope of the legislation at the time, to the extent that its mandate has almost become overtly philanthropic. If we are really going to unleash the potential of social investment, it is vital that we look at the organisation’s scope to be able to invest in businesses that have a social impact and make money. Their financial track record over the past eight years shows that they have a made a loss in six of those years. If we spoke to the organisations themselves, they would agree that if they were given more freedom to invest across the country in different types of business, they could do a lot better.

My next point is on what are commonly known as social outcome contracts, which were first launched in 2011. These are highly complex, very illiquid and somewhat risky arrangements. We have had 87 launched in this country since 2011. They were billed as a way of mobilising billions of private capital. Unfortunately, they have only mobilised £73 million. I therefore urge caution on the Government ahead of proceeding with allocations in future to make sure that they are not investing in social outcome contracts that may not deliver what they say they will.

However, there is one area that I would encourage the Government to look at as part of their consultation, and that is to bolster our liquid, tradeable social bond funds and the market that is out there. These are issued by corporates and charities to ringfence capital that has a social impact. We are a genuine world leader in this. Last year there was $59 billion of issuance that could multiply quite exponentially given what has happened with green bonds. I encourage the Government to look at that in more detail.