Dormant Assets Bill [Lords]

Kevin Hollinrake Excerpts

2nd reading
Monday 6th December 2021 Commons Chamber

[John Glen]

I thank my hon. Friend for that point—a legitimate point that will be raised in different ways across the country during the consultation, and one on which the Secretary of State will need to reflect in due course before an order is laid.

It is vital that we afford everyone a fair and open opportunity to have their say, so the Government plan to launch the first public consultation, which will last for at least 12 weeks after the Bill receives Royal Assent. Until we have launched the consultation and fully considered the responses, the Government are not prepared to make decisions or commitments on the ways in which future funds will be used in England. To do so would clearly undermine the validity and transparency of the consultation exercise.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Under the current legislation—the Charities Act 2011—urban regeneration is one of the areas that distributions are allowed to go into, but it is not clear whether they can go to, for example, a regional mutual bank. As my hon. Friend knows, the all-party parliamentary group on fair business banking is strongly in favour of that. Could the point be clarified in the Bill to facilitate a quicker move to fund those regional mutuals?

[John Glen]

In short, no; that will not feature on the face of the Bill. However, my hon. Friend is a doughty advocate for that cause, and I am sure he will make a hearty contribution to the consultation which will inform the Government’s response in respect of those future parameters.

Mindful of time and the need for contributions from so many Members on both sides of the House, I will end by reiterating that the Government are committed to supporting industry efforts to reunite more owners with lost money, and to provide a practical way for unclaimed and unwanted funds to be put to good use. The dormant assets scheme has achieved that, and we are determined to ensure that it continues to be a success. I hope that the Bill will command cross-party support this evening, and that we will be able to work together on expanding the scheme to unlock hundreds of millions of pounds more for good causes throughout the country in the years to come. I commend the Bill to the House.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

It is a pleasure to speak in this debate. I am supportive of the Bill and the widening of the jurisdiction of the legislation.

As I said in an earlier intervention, my brief remarks will be centred on community banks, which, as both Ministers on the Front Bench—my hon. Friends the Economic Secretary to the Treasury and the Under-Secretary of State for Digital, Culture, Media and Sport, the Member for Mid Worcestershire (Nigel Huddleston)—know, the all-party parliamentary group on fair business banking believes are at the heart of social purpose. Indeed, the APPG’s recent “Scale up to level up” report makes the case for regional mutual banks and community development financial institutions, which could—and in the case of CDFIs do—play an important role in fairness, making sure that we level up properly, and in regional distribution in terms of regional recovery.

Let us look at how regional mutual banks worked in Germany after the most recent financial crisis. In the five-year period between 2008 and 2013, UK commercial banks withdrew financing to small and medium-sized enterprises by around 25%, whereas in the same period co-operative and community banks in Germany increased lending to SMEs by 20%. That was an incredibly important time for SMEs—they need funding to get through crises of that kind—and co-operative and community banks take a different approach to lending. Commercial banks are important in the UK but regional mutual banks could play an important role by getting patient capital to where it is really needed, which is to SMEs and the productive economy.

Regional mutual banks are not just a feature of Germany, and this is not just a romantic ideal; they are very much part of every G7 economy, with the US, Germany and Japan being examples of where they work very effectively. They are not currently part of the UK banking sector—they used to be—but the APPG sees them as crucial to levelling up because they can have a genuine regional focus.

Similarly, there are some very good examples of CDFIs. A business enterprise fund in Bradford, Yorkshire, is key to making sure that people who are financially excluded are financially included. Regional mutuals are full-service banks. CDFIs are not full-service banks, but they make sure that people on low incomes are properly banked, which again works very much on a relationship-based approach. They also lend quite significantly to small and medium-sized enterprises.

There are 50 CDFIs around the country. They rely very much on grants and loans rather than getting money from the markets, so it is incredibly important that they see more funds going into them. I see this as a real opportunity for some of our less well-off communities to thrive in the future. These organisations are sector-based, making sure, for example, that people from black, Asian and minority ethnic communities and women are properly supported.

One very good example of how CDFIs work is Prima Bakeries in Cornwall, which is featured in our report, “Scale Up to Level Up”. At the time, the business had 19 employees. It was refused banking from its high street bank, so it went to its local CDFI, South West Investment Group, which lent it the money it needed to get through. It now has 96 people employed in that organisation. That shows how CFDIs take a different, relationship-based approach, rather than simply looking at the pure numbers, which the big banks tend to do.

It would be very simple for us to try to expand the current legislation—I take on board my hon. Friend the Minister’s comments about going through a consultation. The difficulty with consultations is the time that they take. I know that it is a 12-week consultation, but this kind of stuff might take months or years to implement. It is quite clear from section 3(2)(c) of the Charities Act 2011 that urban regeneration is an area that qualifies for the distribution of dormant assets, but the people who distribute them, Big Society Capital and Fair4All Finance, currently think that regional mutuals and CDFIs do not qualify for those funds.

If we could put something into the legislation, a simple clarification rather than a wider consultation, on the basis that these sectors could be funded through dormant assets—I know that there will lots of different people trying to pitch for all kinds of different things—it would mean money going to those organisations much more quickly. If they are key to levelling up, which I absolutely believe they are, it would be good to see that consultation. We are looking for about £100 million to pump-prime these organisations with this funding. I will table an amendment to the legislation to discuss this at a later stage, because it would be better to expedite this issue than wait for a long-term consultation. No doubt we will have more time to discuss that at a later stage.

[Several hon. Members rose—]