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

Lilian Greenwood Excerpts

Wednesday 15th November 2023 General Committees

[Lilian Greenwood (Nottingham South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. This is my first time shadowing the Minister on behalf of the official Opposition, and I am glad that it gives me the opportunity to welcome the draft order, which enables community wealth funds to be added to the good causes named as beneficiaries of the dormant assets scheme in England.

As hon. Members know, the previous Labour Government introduced the Dormant Bank and Building Society Accounts Act 2008 and created the dormant assets scheme, a success of which we can be proud. The scheme enables funds from dormant bank and building society accounts to be made available to good causes, with English expenditure ringfenced, as the Minister said, to support initiatives focused on youth, financial inclusion and education, and social investment wholesalers. Since the 2008 Act came into force, more than £771 million has been allocated to those three causes in England.

It is important to recognise the four organisations that have distributed these funds and contributed to the scheme’s success: the Youth Futures Foundation, Fair4All Finance, Big Society Capital and Access, the Foundation for Social Investment. Between them, they have funded vital services, supporting young people and helping to break the barriers they face in accessing opportunities. They have offered practical help and support to people facing debt and financial exclusion—people who might otherwise have been forced to resort to loan sharks, other exploitative arrangements, or indeed gone without essential household items, such as the washing machines and similar items that the Minister referred to. Their work has included providing thousands of interest-free loans and, as has been said, they have supported the expansion of the social investment market tenfold to support a multitude of charities and social enterprises working in and with communities across the country, and so they are making a difference to the lives of people most in need. We want these organisations to be able to continue to carry out their important work at a time when we know the cost of living crisis is creating huge challenges both for our constituents and, indeed, for charities themselves. These sources of help and support are needed more than ever.

Last year, following on from the work of the independent Dormant Assets Commission, the Dormant Assets Act 2022 was passed with cross-party support, extending the scope of the original scheme to unlock additional assets and so provide further funding for good causes. Although the Government did not at that stage agree to add community wealth funds to the list of good causes that could be funded, it is really welcome that they listened to the strong arguments made for their inclusion and subsequently held a consultation. I am really pleased that, as the Minister said, the consultation received more than 3,300 responses and was supported by 71% of respondents. It is clear that there is very strong support for the use of dormant assets to support these funds targeted at communities that have low levels of civil society infrastructure and are in high need.

However, while we welcome the expansion of dormant assets and today’s order that enables these new funds to be distributed to a wider range of good causes, there are still a number of questions that I would like to raise with the Minister. We are, of course, conscious that dormant assets are not Government money; they can be reclaimed and it is therefore right and necessary that reserves are held to meet such reclaims. There remains a question about whether the level of funds held in reserve is the right one. What assurances can the Minister provide that the proportion of funds being held back is correct? How is this arrived at? How and when will it be subject to review?

I would also like to ask the Minister to clarify what work the Government are doing to broaden the scope of assets included in the scheme even further. The independent commission had recommended including unclaimed pension pots, but the Government have not done so. Please will he explain that decision? Are there other categories of assets that could be considered in the future? I have heard the suggestion that unclaimed balances on Oyster cards could be a potential source, and no doubt there are others. Could the Minister perhaps say a little on that?

The second set of questions I want to raise relate to the Government’s technical consultation on the design of community wealth funds and how it was undertaken. The first issue I would like to ask the Minister to address is the targeting of the funding. As he will know, the original conception of the community wealth funds was to provide long-term support and funding to invest in social infrastructure, focused on improving outcomes in left-behind neighbourhoods. That drew on the work done by Local Trust and others. That work used a community needs index to identify those areas with a lack of social or community infrastructure, and cross-referenced them with those areas facing high levels of deprivation, which were identified via the index of multiple deprivation.

That research identified 225 wards that were concentrated in housing estates most often on the periphery of towns and cities. However, in the technical consultation, the Government made clear their intention to use the community wealth fund to target communities in small towns of 20,000 residents or fewer. Local Trust has estimated that only 17 of the 225 left-behind neighbourhoods are in such small towns. Does the Minister accept that this risks the funds failing to meet the very places that most need this investment and that most stand to benefit from it? Is there not a danger that this change in focus will fail to provide accurate evidence on the effectiveness of the community wealth fund model, and that it may not provide the best value for money, and thus potentially undermine a second round of funding, or other further rounds?

Community wealth funds have the potential to boost and empower left-behind communities by giving them the resources to invest in the facilities and services that would have the most benefit locally and improve the lives of people who live there. The decision to target only small towns could mean that those left behind will stay there. The Minister knows that there is a perception that Government funding is too often allocated according to political considerations rather than on the basis of those places in greatest need. Does he understand the concern that this change in targeting has prompted? Can he tell me how the Government plan to target the left-behind neighbourhoods when many of them will not qualify for community wealth funds?

Finally, the Government had originally promised that there would be a three-month consultation period on the technical consultation. Given the significant changes between the version of the community wealth fund as originally conceived and the version in the technical consultation, surely providing adequate time for responses was particularly important, yet the Government allowed only four weeks. Can the Minister explain why the consultation period was cut short, and does he not share the concern that this may have impacted on the quantity and the quality of responses?

This order brings in welcome changes, but I hope the Minister agrees that it is important to maintain confidence and cross-party support for the dormant assets scheme.