Dormant Assets Bill [HL]

I thank in particular all those involved in the development, passage and implementation of the 2008 Act, several of whom are in the Chamber today; without their vision of what could be achieved, this would not have been possible. I am proud of what the current scheme has achieved to date and I hope that the Bill will continue to build on its notable successes.

With 34 banks and building societies now participating in the scheme, including all major high street banks, the current scheme is reaching a mature state, with significantly fewer funds flowing into the system each year. Over £300 million was transferred in 2011, but this will decrease to around £42 million per year in future. Expansion means that the flow of funds is not only maintained but will be increased substantially.

Consumer protection remains at the heart of the expanded scheme, with the continued priority being to locate and reunite people with their financial assets. Where that is not possible, expansion will enable more responsible businesses to redirect money to some of the nation’s priority issues. Full restitution will also continue to be a core principle. Asset owners will always be entitled to reclaim what they would have been owed, had their assets never been transferred into the scheme.

Industry expects that around £1.7 billion-worth of dormant assets could be eligible for transfer after expansion. Once transferred, a proportion is held back to satisfy any future reclaims and around £880 million could then be released. Money must fulfil the additionality principle, so it cannot be used as a substitute for central government funding. We have worked closely with industry leaders on how best to design expansion. I record my warm thanks for the support we have received throughout this process. I also thank everyone who responded to the public consultation, whose contributions have informed the shape of the Bill.

I shall now outline the main contents of the Bill. Currently, the dormant assets scheme accepts transfers only from dormant bank or building society accounts. The Bill expands the scope of eligible assets, so certain assets from the insurance and pensions, investment and wealth management, and securities sectors will be eligible for transfer. Our consultation response committed to considering how legislation could best provide the flexibility to expand the scheme further in the future. In reply, the Bill introduces a new power to broaden further the pool of eligible assets through future regulations.

The Bill also enables the specific focus of the English portion of funds to be set through secondary legislation, subject to statutory consultation. This harmonises the mechanism in England with the devolved Administrations and will allow the scheme to respond more flexibly to changing needs over time.

After 10 years of operation, we are at a critical juncture in considering the scheme’s overall operation, and now is the right time to think about how the scheme can deliver the greatest impact once it has been expanded. Therefore, subject to the Bill passing, we will launch a public consultation on the use of funds in England. The current restrictions of youth, financial inclusion and social investment will continue until any new arrangements come into force.

The Bill also includes provisions to improve the operation of the scheme: for example, by making owner reunification efforts a requirement before funds are transferred, with the exception of situations where efforts are considered disproportionate or unnecessary.

The Bill also reflects Reclaim Fund Ltd’s recent establishment as a Treasury non-departmental public body. It names Reclaim Fund Ltd as the scheme’s only authorised reclaim fund, and as a result the Government are seeking a power to enable the Treasury to add, substitute or remove an authorised reclaim fund in future through secondary legislation. The Bill also enables the Government to cover the liability for reclaims should any authorised reclaim fund face insolvency, in the form of a loan. Such a liability will be established following the usual parliamentary process.

In closing, I emphasise our mission to support industry efforts to reunite owners with lost money and to provide a practical way for unclaimed and unwanted funds to be put to good use. I hope that the Bill receives strong support from your Lordships so that we can proceed swiftly with its passage and continue to build on the scheme’s success. I look forward to all noble Lords’ contributions to this debate but in particular to the maiden speech of my noble friend Lady Fleet. I beg to move.

It is almost as if we are facing two ways. We want to ensure that we reunite people with their legitimate funds, particularly in the pensions and insurance industry, where the number of people who do not notify their change of address when they move is staggering. If the figures are correct, 4% of people have not given notice of the change after a number of years. No wonder difficulties arise in reaching out and finding them, although I hope that the Minister will briefly indicate that it will be possible, even with data protection, to encourage the use of other data platforms, including local government, to ascertain where people have moved to and therefore reunite them with their funds. That apart, the critical element here is being able to put to work the massive dormant resource that still exists. I still believe that it is much greater than the amounts that the ABI has talked about.

The Minister mentioned Big Society Capital. Its predecessor, which the right honourable Hazel Blears and I were involved in establishing with the then Chancellor, was designed, as has happened since, to ensure we use that capital literally to kick-start the development of social capital, and the ability of communities to develop their capacity not only to fend for themselves but to create new initiatives that build from the bottom rather than the top.

The National Council for Voluntary Organisations has suggested that there might be the development of a community wealth fund. I hope that we might look at the existing community foundations. For instance, South Yorkshire’s Community Foundation does an enormous amount of good in my area. Making resources available to it for grant giving and establishing social capital funding that would enable community organisations to develop, flourish and become self-sustainable would be an extremely good move. I would be very grateful for the Minister’s confirmation that her department would be prepared to look at that as part of the development and use of the NDPB.

We have made good progress with the lottery over the years. It is much more likely to reach out to the parts that the Government now describe as requiring levelling up. It has certainly been true that it was, as so much of our nation is, southern and London-centric for understandable reasons to do with capacity to put in bids. In the past—not so much currently—the complexity of the bidding process provided a barrier to those who were not familiar with it. I hope it will be possible to make that much easier, perhaps through community foundations.

This is something that we all agree with and support. Clause 29 offers the opportunity of consultation, which the Minister mentioned. Perhaps she will confirm that it will be built into, and be a critical part of, the process. It is important to establish that that is the case, because Ministers move on and departments get reconfigured.

If, from this afternoon, we can have even greater optimism about being able to put this money to use while reassuring people that, if they reappear, their investment and contribution will still be available to them, that would be very good. I also hope that, although we are widening the criteria for access, it will be possible to continue with the existing programming criteria, because so much has been done, particularly on financial inclusion. Many of us have been engaged over the years in promoting social inclusion, and in avoiding exploitation and the way that misuse of domestic credit—and worse—has exploited people in greatest need. The answer to that has to be education on financial matters in school. KickStart Money and the APPG have been doing a really good job, and so have those working in teaching citizenship, which covers financial inclusion and the economy, as well as personal, social and health education.

This afternoon we give a very warm welcome to this legislation, building on what already exists and empowering and freeing people to be part of the solution to the challenges they face in their lives by providing the resources, funding and capital to turn themselves and their communities around through self-help and building from the bottom. It is by civil action that we ensure that, whoever the Government of the day, people remain in a position to fend for themselves, to build for themselves and to be creative in building safe, clean, green and functioning communities.

Although the headline figures in the briefings that we have been given are compelling, we do not, for example, know the costs to industry, to the relief fund or to the distributors, nor do we know important things such as the quantum of the assets put into the recovery fund or the frequency with which they are put into it, only for them then to be rightly reclaimed by somebody who turns up and having to be returned to the institution. We should have that kind of information at our disposal before we move on to more complex assets. I leave it to other noble Lords, including those on these Benches, to talk about the much more complex difficulty of bringing in assets that cannot easily be crystallised because they are not in cash.

The Government have an obligation to bring this sort of detail to Parliament, so that we can avoid the temptation to use this as a fallback or piggyback fund for government when times are tough. The Government did themselves no favours last year when, in the first lockdown, the sector said that it could see that it would lose £4 billion of funding. The Government responded with £750 million of funding, £150 million of which was taken from these sources and thrown into a pot. They really need to think about that.

We are now 10 years on. We know now that one of the most pressing needs of poor communities is access to resources. There is no indication in the Bill of a responsibility to make sure that the voluntary sector bodies carrying out this work on financial inclusion will themselves be sufficiently viable for a number of years. That is missing. One of the problems is that we have relied, yet again, on the National Lottery as the distributing body in England, but this has never been part of what it does. I want to see us looking into how to get greater flow from this source into social enterprises. I agree with the noble Lord, Lord Blunkett, that, right now, there is a desperate need in communities for a source of capital to get viable social enterprises off the ground so that they can create employment. I therefore ask the Minister to make sure in her consultation that those bodies are included as a matter of right.

Finally, I am never a fan of Henry VIII powers in principle, and certainly not when there is not much obligation on Ministers to come back and report to Parliament. If we are going to let this Bill go through—and inevitably we will—I think that Members of your Lordships’ House should ask for a greater degree of reporting than the five-year post-legislative scrutiny given to the 2008 Bill that is responsible for this. We should ask them to come back with much greater detail about the costs and operations of the scheme and its benefits.

We are talking of billions of pounds, but the one thing missing in all that I have read on this is any estimate of the impact that this funding has had in communities, against the objectives set for it. It would be remiss of us to go ahead with this scheme if we do not even ask the question that would be asked of any little charity that applied for any funding: how is it going to demonstrate that it is making the difference that it says it will? With those caveats, I look forward to some detailed work on the Bill, which I am sure deserves to pass, but perhaps not in the form that is before us today.

Most of the money, however, is designated for social or environmental purposes—a very broad category. For England, which receives more than 80% of the cash, in line with the Barnett formula, the demands have been more clearly spelled out. It is specified that the money should be used for youth projects, financial inclusion or social investment. The Bill repeals this, and it is reassuring to know that there will be public consultation on how the increasing funds should be spent before the Government change the stipulations.

It is fair to say that those whose assets are being reclaimed would espouse a variety of good causes, varying from international aid agencies to those charities dedicated to looking after donkeys. But it is perhaps appropriate that these funds, which are available only because of the failure of individuals, either through carelessness or circumstances, to manage their money effectively, should be directed, at least in part, to financial education.

In particular, some of the money could fund vital schemes to make sure that all children in primary schools learned about how to manage money. KickStart Money, which backs this plan, claims that money habits are formed by the age of seven—when so much of a childhood is formed. A lack of financial education in the early years may in part be responsible for the fact that, prior to the pandemic, 11.5 million people in the UK had less than £100 in savings. That will not see them through a rainy day—or, worse still, through the sort of weather that we are experiencing now.

The situation has worsened. The Rowntree Foundation reported that 2.4 million people in the UK experienced destitution in 2019—a 54% increase since 2017. One in seven of those experiencing destitution was in paid work. In many cases, they have little idea of how to manage the money they have. They take on loans at onerous rates of interest. They use hire purchase schemes. A nationwide scheme to teach children about finance would have real benefits and might result eventually in there being fewer dormant assets to be employed in the way in which we are discussing—but that would be no bad thing.

What struck me as I was reading that and thinking about the Bill is that it is true of the voluntary sector, too. The Thatcher and Major Governments had a bold approach to that sector. Indeed, the National Lottery was one of the biggest and boldest reforms of the voluntary and third sectors—and the injection of funds into them—that we have seen in the history of this country. In the 27 years—or whatever it is—since the lottery has been in operation, an estimated £42 billion has been raised for good causes, and that of course has had a dynamic effect. The lottery has massively energised the voluntary life and good causes of this country and it dwarfs the resources that can be made available under the Bill.

The Blair Government sought to be as bold in their vision. The two particular bold things that we sought to push forward included the engagement of voluntary, private and religious-based organisations in the delivery, as appropriate, of public services. When I was Education Minister, we put a huge effort into developing public-private partnerships in respect of schools—particularly independently managed state schools, or academies, which I am glad to say have now spread far and wide. With the enormous partnership of my noble friend Lord Blunkett, we established more than 400 academies and raised more than half a billion pounds in charitable contributions, with huge energy from the sponsors, including notable Members of this House—the noble Lord, Lord Harris of Peckham, is a formidable academy sponsor—and I was very proud of the work that we did there.

The Charities Act 2006 sought to enlarge the scope of charitable endeavour. The single biggest form of charitable endeavour in this country is in education. That Act sought, in particular, to introduce the public benefit test into the definition of the charitable activities of private schools to enlarge their work. I want to come back to that in a moment, because it is a significant piece of unfinished business.

The Cameron Government started well. The idea of the big society is one that I should have thought everyone in the House would embrace as a direction of travel. It built on the National Lottery, on the engagement of the voluntary sector in the delivery of public services and on the Charities Act to enlarge the scope of what could be done by voluntary effort in meeting big, national objectives. I was a strong supporter of the National Citizen Service; indeed, I am a patron, and wish for it to be extended much more boldly than it has been, so that all young people get an opportunity to make an organised contribution to society which will set them on a track that, I hope, will live with them for the rest of their lives, bring our communities together in the way in which we need to—they are so divided, and have become more divided, in this country over recent years—and, in the jargon of today, engage them in levelling up. The tragedy of the big society is that it was a great idea but the policy was not there to follow it up and it essentially fizzled out.

The problem at the moment is that, under the present Government, there is no real strategy beyond a few measures of this kind that are fairly minor in the big scheme of things. The Minister said that perhaps £800 million or so may be raised from this measure over many years to come. That is all very worthwhile but the amount is small by comparison with the big measures that I have talked about. In some respects, we are going backwards.

Of particular concern to me is that the area of charitable endeavour in which we are going backwards is education. An attempt was made by the Charities Act 2006, which was long overdue, to focus the huge charitable assets invested in the education sector on the provision of genuinely charitable activity—by which I mean engaging in poorer communities and giving poorer students opportunities that they do not have. Unfortunately, that big policy emphasis has moved backwards in the past 15 years because of the rigid determination of private schools—which are of course charities, most of whose assets were given in the form of charitable donations, mostly for the education of the poor and underprivileged—and the failure to ensure that those assets are properly applied. That is a constant problem at the heart of our charitable sector, which we were seeking to get at in the 2006 Act.

That policy, by legal action on the part of the private schools, was reversed. Then, under the present Government—including through the appointment of a former Leader of this House as chairman of the Charity Commission; an unusually political act—the policy was actually put into reverse. The obligations that we had sought to impose on those private schools have now been entirely lifted. The private schools sector, which is substantially charitable, is now more focused on simply delivering education for the very rich and privileged in our society than it has probably ever been in the history of this country.

The British Sociological Association, in a paper published last month which is hugely important in order to understand what is happening to the charities sector in this country, estimates that £1 billion a year—I repeat, £1 billion—is spent on fee relief for less-advantaged children attending private schools. These are charitable institutions to start with, and command about £1 trillion-worth of assets between them. But according to the study of 142 schools by the association, 97% of the £1 billion is spent on subsidies to essentially middle-class families who can afford substantial fees; only 3% goes on the relief of fees in their totality, or up to a level of 75%, for families who have very low means. So what starts off as a hugely privileged sector, even in the work that it does that is supposed to be charitable—in relieving fees and giving access to these charitable assets—is not meeting those objectives.

While I welcome the Bill and think that what it does in its own small way is worth while, and while I welcome the laudable objectives for the charitable and voluntary sectors which have been played out in noble Lords’ speeches throughout the debate, we are being deeply complacent if we think that we are moving broadly in the right direction on these issues. We are moving backwards not forwards when it comes to the expansion and engagement of the charitable and voluntary sectors in the life of the country. It is a big part of the problem we have in levelling up across different parts of the country and different parts of the community. The Government need a much bolder and more coherent policy if we are to meet these big social objectives.

Music and music education now fills much of my life. During the pandemic, music has been a source of great joy and comfort to many. This last year has indeed been devastating, but the work of my noble friend Lord Mendoza as commissioner for cultural recovery and renewal has played a vital role in giving hope and funds to music and the arts. Teachers have valiantly persevered, maintaining music tuition wherever possible, often online. They recognise the important role that music plays in a child’s education, boosting mental health and self-esteem and improving cognitive ability to raise attainment in maths and English. Students from low-income families who take part in musical and creative activities are three times more likely to get a degree and a job. I live in hope that there will be renewed government support for music education, following the recent publication of the Department for Education’s Model Music Curriculum. I played a part as chair of the expert panel and believe that the document is an important step in helping our teachers to ensure that every child can access high-quality music education. Concert halls and village halls across the country are ready to take up the challenge of being part of the national rebirth through music and the arts. Like all those for whom culture and the arts are so important, I take this opportunity to urge the Government to negotiate speedily amendments to the visa restrictions and work permits for the EU for all our musicians, actors and artists. They are critical to the livelihoods of tens of thousands of wonderful people and vital to global Britain.

I also take this opportunity to give my full support to the Government’s proposal further to extend the dormant assets scheme in the Bill. I congratulate the Minister on the success so far. It is a remarkable achievement. I am very proud to have been very involved with the voluntary sector, so I look forward to an active role in the debate. Expanding this scheme is crucial to maintaining its impact and to contributing to the levelling-up agenda. Additional funds would make a real difference to so many communities and to the cultural economy. Is this not the moment to level up music education and ensure that children from all backgrounds and all regions can benefit from the power of music?

I am immensely grateful to all those who have welcomed me today, and I look forward to the rest of the speeches in this debate and the many debates to come.

I turn to the substance of the Bill. I am grateful to the noble Lord, Lord Blunkett, for reminding the House of the important role played by the noble Lord, Lord Field of Birkenhead—mainly on a personal basis, as I have known him all my life as a close family friend. It is a great testament to the success of the scheme that it has been broadly uncontroversial, very much welcomed and has channelled many hundreds of millions of pounds to good causes. I echo the noble Lord, Lord Adonis: it is hard to think of any reason to oppose the Bill, although there may be opportunities to improve some of its detail. Nobody can oppose the need to extend the remit of the dormant assets scheme to insurance and pension products and potentially to unlock a further £2 billion for good causes.

I take on board the remarks of the noble Baroness, Lady Barker: it would be interesting to know what one could learn from how the dormant assets scheme has been working in the past decade or so and how effectively the money has been used. Partly on a financial basis, I should be intrigued to know—I may be going a bit off piste here—whether we can learn anything about what type of financial assets are unclaimed and why. I think this will become rarer as we move into a digital age. Noble Lords have mentioned the digital dashboard. As more and more of us manage our finances online, there will be no need to write to our insurers to tell them that our address has changed, because our digital address should, broadly speaking, remain the same.

I was also musing, because I am obviously thinking ahead to my speech on public service broadcasting in tomorrow’s debate, that some of the great causes that the dormant assets scheme has supported so far are exactly the kind of programme that the BBC should be making, so I think we can elide the dormant assets scheme with the future of the BBC.

I want to use this opportunity to raise one specific point that has been a hobby-horse of mine for several years, and I think I may have played a tiny role in nudging things along. As I do not tell need to tell your Lordships, because you all know what I am about to say, I am talking about the National Fund, which is on everyone’s lips. The National Fund was started by a man called Gaspard Farrer in 1928. He was a member of the distinguished Farrer family, the solicitors, but he was a partner at Barings Bank, and he gave half a million pounds to the National Fund, intending it to pay off the national debt. That half a million pounds attracted a few other public subscriptions, and it was then promptly forgotten about, although I think it was managed for years by Barings Bank, which probably claimed useful fees from it. It was actually managed extremely well, because in 2019, before the stock market boom, it was worth £519 million.

We have had one dormant assets Bill in the past decade which has unlocked about £700 million or £800 million. We now have a Dormant Assets Bill which might unlock £2 billion, but we do not have a National Fund Bill, which at one stroke could unlock £519 million, which I know that my noble friend Lady Fleet and I would deploy very effectively to support the arts and music.

What on earth are the Government going to do about the National Fund? At the moment, its future is the subject of a modern-day Dickens novel as it grinds slowly through the courts. I lobbied the Attorney-General, he forgot about it. I lobbied him again, he forgot about it. He finally went to court. At a court hearing at the end of last year, the High Court judge decided that the National Fund could potentially be wound up and its funds deployed to causes other than the national debt. He concluded that because the National Fund represents 0.03% of the national debt, despite the excellent management of Barings and others, it was highly unlikely to achieve its purpose of paying off the national debt, which I think is now £2 trillion. It has even been spotted by the Prime Minister’s former private secretary, Danny Kruger, now a distinguished Member of Parliament, who in a recent report on community service asked why we cannot deploy the National Fund.

I am afraid that I have slightly hijacked the debate on the Dormant Assets Bill to once again bring the National Fund to the Government’s attention. I know that there is no more able and effective Minister than my noble friend on the Front Bench this afternoon to grab this issue, run with it and bring forward appropriate government amendments in Committee to unlock the National Fund and, at a stroke, double the assets available to good causes.