Clause 1 [Transfer of balances to reclaim fund]:
1: Clause 1, page 1, line 9, at end insert—
“(2) In making a transfer the bank or building society should provide the reclaim fund with details of the accounts being transferred.”
The noble Lord said: My Lords, it may be helpful if I deal also with Amendments Nos. 2 and 9.There has been very widespread support for the objectives of the Bill; namely, that banks should be able to transfer the assets in dormant accounts to a reclaim authority, and that those assets could then be distributed to deserving causes while at the same time preserving the right of the owners of the assets—I prefer the term “owners” to “customers of the bank”—who subsequently wish to make a claim against the bank to do so; but under the Bill to do so against the so-called reclaim authority. While there is widespread support for the objectives of the Bill, there is also widespread concern about its structure, both with regard to the way in which the assets are transferred to the so-called reclaim authority and, at the other end of the process, the way in which the proceeds are distributed.
In Grand Committee in the Moses Room, I argued that it was crucial that every effort should be made to find the rightful owners of dormant accounts. I believe that is common ground throughout the House. The banks are certainly making far more effort than previously to find the owners of dormant accounts. Having had much experience of this in relation to the claims resolution tribunal for dormant accounts in Switzerland, I argued that if one really wished to find the owners there was a strong case for publishing the names of the dormant accounts, thereby enabling anyone who thought that they might relate to themselves or to a relative—particularly heirs, of course—to make a claim. It was argued against that that there were problems of banking confidentiality and we had a considerable exchange on this issue. I have made further inquiries about the situation that existed in Switzerland vis-à-vis dormant accounts and it is clear that it was closely prescribed under Swiss law to a specific period; notably, that when the depositors may have been victims of the Holocaust, although we dealt with many other accounts. None the less, there is a strong case for trying to find the owners of dormant accounts in that way.
As regards Amendment No. 1, I suggest that it is crucial that the bank or building society concerned should provide the reclaim fund with the details. If the function of the reclaim fund is to deal with claims made after assets have been transferred, that seems sensible. I suggest in Amendment No. 2 that the reclaim fund rather than the banks should publish the names. Be that as it may, I think that is the right way to approach the matter. But in any case it is important that the details of the dormant bank accounts should be transferred to the reclaim fund.
The situation envisaged in the Bill is very strange. If I understand correctly what the Government are proposing—no doubt the Minister will confirm whether I am right—the assets will be transferred from the banks to the reclaim fund but they will not tell the reclaim fund who the owners are. Instead, if someone subsequently wants to make a claim against the reclaim fund, an agency agreement will be set up between the banks and the reclaim fund. So although the assets have been transferred, the responsibility for any subsequent claim will still rest with the banks. They will have the data. That seems to me an extraordinarily roundabout way of doing it. The obvious thing to do is to transfer the data to the reclaim fund, and for that fund to deal with any claims. As the measure stands, the reclaim fund does not act as a reclaim fund; that function is still being performed by the banks.
There is a further point about Amendment No. 9. The activities of the reclaim fund are closely circumscribed by the Bill—it can do only what is mentioned. Strangely enough—perhaps the Minister will address this point—it does not appear to be empowered to ascertain the owners of the dormant accounts. Therefore, Amendment No. 9 says that it should be able, when dealing with claims, to ascertain the owners of the dormant accounts transferred to it. Here again, it would seem that the obvious thing to do is to transfer the data to the reclaim fund rather than for them to remain, rather like the smile on the Cheshire Cat’s face after the Cheshire Cat has disappeared, with the banks.
These are difficult issues. I am increasingly conscious that if a Bill is structured in a strange way it is virtually impossible for your Lordships’ House to make fundamental changes. We go into a procedure in the Moses Room, where there are no votes and amendments cannot be made. We can vote at Report stage but increasingly there is pressure not to pursue matters further at Third Reading. So the number of votes that one can have on a Bill in your Lordships’ House is very limited. Consequently, if one wants to restructure a Bill, however defective its structure, it is extremely difficult. None the less, I hope that the Government will accept these amendments, which will do something to resolve the problem of the initial transfer of funds to the reclaim fund. No doubt on later amendments we will come to issues about how the funds are distributed, but those are separate issues. I beg to move.
My Lords, I briefly associate myself with comments made by my noble friend about the restrictive nature of our consideration of some Bills under the Grand Committee procedure. As my noble friend stated, it restricts our ability to look at structural issues.
My noble friend is particularly concerned that the reclaim fund should be involved in the activity of an individual seeking repayment of his or her money. That is not what the Government, banks or building societies appear to intend, so it is difficult to get that into this Bill. I say in support of my noble friend that the incentives for properly effecting repayments, if they are to be handled by the banks, are very weak—in fact, they are non-existent. Once the bank has handed over the dormant account money to the reclaim fund, the bank has no obligation in respect of repayment. We discussed that point in Committee. That would mean that when the banks handle repayments, they have no incentive to minimise them or calculate them correctly. My noble friend’s idea of transferring this responsibility to the reclaim fund has genuine merit in terms of getting the incentive structure right within the Bill. I hope that the Minister will carefully consider it.
My Lords, if I may interpret what the noble Lord, Lord Higgins, means, I think he wants to know how it is going to work. To my simple mind, it seems that, once the bank decides that surplus funds are available and it has made every effort to trace the owners, it then writes a cheque for, say, £5 million and sends it to the reclaim fund saying, “This is in respect of these 10,000 deposit holders”. I assume that they will be listed somewhere, because if someone else turns up and the bank says, “Well, we sent your money on”, the person will say, “I did not deal with the reclaim fund, I dealt with you”. Therefore I should have thought that the bank would go to the reclaim fund and say, “Look, here is the proof. That is the name on the list that corresponds to the cheque that we sent. We would like the money back, please”. If that is not the case, it should be explained to us.
My Lords, I am very grateful to the noble Lord, Lord Shutt, because he has explained exactly the Government’s thinking on this; namely that it is the bank’s responsibility and the expectation will be that customers will go to the bank if they have a claim after 15 years and the resources have been transferred. The bank will have the information and will then be able to process the reclaim. I am very grateful to the noble Lord, Lord Shutt, who put these things in a pithy way. I have 25 pages of notes to describe what he has explained in a matter of seconds to the general delight of the House, and I am sure to the total satisfaction of the noble Baroness and the noble Lord. Perhaps there is a bit more in the argument that I need to address, but nevertheless I express my gratitude to the noble Lord, Lord Shutt, for his clarity.
I am sorry about the procedural lament. It seems to me that the Committee stage provides the basis for clarifying what the issues are. As we would expect, noble Lords opposite have done an absolutely excellent job in clarifying those issues and identifying the areas that they wish to pursue further. Here we are on Report with those issues having been identified, so I am not sure that we ought to lament the processes by which we are considering the Bill; far from it. They are eminently defensible, and the House generally agrees that the system works well. If the noble Lord thinks that the structure gives the Government an extraordinarily easy ride, let me say from this Dispatch Box that that is not what it feels like. In Committee, over four days, we were subject to very intensive scrutiny and to some very intelligent questions, as we would expect. Here we are on Report dealing with the digested wisdom of those issues and the areas in which there are still matters in dispute. I cannot think of a better way of processing legislation, and the House should take pride in that.
I thank the noble Lord, Lord Higgins, for reminding the House that the Bill commands widespread support. It is a benign Bill, which has objectives to which we all subscribe, and therefore, within that framework, the noble Lord is right to seek justification for the way in which the Government have gone about achieving the ends of what—I emphasise—is still a private scheme. We will come to those issues with rather greater sharpness later.
Let me make the obvious point that we looked very closely at the arguments made by the noble Lord in Committee. After all, he drew on an illustration from another country that has put such a scheme into practice with considerable success. We are always eager to learn any valuable lessons from others who have trod the path before us. The Swiss account scheme largely related to historic accounts. It will be appreciated that many of the customers dealing with our scheme will still be alive. They may regard the fact that they hold an account as confidential and may object to the information being published. The noble Lord has got to face up to the issues of confidentiality, which I will emphasise in a few moments, and the extent to which the Government ought to tread carefully—or not—regarding those issues.
We certainly looked at the points made by the noble Lord in Committee. We have sought to satisfy ourselves as to whether it would be right and appropriate under the terms of the scheme to make available the names of individual account holders whose money is transferred to the scheme after 15 years. We consulted a great deal on the level of publicity that there would be about the scheme and the steps that would be taken to reunite customers with their accounts. It will be appreciated on all sides that the concept of the scheme—even before it comes into legislative existence—has prompted very considerable activity. We welcome all constructive suggestions on how banks and building societies can be more proactive in reuniting customers with their assets. The one thing that unites us on all sides of the House is that the money belongs to someone and that it should be transferred only when that claim cannot be substantiated. Therefore, every reasonable effort should be made to reunite dormant accounts with their proper holders. However, our view remains, as we set out in the consultation in March 2007 and in our response to that consultation subsequently, that a publicly available register of dormant account holders’ names does carry inherent risks. There is the risk of identity theft and fraud. In Committee, the noble Lord, Lord Hamilton—I am sorry he is not in his place today—expressed anxiety about the potential risk of identity theft and fraud if account holders’ names were publicly available. He felt that there would be the risk of the list being exploited, leading to false claims for repayment.
We are wary of that risk, and we think that we are right to be so. Consumer protection is an important principle for the Government. We owe it to dormant account holders not to place them at a potential disadvantage compared with customers whose accounts have not been transferred to the fund and whose names would not be made public in this way. We need to be fair to customers of banks and building societies and treat them equitably.
We have listened carefully to what the noble Lord said but we do not think that the amendments are necessary. The one-stop shop is evidence of the industry’s determination—the determination of banking and building society groups—to do their best to reunite customers with dormant accounts. The one-stop shop offering this facility to the public will be launched tomorrow. It will allow executors to search for lost accounts and to face any legacy income that may be due, including that due to the charitable sector, a point on which we have had representations.
It remains questionable whether it is desirable for personal data to be transferred from banks to the reclaim fund. The prescribed scheme does not require that. There may be points of ultimate dispute and inquiry on which the reclaim fund cannot reach a judgment until it has additional information from the bank. We have made provision for that information to be available at that point. As a normal matter of course, however, we do not think that all names associated with dormant accounts should be made public in quite the way suggested by the noble Lord and which he indicated had obtained in other schemes in other countries.
We must also take into account the fact that the information held by banks and building societies is currently regarded as confidential. Some holders of dormant accounts may not have any concerns about their identity being made public and may find it useful in enabling them to be reunited with their account or the accounts of deceased relatives. But of course there could be others who may not wish that information to be made public and who will have deposited their money on the assumption that it could not be made public. A requirement to publish personal details without their consent raises real issues of confidentiality. It might also raise human rights issues.
The banks will transfer the money to the reclaim fund under the terms of their agency agreements and these flows will be independently verified and audited. They will not routinely transfer personal data but only, as I indicated, when it might be necessary. I do not see why a list of names would significantly benefit the individual. There appears to be little advantage in seeing one’s name or the names of one’s relatives in a list and then speculating whether this means that the money is owed or whether the name is a coincidence. It might lead to a wide range of speculative inquiries, a phenomenon which is not unknown when money has been unclaimed in other circumstances. It will also involve additional administrative costs; noble Lords opposite are always rightly concerned that we should keep administrative costs down. The Government are committed to a scheme that is cost-effective, which will help to ensure that there is public confidence in the scheme, that banks and building societies will participate fully and that resources are targeted where they are most needed, maximising the amount that is available for good causes.
I hear what the noble Lord says; he wishes that he had been able significantly to redraft the Bill. Of course, that is his right. Nothing would have prevented him from redrafting the whole Bill if he had been absolutely determined to; I know of his assiduity in that respect. However, I hope that he recognises that the Government have reached their position on rational grounds. We have taken into account his proposals; we fully understand the motive behind his amendments. On this occasion, we merely say that we beg to differ. We stand by our scheme for the reasons that I have put forward. I hope that he will think that, using the procedures of the House, he has had a pretty good run at this and will therefore feel able to withdraw the amendment.
My Lords, the noble Lord will appreciate that it will be necessary for the reclaim fund in certain circumstances to require information from the banks or building societies. It is clear that there will be disputed positions in which the reclaim fund will necessarily need verification of the nature of the claim. The period of 15 years triggers the transfer of resources to the reclaim fund; it does not bury the rights of the individual to regain their proper resources after the reclaim fund has obtained them. I cannot emphasise this point enough. To substantiate that their claim is justified, the individual will first go to the bank or building society where the account was held. They will be told that it has gone to the reclaim fund because the account has been dormant for 15 years or more. If the claim has some justification, it will then be necessary for the bank or building society to address the issue to the reclaim fund and for the reclaim fund to reach a judgment. I do not think that we could have a system that was fairer than that, as I explained graphically and at great length to the noble Lord, Lord Shutt.
My Lords, I am anxious not to delay the House further. I will need to consider carefully the points that the noble Lord made, in particular his reference to a one-stop shop. If one is going to have a one-stop shop, it would seem sensible for that stop to be the reclaim fund rather than any other organisation. The noble Lord did not answer the point that I made at the end in my intervention. As the Bill stands, the reclaim fund seems to be precluded from ascertaining the owners of dormant accounts transferred to it. I do not ask him to respond now, but that is, as I understand it, how the Bill is drafted. I believe that the fund needs to have the authority to do that. I find what is proposed an extraordinarily convoluted way of proceeding. The data are never transferred to the reclaim fund. The noble Lord suggested that, when there is a dispute, the reclaim fund will have to go back to the banks as well, instead of acting as what it is supposed to be—namely, a reclaim fund. However, I do not wish to delay the House further and, although I may want to return to this at Third Reading, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 2 not moved.]
3: Clause 1, page 1, line 15, at end insert—
“(3) A charity in receipt of a legacy may make a claim against the reclaim fund if it has reason to believe that the testator may have a dormant account.”
The noble Lord said: My Lords, during the course of our debates we had a number of discussions about the role of charities, and it emerged that there was something of a division of interest between different kinds of charities. There were those, generally large charities, which hoped that as a result of the dormant accounts being sent to the reclaim fund they would receive some benefit, whereas other charities which depended very largely on legacies rather than anything else—sometimes small charities with large legacies—thought that it would be better if the proceeds were divided in that way rather than by putting everything in a pot and handing it out through the lottery fund.
The amendment addresses a situation in which a charity believes that it has a testator who will give it a legacy and that it should have the right to go back to the reclaim fund and ask it to decide whether there is such an account. We now discover that in those circumstances the reclaim fund would go back to the banks and ask them. That raises the question of a one-stop shop. Quite clearly, a charity may believe that someone has died and left it some money but it is not sure with which bank the deceased had an account. In that case it would be better if, as the noble Lord said, there was a one-stop shop approach. None the less, given that there is this division of opinion between different types of charities, such a charity should have the right, if it believes the circumstances are such that it has a legitimate claim against a particular account, to go to the reclaim fund about that claim. I beg to move.
My Lords, I am grateful to the noble Lord for explaining his amendment so succinctly. The purpose of the amendment is to ensure that charities may reclaim directly from the reclaim fund money that they are owed as a result of charitable legacies. We do not believe that it is appropriate to give charities the right to claim repayment of an account independently of the original executors of the deceased person’s estate. Where an estate has been administered but other assets such as a bank account subsequently come to light, perhaps several years later, we believe that the proper process is for the original executors of the will to take responsibility for collecting and distributing the assets in accordance with the terms of the will.
If a customer dies, the right that that customer had to be repaid their money by their bank will pass, under the law of England and Wales, to their personal representatives who are the executors, or to the administrators of the estate if the person has died intestate. Different law and terminology apply in Scotland. The executors or administrators are responsible for claiming the money from the bank and subsequently distributing it to the deceased person’s heirs. The heirs may of course include charities to which a legacy has been bequeathed.
We recognise that there have been concerns about whether very old or historic accounts or accounts of deceased account holders can be transferred into the scheme and whether the heirs of the original holders of the account may reclaim the money. In many cases the bank will simply not know whether the customer is still alive. I would like to clear up any confusion. I would like to make it clear that the legal right to repayment of a deceased individual’s account passes directly to the executor of the will. It does not pass directly to third parties, such as the relatives, friends or charities who stand to inherit according to the terms of a will. It is the responsibility of the executor to collect in the assets and to make payments in accordance with the terms of an individual’s will. That is our intention and it should remain the case under the dormant accounts scheme. In other words, existing inheritance law will not be affected. It is not our intention to make changes to existing inheritance legislation in this Bill by, for example, enabling charities to seek repayment of money directly from a bank without proceeding through the usual channel of the original executors or where necessary seeking the appropriate new form of grant or probate.
Before closing, I should point out that executors will be able to search for lost accounts using the industry’s new one-stop shop website to which the noble Lord referred. Charities as legitimate heirs should of course receive their legacy income. Personal representatives also will be able to search the website on the owner’s behalf. For those reasons, it would not be right to change inheritance law as a consequence of the Bill. I therefore invite the noble Lord to withdraw his amendment.
My Lords, I am most grateful to the Minister for that somewhat unexpected answer. This point did not come out at all clearly in the course of the discussions in the Moses Room, where a number of those with far more knowledge about charities than I have seemed to think that charities which thought they had a legacy would be able to search. I am puzzled by what the noble Lord said about their searching the one-stop shop, since presumably the one-stop shop does not actually have the list of names of those for whom the charities may be searching.
I will consider carefully what has been said. Those who have a particular interest in this matter may have a response to the Minister’s reply. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 had been withdrawn from the Marshalled List.]
4A: After Clause 1, insert the following new Clause—
“Reserve power to control the transfer of balances to reclaim fund
(1) The Secretary of State may make regulations specifying the conditions under which the transfer of the balance of a dormant account to the reclaim fund might occur, including the establishment of a register of dormant accounts.
(2) No regulations may be made under subsection (1) unless a draft of a statutory instrument containing the resolutions has been laid before, and approved by a resolution of, each House of Parliament.”
The noble Baroness said: My Lords, I have tabled the amendment because of the huge impact the Bill can have on the charity sector. I declare an interest as vice-president of Marie Curie Cancer Care, whose tireless work, as your Lordships need no reminding, provides nursing care to cancer patients.
The Bill is important not only for Marie Curie Cancer Care but for the other 53 member charities which comprise the Unclaimed Assets Charity Coalition. It is worth highlighting just how representative the coalition is of the charity sector. As well as the National Council for Voluntary Organisations, which represents 5,400 voluntary organisations across the country—it has itself recently joined—the coalition’s members include charities such as the RSPCA, the Salvation Army and the enormous Cancer Research UK. If we ignore the coalition, we run the risk of ignoring the sector as a whole. As drafted, the Bill appears to ignore the coalition. My amendment takes its interest into account.
There are two issues, both of which would be supported by a reserved power being included in the legislation. First, as the NCVO has argued in its briefing, which has been circulated to all Peers, should a voluntary scheme prove unsuccessful there must be mechanisms in place to enable the Government to make mandatory the transfer of unclaimed assets from banks and building societies to the reclaim fund. This would ensure that the amount of money available for reinvestment in society was maximised—which, after all, is the Government’s stated motivation behind the Bill.
The inclusion of reserve powers would not mean that the Government would have to make use of them but it would give them that option, should it prove necessary, without recourse to further primary legislation. This was a recommendation in the Treasury Select Committee’s report and, while there are merits in the suggested light-touch voluntary scheme, we must be sure that there is enough take-up of the scheme by the banks. My concern is that the removal of unclaimed assets from a bank’s balance sheet may mean that there is little incentive for them to participate.
There is also no international precedent for a dormant accounts framework run on a voluntary basis. In Ireland, Australia, New Zealand and Canada, participation by banks and building societies is mandatory. It therefore seems right to propose the introduction of a reserve power into the Bill.
On the specific issue of a register for unclaimed assets, the aim of which would be to improve reunification efforts, my own view is clear: I would like to see this Bill bring in a mandatory register. It may be that the answers already provided by the Minister will, in part, cover this, but I shall listen with interest to the Minister’s response.
Having listened to noble Lords in Grand Committee, I got the firm impression that a reserve power amendment would be put forward on Report, but as no amendment was tabled, I have tabled this amendment. It is vital that we include provisions in the Bill that ensure that we maximise the incentives for banks and building societies to reunite people, including the beneficiaries of wills, many of which are charities, with what is rightfully theirs—their assets—while also ensuring that where reunification efforts prove fruitless as much as possible is available for reinvestment in society. While a triennial report to Parliament, as proposed in an amendment tabled by the noble Baroness, Lady Noakes, would enable government to monitor the scheme’s progress and make recommendations for improvement, there would be no mechanism in place to enable Parliament to implement its wishes should it then decide that a voluntary scheme was not working. That is a significant gap, and I hope the amendment will plug it.
In their response to the House of Commons Treasury Select Committee report on unclaimed assets, the Government argued that including reserve powers would not be a good use of Parliament’s time. I struggle to reconcile that statement with the simple fact that it might save parliamentary time to include it on the face of this Bill, rather than having to return later. In fact, if a reserve power were not included and the voluntary approach failed, Parliament would have to pass primary legislation, and thus go through the whole debate again before the mandatory register could be established. That was why I thought we should have something in the Bill. The Government have included reserve powers in previous legalisation, such as in the Charities Act 2006 in relation to the regulation of fundraising standards, so there is a precedent.
I wonder whether we risk losing sight of what is at stake here. This is a technical Bill, but surely a simple principle also applies: it is that these are not our assets, they are not the Government’s assets, they are not Parliament’s and they are certainly not the industry’s, however much it might profit from them. They are unclaimed assets that belong to individuals and which in many cases have been bequeathed to charity as a proportion of a deceased’s estate. Of course, in cases where reunification efforts prove fruitless, such unclaimed assets would be to the public good and should be available to channel back into society. However, where it is possible to reunite people with what is rightfully theirs, that would seem to be the right thing to do. That is why the 54 charities that I referred to in my opening remarks are asking for help. One in seven people who dies leaves a valid will including legacy gifts to charity. On average, those gifts total 5 per cent of the total estate, so there are potentially large sums of legacy income that have yet to reach the charities named in the wills.
As many of us know, legacies are a key part of the income stream of the voluntary sector. For example, 46 per cent of the British Heart Foundation’s voluntary income comes from legacies, which came to over £47 million last year. One third of Cancer Research UK’s voluntary income comes from legacies, which was more than £135 million last year. In all, legacy income to the sector amounted to £1.5 billion last year.
The sad truth, however, is that, as drafted, the Bill—as the Minister knows—does not compel financial institutions to make data on unclaimed assets more easily accessible to the general public and to charities. Instead, banks and building societies will be asked to publicise the fact that they hold unclaimed assets, which will be of no help to people who do not know which institution is holding a lost asset and, crucially, it will be of no help to charities trying to trace lost assets belonging to deceased people’s estates. That is why it is important that we strengthen the Bill by ensuring a mandatory register is included in its provisions, whether that be by reserve power or by a provision that a mandatory register be created on the commencement of this Act. I urge the Government to use the unique opportunity of the Bill to get the system right for the charitable sector. I beg to move.
My Lords, the noble Baroness, Lady Finlay, has made a powerful case on behalf of the Unclaimed Assets Charity Coalition for her amendment. We completely agree that a register with good access arrangements is an essential part of the dormant accounts scheme. We understood a moment ago from the Minister that the voluntary arrangements will be launched tomorrow—only a month late. There are questions about whether those voluntary arrangements will be good enough. We certainly hope that they will be, but the Minister should be aware that there is scepticism amongst the charities about that, based on their experience to date in getting information about accounts.
With the Liberal Democrats, we thought long and hard about how to tackle this issue before we came to Report. We chose to table Amendment No. 13, which I shall come to later today. This amendment is designed to keep the parliamentary spotlight focused on dormant account schemes, and it specifically refers to reuniting schemes including those where wills are involved. It is designed to respond to the concerns that the noble Baroness raised. We felt that if the banks dragged their feet it would be possible for the parliamentary spotlight to be put on those unsatisfactory arrangements. The Government, whose powers of persuasion are capable of being very powerful in those situations, would then have a target to go for. It is not always necessary to have reserve powers. If there is a voluntary scheme which is not working, the Government—certainly under pressure from Parliament—could help to make it work better.
The noble Baroness’s amendment refers to,
“the establishment of a register of dormant accounts”.
It is my understanding that the charities want to search for accounts long before they have become dormant. An account does not become dormant under this Bill until at least 15 years has passed, possibly longer. The charities want access to accounts earlier. That is what I understand the banks and building societies are going to deliver. We want to focus on what they are going to deliver, and on ensuring that that works well. I also gulped a bit at the sweeping powers being given to the Secretary of State by the noble Baroness’s arrangement. We often criticise the Government when they seek to take such powers. We are trying to achieve the same things as the noble Baroness but without the heavy hand of an unrestricted power. We believe in giving voluntarism, which underpins this Bill, a chance to work. For those reasons, we cannot support the noble Baroness’s amendment.
My Lords, the issue to bear in mind here is that of giving a voluntary scheme the chance to work. I again declare an interest as a member of the Commission on Unclaimed Assets. Discussions with banks and building societies showed that they were extremely reluctant at the beginning to come into a scheme—and in some cases even to admit the existence of these assets. That is why it has remained a voluntary scheme.
I have two points to make. First, I want to pay credit to the charitable sector for all that it has done in bringing this issue into the public arena. It is entirely through the efforts of some individuals in the charitable sector that we are discussing this Bill at all, or even are aware of the existence of large amounts of unclaimed assets. That is very praiseworthy indeed.
Secondly, we should remember how the money is going to be distributed. If, as I hope, some of the money—perhaps quite a large amount—is going to go to the wholesaler, who will distribute that money further? Again, the focus is on making the capacity of the third sector greater than it currently is. We should not assume that if we do not pass this amendment the charitable sector will be forgotten—on the contrary.
My Lords, I echo what my noble friend Lady Pitkeathley said. All of us who support this Bill owe a great deal of thanks to the Unclaimed Assets Charity Coalition and to charities in general for having pushed this point so that it in effect became an election manifesto promise and then found itself going through your Lordships’ House.
I also pay tribute to the noble Baroness, Lady Finlay of Llandaff, who moved the amendment. I am not going to accept it on behalf of the Government, and I will try to explain why. I shall deal first with the point about the central register. It is an important point but not as important as her point about whether this is a voluntary or perhaps eventually compulsory scheme. She pointed out that there had already been some discussion about the central register in the brief time that we have already spent on Report.
We have concerns. We welcome the constructive suggestions as to how the industry’s reuniting arrangements might be further improved, but a central register would be expensive and would place a large and unnecessary administrative burden on the scheme. More importantly, perhaps, there are concerns that financial institutions respect the confidentiality of the information that they hold about their customers. We would genuinely have to look carefully at the human rights implications of any power to issue regulations that in effect required banks to breach that confidentiality. Reuniting is important, however, and we welcome the banks’ and the building societies’ commitment to a major reunification exercise in the run-up to this scheme becoming operational. In particular, we welcome the BBA, the BSA and the NS&I proposals for a single one-stop shop for reuniting, and their commitment to help hard-to-reach, disadvantaged customers. These proposals will allow people to be reunited with their lost money, and should, we hope and believe, make a register unnecessary.
Participation in the scheme will be voluntary for individual banks and building societies. This has rightly been a focus of our debates. I say “rightly” because I would be the first to accept on behalf of the Government that these proposals are innovative. The unclaimed assets scheme will not be like other mandatory schemes in countries such as Ireland, which the noble Baroness mentioned, or even the United States. Our approach is based on clear and firm commitments on the part of the sector to participate in a voluntary scheme and to make it a success. We welcome those commitments, which are one of the reasons why we believe that we can implement a voluntary scheme with some confidence.
I draw noble Lords’ attention again to the public commitments set out in the joint foreword to the Treasury’s consultation document on the scheme last year, which was jointly signed by the BBA and the BSA. I also draw the House’s attention to the press notice that the industry released on 8 November 2007, which confirmed its continuing commitment to the scheme and illustrated that commitment to the major banking groups that have participated in discussions with the Government to date. Banking groups are fully committed to the scheme, and it is estimated that they represent about 90 per cent of all retail and savings balances held by those institutions in the UK. This is an illustration of the level of support that we believe we have for the scheme.
If a voluntary scheme can be a success, it is not necessary to consider a compulsory scheme now or in the future. There are advantages to a voluntary scheme, and downsides to a compulsory one. A voluntary approach brings some flexibility; I hope that we agree on that. Our legislation provides a minimum definition of dormancy, but will allow individual institutions to refer to a range of indicators that suit their own capabilities and customer needs best in order to determine whether an account is genuinely dormant. This means that not all accounts that technically meet the legal definition of dormancy must be transferred, and enables only genuinely unclaimed accounts to be transferred into the scheme. As a result, the UK scheme will be less rigid than many other international schemes. It has been based on existing industry systems, helping to reduce what can easily run out of hand and add unnecessary administrative costs. It can also be kept up to date, in line with the latest technology. A voluntary scheme allows us to take account of better regulation principles, ensuring a low regulatory burden on business and helping to maximise the money available for reinvestment in the community. I see some noble Lords in the Chamber who are, like me, lucky enough to be involved in another Bill going through Committee, so I hope that this argument rings some bells with them. We believe that if there is an opportunity to maximise money for good causes with the sector’s support, we should clearly take it. Let us be frank: a voluntary approach enables the use of private-sector expertise to manage liabilities to account holders. It is right that the private sector, which has the expertise to manage reclaim risk, should take on that function. As I have said, the sector is committed.
I will look more carefully at the arguments put forward by some noble Lords that banks and building societies might renege on the commitments that they have entered into. We expect institutions to join the scheme in order to play a positive role in reuniting customers with their assets and making money available for community reinvestment. We believe that prestige is likely to be attached to participation, and we do not accept that the industry’s profits really provide incentives not to participate in the scheme. The banking industry estimates that dormant accounts in the UK account for only 0.047 to 0.065 per cent of the totals in retail banking and savings balances held by the nine largest banking groups alone. The industry itself rejects the argument that retaining this money on its balance sheets is a disincentive to participation—not, I repeat, a significant motivation for them. Yet, when we consider its potential to be used for good causes, we see that it is a significant amount to us and to the charities that the noble Baroness, Lady Finlay, so proudly praises—and rightly so.
Of course, the scheme must be highly transparent, to demonstrate that the banks and building societies are delivering on their commitments, to maintain public confidence in the scheme and to strengthen further the incentives for institutions both to reunite customers with their own money and to transfer genuinely dormant accounts to the scheme. Later, we will discuss the disclosure requirements in the Bill, which will result in details being published about which institutions are participating in the scheme, how they will participate and the value of assets transferred into the scheme and of those reunited with account holders.
We hear sympathetically what the noble Baroness says; indeed, we understand some of the scepticism. Yet our view is that those arguments run counter to the public commitments of the industry, the many advantages of a voluntary scheme and the positive incentives for institutions to participate.
I shall deal briefly with the reasons why a compulsory scheme is not the best option. In the light of the sector’s ongoing support, we see no reason to take a reserve power to establish one. We may not agree again all afternoon, but on this occasion I agree with the noble Baroness, Lady Noakes, that the reserve power that the amendment would give to a Secretary of State is very great. We have fundamental concerns about the appropriateness of such a power, as a compulsory scheme would look completely different to a voluntary one. It would not be able to rely on the industry’s willingness to establish a reclaim fund. In effect, the Bill would have to establish that fund as a public body and set out in detail an enforcement mechanism so that it was clear which sanctions would apply to institutions that failed to comply with the scheme. That would have to be monitored and regulated. I could go on, but the point is that a compulsory scheme would require extensive further legislation. I am sure that your Lordships will be delighted to hear that we do not believe that it would be appropriate to deal with such extensive legislation in secondary legislation. Fundamentally, it is not our intention to take substantial reserve powers that we do not believe to be necessary.
In short, we have a lot of confidence in the scheme; let us see whether we are proved right. We do not expect our voluntary scheme to fail. We do not want to take unnecessary powers. We believe that extensive primary legislation would be required to introduce a compulsory scheme.
We have every sympathy for the charities; they do a magnificent job, which is accepted around the House without exception. We do not believe that on this occasion they are right. We believe that we should give this voluntary scheme a chance to succeed, so we ask the noble Baroness to withdraw her amendment.
My Lords, I am grateful to the Minister for his detailed reply and to noble Lords for their comments. I and others have concerns about sweeping powers. I agree with the noble Baroness, Lady Noakes, that one is always cautious about giving any Minister of any Government more powers than are needed. There is a principle about the voluntary sector working with a voluntary scheme—one hopes that it works well and for the benefit of everyone.
I am also grateful to the noble Baroness, Lady Pitkeathley, for her intervention, particularly for her reminder that the charitable sector has not been forgotten. I say to the House that neither will the charitable sector forget: it will be watching this legislation like a hawk. It needs to know that, everyone having worked so hard to get this far, the legislation really will work.
I understand the criticisms of my amendment—perhaps the powers were a bit too sweeping—but I emphasise the fact that voluntary schemes cannot have people reneging on them. A huge amount of money is at stake for the charities. It might be a small amount for the banks, but, as the Minister said, it is a large amount for the charities. I will watch with great interest the amendment tabled by the noble Baroness, Lady Noakes. If it helps to solve the problem, it will have done a great service to the charitable sector. We will have that important debate later today.
With those reservations and understanding the criticisms, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Transfer of balances to charities, with proportion to reclaim fund]:
5: Clause 2, page 2, line 4, leave out “smaller bank or building society” and insert “building society or a smaller bank”
The noble Lord said: My Lords, the ultimate purposes of this Bill are, first, that in general money for good causes as defined, with separate provisions for Wales, Scotland and Northern Ireland, ends up being disbursed by the Big Lottery Fund. The second purpose—the alternative scheme—is to assist charities that are local to where the banks or building societies are based. Banks and building societies are able to avail themselves of the alternative scheme if they have an asset base of less than £7,000 million.
In Committee, I endeavoured to put the view that the £7,000 million was a cliff edge and that there should be some apportionment for all banks and building societies. All of them have a local or regional element, whatever their size. I am not clear how many banks in the scheme as envisaged would fit the smaller scheme. However, as the building societies publish figures, we know that the smaller scheme applies to 51 of the 59 societies. I have received no message from any bank, and I find it sad that the banks shrug their shoulders, so to speak, and say, “We’ll fit in with this. So be it”.
That is not the case with the building societies. The eight largest building societies—the “big eight”—do not wish to be volunteers for the general scheme. Indeed, they have written to us. We are told that this is a voluntary scheme but the building societies do not wish to volunteer. Why is that? Building societies all have a clear local or regional element. Perhaps the Nationwide, the biggest of them all, is the only one that really is, as its title suggests, nationwide. Seven of the eight biggest building societies have clearly defined charitable foundations that they themselves have set up and into which they put millions each year. Those foundations have independent trustees. All eight see clearly that charitable giving is an expression of their mutuality.
It is invidious to treat the building society movement on this 51:8 basis. It is right to treat them all in the same way. The Bill says that the £7,000 million can be changed by order. That could be needed quite soon. Take building society number nine, the Derbyshire. At its last account date in 2006, its asset base had exceeded £6,000 million. Unless an order is placed in the next couple of years, it will, as it were, be added to the big eight.
We do not know much about Northern Rock, although much has been said here and in the other place. We saw the queues. I suspect that many of those people making withdrawals from Northern Rock went around the corner and placed their funds in a building society. We do not yet know—we will not know for a month or two—what effect that will have on the balance-sheet values of all the building societies. There could well be a quantum leap in all building societies at the 2007 balance-sheet dates.
It occurs to me that mergers are not totally unknown. In 1900, there were 2,286 building societies; by 1950, there were 819; 20 years ago, there were 131; and, 10 years ago, there were 71. Now, there are 59. I do not believe that anybody has decreed that there should be no more mergers. It would be wrong for this Bill somehow to get in the way of what building societies naturally wish to do. I am suggesting neither that there should be further mergers, nor that there should not be further mergers. If, for reasons of their own, which might have something to do with cash machines or computers, the societies believed that there should be a merger, it would be very strange if, under this Bill, that merger meant that, in future, dormant accounts had to join the general scheme, rather than the two local schemes.
Decision-making in those building societies—sub-contracted, in the cases of seven of the big eight, to those trusts that they have set up—involves several people. Often, the societies involve their membership in deciding how, with their mutuality, they give away what they feel is right to society and the communities that they represent. I contrast that with the decision-making that may be there when we come to the Big Lottery Fund and its board.
It is right to free all building societies from being part of that general fund and to let what has certainly been built up locally be used in a local way. It is often used in this way at present, but this would firmly enhance it. I beg to move.
My Lords, I have been involved in the mutual movement for probably the whole of my adult life, so I think that I understand that movement and its ethos. A person who joins a building society, a friendly society or a credit union does so specifically as against joining a commercial bank. That is because, as they all understand, those bodies that I have just mentioned are mutual, there are no shareholders, and the operational surplus achieved—and all of them achieve it—is shared among the membership. That is very different to a commercial banking arrangement. I fear that the Government have never really full understood that fact.
With a dormant building society account, members who opened that account originally made a conscious decision to put their money in a mutual society. They could have gone the other way but they did not. So they and their successors in life, who have somehow or other got lost, would want to see their money being used on the same principles for which it was originally invested and used by the charities set up by that particular building society. That is not a party-political thing at all. Certainly, given the choice between the building societies’ own charities—which all have independent trustees and are geared to what the society is interested in, by way of helping a community or the environment or whatever—and the Big Lottery, I do not believe that a single member of a building society would vote for the Big Lottery. Very few would vote for the lottery as a whole, although that would be a little better.
The Big Lottery, like it or not, does not have the image today that people in the mutual world trust. I am sorry to be so blatant, but you have only to look at some of the projects that the Big Lottery has got into and the image that it has. It may be unfair but it is a fact that the image that it portrays is one of being an extension of government, excessively PC and not really understanding the local environment in which the building societies operate. In addition, cost efficiency is a criterion. This is money brought forward from a dormant situation. The existing charities, controlled by the charity commissioners, are very cost effective. While I do not have the detailed figures of the Big Lottery, I suspect that if I went into it I would find that the Big Lottery’s costs are far higher than any of the cost bases for their charities.
The building societies are already regulated by the charity commissioners and they have their own auditors. I chaired a friendly society for eight years, which had a charity. At the AGM, probably our most actively discussed area was what our funds were being used for within the charity. I commend the Government for bringing forward this voluntary scheme, but they need to recognise that this minority sector, which it is, has a different outlook and the money would be better used in the existing charitable framework that is there than if it is put into the vast pot of the Big Lottery. That is why I support the noble Lord’s amendment.
My Lords, as I said in Grand Committee, we are sympathetic to the desire of large building societies to build on their existing charitable foundations, which support the communities in which they operate. These amendments affect only eight building societies, as the noble Lord, Lord Shutt, explained, although because of their relative size within the building society movement they would probably account for the vast majority of the £150 million or so that is estimated to come from dormant building society accounts.
I can see that the Government fear losing control over a large tranche of dormant account money, which, if this provision were fully implemented, will escape the clutches of the Big Lottery Fund. We do not see that as a disadvantage, so we will support the Liberal Democrats if the Government do not accept the amendment of the noble Lord, Lord Shutt.
My Lords, I am grateful to all noble Lords who have spoken in the debate. The noble Lord, Lord Shutt, has reiterated, with great consistency and with considerable force, the points he made on the Bill at Second Reading and again in Committee. I guess that I am obliged to recognise that I am not making much impression on him with my responses.
The noble Lord, Lord Naseby, brings an additional insight into these issues—his long association with the mutualisation movement. I want to address the issues he has brought to the House. The noble Baroness, Lady Noakes, has spoken to the point and with her usual succinctness; she said that she agrees with the noble Lord, Lord Shutt. If these issues are put to the test I think I know the figures that might emerge. Therefore, I shall not deploy my full persuasive talents as I might be wasting them on the desert air with this amendment.
Suffice it to say that, if we accept the proposition of the noble Lord, Lord Shutt, we would be obliged to accept that all building societies—and the noble Lord, Lord Naseby, gave voice to the excellence of the mutualisation movement—look alike and that all have a pretty uniform relationship to local communities. The Government’s contention is that that is just not so. We recognise that—as the noble Lord, Lord Shutt, confessed—of the 59 building societies, 51 are small enough, local enough and limited in their ambition enough to play their full part in local areas. We know which local areas would benefit from their work, and rightly so, because they have built themselves up on the basis of the community, as indicated by the noble Lord, Lord Naseby.
The other eight are in an altogether different category. To which locality is a building society called Nationwide meant to be local?
My Lords, many.
Many, of course, my Lords, but indefinable numbers would be involved, given the colossal assets of the society, its great reputation for effectiveness and its size. As the noble Baroness indicated, the eight represent a substantial proportion of the resources that are likely to emerge from dormant accounts. It is reasonable therefore for the Government to say that local societies can do an enormous job in their localities and should be encouraged to do so, and that we want to encourage that local activity by such local institutions. It is a different matter altogether with the eight that are truly nationwide—if not all by name; a relationship between location and point of origin has long been departed from because of the sheer size of the operation.
The noble Lord, Lord Naseby, has to face up to facts. Of course I enjoyed his exemplar of the best assets and virtues of mutualisation, but anybody would think that no building society had ever demutualised, that there had never been an occasion when people vested with these virtues had ever taken a different view about the role of the building society and its transformation. We have seen that occur; and the noble Lord knows a great deal more about it than I do.
All I am indicating is that there is a difference between the commitment of a local building society and that of the large institutions. During consultation we were challenged to define the credible threshold. We defined it as assets of about £7 billion. Under the Bill, 51 out of the 59 building societies are defined as local. Only eight will be concerned with the wider distribution of resources. This is surely a perfectly reasonable position for the Government to adopt. The noble Baroness, Lady Noakes, was right to say that the Government were concerned about equity across the nation and about there being less money available for wider projects across the nation if all building societies were allowed to follow the local path and look to their local areas, if that could be defined in certain circumstances. Of course, she is right about that. That is the basis of the Government’s case. There is a difference between resources that ought properly to be determined locally and resources from nationwide institutions whose dormant account money could properly be directed towards the benefit of local communities, but be defined in terms of national priorities. We have been clear about the basis on which we think those resources should be allocated.
We shall debate these issues later. I hope that the House will forgive me if I have delved too far into issues concerning the Big Lottery Fund and its distribution role. Later amendments will require the Government to address themselves from the Dispatch Box to the pertinent points that will be made from the Opposition Benches in that regard. However, there is great advantage and fairness in distributing huge resources for the benefit of communities right across the nation as opposed to the arbitrariness that would flow from the amendment of the noble Lord, Lord Shutt. The small building societies are concerned and knowledgeable about their localities. They are constantly in contact with them and are able to distribute resources to them accurately and effectively, in ways which the Government and the whole House commend. The eight big institutions will generate a huge percentage of the dormant account resources, as we see from the figures, and therefore a different distribution mechanism will be necessary. I know that there will be criticism of the distribution mechanism the Government have chosen, but suffice to say that we have chosen one which is involved in nationwide distribution but has regional and local branches and, of course, understands the separateness of the nations of the United Kingdom in this regard. That is the basis of the role of Big with regard to distribution.
I cannot go any further at this stage because there is an issue of principle between us. The noble Lord, Lord Shutt, made it clear right from the beginning that a building society is a building society, that it has strong local links and should be allowed to deploy whatever resources come out of its dormant accounts as it sees fit. We seek a clear differentiation between resources that would benefit discrete localities and bigger resources that could more effectively be distributed through another route. That is the bone of contention between us. I see that I have not persuaded the noble Lord, Lord Shutt, but I give way to the noble Lord, Lord Naseby.
My Lords, the Minister seeks clarity. Does he not understand that the Coventry Building Society is involved in an area round Coventry? I do not think that there is a branch of the Coventry Building Society in London. I do not think that the Chelsea Building Society has a branch in Coventry. These are primarily local societies. The one example the Minister gave was Nationwide. Nationwide did a marketing exercise. It is the old Co-op movement. If one analyses what happens to its charitable money, one sees that it is all geared to local former Co-op areas. It is time that the Minister recognised the history of that society.
My Lords, I accept what the noble Lord says—that the Coventry Building Society has a strong local base and that you will not find a branch of it in London. That might be the case with other big building societies. Is the noble Lord saying that because London does not have a local building society, it has no local communities? I refer not just to London—it may be the case that other significant cities do not have building societies with his mutualisation philosophy. For the Government, the process of mutualisation and the existence of the institutions are not sufficient guarantees of fairness to the people and communities of the United Kingdom. That is why we added an additional mechanism to the one favoured by the noble Lord, Lord Shutt.
My Lords, I am glad that the Minister accepts where I stand. I thank the noble Lord, Lord Naseby, and the noble Baroness, Lady Noakes, for their comments. In an idle moment this morning, I looked at those building society websites that I could find. Without access to the registers, I do not know where the members live; but one way of looking at this is to find where the branches are. I looked at the websites of the Skipton Building Society and the West Bromwich Building Society. Most branches of the Skipton are in Yorkshire and most branches of the West Bromwich are in the West Midlands. Most branches of the Chelsea are in London and most branches of the Leeds Building Society and the Yorkshire Building Society are in Yorkshire. I did accept at the outset that the Nationwide was just that. But as the noble Lord, Lord Naseby, indicated, it was based on the old Co-operative Permanent Building Society, which decided in 1970 to cheer itself up with a new name. I would venture that the reason that it did not demutualise was because of its co-operative roots—it is the only one of the very big societies that did not demutualise, even though the rest of the big eight are far smaller. I would submit that since that wave of demutualisations, the mutuals—I have seen this on the websites—have said, “Look, we have got to be proud about being mutual, we have got to say there is something special about being mutual”. They say that their generosity is special—I refer, for example, to the percentages of profits that they put into charitable foundations and the fact that they bring in independent people to disburse these funds.
It was interesting that the Minister said, a few moments ago, that all building societies were “allowed”. Allowed? This is a voluntary act, we are told. But the building societies do not want to volunteer in that way. They are happy to volunteer in another way and to use the alternative scheme. On that basis, I believe that this is the time to test the opinion of the House.
6: Clause 2, page 2, line 30, leave out “or building society”
On Question, amendment agreed to.
Clause 3 [The assets-limit condition]:
7: Clause 3, page 3, line 2, leave out “or building society”
8: Clause 3, page 3, line 5, leave out “or building society”
On Question, amendments agreed to.
Clause 5 [Functions etc of a reclaim fund]:
[Amendment No. 9 not moved.]
10: After Clause 5, insert the following new Clause—
“Parliamentary accountability of reclaim fund
(1) A reclaim fund must send to the Treasury as soon as possible—
(a) a copy of its annual accounts and reports prepared in accordance with Part 15 of the Companies Act 2006 (c. 46), and(b) a copy of any information published under paragraph 3 of Schedule 1 to this Act.(2) The Treasury must lay before each House of Parliament—
(a) any directions issued to a reclaim fund under section 5(4) of this Act, and(b) any accounts, reports or information received from a reclaim fund in accordance with subsection (1).”
The noble Lord said: My Lords, we come to parliamentary accountability. One feature of the Bill that was not to my liking right at the start was that I would much have preferred a statutory scheme. That was not to be—neither of the other Front Benches warmed to it—and I have to accept that. However, if we are not to have a statutory scheme, at least let us have some parliamentary accountability, because the Government and the Treasury are involved. Amendment No. 10 would introduce a new clause providing for parliamentary accountability of the reclaim fund. It says:
“A reclaim fund must send to the Treasury as soon as possible … annual accounts and”,
other information. It continues:
“The Treasury must lay before … Parliament … any directions”,
that it has given to the reclaim fund, as well as accounts and other information. As I said, if we are not to have a statutory scheme, it is important that we make certain that there is real accountability to Parliament.
Amendment No. 17 is about the accountability of the general scheme. It was interesting that, in Committee, my noble friend Lord Newby and I were berated by the Minister for not enthusing about the devolution elements. I put that right, right now: I enthuse. Looking at Clause 18 for the Welsh, Clause 19 for the Scots and Clause 20 for Northern Irish, one finds that after some Barnett formula-type split, the devolved Ministers can put an order to those devolved Assemblies, after consultation with the Big Lottery Fund and others, and the orders then have to be approved by resolution of the devolved Assemblies on how the money is spent. But what about England? What we know about the Bill is that the resources that go via the Big Lottery Fund have to be used for young people or for financial inclusion or for the social investment bank. However, there is no order to come back to Parliament; there is no consultation; and there is no suggestion about the disposition of resources between the three types of expenditure. Is it any wonder that some people here think that there is something called “the English question”?
The amendment would bring Parliament back into decision-making for England. We had ripples about this in Committee, particularly about the social investment bank, for which, we are told, there needs to be a serious slab of money. It is clear that the Government are not certain whether they want to go that far, but, if the amendment is passed, the matter will be brought back to Parliament, and Parliament can have its say. I beg to move.
My Lords, our names are to the amendments in this group, and we strongly support them. Parliamentary oversight and transparency are ingredients that are largely missing from the Bill. These amendments, together with amendments that I shall move later, are essential to underpin the dormant-account scheme. In Committee, we were repeatedly told that it was to be a voluntary scheme and that the Bill merely facilitated that. However, there is huge public interest in the success or otherwise of the scheme, and Parliament is being asked to set up the structure without being given any way of tracking the scheme as it goes forward—it is just written out of the script.
The reclaim fund will publish important information about the work of the scheme in its annual report and in the list required by Schedule 1. Do the Government expect individual parliamentarians to search out that information all the time in case they miss something? It seems to me to be a no-brainer that the information should be laid before Parliament as soon as it is available. The reclaim fund is being set up as a statutory body; it could as easily have been a public body because it is channelling money towards the Big Lottery Fund. If it were a public body, it would have had accountability arrangements set out for it. In truth, because of the involvement of the Treasury and the oversight of the FSA, this is a hybrid body, and we need to reflect Parliament's natural interest in that.
I fully support what the noble Lord, Lord Shutt, said on Clause 21 with regard to spending, the involvement of Parliament in that, and in particular the social investment fund, which the Government have told us is not one of their favoured spending priorities. There are many, including the Commission on Unclaimed Assets, which the Government charged with looking at how dormant account money should be spent, who believe that it is essential to set up a social investment fund. It needs a significant critical mass of money to get it going.
One of the most disappointing things that we heard in Committee was that the Secretary of State mentioned throughout the Bill, who will be responsible for giving directions to the Big Lottery Fund in connection with how the money is to be spent, is to be Mr Ed Balls. He is the Secretary of State with responsibility for schools; he does not have responsibility for social investment. The chances of any money going to social investment without any parliamentary involvement at all seems to us to be very small, which is why we need to keep Parliament involved.
My Lords, we had intensive debates on these issues in Committee, as both the noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, indicated. Their arguments have not changed a great deal.
We have thought about the issue carefully, and I will demonstrate more effectively than I was perhaps able to in Committee why the Government think that these two amendments are unnecessary. However, we are of course not against the objectives behind the amendments. Because the operation of this scheme—which I hasten to add is a private one—is directed towards public purposes and Ministers have a role to play in it, it must be accountable and transparent. We want to meet the objectives which noble Lords opposite have identified, but have gone about it in a different way. I shall explain why, and why our system and proposals will work.
I first make it absolutely clear that the reclaim fund is not a government body. The legislation defines the reclaim fund and sets out a clearly defined set of conditions to which the fund is subject, including matters that it must include in its articles of association, but it is a private institution. The issues of parliamentary scrutiny and accountability for a private body are different from those for a public one, which would be directly answerable in the public domain. Of course we have a different approach from any non-departmental public body or other institution which the Government have set up. This is a private scheme.
In this private scheme, banks and building societies may cancel their liabilities to customers only if they transfer their assets to the reclaim fund. Of course, the reclaim fund will be established in compliance with the conditions set out in this legislation, and will be authorised and supervised by the Financial Services Authority. The industry, which will set up the reclaim fund, published on 8 November a timetable for selecting candidates and having interviews later this year. We await further updates on the running of the reclaim fund and how it will be constituted, but it will operate within the constraints of this legislation. I therefore cannot say now who will be running the reclaim fund. That will depend on the selection process of these private institutions for this private body. Of course, if a suitable candidate does not come forward to apply for FSA authorisation at the end of the process, the industry representatives will have to establish a reclaim fund themselves. They have made a public commitment to that action of last resort.
Once it is established under the provisions of the Bill, the reclaim fund will be entirely independent of government. The Government will not make appointments to the board or membership; nor do we feel it necessary or appropriate to do so. The expertise for managing the reclaim fund lies within the private sector, not government. We do not want to place controls over the reclaim fund in this way. Rather, we set out in legislation what we regard as sufficient checks and balances on a private institution to ensure that it will have a clear purpose from which it will not depart and that the requirements in legislation are enforceable in the highly unlikely circumstances that it would be necessary to take any action. However, the reclaim fund is not a public body. I maintain that the Opposition are putting forward proposals for parliamentary scrutiny that are applicable only to a public body. This is manifestly not one. In other circumstances, they would be only too eager to emphasise how government should regulate with a light hand. If I have stood at this Dispatch Box once, I have stood here a hundred times, and heard of the bonfire of regulations that is necessary for a light touch with all sorts of institutions. The reclaim fund is a private institution and we are proposing to regulate it with a light touch. The noble Lord, Lord Shutt, and the noble Baroness, Lady Noakes, are seeking the heavy hand of parliamentary regulation as if the reclaim fund were some kind of direct public body. I ask them to consider whether they really have a commitment to dealing with this body in this form. Have they in mind a precedent for a private company or institution being required to report directly to government or to Parliament in the way that their amendment contends?
We have taken an innovative approach in the Bill to this interesting—I shall not say unique—institution, the reclaim fund. That is the nature of our task because we are introducing an unclaimed assets scheme that is about private property being reclaimed at best by those who have the right to own it, with the reclaim fund being only the residual position when attempts to restore funds to private citizens have failed. Then the money goes to the reclaim fund. The reclaim fund is a product of the work of the private institutions which are committed to this legislation. The other factor we must bear in mind is that these commitments are made by private institutions—the banks and building societies—to tackle the problem of moneys that have been placed with them for keeping which they cannot return to the proper owners. Those moneys will go to a reclaim fund that they will institute and be responsible for. That could not be further from a regulated public body.
Clause 5 sets out the three purposes that the reclaim fund must have: it must meet repayment claims; it must manage money prudently; and it must transfer surplus funds to the Big Lottery Fund for distribution. Those are the three constraints on it. That is where public policy comes into play. The law defines this private institution, but the Bill sets out clear ways in which the fund fulfils the obligation. First, with regard to customer repayment, let me make the obvious point: the banks and building societies are making strenuous efforts to ensure, as best they can, that they reacquaint customers with their resources. A customer has a statutory right to repayment. If the money has gone to the fund because the account has been dormant for 15 years or more, the individual’s right to claim that money is still there, and the fund must have a process for how it can be claimed. That is public policy and is a constraint built into this legislation. However, that is not the same thing as parliamentary scrutiny.
Secondly, the reclaim fund has to manage its money prudently. It will take control of significant assets, and we would all want to be absolutely assured that it maintains sufficient resources to meet any future claims from customers. Otherwise it will miss the principle on which we are operating. Individual customers have the right to their assets if they can establish a claim, even after 15 years or a multiple of 15 years. If the money is in the reclaim fund and it is theirs, the reclaim fund must repay it. That is specified in the Bill. The body will be subject to the Financial Services Authority—prudential regulation of such an institution.
Thirdly, the reclaim fund is obliged to transfer its surplus to Big. It must on the one hand calculate how much money it needs to protect its undeniable duty to meet future claims, and on the other transfer the surplus money so that distribution can occur. We cannot specify these amounts of money. We do not know the original totals which will occur, let alone what this fund will look like as times goes on. Yet Schedule 1 to the Bill is absolutely clear on how the reclaim fund will operate. The legislation also states clearly that the reclaim fund may use the money it receives to defray its operating expenses as long as they are reasonable. Again, the body is prescribed in law—if this Bill becomes an Act.
I emphasise that the reclaim fund has to be transparent. That is absolutely crucial to this dormant account scheme. The scheme will not work if it is not operating with full public awareness of what it is doing. We are all united in this House on this necessity for transparency. Schedule 1 requires the reclaim fund to publish annually a list of institutions participating in the scheme, the amount of money transferred into the scheme at individual institution level, the amount of money reclaimed by consumers also at individual institution level, and the aggregate amount of money that they pass on to Big. This information will be available for public scrutiny. It will be in the public domain, so this body has to be accountable.
The issue identified by the noble Lord and the noble Baroness with their amendment is that this is not good enough and that we need parliamentary scrutiny of its operations. Of course if Parliament wishes to scrutinise or debate any specific figure or point of detail in any work of the reclaim fund, among us in this place we have the expertise to subject to public scrutiny a body which is fulfilling a public purpose but is a private institution. If there is any doubt that we might lack the expertise to do that, I do not doubt our capacity for that for one instant. The other place is scarcely going to let any malpractice occur without Members of Parliament finding many conceivable ways of drawing public attention to any misuse of that body’s rights and powers.
I appreciate the intentions behind Amendment No. 17—that parliamentary scrutiny of the directions to Big is required. But we have clear transparency of operations. Establishing a role for Parliament in the issuing of directions regarding Big’s expenditure in England is a pretty heavy-handed way of controlling this position. Of course the Government are bound to say that this is excessively heavy handed, but the Delegated Powers Committee, which reported last November, noted that the approach set out in the Bill follows the model that functions under the National Lottery Act, and is satisfied that it meets its requirements for parliamentary scrutiny. We are not building afresh here; we are following a model that already operates.
My Lords, will the Minister read out more of what was said by the Delegated Powers Committee, of which I am a member? I believe it said, as he rightly stated, that it was a finely balanced affair. This was following the scheme in the lottery Acts, but if it had not been for that, the powers taken were wide enough to be described as having a legislative purpose. So it was a balanced comment; it was not wholly favourable.
My Lords, the noble Viscount is well versed in these issues. I was not going to suggest that there was 100 per cent approval from the Delegated Powers Committee—heavens, I have far too much respect for its members to think that they cannot find a number of weaknesses in the legislation. On the question of scrutiny, however—I believe that the noble Viscount, Lord Eccles, would concede this point—the committee regarded the Government’s position as being well within the confines of the way in which the provisions of the National Lottery Act already operate. Indeed, this House considered that Act, as did the other place, to a very great extent a few short years ago.
The amendment deals with the powers of the Secretary of State. The noble Baroness is distressed that one particular Secretary of State is vested with the responsibility of exercising these powers. I make the obvious point that there must always be one. In circumstances in which it is clear that a number of Ministries have a real interest in this issue, I assure the House that the work will be the product of interdepartmental work by civil servants. However, there must be ministerial responsibility, and the appropriate Ministry here is the Department for Children, Schools and Families.
Big plays a very important part in the operation of the lottery, and this House has recognised that role. The suggestion is that Big should operate under the National Lottery Act without excessive constraints, but that in its operation of this particular issue, there should be additional parliamentary scrutiny of the direction. Let me say that the affirmative procedure—in other words, if the Secretary of State had to table approval for the decisions that he has to take—would exaggerate the necessity. It was not thought necessary with the National Lottery Act, which set up a public body. This is a private body; yet it is being suggested that the parliamentary scrutiny of that body should be at that level of intensity.
I cannot recall a time when noble Lords opposite—certainly not noble Lords speaking for the Official Opposition—have suggested that a private institution should be subject to this degree of intensive parliamentary scrutiny. It seems odd that this was not suggested with regard to the lottery, but that it is suggested in this rather specific and relatively small-scale operation of Big. It is suggested that those directions should be subject to this intensive parliamentary scrutiny, and I can maintain only that the demands are excessive and unnecessary. This body will be accountable, transparent and answerable. There is no question that it will not be subject to public scrutiny as envisaged in the Bill. I hope that the noble Lord will accept the Government’s argument.
My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Naseby, for their comments. The Minister does not have the same sight on this as I have. Clause 5(4) says:
“The Treasury may give a direction … requiring it”.
If that is not the Treasury saying to this private company, “You shall do something”, what is? That is so clear. All Amendment No. 10 says is that these people who are required to do things had better be required to send some accounts. The Treasury should then lay those accounts before Parliament and tell us about the directions. That is simple and straightforward; I see no great problem in that. The dilemma for the Minister is his concern that this is a sort of private affair. The main thing is that this is primarily about something that is being done for the public good. Lots of people want to see the right thing being done for the public good. It therefore seems to me that this very simple matter should be acceptable.
The Minister has an idea that Amendment No. 17 is heavy handed. Perhaps he needs a bit of help. There is all this talk of this being voluntary, but only one volunteer decides how the Big Lottery Fund shall spend the money. There has been tremendous concern about the disposition of the money. Many people could think of all sorts of bright ideas for the use of this money, but by and large people have thought, “Fair enough: youth, yes—bearing in mind where the money is coming from; financial inclusion, yes; social investment bank, not quite certain but we’ll give it a go”. However, this one volunteer will say, “£300 million for that, £50 million for that, and £50 million for that”. Surely the people who have had such great concern about the disposition of these resources and who represent people in various places should have a say in this, rather than it being at the whim of one Minister at the particular moment when the penny drops, the money is available and Parliament is not involved. It beggars belief that that is the position. I therefore wish to test the opinion of the House.
Schedule 1 [Provision to be made in articles of association of reclaim fund]:
[Amendment No. 11 not moved.]
Clause 10 [“Dormant”]:
[Amendment No. 11A not moved.]
12: Clause 10, page 6, line 40, at end insert—
“( ) Notwithstanding anything in subsections (1) and (2), a bank or building society must use its knowledge of its accounts, its account holders and any other relevant matters in determining whether an account is dormant.”
The noble Baroness said: My Lords, Clause 10 contains some technical rules on what is dormant. Subsection (1) defines what is dormant and subsection (2) defines what is not. In Grand Committee we probed the definitions with many examples of real-life situations where the technical rules may have been met. For instance, we raised the case of an account that would have been classified as dormant within the terms of Clause 10 although in reality it was not dormant. This includes cases where the customer has told the bank not to treat the account as dormant or where the customer does not want communications from the bank. If the noble Lord, Lord Monson, had been in his place, he would have explained that in the context of Amendment No. 11A. We also talked about family disputes where agreement cannot be reached on how trustees or executives can access accounts, so that although those accounts apparently remain dormant, they are not dormant. Some accounts exist merely to pay interest to another person but the capital is left untouched. I went through many other examples in Committee. The Government said that the banks would not treat those accounts as dormant, but the Bill would allow them to do so.
As we are dealing with accounts that do not belong to the banks, it should not be for the banks to determine whether an account is dormant. We are concerned with the property rights of individuals who would be entitled to tell banks how they want to be treated; for example, if they never want their accounts to be treated as dormant within the context of the Bill. We have a fear that the banks will write computer programs to identify dormant accounts in accordance with Clause 10 or with other defined mechanical criteria. That is how computers work. This algorithm would be used to identify dormant accounts which would then be sent off to the reclaim fund. We want banks to use their common sense. That is all that my amendment requires. If banks have knowledge about the accounts or the holders or know any other relevant information, they ought not to treat the account as dormant.
The existence of the reclaim fund does not deny people access to their money, but people may not want to go through the procedure of making a formal reclaim and possibly getting involved with a repayment claim in respect of the reclaim fund. As I explained in Committee, the covenant of the reclaim fund could well be considerably weaker than the covenant of the bank with which the account was held. So there is a very good reason why individuals may not want their accounts to be transferred for repayment purposes to the reclaim fund.
This is a small amendment. It is designed to get thinking involved in the process of designating accounts as dormant and not allowing plain rules to drive the transfer of money into the reclaim fund. I beg to move.
My Lords, as I was not aware that the noble Baroness, Lady Noakes, was not proposing to move Amendment No. 11, I was having a relaxed cup of coffee and missed my turn to move Amendment No. 11A. However, as Amendment No. 12 is in many ways an alternative to it, perhaps I may speak to them both.
Amendment No. 11A was based on the presumption that it is not unreasonable for an individual to decide to put few hundred or a few thousand pounds into a bank or building society for the proverbial rainy day, and to leave that sum wholly undisturbed for 15, 20 or even 25 years if such a day never arrives. If that is accepted, the account holder should not have to stay awake at night worrying whether his account might be declared dormant against his wishes, nor should he be put to any other form of inconvenience. However, as the Bill is drafted, the only other way in which he can be 100 per cent confident of not having to worry is by formally declaring that he does not want to receive any communication whatever from the bank or building society concerning the account. Who but the most extreme eccentric would in practice want to opt for such a course? I suppose that the only exception would be someone who does not want other members of his family to know that he has a large amount of money stashed away in an account. But such people cannot amount to more than one depositor in 1,000, at the outside.
I submit that most normal people would positively want to receive a statement at least once a year to verify that their account was still in existence and had not been misappropriated by some rogue trader. They would also want to know what interest had been earned and what bank charges, if any, had been deducted. Indeed, where interest-bearing accounts are concerned—and most such accounts will earn interest, however little—I suspect that it would be illegal for the bank or building society to fail to send the holder at least a yearly statement setting out the interest earned in the financial year and the tax deducted. How else could the holder complete his or her tax return? Perhaps the Minister could confirm that I am right in that assumption.
Amendment No. 11A, which cannot now be moved, would have ensured that such basic information is provided and that the account remains officially non-dormant—officially being the point. It may be that the noble Baroness’s amendment will achieve the same objective in a more roundabout way, the only snag being that the ball would then be entirely in the court of the bank or building society. At least 99 per cent of them can be trusted to be conscientious about this matter, but a few might not be. However, we shall have to wait to hear what the Minister has to say about that.
My Lords, we believe that Amendment No. 12 is unnecessary. It does not alter the position of account holders potentially affected by the scheme. Instead, the amendment mirrors how the scheme is intended to operate: that banks and building societies will transfer only genuinely dormant accounts to the scheme.
The Bill’s provisions set a clear minimum requirement that an account must meet for it to be eligible for transfer to the scheme. First, there must have been no customer-initiated transaction in the account for 15 years. The scheme is voluntary for financial institutions, and we believe that one of its key advantages is that banks and building societies will have the flexibility to refer to other forms of customer-initiated activity before deciding whether an account is truly dormant. That includes correspondence, e-mails, telephone calls and activity on other accounts. Institutions may differ in the approach that they take to recording such activity, but we fully expect banks and building societies not to transfer these accounts where they are aware that an account is active.
Noble Lords have occasionally in our debates seemed sceptical of banks’ and building societies’ intention to act on their knowledge of customer activity under the definition provided in the Bill. However, the scheme has been designed to give both banks and building societies the ability to act on whatever knowledge they may have about the account or the account holder. This will allow individual institutions to take a more sophisticated approach, suited to their particular capabilities, to identifying dormant accounts. This approach will be more sophisticated than would be permitted under similar international schemes which commonly focus only on customer-initiated transactions.
We are also clear that the scheme should draw on existing regulatory procedures in keeping with our attempt to maintain the scheme’s light-touch approach. With great respect, this amendment is out of step with those intentions and goes no further in protecting consumers. The Banking Code already refers to dormant accounts, and, in section 9.16, explains that if a customer has money in a dormant account, it will always belong to that account holder. Once the scheme is operational, banks and building societies will be required to follow the Banking Code provisions relating to the scheme. Each institution will be required by the Banking Code to publish its policy on determining when an account is dormant and to inform its customers of its approach.
On 8 November, the BBA made an announcement confirming that the banking industry itself is in the process of amending the Banking Code to reflect just this. The BBA and the Building Societies Association also have 10 core pledges underpinning their existing tracing schemes for dormant-account holders. These set out how banks and building societies, in addition to the BBA and the BSA, should treat dormant-account holders. The pledges will be updated to reflect our new scheme. They will continue to require a bank or building society to try to re-establish contact with a customer before making their account dormant; to inform customers about their policy and when an account may be deemed dormant; and to inform them about the process for reclaiming money in a transferred dormant account.
Should the customer seek repayment when the balance in an account is transferred to the scheme, they will be able to contact their bank or building society. It is envisaged that the process for these customers to reclaim what is their own money should be no different from the process to reclaim an account which an institution has deemed dormant for internal purposes but where the institution has not transferred the money to the scheme. The Bill gives affected account holders a right to repayment. The scheme has been designed so that banks and building societies will be able to refer to a range of consumer activities in deciding whether an account is dormant.
As the noble Lord, Lord Monson, spoke to his amendment I shall out of courtesy deal briefly with what he said. It is quite similar to what I said in response to the amendment of the noble Baroness, Lady Noakes. It is intended to base the scheme on genuinely dormant bank and building society accounts which have been forgotten or lost by the account holder. The noble Lord’s amendment would extend the exclusion from the scheme of no-mail accounts to accounts where the holder has instructed their bank or building society to send periodic only statements but no other mail.
Generally, no-mail accounts are those where, as the House will know, the account holder has requested that their bank does not contact them. If the bank or building society has not had a statement returned to them indicating that the account holder is no longer at that address, then it is possible that the account holder is still aware of their account. However, in some circumstances a bank may wish to clarify to clarify with the account holder—not only for the purposes of the scheme, but for its own operational purposes—whether the account holder is aware of the account. If the account is operating under strict no-mail conditions then it follows that the bank simply cannot contact the account holder to establish that. However, if the account is operating under more usual arrangements, the bank will be able to contact the account holder to establish whether the account is dormant or merely rarely used.
The voluntary nature of this scheme will allow banks and building societies the flexibility to refer to customer-initiated activities that may indicate that an account is, in fact, not dormant even if there have been no transactions on the account. If the institution understands the account holder to be aware of their account—for example, by requesting periodic statements—we fully expect institutions to take note of the relevant circumstances and not transfer such accounts.
Ultimately, carving the accounts to which the noble Lord refers out of the scope of the Bill could remove a large amount of possible dormant account money that could go to good causes. This step is unnecessary because the scheme’s flexibility allows banks and building societies to make a judgment and to take a sophisticated approach to determining whether accounts are dormant. That is why, although we understand exactly the intention behind the two amendments, neither is necessary. If this were a compulsory scheme then there may well be a need for such provision in the Bill. However, because the scheme is voluntary—a scheme which I think is supported by most noble Lords on all sides of the House—neither amendment is necessary.
My Lords, I apologise to the noble Lord, Lord Monson. I looked for him to tell him that I did not intend to move Amendment No.11 but he was not in his place and I did not know which place he was in. I hope his concerns are covered by my own amendment, as I said in my introductory remarks.
The Government said that they fully expect the banks to behave in a way that meets the concerns I have raised and that money would not be transferred. The Minister says that the Act is designed to give the banks the ability to act on their knowledge. However, our concern is that they must act on the knowledge they have or on any other information that is available to them.
The Minister also referred to the Banking Code, which is welcome and sets out some useful points. However, that is a voluntary code and not universal. Finally, he referred to this as a voluntary scheme. However, for the account holders it will become a compulsory scheme if the banks are allowed to define their own rules without reference to their knowledge of the account holders. I therefore wish to test the opinion of the House.
13: After Clause 10, insert the following new Clause—
“Triennial report to Parliament
(1) Within three years of the commencement of this Act, and not more than every three years thereafter, the Treasury shall prepare a report on the operation of the dormant accounts arrangements.
(2) The report shall include—
(a) the effectiveness of arrangements that exist to enable those with rights, including those whose rights are established by way of a will, in respect of accounts with banks and building societies to trace those accounts and to be paid money held in those accounts;(b) the amount of money which has been transferred to one or more reclaim funds under section 1 and to charities under section 2 in the period covered by the report;(c) an estimate of the amount of money which could be transferred under sections 1 and 2 together with the Treasury’s view of the possible reasons for such money not being transferred;(d) the effectiveness of the arrangements made by reclaim funds to meet repayment claims;(e) the appropriateness of the way in which banks and building societies have identified accounts as dormant within section 10;(f) the desirability and practicality of establishing similar schemes for other categories of assets which have or may become dormant; and(g) any other matters that the Treasury considers to be relevant to the operation and scope of the dormant account arrangements.(3) If the report shows any of the matters covered by the report are unsatisfactory in any respect, the Treasury shall state—
(a) the improvements that could be made to the arrangements;(b) whether those improvements require legislation or could operate on a voluntary basis;(c) the timescales involved in achieving those improvements;(d) the detailed actions that the Treasury propose to take. (4) Before preparing the report the Treasury shall consult those persons who it considers have relevant knowledge of the operation of the dormant account arrangements.
(5) The report shall be published in such manner as the Treasury shall determine and shall be laid before each House of Parliament.”
The noble Baroness said: My Lords, the amendment inserts a new clause after Clause 10 requiring a triennial report to Parliament on the operation of the dormant account arrangements. As the Minister will recall, we had long discussions in Committee about the arrangements to transfer dormant account money. Very broadly, we argued for more specificity in this Bill, but the Minister’s consistent response was that these arrangements constituted a private scheme undertaken voluntarily. He said that the reclaim fund was a private fund and that Part 1 merely facilitated private arrangements. That was the Government’s main reason for resisting a large number of amendments.
We simply do not buy the approach of little involvement from the Government but, importantly, almost no involvement from Parliament. The Government have reached an agreement with the British Bankers’ Association and the Building Societies Association that they will hand over the dormant money; and that is good. But the Government have been so keen to get their hands on the money that they have agreed to leave the banks and building societies almost entirely in the driving seat for the detailed arrangements. We do not believe that the Government’s approach is responsible.
Instead of tabling a raft of detailed amendments, we have decided to propose this amendment to give the Treasury and Parliament more insight into various aspects of the arrangements. We have chosen a pragmatic path, which involves reporting to Parliament on the scheme as it starts to work. My amendment requires a report by the Treasury to be published and laid before both Houses of Parliament every three years. It has to cover many of the things that we have already discussed today, and I hope it meets the concerns of the charities behind the Unclaimed Assets Charities Coalition, to which the noble Baroness, Lady Finlay, who is no longer in her place, spoke.
New subsection (2)(a) deals with the issue of the register. We debated that matter earlier today. We firmly believe that it is important that there is continuing scrutiny about how well those arrangements are working in practice. We recognise that many in the charity sector doubt whether they will do so. Parliament needs to keep that under review.
Paragraphs (b) and (c) focus on how much is actually being transferred to the scheme and how much could be transferred. Again, there are doubts about whether this voluntary scheme will be fully complied with. This will allow an ongoing review. That was one of the concerns outlined by the noble Baroness, Lady Finlay, and it is an alternative approach to compulsion. Paragraph (e) focuses on whether the repayment arrangements work in practice. They have to work well if consumers are to have confidence in a scheme that transfers their money ultimately to the Big Lottery Fund.
I have already spoken this afternoon about how banks identify accounts as dormant. The Bill’s minimalist approach may or may not cause problems in practice. The Bill says that dormancy will start only after 15 years, which is way in excess of any other international scheme. We need to keep under review the evidence of the relationship between the expiry of time and dormancy. This and other issues in relation to dormancy are covered by paragraph (e).
As we debated in Committee, the Bill modestly confines itself to the accounts held in banks and building societies. We were unable to table amendments to cover the wider range of other assets that are similarly lying unclaimed. We want to keep public focus on expanding the range of assets to be liberated from dormancy and put to good use. That concern is also shared by the Unclaimed Assets Charities Coalition. This is provided by paragraph (f); and paragraph (b) will allow any other matters to be addressed.
The report will require the Treasury to identify unsatisfactory arrangements and say how improvements could be made and whether legislation is required. We do not believe that legislation is automatically required where deficiencies are identified. The nature of a voluntary scheme, as the Minister said this afternoon, is that it has flexibility and can change. What better way to promote change than a debate sparked by a report prepared by the Treasury and laid before Parliament?
I do not rule out further legislation. Sometimes that is required, but we hope that when something can be done voluntarily it will be, because volunteerism is always our first port of call.
In Committee, the Minister told us that the Treasury would review the scheme at some time and in some way. It was not clear whether such a review would be published. That is not good enough. We believe that parliamentary involvement should be hard-wired into this Bill on the basis of a regular report. I beg to move.
My Lords, our names are attached to this amendment and I would like to speak to it. I would call this “accountability and action”. As the Minister said earlier, this is a novel way of going forward; if so, it had better be right. The triennial report would be a very good way to consider that and to see whether reuniting is going fine, whether the reclaim fund is working well and whether we have confidence in the voluntary scheme.
I am particularly attracted to the paragraph that says we need to raise the horizons and look at other orphan assets. We know that in other places, such as Ireland, other assets have been brought in. If this report is brought forward, it will enable people watching the scheme to look at international comparisons. I hope that the scheme is a great success. As the Minister indicated, I am an enthusiast for the scheme. I hope that insurance, unclaimed dividends, shares and betting slips—you name it—can be brought into the scheme.
Earlier today the Minister said, “Let’s see if we are proved right”. One way in which we can see if the Government are proved right is to get a report about how things are doing and to lay it before Parliament.
My Lords, the Government think that in principle the Opposition have a strong argument. We agree in principle with the concepts that lie behind the amendment. This is a good opportunity to look to a time when the scheme is up and running. We need to consider such matters because this is an innovative scheme. I emphasise the fact that the transfer of money into the scheme will be managed by a reclaim fund run by the private sector, under private arrangements put in place by the reclaim fund of the banks. That will be in compliance with the legislation, the Banking Code and the FSA regulations.
We agree that the Government should not lose sight of the scheme once it is inaugurated. We have no intention of losing sight of it. It is right that at some stage the Government will return to it after its implementation to review whether the scheme is effective and delivering the right outcomes for consumers.
We will think further about these issues. We are by no means convinced that this amendment should be in the Bill. I listened to the questions today and in Committee about the scope of the Bill. I remind the House that this Bill is restricted only to bank and building society accounts and that other assets and other schemes are outside the scope of the legislation. Therefore, when we look at the review we will be looking at that. I also do not see any great merit in the amendment which suggests that there should be regular reviews every three years. I cannot see the logic behind that.
I can see the necessity for the Government to respond to the principle of review, and so at Third Reading we will come back with a statement on how we think that review should be carried out. We will consider carefully when an appropriate time for the implementation of the review will be, in line with better regulation practice and we will take into account the available data on participation levels and the amount transferred to Big for distribution. The noble Baroness may be right that after three years we will be in a position to make those judgments. We do not think that we are in a position at this stage, and certainly it would be wrong to place in the legislation an amendment which ties us down on the matter. The noble Baroness is right that this scheme should not be implemented or operated without a review. I undertake—
My Lords, I am sorry to interrupt the noble Lord, particularly on Report, but he referred to a statement at Third Reading rather than the possibility of bringing forward an amendment. May I draw his attention to the fact that a precedent was set on the Pensions Bill by agreeing an amendment that provided for some degree of post-legislative scrutiny, which is what is being sought here?
My Lords, I understand that point but the noble Lord will recognise that I have crucial reservations about the amendment. We agree with the principle and we will take steps to implement it. However, we do not think that it should be in the Bill, and certainly not in the terms of the amendment. There is no disagreement between us in principle as regards the objective, which we will seek to realise. I undertake to be clearer at Third Reading than I am today as regards how the Government foresee that happening.
I am aware that this may not—
My Lords, I find the Minister’s statement somewhat puzzling. He is saying that the measure will not be in the Bill, that the Government will do something about the matter in some other, unspecified way, but that we will not find out what that is until Third Reading. He has had long enough to think about this rather simple point. Can he give us some clue about what the Government have in mind?
My Lords, I indicated why the amendment is unacceptable to us and the reservations we have about it. The noble Lord makes the obvious point that the Government should be ready for all developments at all times. These arguments were presented in Committee. The Government are asked to listen to the arguments made in Committee and to respond. The amendment has been tabled today on Report. I am indicating that the Government agree with the principle. We have listened, we agree with the principle and we will take constructive action. At Third Reading I will announce how the Government envisage that action should be taken. I am signalling to the House that I do not think the measure needs to be included in the Bill. Of course, the House must judge the value of the point I am making. I hope that I will at least be given credit for the fact that I am not indicating straightforward disagreement with the amendment; far from it. I accept the principle behind it. The Government have the right to indicate that they will try to solve this problem in their own way. It will then be for the House to judge whether that way is satisfactory.
My Lords, I thank the Minister for that reply and the noble Lord, Lord Shutt, for supporting the amendment. When the Minister started to speak I thought that we were getting somewhere but, as he pointed out, we considered a very similar amendment in Committee. He said very similar things in responsethat that—there would be some kind of review at some time—but he gave no indication of what would be in it, when it would take place, whether Parliament would be involved, or of a lot of other things. The only advance we have made concerns the things that the Minister does not want. He does not want there to be a regular report to Parliament and he certainly does not want it to include other assets. We think that those two aspects are very important.
The Minister has made no attempt to talk to me about the content of a report, notwithstanding the fact that we started Committee in early December. I hear what he says about making a statement on the Government’s view at Third Reading but I cannot believe that that will be satisfactory. I wish to test the opinion of the House.
[Amendment No. 14 not moved.]
Clause 15 [Distribution of dormant account money by Big Lottery Fund]:
15: Clause 15, page 8, line 5, after “Fund” insert “, under the name of “the Reawakened Fund”,”
The noble Lord said: My Lords, we return to territory that is familiar to those of us who have been in Grand Committee—the name of the dormant account money that is in the hands of the Big Lottery Fund. I suggest that this should be called “the Reawakened Fund”.
The Minister made some helpful comments in Committee. It is clear that the fund will be kept separate, that it will be marketed separately and that it will be accounted for separately. I want to be certain that it will be labelled separately. In a sense, there is a lot of “re” about this Bill—there is reference to reuniting and reclaiming, so it is appropriate that these dormant funds are being “reawakened”. I indicated in Committee that there are people—perhaps they are a minority, even a small minority, but they are there—who do not want to apply for, or use, funds that they believe are from the National Lottery. They believe that their causes should not benefit from the proceeds of gambling. Therefore it is very important that the fund is properly named. We have had a week or two to think about it. I have not come up with anything else and neither have the Government. So let us have another try and use the word “reawakened”. I beg to move.
My Lords, we on this side appreciate and admire the noble Lord’s spirited attempt to ensure that the investment of dormant account funds in communities across the UK is properly recognised. It is our intention that the distribution of dormant account funds should be appropriately publicised, reflecting the unique opportunity they present to make a real difference to communities across the UK. However, the effect of the noble Lord’s amendment is to impose a UK-wide brand. I hope that the House will appreciate that, just as it is important that the devolved Administrations set their own spending areas, so it is important that the use of dormant account resources is branded in a way appropriate to each of their communities. At this early stage, it is not appropriate to take decisions about the branding and publicising of dormant account fund investments that would then stand, whether they were right or wrong. I hope that when the appropriate time comes, expert and public opinion will contribute to the consideration. There may well be a degree of consultation, particularly among young people, about what the brand should be in Scotland, Wales and England.
With the greatest respect, these are matters that should be properly beyond the House. This does not need to be in the legislation. If the amendment was prompted by a desire for government reassurance yet again about the ways in which dormant account funding would be delineated from other funds distributed by Big, which I know in large measure it is, let me once again try to reassure the noble Lord and the House. Big is clear that any non-lottery funding will be accounted for and promoted independently from lottery funding. The Bill requires Big to report annually on any grants made with dormant account money, and Big has committed regularly to update its website with grant details. This will be clearly branded as distinct and separate from lottery funding.
The Big Lottery Fund is fully accountable to the Secretary of State and Parliament for lottery distribution. This level of accountability will be extended to dormant account money in our reporting and in access to information on our funding. I remind the noble Lord, as I am sure he knows, that Big already runs a non-lottery funding programme, the Community Assets programme, on behalf of the Office of the Third Sector. This is an example of a programme that is clearly branded as distinct and separate from lottery funding. Big’s work on the Community Assets programme is accompanied by the following statement:
“The Big Lottery Fund is delivering the Community Assets programme on behalf of the Office of the Third Sector. This is not lottery funding”.
That is one example of how Big already manages a clear separation of its funds. The Government expect that Big will similarly manage to ensure that dormant account funding remains publicly and operationally distinct. While we have great sympathy and more with the noble Lord’s intention, we think that it is too early to give a definitive name to this fund. I repeat that those who run it in other parts of the country will want to brand it in their own ways. I ask the noble Lord rhetorically, “Is it really for us, today, while the Bill is going through Parliament, to give it a name that, once given, cannot easily be changed?”. I thank him very warmly for dealing with this issue, but I invite him to think again and perhaps to withdraw his amendment.
My Lords, I thank the Minister for his contribution. It may well be that there are other, brighter ideas. I hope only that those who make inquiries as to possible names will make inquiries of people who come up with brighter names than three-letter words such as “Big”. I am sure that better can be done. I hope that words that engender excitement can be put into the title. The Minister possibly realised that I would not necessarily press the amendment, and I will not do so on the grounds that I am frankly more interested in substance than top show. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
16: Clause 15, page 8, line 7, at end insert—
“( ) Subject to subsection (1), the Big Lottery Fund may distribute money to other Lottery distributors for meeting expenditure that has a social or environmental purpose.”
The noble Viscount said: My Lords, in Committee, I tabled an amendment allowing some of the proceeds from dormant accounts not only to go to the Big Lottery Fund but to the other distributing bodies. As it was on the third day of Committee, I was not able to be there, but my noble friend Lord Howard kindly moved the amendment for me, and the Minister replied. I always listen to the Minister very carefully, and in this case I read very carefully what he said on my amendment. He made an important point about the accountability of the funds. He said:
“We think that it is better, clearer, more effective and more answerable to the nation that Big should take responsibility for distribution, but with an entirely separate accounting and reporting procedure on its work with regard to these assets. That is the principle behind the Bill and we want these unclaimed assets to be entirely separate from other operations of the lottery distributors. We are insisting upon mechanisms within Big that guarantee that”.—[Official Report, 10/1/08; col. GC 376.]
I regard the Minister’s words as very important, and so I come back with another amendment today taking account of them. The amendment allows the Big Lottery Fund to distribute money to other lottery distributors for meeting expenditure on exactly the same terms, so that it has a “social or environmental purpose” as is written into the Bill. It gives the Big Lottery Fund that power.
One of the problems with the Big Lottery Fund, as my noble friend Lord Eccles said at Second Reading, is that in effect it has become the arm of government. We can see from its annual report that it is seriously oversubscribed. Last year alone, it received applications of £8 billion for an income of £600 million. I am afraid that it has lost its way, and it is giving money all over the place. In the accounts, one can see that it gave nearly £900 million to statutory bodies, including £112,000 to Wakefield Council to spend on a traffic calming scheme, £315,000 to Blyth Valley Borough Council for the enhancement of footpaths and £27,000 to Exeter Council for a new walking route network. I am sure that those walking route networks and paths are important, but do we really think that they are a matter for lottery spending? Can they possibly be additional or anything to do with the principles of the lottery and how it was set up? They really are part of government expenditure, whether that be national or local government.
The Big Lottery Fund has become huge. It has about 1,100 employees, which is about the same number of employees as the Treasury. Some 12 per cent of its budget is spent on administration, which costs £77 million a year. It has become too big and too cumbersome. The most important thing is that it is getting all this extra money when we know that, because of the Olympics, £675 million is being diverted from the lottery to the Olympics, which is mainly falling on the other distributing bodies. They are not getting any of that money and they are under pressure. My amendment does not force the Big Lottery Fund to give money to the other distributing bodies, but it allows it to do so. To come back for a moment to additionality, when the previous lottery Bill was passing through Parliament, we tabled an amendment requiring the Big Lottery Fund to report on additionality. We await that report with mounting excitement. It might win this year’s prize for fiction; or it might be honest with the facts. We wait to see.
The central point is that the distributing bodies that have suffered most because of the Olympics, such as the arts and the sporting bodies that are not involved in the Olympics, are very short of funds. This is an opportunity for the Government to say to the Big Lottery Fund that they can help it to make up the deficit that those bodies have suffered. Can the Minister tell me whether the Government can do that under the Bill anyway? It may be that they have the power already. This amendment gives the Minister an opportunity to tell noble Lords whether that is the case. I beg to move.
My Lords, I support the amendment. Some of the other lottery distributors have considerable knowledge of the sectors in which they work, and it seems only sensible to allow the Big Lottery Fund the flexibility of making use of those organisations, especially those that have specialist knowledge in the spheres that meet the criteria set out in the Bill. Indeed, that would be a cheap and effective way of distributing funds. The Big Lottery Fund should be not only permitted but encouraged to make use of that pool of talent.
All the reasons the Big Lottery Fund put forward explaining why it would be an appropriate distributor of dormant money hold true for other lottery distributors. I hope that the Minister will be sympathetic to this small amendment. It does not in any way restrict the Government in directing this money to the causes that they have defined; instead, it increases the chances that the money will be distributed by the organisation that is best suited to the purpose.
My Lords, I am grateful to those who have spoken in the debate and particularly the noble Viscount, Lord Astor. We missed him in Committee. He is more than welcome to discuss, in his inimitable way, issues in relation to the Lottery on which we have discoursed together on many occasions.
The amendment possibly had a modest objective. The noble Viscount may have been seeking the assistance of other agents among the lottery distributors in distributing the resources in accordance with the priorities identified in Clauses 17 to 20. The noble Lord, Lord Shutt, asked me whether Big could ask other lottery distributors to hit certain targets within the framework of Clauses 17 to 20. The answer is yes; Big currently does that outside the scheme. Big does, from time to time, hit the objectives that it wants to achieve in partnership with other lottery distributors. The case that the noble Lord, Lord Shutt, mentioned is an illustration. The delivery of the Parks for People programme is run with the Heritage Lottery Fund. Big has got that experience and I cannot see anything that would inhibit Big from following that objective within the provisions of Clauses 17 to 20. However, I fear that what the amendment would—and what in fact the noble Viscount intended it to do—enable Big to operate outside the priorities in Clauses 17 to 20 and to follow other priorities that obtain in relation to lottery funds and spending. What, otherwise, would be the point of his reference to the pressures on other expenditures and schemes within the Lottery if they did not need supplementation from this fund? I cannot accept that. He will appreciate that we would expect Big to work separately; this account is separate. Big has got to be accountable for the separateness of that account—all our processes of accountability require that. As to the use of agents for the distribution of the money for the purposes defined in the Clauses 17 to 20, we expect that to happen—not to a huge extent but where it is felicitous for it to do so.
However, the amendment opens up the wider field; namely, that the dormant account proceeds might fill the gaps in funding denied to the lottery through other decisions. We cannot accept that because that would be putting this fund into the framework of lottery priorities. We have built into the Bill priorities for expenditure. If the amendment had referred to the use of agencies and involved felicitous interchange, I would have been able to give it the warmest of welcomes because it would have been consonant with present practice. Unfortunately, the noble Viscount indicated, as we had anticipated, that the amendment is a bit more strategic than that and we do not accept that strategic objective. I hope that he feels that he has pushed this as far as it can go and that he will withdraw the amendment.
My Lords, the Minister has given an interesting reply. He has accused me of opening gaps by trying to extend where this money could be spent. My amendment does not do that. It refers very clearly to,
“meeting expenditure that has a social or environmental purpose”.
Those are exactly the words on page 8, Clause 15(1). I have mirrored those words, so I have not opened any gaps. All I have tried to do is to show that the Big Lottery could give money to other lottery distributors, to be spent on exactly the same basis, subject to all the provisions in Clauses 17 to 20, as the Minister said. I think he said in response to the noble Lord, Lord Shutt, that they could do that. I will have to study what he said with care; if he did say that, I am grateful—that is one of the things we were asking for. He explained why he thought that my amendment was defective; I do not necessarily agree with that. However, I take his final point, which was that it could be redone in a better way.
I know the Minister has had a difficult and bruising afternoon and I do not wish to add to his woes any more. I will look at what he said and see whether his words give us comfort on this—they may do—or whether they encourage me to come back with a slightly amended amendment that fits my purpose and does not break any of the principles, with which I agree, that the Minister wants to make sure are held throughout this Bill. I am not just trying to open gaps. I am grateful to him for his reply and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 21 [Directions to Big Lottery Fund]:
17: Clause 21, page 10, line 30, at end insert—
“( ) Any direction given under this section may not be made unless a draft statutory instrument containing such a direction has been laid before, and approved by a resolution of, each House of Parliament.”
On Question, amendment agreed to.
Clause 25 [Expenses]:
18: Clause 25, page 13, line 46, at end insert—
“( ) Money defrayed under this section must not exceed 10% of the money distributed by the Reclaim Fund each year.”
The noble Lord said: My Lords, this amendment is similar to the one moved in Committee, and many of the arguments are similar.
The Big Lottery Fund has lobbied for and—because of its experience working with grant applications and its existing infrastructure throughout the United Kingdom—been awarded the job of distributing dormant resources. Therefore, it is not inappropriate to expect the Big Lottery Fund to fulfil its promised economies of scale. This amendment stops the Big Lottery Fund spending more than 10 per cent of the funds it receives on administration. Your Lordships will no doubt remember that during the debate in Committee, many considered the original cost ceiling of 5 per cent to be unreasonably low, although I am grateful to my noble friend Lord Eccles for defending the original percentage as being perfectly feasible for a well run organisation to achieve.
The Big Lottery Fund currently spends about 12 per cent of its money on distributing lottery funds. Given that it has an existing structure, distributing the extra funds for well below the suggested limit of 10 per cent should be well within its capabilities. Indeed, a 10 per cent limit would give substantial headroom. The Minister also made it clear that he expects the Big Lottery to be able to reduce its administrative costs as it settles into its role; noble Lords may recall that he mentioned more than once bearing down on these overheads. This, and the Big Lottery Fund’s commitment to delivering economies of scale, makes the 10 per cent target extremely realistic. I hope that the Government will be sympathetic to the amendment.
In response to previous criticisms that limiting the Big Lottery Fund in this way would be unreasonable because it would impose a requirement that would never be imposed on a private organisation, I point out that private organisations are subject to the disciplines of the marketplace and are therefore compelled to keep administrative costs down if they wish to prosper and survive. The amendment would not impose an undue lack of flexibility on the Big Lottery Fund. On a conservative view, even if the reclaim fund retains up to half the money expected from dormant bank accounts for possible claims, the Big Lottery Fund must be expecting to receive something in the region of £200 million. Surely the Big Lottery Fund can distribute this money effectively without spending more than £20 million on extra administration. I hope that the Minister will consider the amendment with the attention that it deserves. It would encourage efficiency and do much to reassure the public that these funds are being well managed. I beg to move.
My Lords, I am not inclined to support the amendment. I have no idea whether 10 per cent is the right figure, although it sounds reasonable. However, I am a member of a charitable trust for which the figure would be higher. It depends how you describe the 10 per cent and what funds come within it. Monitoring grants—seeing that things are going well and stopping problems—is all part of the business of grant making. Some people may say that that is part of the grant, while others may say that it is part of administration. Timing may be also an issue if there were to be such monitoring, as the figure might be 9 per cent one year and 11 per cent another. I am not inclined to support the amendment, although I very much appreciate the principle of not wasting money and wanting real value for money.
My Lords, the noble Lord, Lord Shutt, made a similar speech in Committee, which I greatly applauded. I am happy that he has produced an encore so that I can offer my applause again. In fact, I shall quote what the noble Lord said in Committee. He did not quite repeat himself, so I shall delight the House by showing how extraordinarily accurate and perceptive he was. He said:
“If one spends 12 per cent in giving away 88 per cent well and doing a proper and thorough job of it, it is far better than giving away 100 per cent and being clueless about it”.—[Official Report, 15/1/08; col. GC 470.]
That is graphically put; I could not express it as well myself, which is why I indulged in the quotation. I am grateful to the noble Lord for his contribution today, too.
The necessity of bearing down on administrative costs is, of course, continually with us. We share that objective with the noble Lord, Lord Howard. Like the noble Lord, Lord Shutt, we do not think that Big’s current spending is outrageously large, given that Big is involved in complex disbursements of money.
That brings me to whether an annual cap would make any sense. The noble Lord, Lord Howard, has vast business experience, so I shall not venture down any road in trying to enlighten the House on areas that he knows inside out and far better than I do. However, for a body that operates, as Big does, a portfolio of operations over time—commitments are for more than three years and payments are made over five years or more—an annual cap would be the most extraordinary and arbitrary intrusion. I do not think that it would fit within the framework of any business that operated in quite the way that Big does.
Let me take the most obvious example. When Big deals with issues in this account, such as providing support services for young people, we would expect it to consult not only those who can provide the services but young people themselves, so that young people are actively engaged in shaping the bids for community resources. That kind of activity can be prolonged; it is not the kind of thing on which one strikes a deal overnight with a handshake. One is not dealing with these groups on those terms, nor is one meeting needs expressed in those terms. We want to give Big the flexibility to meet its distinct and often difficult objectives, which it has experience of doing through the lottery. It currently operates with a degree of flexibility that the amendment would come close to destroying.
I assure the House and the noble Lord that we are concerned about the accountability of the distribution costs of lottery funds. The Big Lottery Fund is legally required under the National Lottery Act to comply with a statement of financial requirements issued by the Government, which makes clear the fund’s responsibility to ensure that its finances are managed appropriately. We also have the accounting officers for the departments in which the fund is spending money. As far as this account is concerned, that would be the Department for Children, Schools and Families—I know that that department has not found too much favour on the Benches opposite—and the Secretary of State would sign off the accounts. Big’s administrative costs will be subject to the accounting officers of the departments and of the devolved Administrations. There is a clear accountability framework. We have had considerable experience of this with the operation of the National Lottery. I hear the criticisms of Big’s expenses, but the noble Lord, Lord Shutt, is right in principle. Big is involved in difficult community and local work and you cannot expect it to hit the same target levels as might occur with those much simpler operations—even those involved with such resources—with which it is sometimes compared.
The amendment is also worried about the defrayment of the Government’s expenses. Aren’t we all? It is our job to make sure that Governments keep their own administrative costs down. I put this basic point to the House: for the administration of the distribution of lottery funds, the Department for Culture, Media and Sport charges the National Lottery Distribution Fund about £250,000 a year, which is less than 0.02 per cent of what is raised for good causes each year. The Government estimate that the costs in relation to the reclaim fund will be less in cash terms, because it will be a smaller fund. I do not think that there is great cause for anxiety on that score with regard to government accounts and I hope that the noble Lord will feel satisfied enough to withdraw his amendment.
My Lords, I thank the Minister. It will not surprise him to hear that I do not agree with him. Given that the fund already has more than 1,000 employees and an existing structure, that it has pitched to get this, and that it has briefed us on how its existing administrative overhead can easily absorb this new money, I think that it has massive flexibility within a 10 per cent ceiling on its expenses. It should have some discipline over what it spends. I know that that is not customary, but then it would be nice to think that at least some government organisations cannot spend whatever they feel like spending. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.