Clause 29: Distribution of dormant assets money for meeting English expenditure
1: Clause 29, page 22, line 13, at end insert—
“(1A) An order under this section may enable the creation of funds (to be known as “community wealth funds”) that may make grants and other payments to support the provision of social infrastructure to further the wellbeing of communities suffering from high levels of deprivation and low levels of social infrastructure.(1B) The Secretary of State may—(a) by order create one or more community wealth funds for a temporary period of at least 10 years, and(b) at the end of that period review the efficacy of the community wealth funds with a view to creating community wealth funds on a permanent basis.(1C) In subsection (1A), “social infrastructure” means—(a) buildings or other assets owned or managed by organisations located in communities for the purposes of local residents’ meeting, socialising, accessing educational resources, or conducting other activities to improve their wellbeing, or(b) organisations, whether incorporated or unincorporated, existing for the purposes set out in paragraph (a), (c), (d), (e), (f), (g), (i) or (j) of section 3(1) of the Charities Act 2011.”Member’s explanatory statement
This amendment would enable orders under Clause 29 to create community wealth funds as a means of tackling deprivation and building social infrastructure in left-behind communities. It would mandate the Secretary of State to establish and review the effectiveness of one or more pilot schemes which would run over at least ten years.
My Lords, I welcome the Minister to his first outing on the Bill. Before I get into the body of the amendment, I perhaps ought to declare an interest. I am a member of several boards of charities, and I work for a charity, so I am rather hoping that if we endorse this amendment, those charities might at some point benefit from it. Nevertheless, it is an interest to be declared.
I thank the noble Lord, Lord Hodgson, for leading this debate in Committee, when he proposed what could be called a “full-fat” version of the community wealth fund initiative. In Committee, the Government argued that the local trust proposals, while interesting, are not sufficiently worked through, meaning that the DCMS is not in a position to make community wealth funds a beneficiary of dormant asset funds at this time.
Amendment 1 suggests a reasonable compromise and, on that basis, we hope that the Minister will be able to accept the amendment. The text would give the Government the power to establish a long-term pilot scheme, enabling small-scale investments to be made in local communities that have been left behind in recent years and for data relating to the social impact of those investments to be gathered and analysed. The amendment does not compel Her Majesty’s Government to act but gives them the tools needed to commission such a pilot.
The Government’s stated commitment to the levelling- up agenda was very much at the centre of their 2019 election campaign and, of course, they have subsequently argued strongly in favour of levelling up in many different guises and fora—we await anxiously, with bated breath and much anticipation, the arrival of the White Paper—so it is hard to see any reason why DCMS should exclude itself from that policy process and not agree to trial the community wealth fund approach.
My argument is simply that the proposal could act as a powerful tool in boosting deprived areas, putting small sums of money in communities’ hands so that they can invest in the facilities or services that would have the most local benefit—perhaps subsidising a community hall, running adult learning classes, supporting skills and training hubs and sports facilities, and improving digital connectivity. I am sure we could all come up with a long list of things that could directly benefit communities that have been left behind and require levelling up.
The other feature of this, which speaks to the amendment, is that much of the Government’s funding so far announced for levelling-up programmes is focused from the centre, so it is directed and targeted at precise places and communities. There is nothing necessarily wrong with that, but the community wealth fund, if trialled and piloted in the right way, would put money directly into the hands of communities that sought to benefit from them, giving a sort of bottom-up approach, one that I believe most of us in your Lordships’ House would very much support.
Stakeholders have repeatedly signalled a willingness to discuss their idea with Ministers. They are realistic about the difficulties of adopting community wealth funds with a big bang approach, which in my view adds rather more weight to the proposal for a time-limited series of low-risk pilots.
Finally, while I am on this point, I thank the right reverend Prelate the Bishop of Newcastle, who has made a valedictory speech and is therefore unable to contribute to this debate. We are grateful for her support for this amendment, as well as that of the Bishops at large. We are also, of course, very grateful to the right reverend Prelate for her wider service in your Lordships’ House.
We see this amendment as part of a levelling-up agenda and a way of empowering communities, as well as an opportunity to trial new and innovative ways of funding communities. We believe that this has a low-risk attached to it but would nevertheless give a boost, and some inspiration and thinking, to local wealth creation. I beg to move.
My Lords, I am very delighted to support this amendment. My colleagues and I are great believers in empowering local communities. Indeed, in my years as an MP, I saw a number of local initiatives, driven by local people and community groups, that did some extremely good work but could not cope with the mutual demands of both providing their services and fundraising, so they were unable to grow to that kind of sustainable point that was so important in the community. It seems to me that the community wealth fund gives opportunities to those new initiatives, driven by local people, targeted very much towards the members of the local community and very much reflecting local need. It would seem ideal to do this under the structure of the dormant assets programme.
I have two other reasons for feeling that this is important. Later on Report, we will address issues of oversight over the kind of programmes funded through dormant assets. But it seems to me that there is no way that that issue can be addressed without recognising that the kind of resources for the detailed scrutiny and monitoring of programmes is in short supply. It seems to me that, when you have small local programmes, a well-structured community wealth fund arrangement can put in place that administrative oversight and make sure that, locally, the funds are well spent, provide value for money and are properly targeted. So that level of administration in fact makes up for a much broader weakness, frankly, within the overall dormant assets structure.
I am also very pleased to look at a pilot approach—this will be a case of trialling, reshaping and refining—because I am concerned to make sure that the money derived from the dormant asset funds is used in addition to the kind of services that ought to be provided, whether by central or local government. It will be really important for an entity such as the community wealth fund to work in tandem with local authorities but not substituting for what they can or should be doing. We do not want duplication of administration or service, and we certainly do not want to give central government an opportunity to further reduce the resources that it provides to local authorities on the grounds that the dormant asset fund and various charitable and local civic societies will do the work in its place and not require the normal support and resource that ought to be provided.
It therefore seems to me that this is very much a win-win approach, and I hope that the Government will take it on board. The Bill is an opportunity to expand what has been a very successful programme in significant additional directions, and this is certainly one of them.
My Lords, I have my name down in support of this amendment, which, as the noble Lord, Lord Bassam, said, builds on one that we debated in Committee. As is always the case, when you come back to the subject, there is a risk of a great deal of repetition, and I do not wish to try the patience of the House with a long exposé. During the debate in Committee, the Minister’s predecessor, my noble friend Lady Barran, raised some significant concerns that the Government had about the way that this might operate. The amendment of the noble Lord, Lord Bassam, has very neatly—if I may say so without sounding patronising—answered some of the points made then.
I will repeat, in four sentences, four reasons why I am attracted to community wealth funds. They are very local and can reflect the often highly idiosyncratic needs of a particular local community. They can provide a physical space—a building—as a focus for presenting and answering those particular needs. Thirdly, they can provide an element of professional help, without which a purely voluntary organisation can struggle. Fourthly—this is most important—they can provide the long-term capital needed to answer and build answers to the very deep-seated challenges that many of these communities face.
However, as my noble friend Lady Barran said—I am sure that if I could see my noble friend’s speaking note I would see that he will repeat it in a minute—this is a new approach and the Community Wealth Fund Alliance is setting out, brimming with confidence, hope and optimism. I certainly wish it well, but there will be difficult days ahead with hard decisions about structure, approach, governance and impact. The noble Baroness will probably raise that last issue in her speech in a minute. It is dangerous if you accept too rigid an approach in primary legislation; if it subsequently turns out to be less than ideal, you are stuck with it. So there is an element of “Be careful what you wish for”.
Then there is the issue of consultation. I think many of us would say that this was a case of putting the cart before the horse. Normally you have a consultation, get the results, draft the legislation and then discuss it in the light of what has been discovered, but that has not happened here and we are going at it the other way around. Whether we like it or not, that is where we are. So I can see why, unsatisfactory though that approach is, in the circumstances, the Government cannot and do not want to pre-empt the results of that consultation.
Conversely, primary legislation, like buses, does not come along very often; the next Bill might be in another five or 10 years—it is 15 years since the noble Lord, Lord Bassam, and I discussed the Charities Act, and we have had probably had one since—but we need to send a signal of our support for community wealth funds. How do we balance those issues? I suggested that if the noble Lord, Lord Bassam, replaced “must” in his original drafting with “may”, that might provide an answer that would not force the Government, the Secretary of State and my noble friend on the Front Bench to set up a community wealth fund but would provide them with an option to do so in light of the consultation when they had the full outcome available. Since the noble Lord was kind enough to make that change, I am delighted to support his amendment.
My Lords, the noble Lord, Lord Bassam, is correct that my friend the Bishop of Newcastle has made her valedictory speech, but I have been permitted to speak on her behalf. Noble Lords may have noticed a certain discrepancy in height and volume between me and the Bishop of Newcastle but she is living proof that stature has nothing to do with size. I applaud my friend for her significant role as a Lord Spiritual and a community leader in Newcastle; the city has honoured her with the freedom of the city in recognition of her work.
In support of the amendment, we would like to say that the creation of community wealth funds, as the noble Lord, Lord Bassam, has said, will strengthen community life in left-behind communities, including many in the diocese of Newcastle. Levelling-up investment, while welcome, has been largely about hard infrastructure but we want to see more investment in social infrastructure so that our communities can flourish. It is precisely that social infrastructure which could be provided by the community wealth funds, so they are already creating confidence in communities even if the consultation is yet to happen.
One of the key founder members of the Community Wealth Fund Alliance is a local trust that administers the Big Local programme, a programme that has inspired this community wealth fund proposal. The Big Local programme has been operating for 10 years and has generated considerable learning and evidence that could inform the design of the new pilot fund or funds that the amendment would enable.
The Big Local programme supports 150 neighbourhoods across the country that have each received just over £1 million in funding from the National Lottery Community Fund. That funding is placed directly into the hands of local residents, giving them the ability to make decisions about how to improve their neighbourhoods and their quality of life. Areas were selected on the basis that they suffered from higher-than-average levels of deprivation and had previously missed out on their fair share of lottery or other public funding.
An in-depth evaluation of 15 of the 150 Big Local areas half way through the programme outlined the benefits for individuals, groups and organisations and charted wider community change as a result of the funding and support offered. The benefits are considerable, including increased employment and access to employment opportunities, increased confidence and aspiration and reduced social isolation. The programme has also increased people’s sense of agency and belief in their own ability to make things happen.
The noble Lord, Lord Parkinson, will no doubt be aware that one of the 15 projects evaluated in depth is in Whitley Bay in the diocese of Newcastle. I should interpolate here that I am very interested in the continued development of Whitley Bay as it is where I intend to retire. Early on, Whitley Bay Big Local identified local people who would benefit from a community hub, a place to meet and enjoy a range of activities. The team worked hard to make this project a reality, and the right reverend Prelate Bishop of Newcastle and I would like to congratulate them. Recently, Big Local has received £300,000 of funding from the community partnership fund. This, together with funding from North of Tyne Combined Authority, will support the purchase and refurbishment of a building as its new eco-hub, enabling it to run more community activities. Whitley Bay Big Local has also worked with the local authority to identify improvements for the town centre and run volunteer-led projects to create these changes.
Thirty-five years ago, when I was a curate in Gateshead, members of our parish went for their fortnight’s holiday by taxi to Whitley Bay. It is very good that through the fund Big Local has established and supported Whitley Bay Carnival, which has become a sustainable annual event attracting thousands of visitors to the area. The community wealth fund proposal is not being plucked out of the air. The local trust has the expertise to deliver it, and it comes with the backing of over 450 organisations, including 40 local and combined authorities. The Big Local project has made such a difference in Whitley Bay and in communities all over the country.
It is a pleasure to be able to speak in support of the amendment. As Committee was quite a long time ago, I hope noble Lords will forgive me if I repeat some arguments.
We are all committed to building back better—to coin a phrase—and the proposed community wealth fund or funds could be a valuable foundation, enabling us to tackle a range of inequalities and improve outcomes for the residents of our most disadvantaged areas. As such, they potentially have a key role to play in the levelling-up agenda, as already noted, as increasingly it is recognised that levelling up must involve not just physical but social infrastructure, as the right reverend Prelate has said. As the report from the Bennett Institute for Public Policy argues, social infrastructure brings
“economic, social and civic value”
—and, we might add, cultural value—to areas where such assets may be weak. According to the British Academy, of which I am a fellow, the pandemic has shown:
“National capacity to respond to changing circumstances and challenges requires effort to sustain a strong web of communities and community engagement at local levels.”
Community-led networks are vital for combating inequalities over the long-term and must be at the centre of plans to build back better.
Social infrastructure matters to people. There is a lot of evidence that the presence or absence of it makes a big difference to how people feel about their neighbourhoods and their satisfaction with them. In areas with strong social infrastructure—particularly places and spaces to meet, and community organisations—people feel a greater sense of community, civic pride and belonging. These areas are more neighbourly and more cohesive. They also have better health and employment outcomes.
The Minister may have seen the recent report from Onward, a right-of-centre think tank, entitled Turnaround. It draws a number of positive lessons from the Labour Government’s new deal for communities, one of which is that
“the most significant sustained improvements are those with the strongest base of civic assets and most engaged communities. This suggests that the government should pay much more attention to nurturing the social fabric of a place alongside economic interventions.”
It also emphasises the importance of
“social infrastructure within local places”.
If we are to build back better, we need to invest in social infrastructure in these deprived neighbourhoods. We need—as is the case with the proposed community wealth funds—this investment to be long-term so that it provides continuity. Crucially, as my noble friend Lord Bassam of Brighton said, we need it to be community- led, albeit with communities receiving appropriate support to build community confidence and capacity. Again, to quote the Onward report, one of the lessons from previous regeneration policies is that
“communities must have a stake in regeneration, not merely be consulted … community involvement is essential, but many are capacity constrained”.
I realise that the Government are reluctant for the Bill to be amended to specify the distribution of dormant assets—and I am supportive of the intended consultation which will be the subject of later amendments —but, as has already been explained, this is a permissive amendment. I can see no reason for the Government not to support it.
One of the reasons I am speaking in support of this amendment is because it has such widespread support, as has already been said by the right reverend Prelate. Those 450 organisations to which he referred are part of a growing alliance advocating for the fund. This includes 40 local and combined authorities, most of the major independent charitable funders and all the main civil society umbrella groups, including the NCVO.
Polling research by Local Trust—and I express my appreciation for the briefing that it provided—demonstrates that the proposal would have the support of senior leaders in the financial services industry.
The community wealth fund has also been recommended in reports from a large number of think tanks and inquiries, including Localis, the Centre for Cities, the Fabian Society, New Local, the No Place Left Behind commission and the Civil Society Futures inquiry. It has also been endorsed by the APPG for “Left Behind” Neighbourhoods, of which I am a member.
I acknowledge concerns expressed by those who use dormant asset funding for the work that they already do. However, I see no reason why they should not continue to do that work and receive funds because these are new funds and no one is arguing that the whole of them should be used for community wealth funds. Again, this is a permissive amendment, not one that requires specific action. Such a strong case has been made by so many civil society groups. There is a growing consensus that a community wealth fund, or funds, is much needed and that investment should come from dormant assets. I therefore urge the Government to listen to civil society and accept this modest amendment.
My Lords, it is a great pleasure to follow the noble Baroness, Lady Lister of Burtersett. I think the case for this amendment has been powerfully made and I want to show the breadth of support for it.
Last night in the policing Bill we were debating how we saw a grass-roots-up initiative starting from Nottingham that saw the practice of recording misogyny as a hate crime. So many new ideas and innovations start with the local and start in local areas. Yet we live in one of the most centralised nations on this planet, certainly in Europe, with power and resources concentrated here in Westminster. This amendment very modestly puts power and resources out into places that desperately need them.
Often, we are talking about places that no longer have a place to meet—even the pubs have closed in many of the poorest communities that I see. Lots of housing has recently been built without any public meeting places and places for people to gather at all. What we are talking about here is giving power to local communities that are really struggling, to let them decide for themselves what they need to do. I think we could see some truly wonderful innovations starting from the community wealth fund that then could spread far more widely. Perhaps appropriately for a Green, let us think about throwing out some seeds and seeing some wonderful plants flourishing, flowering and growing.
My Lords, when I initially heard about community wealth funds, I was rather sceptical, and I perhaps remain on the more sceptical end of the spectrum in your Lordships’ House. But during discussions on the Bill, I have become less sceptical about the idea, as the noble Lords, Lord Bassam of Brighton and Lord Hodgson of Astley Abbotts, have talked to me, along with the groups mentioned by the right reverend Prelate the Bishop of Ely.
Two things in particular have caused me to think again. The first is the experience of the pandemic and how everybody’s sense of locality and place has changed. I happen to live in south London, and one of the many things that got me through the toughest of times was discovering local parks that I had never come across before. Watching other people having to live their lives in a much more geographically restricted scope has made a new sense of place. I now understand —in a way that I perhaps did not before—that being able to appreciate and develop your community space will be a very important part of people’s physical, economic and mental well-being in future.
The second reason why I have changed my mind is this. The noble Baroness gave a long list of community initiatives that have flowed out over the past 30 years, many of them from the National Lottery, the new deal for communities and so on. Pretty much all of them were the release of resources into a community, with varying degrees of restriction on how they could be spent—but they were resources to be spent in poor communities.
This is about something different. It is about an investment fund that has to generate wealth within those communities. To do that, the people who will be managing it locally will have to learn and display economic development skills themselves. That is a different proposal from the ones before. The noble Baroness is right that, as we move through a huge period of economic change—green development and the green economy—if we get away from the old idea of development solely in buildings and talk about investment in economic skills and new jobs, managed in a much more local way, that has the potential to be different.
The noble Lord, Lord Hodgson of Astley Abbotts, was absolutely right: we had to grab a passing Bill and shove something on to it. But the very purpose of this Bill is to take assets that are lying dormant and put them into communities where people are financially excluded, do not have business skills or need some help with the generation of wealth and well-being. This is about doing that with people in their community, not yet another building. So I have changed my mind and think this is something different, and therefore I now think it is worthy of support.
My Lords, I thank the noble Lord, Lord Bassam of Brighton, the noble Baroness, Lady Kramer, the right reverend Prelate the Bishop of Newcastle, and my noble friend Lord Hodgson of Astley Abbotts for tabling this amendment relating to community wealth funds. I am also grateful to the right reverend Prelate the Bishop of Ely, who spoke on behalf of his right reverend friend, who, as he explained, has made her valedictory speech to your Lordships’ House and is therefore unable to speak today. I offer my best wishes to her as she leaves your Lordships’ House for a well-earned retirement and thank her for her contributions, both here in your Lordships’ House and across the diocese; it is one I hold particularly dear, having been baptised in it and having many relatives who live there still. I know that she will be much missed, but we are delighted that, through the apostolic succession, the right reverend prelate the Bishop of Ely was able to speak for her today.
I hope that, during my remarks, I can reassure all noble Lords who have spoken that it is already possible for community wealth funds to be a named cause in an order made under Section 18A, and that I can demonstrate why this amendment, even in its semi-skimmed form—if that is the evolution from the full-fat version to which the noble Lord, Lord Bassam, alluded earlier—is still unnecessary.
This amendment and our debate today have made clear the support of many noble Lords for using the English portion of dormant assets funding to support communities with high levels of deprivation and low levels of social infrastructure. The scheme has spent the last decade working to tackle systemic social challenges and to level up communities that need it most—in particular, by targeting and benefiting areas that have in many ways been neglected or overlooked for too long. I was delighted that the right reverend Prelate shone a particular light on Whitley Bay and the good that funding can do. The noble Baroness, Lady Barker, is right to underline how our sense of place, pride and value in our local communities has been accentuated during the pandemic.
As the noble Baroness, Lady Kramer, highlighted in Committee, we already have four distributors that can pass funds under the current rules of social investment to local community groups doing all kinds of activities. This, and more, is exactly what has been facilitated through the existing scheme. Over the past decade, more than £465 million has been invested in charities and social enterprises through the independent spend organisations. Big Society Capital and its co-investors have committed more than £84 million to help create thriving and inclusive communities, developing local solutions that meet local needs with the right kind of long-term finance and support. Communities are already supported through the scheme to use social business models to invest in their social infrastructure, which includes purchasing community buildings, as my noble friend Lord Hodgson and others mentioned, developing community spaces and installing community energy schemes.
Supporting front-line organisations to tackle deprivation, developing strong social infrastructure and initiatives at the local level, and embedding beneficiary decision-making into processes are already some of the broad priorities on which the scheme has distributed funds in England. Over the past decade, the scheme has built a compelling evidence base for these types of activity, and we are committed to ensuring that it continues to benefit the people and communities that need it most. We are also committed to affording everyone a fair opportunity to have their say on the purposes for which funds can be distributed. We are clear that a consultation is the best and most inclusive way to agree future spend priorities in England. The community wealth fund model could be one way in which to meet the priorities that have been outlined by noble Lords in our debate again today, but it is demonstrably not the only approach that could be taken. That is why the Government have consistently committed to considering all responses to the consultation without trying to predetermine its outcomes.
The consultation will provide the opportunity for the general public, the civil society sector, noble Lords and Members of another place, and industry bodies to express their views. The Government have tabled Amendment 3, which we will come to shortly, to ensure that the opportunity for broad and inclusive input must always be provided. I reassure noble Lords that we intend to consult widely to capture as many views as possible, taking particular care to welcome the voices of local communities, as noble Lords have suggested today. During the process of consultation, we will be keen to hear from everyone, including those who advocate the use of community wealth funds. If the consultation process finds that community wealth funds are the best use of dormant assets funding in England, the Bill is already designed to provide the most appropriate avenue to make that a reality. We think it would be inappropriate to undercut the process of consultation in the way that the amendment proposes. Naming any specific cause in the Bill without first asking for that wider impact would undermine the validity and open-mindedness of the consultation.
The issue is not to do with the cause itself, but rather the fundamental principle that people deserve to have a say in how the money should be spent in England. This was out of scope of the expansion consultation last year because youth and financial inclusion only began to receive dormant assets funding in December 2019. However, the responses made it clear that there are wide-ranging views on the best use of this money—not just community wealth funds—and these views deserve to be heard as well. Not hearing them would pose a serious risk to the success of the scheme, the voluntary participation of our industry partners, and the confidence of the general public.
I stress that the Government are not opposed to considering community wealth funds. We acknowledge that the core features of it—community decision-making at a hyperlocal level and investment in social infra- structure—have an important role to play in improving access to opportunities for everybody, particularly those in the more deprived communities. I have spoken today about some of the ways in which the scheme does that. However, the scheme also values evidence and data-driven decisions. We are aware that current evidence for community wealth funds, as well as concrete designs for how they would operate, are relatively sparse. My speaking notes do not actually include the words “new approach”, but as my noble friend Lord Hodgson of Astley Abbotts used them, I will certainly point to them. We think that there is more work to be done in this area before a commitment can firmly be made. Further work is needed to establish how it would work and whether dormant-assets funding would be the right type of money to support it. That is why we feel that it is too soon to commit to including it as an explicit option in legislation in the way that this amendment proposes.
Officials at DCMS and Ministers will maintain engagement with those who are responsible for its development, notably local trusts. The levelling-up taskforce is working across Whitehall, including with DCMS, to establish evidence and identify activities to help support communities to level up, as part of the development of the White Paper. This includes whether and how a long-term sustainable funding model, with similar ambitions to Local Trust’s community wealth fund, could be established. More evidence-gathering and policy development needs to be done to determine if and how this could be achieved, including how it could be funded with sustainability and longevity in mind.
It is already possible under Clause 29 for community wealth funds to become recipients of dormant-assets funding in England. However, as I said, this should not happen without first consulting. We will come on to discussing the nature of this first consultation when we debate Amendments 3, 4, and 5, so I hope noble Lords will forgive me if I address those issues further then. I hope, however, that I can reassure noble Lords that we will ensure that this consultation provides the opportunity for people to respond with their view that community wealth funds would be their preferred course of action, if indeed it is.
In conclusion, we are not opposed to the concept of a community wealth fund, but for the reasons I have set out, we are not able to accept the noble Lord’s amendment. We are clear that a consultation is the best way to agree future spend priorities for England. Should the consultation process find that community wealth funds are indeed the best use of dormant-assets funding, the Bill is already designed to provide the most appropriate avenue to make that a reality. In this spirit of enabling everyone interested to have their say, I invite the noble Lord to withdraw his amendment.
My Lords, I thank all noble Lords who have spoken in this debate. With the exception of the Minister—although not entirely with the exception of the Minister—all have been rather in support of the amendment. I listened very carefully to what the Minister had to say, and by the end of his speech I was almost convinced that he was going to agree with our side of the argument.
The key to this amendment is one word, and the noble Lord, Lord Hodgson of Astley Abbotts, touched on it: the word “may”. This amendment is extraordinarily modest. It just says to the Government, “Look, you may do this; you don’t have to”. For me, that is the key, because the Government may do it after a period of consultation. It does not seem to me to be a great leap of faith to encourage the creation of community wealth funds for social infrastructure in having the consultation that can take place at any time, where this provision actually enables the Government to be more active in supporting, if they wish at some later stage, the introduction of pilots running community wealth funds.
Noble Lords have all spoken to the importance of creating social infrastructure. That is what this amendment seeks to do, through ensuring that we create community wealth funds. That is the part that particularly attracts me to it, because in my day job as an employee of Business in the Community we seek to create levelling up through work in places. One essential thing we do not have ready access to is good, robust, sustainable funding. In future, I can see community wealth funds becoming exactly that.
It is critical that we provide communities with that hope and potential. Many of our poorest communities do not have the capacity to generate funds or the social infrastructure to enable them to develop as communities and grow the resilience and strength they need. The noble Baroness, Lady Barker, touched on this rather well in talking about her experiences during lockdown. I experienced similar feelings; well-managed, manicured open spaces provide you with a lifeline, inspiration and an ability to go out, enjoy fresh air and breathe and live again. Many of us had that experience, particularly during the first lockdown. Those things and places need nurturing and looking after. They are community assets, and something like community wealth funds will ensure that they are there and are well managed and looked after.
I will not detain the House too much longer. The noble Lord’s primary argument against the amendment was consultation. There is no reason why that cannot take place. It is already taking place. He also said that the power is already there; why not use this clause as a way of driving that and supplementing the power that is already there? It is useful in highlighting the importance and value of creating those community assets and ensuring that we have social infrastructure that works for local communities.
At an earlier stage of the Bill, the noble Baroness, Lady Barran, suggested that the ideas were not yet perfected. I do not think that is the case. That now seems to have fallen away from the Government’s range of arguments. I agree with the Minister that we need sustainable, long-term funding models. Some of those already exist, but this would add to and empower local communities in a very specific and direct way. It would not be top-down, but bottom-up. It would enable communities to thrive and do much to tackle the long-outstanding needs of some of those communities which are obviously in urgent need of levelling up.
For those reasons, I wish to test the opinion of the House on this amendment.
2: Clause 29, page 22, line 13, at end insert—
“(1A) Regulations made under this section must specify that any organisation in receipt of a distribution of dormant account money—(a) must demonstrate that any returns to private companies or individuals are commensurate with the overall aim of delivering public good, and(b) must not be used to enhance investor returns.”Member’s explanatory statement
This amendment would ensure that a distribution of dormant assets money must be to an organisation that has an overall aim of delivering public good and must not be used to enhance investor returns.
My Lords, this amendment was triggered by remarks made in Committee by the noble Baroness, Lady Barran, who was the very capable Minister then who was replaced by another very capable Minister. She was very open in response to a question that had been asked quite innocently. We wanted to put in an amendment in Committee a requirement to confirm that the dormant asset money would flow to charities or recognised and formalised social enterprises.
In her response, the noble Baroness said no, that the Government wanted to make sure that the money was also available to mission-focused for-profit companies. There was general shock around the Committee, as everyone talked about the Dormant Assets Bill as providing money to charity and social enterprises, and it sent me away to Google. Perhaps others in your Lordships’ House were far less naive than I, but there is a massive business growing in the social impact arena these days, which has become very attractive to the private sector.
To give your Lordships an idea of who is coming to play in this particular arena, I will refer to one of endless websites that contain copies of similar discussions: “Mainstream venture capital … funds”—we are talking about VC funds—
“are beginning to look for a new kind of unicorn—companies that will not only provide huge financial returns”—
we are talking here about 12% returns for modest venture capital, perhaps with earlier-stage money 20% returns—
“but also create huge social impact.”
It notes London and San Francisco as two of the leading hubs for these kinds of investments.
I have no argument with a venture capitalist who puts money into social good. That is absolutely fine as far as I am concerned. But I am very concerned if that entity is seeking grants from the dormant asset fund and turning that around to enhance the returns to its investor, who is expecting a return around the 12% to 20% mark. I can see why it is extremely attractive to the for-profit company; after all, it is very hard in most circumstances for social impact to generate returns of that extraordinary size. But if there is a very significant grant coming from the dormant asset fund, one can achieve those kinds of benchmarks easily. I do not think that is the purpose that was embedded in the original Bill or the purpose which most of us who are associated with this have in mind.
The amendment is not an attempt to exclude all for-profit companies, because I understand that there are some areas where they have been very useful, for example in teaching financial literacy. It is to make sure that they are not plucking extraordinary returns as a consequence of grants from the dormant assets fund. Charities and social enterprises seeking funds and grant money may indeed find that they have some excess over the particular project that they have been working with, but their whole constitutional structure requires them to make sure that money flows back into good causes. I do not want this to turn into an opportunity for that money to flow back to large-scale investors.
As we all know, the oversight process in the Dormant Assets Bill—we will talk about this on the very last amendment—is very weak, because in the original concept the end users were going to be charities and social enterprises that were under constraint and governance of various different kinds. Therefore, an additional level of scrutiny was not a matter of significant concern. With this big expansion, and with the purposes to which the fund can be applied being essentially in the gift of the Secretary of State, this becomes a major concern.
We are all concerned about money being spent inappropriately. Nothing would be more damning to this whole process than a major scandal in which we suddenly have a newspaper describing circumstances in which money from the dormant assets fund has gone to an investor seeking very large returns. This could compromise not just that particular project but the whole programme. Frankly, I do not think that is a principle that should be allowed to proceed in this Bill, which is why I have moved this amendment.
My Lords, I rise briefly to commend the noble Baroness, Lady Kramer, on her alertness in uncovering this issue, and to make a very simple comparison with something that has occupied a great deal of time in your Lordships’ House lately: the water companies, and what we have seen happen with them, with, very often, hedge fund owners involved, massive profits being taken out and massive loads of debt. This is a terribly important amendment. I regret not attaching my name to it. I certainly would have done had I been alerted to it earlier. This is terribly important, and I encourage the noble Baroness to keep pushing.
My Lords, I do not have a great deal to add. The argument of the noble Baroness, Lady Kramer, is very sound and was well made and well researched. We had an interesting debate on this topic in Grand Committee, and I am grateful to our colleagues on the Liberal Democrat Benches for allowing us to return to it through this reformulated amendment.
During the previous debate, examples were raised of organisations that are not social enterprises or charities, but which nevertheless deliver public good through the use of dormant assets funding. This new amendment captures that reality, while introducing the safeguard that these funds, which are finite and will be highly sought after, are not used to enhance investors’ returns, where that may be a concern.
I do not really understand why the Government should not write this kind of safeguard into the Bill. Failing that, will the Minister put something on the record that will provide us with some comfort? We need that reassurance, protection and level of accountability.
My Lords, I will just add two points to the very convincing case made by noble friend Lady Kramer. First, the Minister knows from all our discussions that we on these Benches have concerns about the loose nature of this scheme and the somewhat loose definition of its purposes. Therefore, it remains a concern that it is a not insignificant pot of money that can be very easily diverted. Part of what we are trying to do this afternoon, in a number of different ways, is to bring this scheme under a much tighter definition and close loopholes.
Secondly, we listened very carefully to the noble Baroness, Lady Barran, and the noble Lord himself, when we had discussions. They explained to us, in particular, that the new purposes under the Bill—financial inclusion and the very ambitious programme that Fair4All Finance has of putting loan sharks out of business—might necessitate the sorts of skills that are not commonly found within the social enterprise or charitable sector. It might require there to be companies in forms that are not usually found within the social enterprise sector, either. So I would like the Minister to acknowledge, in dealing with this amendment, that it is specifically that part of the scheme which has caused us to move. We are not talking about private companies entering into the other parts of the Bill, to my mind—unless he can make a case for them to do so.
I am grateful to the noble Baronesses for their amendment and for their vigilance and scrutiny in this area. I am grateful also for their time the other day, when we had a helpful discussion.
Amendment 2 concerns the direction of the English portion of dormant assets funding and seeks to ensure that money cannot be used purely for profit but must have public good at its heart. It is already enshrined in primary legislation that dormant assets funding must be distributed to initiatives with a social or environmental purpose. This is a clear and core function of the scheme and it remains unchanged in the Bill. The Government of course agree that private profit is not the purpose of the dormant assets scheme.
The noble Baronesses’ concerns, as expressed in the amendment and their contributions today, relate to the scheme’s current support for social investment. As I mentioned in the debate on the previous group, dormant assets funding has provided £465 million to Big Society Capital and Access over the last 10 years. During that time, social impact investing in the UK has grown almost eightfold, increasing from £830 million in 2011 to £6.4 billion now, thanks in large part to those two organisations. It is largely by leveraging private capital alongside dormant assets that the market has been able to expand in this way, providing the voluntary, community, and social enterprise sector with access to billions of pounds of investment.
To give an example, dormant assets funding enabled Big Society Capital to invest £6 million in the Fair By Design fund, which aims to eradicate the poverty premium by 2028. Fair By Design invests in several initiatives, including some businesses with considerable impact which provide services in sectors such as energy, insurance, borrowing, transport and food, to support over 340,000 people across the country. Its work has helped those people collectively to save £12 million per year on goods and services for which they were previously paying more than those who were financially better off. The scheme advances important opportunities such as this for collaborating with the private sector and civil society organisations to amplify its impact, within the boundaries of governance structures which ensure that the money is managed appropriately.
I hope I can reassure noble Lords that robust systems are in place to ensure that the money funds projects delivered by organisations that prioritise impact. As a registered charity itself, Access employs strict eligibility criteria for its funding, which ensures that money flows only to those social enterprises and charities that it was created to support. Similarly, £2.5 billion from Big Society Capital and its co-investors is being used to support over 1,500 social enterprises and charities across the country. Both organisations apply layers of due diligence to ensure that the intermediary fund managers with whom they work also have impact embedded in their approaches. Fund managers applying for Big Society Capital funding are required to present a social impact plan during the due diligence process, and Access requires its funds to be held in finance structures that cannot be used commercially.
As these existing structures have operated effectively over the past decade, we do not consider it necessary to place in primary legislation a requirement such as that proposed by Amendment 2, though we understand the concerns the noble Baronesses had and the vigilance which led them to table it. The scheme already ensures that funds go towards organisations with the overall aim of delivering public good, and we will ensure that this continues to be the case.
Ultimately, it remains the Government’s priority to afford people the opportunity to have a say in how funds are distributed in the country, including whether social investment should remain a priority. That is why we have committed to a public consultation to welcome wide-ranging views on how these funds can best have an impact on social and environmental priorities in England. Those are the reasons we cannot accept the amendment, and I hope that the noble Baroness will be satisfied to withdraw it.
My Lords, I am glad to have raised the issue and I will be withdrawing the amendment, but I hope very much that the point that I have made will carry through into the Government’s thinking, because this is a constantly changing field. As the Minister knows, with mission-focused companies there is nothing to say that they cannot pay their directors what they like; they can pay what salaries they like and make what returns they like to their core investors. We very much hope that in the reporting requirements that he will talk about later there will be real clarity around this issue. He can expect to find quite a number of Written Questions asking him to detail those kinds of benchmarks, so that we understand what is actually happening with this dormant assets fund. I beg leave to withdraw the amendment.
Amendment 2 withdrawn.
We now come to the group beginning with Amendment 3. If Amendment 3 is agreed to, I cannot call Amendments 4 or 5 due to pre-emption.
3: Clause 29, page 22, leave out lines 17 to 20 and insert “—
(a) carry out a public consultation about the purposes for which, or the kinds of person to which, the money apportioned under section 17 for meeting English expenditure should be distributed, and(b) consult the Big Lottery Fund about a draft of the order.”Member’s explanatory statement
The amendment would have the effect of adding to 18A(3) of the Dormant Bank and Building Society Accounts Act 2008 (as inserted by Clause 29) a new duty to carry out a public consultation before making a section 18A(1) order, in place of the duty in the current section 18A(3)(b). The consultation would relate to what, or who, should be supported by dormant assets money distributed in England.
My Lords, a number of noble Lords tabled and signed amendments in Committee which sought to broaden the range of consultees listed in Clause 29 of the Bill, which I believe remains the primary intention of this group of amendments. We share the view about the importance of considering how dormant assets funding can be used most effectively, and we are keen to get a wide range of views to help shape our position, as I said in previous debates. That is why we have consistently committed to launching a public consultation on the social or environmental focus of the English portion of funding before the first order is laid under Clause 29.
In response to the multiple calls which have been made in your Lordships’ House, we are happy to formalise this commitment in legislation. Amendment 3, in my name, therefore makes a public consultation a requirement before any changes can be made to the focus of the English portion of funds now or in the future. I thank the noble Lord, Lord Bassam of Brighton, for adding his name and the support of Her Majesty’s Opposition to our amendment.
Amendment 3 takes the broadest and most inclusive approach to ensuring that the scheme benefits the most pressing social or environmental priorities in England. The Government plan to launch the first of these consultations after the Bill receives Royal Assent and are happy to commit to this lasting at least 12 weeks. Our amendment requires the Secretary of State to consult the National Lottery Community Fund, as the named distributor of dormant assets funding, about a draft of this order. The order would then be subject to the scrutiny of both Houses through the draft affirmative procedure. I beg to move.
My Lords, I am speaking on behalf of my noble friend Lady Merron, who signed Amendment 4 but is unable to participate in today’s debate. I should explain that one of our concerns has been a lack of clarity around future consultation. We have already had some discussion this afternoon about consultation, and, of course, it was raised by a number of colleagues during the Bill’s Second Reading and featured fairly heavily during the debates in Grand Committee.
On the face of it, we do not really understand why Amendment 4, which lists a variety of topics and proposed participants, is not acceptable to the Government, but we are nevertheless grateful to the Minister for tabling Amendment 3. For that reason, I agreed to co-sign it on behalf of our Benches. That amendment ensures that there will have to be a full public consultation, as the noble Lord, Lord Parkinson, has already described, which will have to take place before uses for dormant assets funds are determined in regulations.
I am grateful to my noble friend Lady Lister of Burtersett for tabling Amendment 5, which seeks to ensure that future consultations include consideration of the merits of establishing community wealth funds. This is a good addition, and we hope that the Minister can address this point explicitly in his response—not least, of course, because we have passed and supported the community wealth fund amendment this afternoon.
I am therefore looking for further reassurance from the Minister that the public consultation will be run in accordance with Cabinet Office best practice, including the Secretary of State being proactive when engaging with charities and social enterprises, rather than merely posting a notice online. We are satisfied by the Government’s amendment, but we would like to see them go further. I guess that our amendment is inviting them to flesh out exactly how they see this working in some more detail.
My Lords, I rise to speak in support of Amendment 4, to which I have added my name, and Amendment 5 in my name, which augments the original amendment by ensuring that the consultation makes specific reference to community wealth funds as a potential beneficiary of dormant assets.
I am grateful to the noble Lord, Lord Hodgson, and my noble friend Lord Blunkett for their support—and to the Government for listening to at least some of what we said in Committee about consultation so that, as we have heard, the Bill now makes clear that there will be a public consultation. I am very grateful to the Minister for, first, finding the time to have a word about this yesterday and, secondly, for confirming on the record that the consultation will last for at least 12 weeks, which I and others pressed for in Committee.
I will simply speak to Amendment 5, about the explicit reference to community wealth funds. When this was raised in Committee, the then Minister’s initial response was that she was unable to give any reassurance because:
“We need a collective agreement on what goes into any consultation document”.—[Official Report, 23/6/21; col. GC 99.]
But when I read that in Hansard, I realised that I did not really understand what she meant. Collective among whom? Could the Minister please explain? Could we not collectively agree today that the consultation should include specific reference to community wealth funds because, otherwise, many of those consulted might not have heard of them and only those who already know about them would be in a position to support them?
In doing so, I do not think it excludes other possible uses of the fund. The Minister raised this fear in his response to Amendment 1, but having a consultation that does not put out some options will not be terribly useful. Therefore, all we are asking is that he makes clear that this is one of the options and that the consultation would explain what community wealth funds are.
When I pressed the then Minister, she made a commitment to consider the community wealth fund proposal
“as we review the range of questions that go into the consultation.”—[Official Report, 23/6/21; col. GC 100.]
Can the Minister reconfirm that commitment? Regardless of what happens to Amendment 1 when it is sent to the Commons, it is important that the consultation on the use of the new dormant assets includes explicit reference to a proposal that has such widespread support from national civil society organisations.
My Lords, my name is attached to Amendment 4 and I would gladly support Amendment 5. Government Amendment 3 is definitely an improvement on the previous situation, which was unclear; the Government were sure they would have a public consultation but were not really required to do so.
When the original Dormant Assets Bill was passed, the purposes for which dormant assets could be used were on the face of the Bill in primary legislation. Consultation, now that the Secretary of State is in a position to expand that range significantly, is absolutely vital. In Amendment 4, we reflect some of my ongoing frustrations with consultation after consultation: they fall to the attention of the usual suspects and, indeed, the responses of the usual suspects are very often taken into serious consideration, but they never get out into the wider world. When there are lots of diverse views, perhaps supported or mentioned by only small handfuls of people because they have never occurred to others, those tend to go into the “dismiss” bucket almost immediately.
I know how difficult it is to structure a consultation that really does consult. I say that from the position of having been a Minister during the coalition years, when I wanted to use a consultation to bring in new ideas as well as to get people’s responses to possible avenues that we might go down. It was a sheer battle with my own staff to devise such a consultation and questionnaire and to leave space for open responses and gather them in. It is not the norm; I am very well aware of that. I do want to press the Minister, because this should be going to a much wider range of groups than might normally keep an eye open for a consultation —the wide range of social enterprises and charities that go out to various communities, particularly deprived communities. Those communities tend to be the least alert to the fact that there is a government consultation happening or to knowing how to respond to it.
Then there is Parliament. Most of us understand that secondary legislation is not worth the paper it is written on in terms of getting parliamentary opinion or any potential for amendment, so it is important that the relevant committees of Parliament are engaged with something as significant as this. I press the Minister: we understand that he has moved some way, but we need quality. The style is perhaps there but there is no quality or content behind it to give us full reassurance. If he will not accept Amendments 4 and 5, can he at least give us a verbal assurance of the kind of quality that we want within the consultation itself?
My Lords, I have put my name to Amendment 5 in the name of the noble Baroness, Lady Lister. I was reassured by my noble friend’s introductory speech and the deal that has been hacked out between him and the noble Lord, Lord Bassam of Brighton. The noble Baroness, Lady Kramer, has, in part, shot my fox because I wanted to talk about the usual suspects, which she referred to. That is the danger, although I say to the signatories to Amendment 4 that it looks to me like a pretty good list of usual suspects in that amendment. I was not sure that we were not just going back down the track that we were trying to avoid going down.
My reason for supporting the amendment in the name of the noble Baroness, Lady Lister, was to make sure that we would make a big effort to get down to the smaller organisations, which often had unique insights into the problems of a particular area. From my point of view, I rather doubt whether that goes well into legislation, but it is the sort of area where a good strong ministerial Statement, given on the Floor, would reassure a lot of us that there will be words that we can go back to if the consultation does not reach as far, as deep and as wide as some of us think it should.
My Lords, I thank noble Lords for their recognition of the action the Government have taken on this, even if it is conditional at the outset. I am grateful to the noble Baronesses, Lady Kramer, Lady Merron and Lady Lister of Burtersett, for the important issues they have raised in tabling Amendment 4. I thank the noble Baroness, Lady Lister, my noble friend Lord Hodgson, and the noble Lord, Lord Blunkett, for Amendment 5.
We have had a good debate, both in Committee and again today, and I welcome the support shown for securing the widest possible input into determining the future spending priorities for England. I share the desire raised by noble Lords to ensure that the public, beneficiaries, both Houses of Parliament, social enterprises and charities can have their say on the future focus of dormant assets funding; although I disagree about the means and submit that Amendment 3 is a better way to achieve this, we all share the same intent.
As my noble friend and predecessor Lady Barran outlined in Committee, it is our position that everybody who is interested, rather than a collection of predetermined or specified stakeholders, should be consulted. That is why we have chosen to take the broadest approach available in Amendment 3, and why we believe that Amendment 4 is not as inclusive.
Dormant assets funding is not government money; it originates from individuals who have lost or forgotten about their asset and is voluntarily transferred into the scheme by responsible industry participants who, despite their best efforts, have not been able to reunite those moneys with their owners. The scheme is a unique example of collaboration between the public, private and civil society sectors, responding to the imperative to put forgotten money to better use, rather than letting it gather dust in inactive accounts. Because of the wide range of organisations and individuals that are potentially affected by the scheme, we want to avoid at all costs making further specifications in this clause which could imply that certain groups are more important than others that it might be equally appropriate to consult.
The government amendment is sufficiently broad and, in line with common practice, parliamentary committees will continue to be able to consider relevant issues as they see fit in the future. That is why we do not think it is appropriate or necessary explicitly to name parliamentary committees as a consultee. However, we are happy to commit on the record to engaging with relevant and interested parliamentary committees for the first consultation.
As noble Lords have highlighted, the social and environmental focus of the English portion is a significant and important question. The Government agree that the consultation must be open for a proportionate amount of time to allow for considered and good-quality responses. That is why I am happy to place on the record our commitment that the first consultation under this section will last for at least 12 weeks. I am grateful to the noble Baroness, Lady Lister, and others for their appreciation of that.
I also reassure noble Lords that our intention is to consult widely, taking care to welcome local community voices into the discussion to ensure that we capture as many views as we can, as the noble Baroness, Lady Kramer, my noble friend Lord Hodgson and others rightly pressed.
The Government will continue to consider the most appropriate length of future consultations, in line with Cabinet Office guidance. I hope that our previous conduct in this area has proven we take that seriously and are committed to ensuring fair and open consultations on the dormant assets scheme. The 2020 consultation on its expansion, for example, was extended from 12 to 21 weeks, as requested by voices in the industry in response to the Covid-19 pandemic, to ensure that everybody had the time to contribute meaningfully. I am pleased to say that that was very successful: we received 89 responses, representing over 500 organisations and individuals, which informed the development of this legislation. Given the range of interested parties involved and the complexity of the policy area, we will always ensure that a proportionate length of time is provided for consultation. In order to preserve the integrity and protect the impact of the scheme, we also do not anticipate changing the causes regularly.
The consultation would seek views on what social or environmental causes should be supported with dormant assets funding in England. However, we do not think it is appropriate to specify the scope and content of the consultation in primary legislation, including the extent to which the scheme is meeting some of its underlying policy objectives or what additional assets or operational changes would improve its performance. We believe it would be most appropriate and effective to consider those as part of Amendment 7. We therefore do not support combining aspects of this equally important work with the duty to consult, particularly as the latter relates only to England.
Our commitment to an open, fair and inclusive consultation is also the reason why we cannot accept Amendment 5, from the noble Baroness, Lady Lister, which seeks to require the Government to consult on community wealth funds every time an order on English expenditure is considered. I am conscious that we went into a more detailed discussion of the community wealth fund model in our debate on Amendment 1. Even if I did not convince your Lordships’ House not to support that amendment, I hope I convinced noble Lords that the Government are by no means against the proposals for community wealth funds but maintain that putting them in the Bill, and in the case of this amendment legislating for them to be consulted on every time an order was considered, would be inappropriate.
I am conscious that the Minister has said “every time” every time. Could he give the commitment on the record that the noble Lord, Lord Hodgson, was looking for: that the first time—that is, in the first consultation—the Government will give serious consideration to including a reference to community wealth funds and an explanation of what they are?
The noble Baroness has anticipated my next remarks: I was going to reiterate the commitment given by my noble friend Lady Barran in Committee that the Government will consider including community wealth funds in the first consultation launched under Clause 29. I have already noted that the Government are considering the community wealth fund model as part of the wider development of the levelling-up White Paper. As the work on that is ongoing, now is not the right time to commit to any particular source of funding to be associated with the proposals, but we will continue to look into this matter. As I committed earlier today, the Government will ensure that the consultation provides the opportunity for people to respond with their view, including advocates of community wealth funds and those who think that is their preferred course of action.
For these reasons, the Government feel that our amendments to bolster the consultation requirements and to introduce a separate review and reporting requirement better accomplish our joint aspiration to secure the scheme’s success. I believe that Amendment 3, which I am pleased to say has cross-party support, strengthens the Bill and addresses the House’s desire that any consultation on the use of future dormant assets funding in England must not be restricted to a limited number of perspectives.
In the light of that, I hope the noble Baronesses, Lady Kramer and Lady Lister, will be content with what we have proposed in our amendments and the assurances that I have given today and so may be minded not to press their amendments. With thanks again to the noble Lord, Lord Bassam, for putting his name to it, I commend Amendment 3 to the House.
Amendment 3 agreed.
Amendments 4 and 5 not moved.
6: Clause 29, page 22, line 20, at end insert—
“(3A) An order under this section may not be made unless the Secretary of State has certified that dormant account money will be used to fund projects, or aspects of project, for which funds would be unlikely to be made available by a Government department.”Member’s explanatory statement
This amendment would require the Secretary of State to certify that dormant assets money would be additional to, and not replacing, Government spending.
My Lords, this amendment deals with additionality. It was the intent of the original Bill, which placed a responsibility on the Big Lottery Fund alone to ensure that the moneys were additional to expenditures that one would expect a government department to make; I assume that means any level of department, including local authorities. That seems to be a fundamental concept which sits behind the dormant assets fund. In our early discussions, the Government constantly confirmed that the principle of additionality was an immovable one for this Act.
One should always spend some time looking at government websites. I was slightly surprised to find a government announcement from June 2021 of financial support for voluntary community and social enterprises, to enable them to respond to the coronavirus. This was a very good thing which I have no criticism of; however, according to the announcement:
“The government has pledged £750 million to ensure VCSE can continue their vital work supporting the country during the coronavirus (COVID-19) outbreak, including £200 million for the Coronavirus Community Support Fund, along with an additional £150 million from dormant bank and building society accounts”.
In other words, that means dormant asset funds. Technically, this does not say that the Government have said to the folks at the dormant asset funds, “We want £150 million from you to support this activity, because we don’t really want to put in more than £750 million”, but it is a very grey area. Anyone reading this would assume that the Government were announcing what they would regard as the use of funds under their control.
I am very concerned, because additionality can be a very grey area. What should be the responsibility of the local authority of a particular government department? What should be the add-on which comes from the dormant assets fund, with its focus on supporting the additionality that is provided by the charity and social enterprise sectors? Therefore, I have very quickly drafted an amendment requiring the Secretary of State to certify that as far as he knows, the additionality principle is in play. I am slightly surprised that the Government have not said, “The Secretary of State only wants this to be additionality and is delighted to sign a piece of paper confirming that this is how the money will be used.”
That is the rationale behind this important amendment. From the announcement I read a moment ago, it is not difficult to see that the creep across the boundary is relatively easy. The initial dormant assets fund was under £1 billion. The new assets that will be brought into scope as a consequence of this Bill amount to a minimum of an additional £2 billion. As expansion goes beyond that, that number will keep increasing, so we are talking about very large amounts of money. The Treasury could view this as an opportunity to constrain public sector debt or to enhance particular spending programmes.
It is very important that we get an assurance from the Minister that this amendment is not needed, otherwise, it will be necessary for me to press it. I have been listening to the response from the Minister, but my noble friend Lady Barker, who is a specialist in this field and far more expert than I, will be the person who is really listening. I will see whether she is satisfied—if not, I will ask the House to pronounce on something that I believe is fundamental.
My Lords, this is an important topic. It took quite a bit of our time in Committee, has been raised again today and runs as a thread through our concerns. We have had some discussion with the Minister between stages, and useful discussion it was.
We acknowledge that additionality has been built into Amendment 7 in the next group, but we are very sympathetic to the call from the noble Baronesses, Lady Kramer and Lady Barker, for the Secretary of State to certify as part of the regulation-making process that funds will indeed be on top of existing government commitments. The noble Baroness, Lady Kramer, has made quite a compelling argument. Dormant assets are going to grow. There are many other sources of dormant assets not included within the current scheme. I could see a hungry Treasury, worried about the supply of funds in the future, seeking to make use of substitute funding from dormant assets. I think we will need to be thoroughly convinced by the words of the Minister this afternoon if he is to avoid us having a further Division.
If the Government have no plans to pull accounting tricks, I would have thought that there was no issue with accepting this amendment or perhaps introducing a new text either at Third Reading or when the Bill moves to the House of Commons to put this issue beyond doubt. That is what I am listening for this afternoon and hoping to hear from the noble Lord.
My Lords, I wish to add two points to those made by my noble friend Lady Kramer. It is right that in the next government amendment there is reference to a report and the additionality principle being included in that report. The reason why we drafted this amendment in the way we did was the requirement for the Secretary of State to certify the matter. One of the criticisms that was initially made of this Bill by the Delegated Powers Committee was the number of Henry VIII powers being assumed by the Minister.
The second reason is that the next government amendment refers to:
“Periodic review and report to Parliament”.
It does not say what those periods should be. Therefore, we are trying to deal with exactly the sort of scenario outlined by my noble friend Lady Kramer, where the Government suddenly dip into this back pocket of money and start to use it. That is the reason why it is there and why we think it is so important.
I am grateful to the noble Baronesses, Lady Kramer and Lady Barker, for tabling Amendment 6 on the additionality principle. I also thank the noble Baronesses for their time in the productive discussion that we had on this issue. I hope that during the course of my remarks I can reassure them and other noble Lords that the intentions of this amendment are sufficiently covered both in the 2008 Act and through the Government’s Amendment 7, to which the noble Baroness, Lady Barker, just alluded.
The principle of additionality has successfully under- pinned the scheme since its inception and will continue to be a core principle of its distribution across the UK. In line with the proposed wording in Amendment 6, the 2008 Act already describes additionality as the
“principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by … a Government department”
or devolved Administration. Therefore, the principle as defined by this amendment is already enshrined in legislation.
Can I just ask for some clarification? Does not that responsibility apply only to the one distributive entity—to the Big Lottery Fund, or whatever it is called—and very conspicuously not to any other distribution sources or to the Secretary of State?
Without having the 2008 Act in front of me as well as the Bill, I am afraid that I may not be able to give the noble Baroness the speedy response that she seeks.
I shall address the point that she also raised—while seeking an answer, if I can give her a definitive answer now—about the £150 million that was released last June. As she noted, the scheme released £150 million of dormant assets funding to support the response to the Covid-19 pandemic and recovery across England. That was distributed by the four spend organisations in line with the 2008 Act. In this instance, it is important to note that the funding was entirely separate from the UK-wide charity support package of £750 million, which was announced in April 2020.
The reference is in Schedule 3 to the 2008 Act—on page 24—under Part 3, headed “Reports and Accounts”, where it says in paragraph 9(3), in relation to the Big Lottery Fund:
“The report shall set out the Fund’s policy and practice in relation to the principle that dormant account money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by”—
and then it lists
“a Government department … the Welsh Ministers … the Scottish Ministers, or … a Northern Ireland department”.
That does not appear to apply to anything other than the Big Lottery Fund. When the 2008 Act went through, the only distribution entity was the Big Lottery Fund. There are now three others, and the new Bill anticipates potentially creating more distributors, whose responsibilities will be directed by the Secretary of State.
I fully accept that, in the original concept and structure of the Act, additionality was a fundamental underlying principle. That does not appear to have carried over into the expansion that is embedded in the new Bill. That is my concern.
I am grateful to the noble Baroness for that, and I hope that what I go on to say will address that point. If there is a change in distributor or an additional distributor is established, there are already powers in the 2008 Act to amend the legislation to ensure that any new or additional distributor must similarly report on their policy and practice in relation to the additionality principle. The noble Baroness is very welcome to intervene again, if I have not addressed her point.
The question to consider is not about the definition of additionality but where the accountability for that principle should lie. We fully support all the points raised in Committee regarding the fundamental importance of ensuring that the principle is adhered to, but we believe that how the 2008 Act positions the additionality principle, plus the new provisions in government Amendment 7, is the right approach to ensuring this and I welcome the opportunity to clarify why.
The Labour Government which brought in the 2008 legislation ensured that the accountability for the additionality principle lies with the named distributor responsible for all the funds across the UK, rather than the Secretary of State. This Government agree that it remains the most appropriate place for its inclusion in primary legislation. As we outlined in Committee, Schedule 3 to the 2008 Act requires the National Lottery Community Fund, the current distributor of dormant assets funding across the UK, to set out in its annual report its policy and practice in relation to the additionality principle. These reports must be laid before Parliament, and this Bill does not change that requirement. In fact, Amendment 7, to which we will come in a moment, seeks to bolster this further by requiring additionality to be included in periodic reports of the scheme’s effectiveness, as the noble Baroness, Lady Barker, noted. Your Lordships’ House will continue to have the opportunity to scrutinise how the National Lottery Community Fund approaches this in practice. This will ensure that funding continues to be directed to causes which fulfil the scheme’s objectives while being additional to central or devolved government funds.
As has been noted, the principle as it stands is critical to the scheme’s success, and our partners in industry have made it clear that their participation is reliant on it. As this is not central government funding, and as the Government have limited control over only the English portion, it is appropriate that the primary accountability for the principle should sit with the UK-wide distributor of the funding and its accounting officer—namely, the National Lottery Community Fund. Indeed, the fund is well versed in making this assessment, as an additionality principle also applies to its other portfolio of funds. To date, there has never been a breach of this principle of which the Government are aware.
We feel there is no evidence that the principle needs to be altered, and we believe the current approach is serving the scheme well. It has been upheld for 10 years, and we do not think it necessary or desirable to significantly change a demonstrably successful approach.
The commitment is already made in the 2008 Act. If there is a change in distributor, or if an additional distributor is established— and I should stress that there are currently no plans for that—there are already powers in the 2008 Act to amend the legislation to ensure that any new or additional distributor must similarly report on their policy and practice in relation to the additionality principle.
However, we have responded to the noble Baroness’s desire to see the Secretary of State more specifically held accountable to the principle, and we have reinforced its importance even further by including it within Amendment 7, which we will come on to shortly, on reviewing the scheme and reporting to Parliament. The noble Baroness, Lady Barker, said in Committee:
“We must also be able to work out from all the reporting that we do get to see that the principle of additionality is being adhered to.”—[Official Report, 21/6/21; col. GC 9.]
We thoroughly agree, which is why our Amendment 7 will ensure that the report must include any policies and practices of the principle by the Secretary of State as well as the National Lottery Community Fund. This provision responds to requests made by noble Lords that the Secretary of State should be held more expressly accountable for ensuring that and explaining how dormant assets funding is used in ways that are genuinely additional to central Government expenditure. This demonstrates our ongoing commitment to ensuring that the principle continues to be honoured, including the ways in which funding flows to distributing bodies and on to beneficiaries.
That is why we cannot accept the amendment. I hope I have reassured the noble Baronesses that we understand their concerns, and that is why we have brought forward the additionality provision in our review and reporting amendment, Amendment 7. I can see the noble Baroness is rightly consulting the 2008 Act for the references to it. I hope on that basis she will be content with what we have proposed and content to withdraw her amendment.
My Lords, I thank the Minister for the attention he has given to this, but I will pick him up on one issue. A power to do something is only a power; it is not an undertaking that the thing will be done. I do not think he has spelled out, as I hoped he would, how exactly the Secretary of State would be reviewing the additionality and demonstrating the additionality. It may be that he is going to come on to that under Amendment 7. But it seems to me that it is only the Secretary of State who can determine whether something is additional or not, because only the Secretary of State can have full knowledge of what the Government’s overall intentions were. I think this is important. I think we have had the example my noble friend talked about, and I would therefore like to test the opinion of the House.
7: After Clause 29, insert the following new Clause—
“Periodic review and report to Parliament
(1) The Secretary of State must carry out periodic reviews of the following matters—(a) the operation of the dormant assets scheme and the alternative scheme under section 2 of the 2008 Act during the period to which the review relates;(b) the effectiveness of the steps taken during that period (by institutions holding or providing assets within the scope of the dormant assets scheme or the alternative scheme) to reunite assets with their owners;(c) any use made of the powers conferred by section 19 during that period;(d) any use that may be made of those powers after that period.(2) In reviewing the matters described in subsection (1)(a) the Secretary of State must consider—(a) how many institutions have made transfers;(b) how much money has been transferred;(c) the effectiveness of the arrangements made with institutions for meeting repayment claims.(3) The steps referred to in subsection (1)(b) include anything done with a view to tracing, and verifying the identity of, either (or both) of the following, in relation to a particular asset—(a) the person whose right to payment (or right to direct payment) is or would be extinguished by a transfer;(b) where the asset is the proceeds of another asset, the owner or beneficiary of that other asset (before its conversion into proceeds).(4) In subsections (2) and (3)— “transfer” means a transfer of an amount to an authorised reclaim fund as mentioned in section 1(1)(a) or 2(1)(a) of the 2008 Act or section 2(1)(a), 5(1)(a), 8(1)(a), 12(1)(a) or 14(1)(a) above;“repayment claim” means a claim against an authorised reclaim fund relating to a right to payment arising as mentioned in section 1(2)(b) or 2(2)(b) of the 2008 Act or section 2(2)(b), 5(2)(b) or (3)(b), 8(2)(b), 12(2)(b) or 14(2)(b) above. (5) The matters within the scope of a review do not include the regulation by the Financial Conduct Authority of an authorised reclaim fund or any other institution.(6) The Secretary of State must—(a) make arrangements to enable anyone with an interest in any aspect of a review to make representations,(b) consider all representations received, and(c) set out the results and conclusions of the review in a report and lay it before Parliament.(7) The report of a review must also include—(a) information about the uses made by any authorised reclaim fund of its financial resources during such period as the Secretary of State considers appropriate,(b) information about the uses made of dormant assets money for meeting English expenditure during such period as the Secretary of State considers appropriate,(c) the text of any directions given by the Secretary of State under section 22 of the 2008 Act which have effect during the period mentioned in paragraph (b), and(d) information about any policy and practice in relation to the additionality principle of—(i) the body or bodies specified in section 16(1) of the 2008 Act, and(ii) the Secretary of State, in exercising functions under Part 2 of that Act.(8) The report of a review may include information about the uses made of dormant assets money for meeting Welsh expenditure, Scottish expenditure or Northern Ireland expenditure during such period as the Secretary of State considers appropriate.(9) In this section—(a) “the additionality principle” is the principle that dormant assets money should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by a government department, the Welsh Ministers, the Scottish Ministers or a Northern Ireland department;(b) “dormant assets money”, “English expenditure”, “Northern Ireland expenditure”, “Scottish expenditure” and “Welsh expenditure” have the same meaning as in Part 2 of the 2008 Act.(10) The first report under this section must be laid no more than 3 years after the day on which this Act is passed.(11) Any subsequent report must be laid no more than 5 years after the day on which the previous report was laid.”Member’s explanatory statement
The amendment would require periodic reviews of the dormant assets scheme and the alternative scheme, with a report to Parliament on the results. A report would include certain additional information, on matters such as the expenditure of the reclaim fund, and the use made of dormant assets money, and the additionality principle, in England. Information about use of dormant asset money in the rest of the UK would be optional. For practical reasons information included about the use of dormant assets money, or the additionality principle in England, is likely to be information publicly available elsewhere.
I thank noble Lords for their amendments in this area and for the issues raised in Committee and during meetings with me and my predecessor, my noble friend Lady Barran. We have carefully considered the different concerns raised about the need for the dormant assets scheme to be periodically reviewed and reported on to Parliament. We have both heard the strength of feeling about the importance of transparency, and welcome and echo the enthusiasm for maintaining momentum beyond this phase of expansion.
That is why the Government have brought forward Amendment 7, as many noble Lords invited us to do in Committee, which would require the Secretary of State to review and report on various aspects of the scheme on an ongoing basis. I again thank the noble Lord, Lord Bassam of Brighton, for adding his name to it.
Our amendment mirrors Section 14 of the 2008 Act, which some amendments tabled in Committee also sought to replicate. It goes further, however, responding to noble Lords’ calls for maintaining momentum for further scheme expansion, greater transparency over the use of funds as well as reporting on how the principle of additionality has been met. We heard in the debate on the last amendment about the importance of ensuring that this principle flows through to not only the National Lottery Community Fund but any new or additional distributors, were there to be any. To clarify, the National Lottery Community Fund is the only named distributor, and the four independent organisations receive funding from it rather than being named distributors themselves under the Act.
I would also like to draw noble Lords’ attention to the very deliberate phrasing of subsection (7)(d)(i) of our Amendment 7, which refers to any distributor or distributors named in Section 16(1) of the 2008 Act. We have done that, rather than specify the National Lottery Community Fund, so that in the event that a distributor is changed—which Section 24 of the 2008 Act allows the Secretary of State to do as well as allowing them to make consequential amendments to Schedule 3 to ensure that the principle of additionality similarly applies—this would ensure that it is still covered by our Amendment 7.
Amendment 7 will require the Secretary of State to carry out periodic reviews of specified matters, including the operation of the scheme from transfer to reclaim; the effectiveness of tracing and reunification efforts by scheme participants; and any efforts to expand it to include new dormant assets. The amendment will require the results of the review to be laid in a report before Parliament within three years of the Bill receiving Royal Assent and every five years thereafter. This is in line with Amendment 8 in the name of the noble Lord, Lord Bassam of Brighton.
In Committee, my noble friend Lady Barran explained that a number of mechanisms for reviewing and reporting on various aspects of the scheme already exist. We agree, however, with the helpful suggestion of the noble and learned Lord, Lord Etherton, that it is sensible to bring these together in one place. Therefore, Amendment 7 also requires the report laid before Parliament to include information about the uses of dormant assets money, including the principle of additionality. This will build on reports already published by Reclaim Fund Ltd and work done by the National Lottery Community Fund and, currently, the Oversight Trust, which oversees the four existing distribution organisations, to assess the scheme’s impact.
I hope that this amendment provides reassurance that the Government are committed to ensuring the ongoing success of the scheme and reflects a number of the helpful suggestions that noble Lords have made in our debates on the Bill hitherto. I beg to move.
My Lords, I should first say that our amendment, signed by me and the noble Baroness, Lady Bowles, was an attempt to combine different aspects of previous amendments into a single text. The result is, as noble Lords can see, a fairly lengthy shopping list. The thing about shopping lists is that something is always forgotten; something always falls off the end. That makes their operability in legislation perhaps less than perfect.
We envisaged, in construct, that the amendment would cover what had happened during the relevant period and whether the funding was delivering on the scheme’s priorities. So, we are grateful—I am certainly very grateful—to the Minister for his constructive approach to discussions since taking up his post. I believe that Amendment 7 represents a fair compromise. I think the Minister has said the reports will combine information that was already available from other sources —annual reports et cetera—but also require the Secretary of State to go somewhat further, including by giving information on whether and how the additionality principle has been adhered to. We have heard in earlier debates how important that is.
We hoped to gain more from the Government, including more concrete data on the contribution that funds make to people and communities subject to high levels of deprivation and inequality, but I am sure that there will be further consideration of such issues in the other place, and perhaps in our debates here as well, as this legislation kicks in. I am impressed with the approach the Government have taken, and they have certainly listened to our Committee considerations, taking on board the core of what we are after. Nothing is ever perfect, but this goes a long way in the right direction. While I would have preferred our amendment, I was more than happy to sign up to the Government’s, as it represented real progress in the way we considered the Bill.
My Lords, as I am sure the Minister has noted, there were significant contributions about review in the earlier stages of the Bill. It is in that vein that these Benches worked with the noble Lord, Lord Bassam, on Amendment 8. Like him, I still prefer some of the content of Amendment 8 and wish to try to establish how far the wording of the relevant bits of the amendment put forward by the Government delivers similar things. I appreciate the efforts which have been made, in the review amendments and concerning consultation but, as has already been aired by my noble friends, there are certain things which do not appear necessarily to carry through exactly as expected.
First, can the Government say whether their review can do everything envisaged by Amendment 8? Further, is there appetite to cover everything covered by Amendment 8? The first difference was on timing. The Minister said that they would broadly follow the three-year and five-year timing proposed in Amendment 8, which is one tick. The next big difference is whether the review will cover the worthiness of the expenditure and whether—as in subsection (2)(b) of the new clause proposed by Amendment 8—the expenditure has met the scheme’s underlying objectives, particularly the criteria listed in subsection (2)(c) addressing deprivation, inequality, the capacity of social enterprise and charity, and the principle of additionality. I am particularly interested in these policy criteria because the wording of the consultation introduced by Amendment 3—which we broadly support—nevertheless leaves an open question about what the conclusion of that consultation will be. It could change the direction of policy. One could say that it is acceptable that a public consultation is used to change the direction of policy, but is that what the previous consultation paved the way toward, when it consulted about whether further dormant assets should be incorporated into the scheme, as had been successfully done for bank deposits? It seems that public consent, in essence, was given to the first Act on the basis of additionality and the worthiness of the public goods undertaken with the money. If there was a substantive change from that, the public might be surprised, even if it was the result of a consultation held with many more responses coming from well-funded private enterprises and the “usual suspects”, in the terminology that we have adopted.
That is the background. Looking at the issue about additionality we touched on just now, the Minister said that the review will cover whether and how additionality has been met, but that is not actually what the amendment says. It says:
“information about any policy and practice in relation to the additionality principle of … the body or bodies specified in section 16(1) of the 2008 Act, and … the Secretary of State, in exercising functions under Part 2 of that Act.”
As we have been discussing in private, it is not necessarily entirely spelled out that everybody who comes into the way of distributing the scheme has to be under that position of additionality.
The fact it refers to “policy and practice” means that if you need to report on it, it is almost implying that there can be changes around that “policy and practice”. It is not, as Amendment 8 would ensure, a check that it has happened. This is not checking; it is reporting. I think that is slightly different and does not carry with it the soundness of checks. I would like to hear unequivocally from the Minister that the intention is to check that the additionality principle has been met. If you want to report on policies around that which might be additional, that is fine, but a policy might be to disregard it. If it is not obligatory, it could be that the policy sometimes differs. It is as simple as that.
Another difference between Amendment 8 and the government amendment is in proposed new subsection (2)(f) to include consideration of
“the extent to which administrative, investment policy or other changes to the scheme would improve its performance.”
I understand that there are FCA rules on the prudence of investment policy. The government amendment has specifically put in an exclusion so that the review cannot cover what the FCA regulates. I understand that that means that you do not go poking around in the prudential requirements of investment, but, as we discussed in Committee, there were quite surprisingly large amounts of money being spent on administration. If you think it has not been done efficiently, would that fall under the prohibition in the government amendment because the FCA has some say in that area, or would it still be possible under the government review to look at whether there was overuse of rather expensive asset managers as well as having in-house asset managers and that kind of thing? I do not think this is the moment to try to decide that, but I spent some time looking at the annual report. I am prepared to believe that there is something else and other excuses that can be made for the level of expenditure, but I will leave it that I was surprised.
That suggests some of the things that concern us and why I would still have preferred Amendment 8, or for more of its content to be reflected in government Amendment 7. I am glad that we have this extensive review, but it is important that we know that it will actually do a proper analysis and not just give facts and figures essentially extracted from the annual report—that it will do a kind of audit, if you like, of how well the processes have worked and whether they are actually delivering, particularly on the criteria and principles that have surrounded the dormant assets scheme right from the start.
My Lords, I welcome the collaborative and pragmatic approach of the noble Lord and the noble Baroness in relation to government Amendment 7. I am also grateful for the contributions on that and on Amendment 8 on reviewing and reporting, which would require a review of the performance of an authorised reclaim fund and the Big Lottery Fund, now operating as the National Lottery Community Fund, in administering the scheme. Although I recognise the intention to ensure that the scheme’s success is maintained, bringing such details within the scope of a review would only duplicate processes that already exist.
Both the National Lottery Community Fund and Reclaim Fund Ltd are arm’s-length bodies, of DCMS and Her Majesty’s Treasury respectively. As they are public bodies, robust mechanisms are already in place for the monitoring of both organisations’ delivery against their objectives. These are more frequent than every five years and enable regular assessment of whether they are running effectively and efficiently. Instead, Amendment 7 will ensure that there are periodic reviews of the operation of the scheme from transfer to reclaim and that relevant information from both organisations’ existing reports is included in the report laid before Parliament. This will enable it to track the journey of dormant assets money from participant to beneficiary. This includes how the principle of additionality has been approached, and we can confirm that it is the intention of this part of Amendment 7 to ensure that the principle has been met and that Parliament receives information about how.
As a scheme that is led by industry and backed by the Government, it is appropriate that the scheme’s primary policy objectives—namely, to reunite customers with their money, to ensure voluntary participation and to guarantee full restitution—are similarly the primary focus of the periodic reviews. However, as part of the journey from participant to beneficiary, the scheme’s impact on social and environmental initiatives will, of course, be an important aspect to report on. There have been calls to assess the impact of the scheme here as well as at previous stages of our debates on the Bill. It is absolutely crucial that the funds have a positive impact on social and environmental initiatives. However, Amendment 8 seeks to assess the scheme against more narrow criteria than social and environmental causes. In line with the scheme’s impact to date, it specifically focuses on the benefit to people and communities subject to high levels of deprivation or inequality, and the impact on developing the capacity of social enterprises and charities.
I understand that the overarching purpose of this is to ensure that the scheme has maximum impact on the communities that need it most. However, the Government are clear that the nature of this impact should be subject to a future consultation. That is why we tabled Amendment 3, which would require this to be realised through a public consultation. The Bill must therefore be sufficiently broad to accommodate the outcome of this and future consultations, and to ensure that it is captured by the requirement to report on the scheme’s impact. It may be, for instance, that the public wish to see more of the funds being targeted at environmental initiatives, which would not be satisfactorily covered by the more narrow definition of the scheme’s objectives in Amendment 8.
Amendment 8 also seeks to review the extent to which administrative, investment policy or other changes to the scheme would improve its performance. Government Amendment 7 will ensure that the relevant information from organisations in the ecosystem are presented in the report. In particular, subsection (7)(a) provides that it must include
“information about the uses made by any authorised reclaim fund of its financial resources”.
The amendment should not encroach on the governance arrangements and regulations in place for managing and maintaining an authorised reclaim fund by both Her Majesty’s Treasury and the Financial Conduct Authority.
Finally, Amendment 8 would also require the Secretary of State to consider the views of specific groups when conducting the review. We agree that the review should be informed by a range of views, including those of social enterprises and charities. However, as I said in relation to previous amendments, we believe that prescribing a set list would be too restrictive. The Government’s amendment will instead enable anyone with an interest in the review to make representations and all representations received must be considered by the Secretary of State.
We think that the changes proposed in Amendment 7 strike the balance that noble Lords have called for today and in previous stages. I am again grateful to the noble Lord for his support. I hope that our Amendment 7 demonstrates that we have listened and are committed to transparency and robust reporting. That is why I hope your Lordships’ House will support the amendment and that the noble Lord will be minded not to move Amendment 8.
Amendment 7 agreed.
Amendment 8 not moved.
9: After Clause 29, insert the following new Clause—
“Capacity of the Oversight Trust
(1) Within six months of the day on which this Act is passed the Secretary of State must lay before Parliament a review of the Oversight Trust. (2) The review in subsection (1) must include but is not limited to an assessment of—(a) the capacity of the Oversight Trust to oversee the operations of companies that receive dormant assets money;(b) whether the Oversight Trust has the appropriate resources to fulfil its objective;(c) whether the Oversight Trust has the appropriate powers to fulfil its objective; and(d) whether a duty should be placed on the Oversight Trust to monitor the distribution of dormant assets money, and whether it would have the resources to undertake this duty.(3) The review in subsection (1) must make a recommendation as to whether the Government should bring forward further legislation to improve the capacity and effectiveness of the Oversight Trust.”Member’s explanatory statement
This amendment would require the Government to undertake a review of the capacity of the Oversight Trust and make a recommendation as to whether further legislation is needed to improve its effectiveness.
My Lords, as those who followed our previous deliberations will know, when this scheme was originally set up, the Government introduced an arm’s-length body, the Oversight Trust, to monitor the performance of the distribution bodies. It is a very small entity with a small budget and it does not have a great many staff.
The question we put to the noble Baroness, Lady Barran, in Committee was whether this small body would be able to deal with a scheme that was going to increase in not only volume but complexity. Having listened to what the noble Baroness said, we on these Benches went off and met the Oversight Trust. We had already spent time reading some of its reports and reviews. Every year, it produces a report on all of the distributors and does a very detailed report on one of the distributors.
It became apparent in our conversation with the Oversight Trust that, although it has done several reviews of the bodies that have grown out of Big Society Capital and so on, it has not yet done a big, deep review of Fair4All Finance. As I said before, that area of work is perhaps the most difficult of all, in that it is about, in short, trying to put loan sharks out of business by making sure that there is affordable finance in poor communities.
It seems to us that understanding the impact or performance of a body such as that is different and less easy in terms of the annual reports and accounts that the trust is used to looking at. In particular, through the youth finance bodies and so on, it is more used to looking at charities and social enterprises. Therefore, we thought it not unreasonable to ask the Government to look at the capacity of that body to ensure proper and deep oversight of a much more complex scheme. Consequently, we have tabled this amendment to raise the issue at this stage. I look forward to the Minister’s response and I beg to move.
My Lords, I want to add just a word or two. My noble friend Lady Barker said that the Oversight Trust had relatively few staff; my understanding is that it has one staff member. I have great respect for the trustees; they are highly capable, totally dedicated people. But resource matters when you are dealing with a complex world. The original oversight body was designed to cope with a situation in which the amount of money in play was relatively small—under £1 billion—and the primary recipients of the end funds were going to be charities and social enterprises. The Charity Commission is involved in the disciplinary process, and there are clear structures that social enterprises have to follow if they are formally to be social enterprises.
We now all accept that the Government consider that the language allows for-profit companies to be recipients of the funds, provided they are mission focused—although nobody can tell me what mission focused looks like. If you are looking at the statutes of a particular company, there is no formal constraint on what is paid to directors in the form of salaries, no definition of acceptable returns to the original investors, and new distributors can be added. We are talking now about a pool of assets of a minimum of £2 billion, and that is just stage 1—it could easily expand to £4 billion, £7 billion, £8 billion or even £10 billion as more and more entities or organisations are captured within the scope of those eligible to provide dormant assets to the fund.
This is an attempt to ask the Government to set up a structured review to make sure that the Oversight Trust has the capacity that it needs, recognising the significant increase in complexity and responsibility. That is not in any way to denigrate anybody who is involved today with the Oversight Trust. I do not know how they do it, frankly, with one staff person. The time has come for expansion of this group, and what we are listening for from the Government is real recognition of the importance of detailed oversight.
My Lords, our colleagues on the Lib Dem Benches have made a pretty compelling case here. It is obviously good that we have the Oversight Trust but, with a staff complement of one, anything it does will be light touch. The amendment from the noble Baroness, Lady Barker, makes quite a lot of sense in terms of reviewing arrangements and determining whether further legislation is needed to improve its effectiveness. For that reason, we happily support this amendment.
If the Minister cannot accept the amendment as drafted, perhaps he can explain to the House how the matter is to be kept under review, and how the Oversight Trust can be strengthened to ensure that it does its work, because, clearly, oversight is very important in all of this. We need to have that assurance and guarantee that things are as they should be.
As the noble Baronesses, Lady Barker and Lady Kramer, have said, Amendment 9 has been tabled with a view to ensuring that the Oversight Trust is appropriately resourced and empowered to monitor the distribution of dormant assets funding. The DCMS and the National Lottery Community Fund have worked closely with a range of partners to ensure that the right levels of accountability and transparency are in place for the organisations that are given the task of distributing dormant assets money in England. We have sought to support their independence while respecting that dormant assets funding is money which comes from the public.
The four spend organisations’ operations are regularly reviewed by the Oversight Trust, which, as the noble Baroness said, is an independent organisation that ensures accountability and transparency in each of the spend organisations’ activities. I should flag that the trust’s reviews are not conducted in-house; it commissions external experts to conduct them independently. The Oversight Trust does not intervene in day-to-day operations, which are of course the responsibility of the organisations’ boards; rather, its aim is to ensure that each remains true to its objectives, which involves having oversight of the general operations of the spend organisations, as referred to in subsection (2)(a) of the new clause proposed in the amendment. In particular, the Oversight Trust is required to ensure that the four organisations are well governed and that their strategic plans and budgets are in accordance with their objects; and to review their achievement of social impact and transparency of financial and impact reporting.
Those powers are formalised in legally binding governance contracts between the Oversight Trust and each organisation. These contracts empower the Oversight Trust, for example, to remove directors in the case of significant mismanagement; to approve any changes to remuneration policies; and to be involved in the process of appointing new chairpersons, including ratifying their formal appointment. The contracts set out the key processes to enable the Oversight Trust to fulfil these responsibilities, and the trust may make reasonable requests from each spend organisation, in addition to those set out in the governance arrangements, if necessary, to help it meet its obligations.
The Oversight Trust receives quarterly updates, conducts annual deep dives and publishes quadrennial reviews on each organisation, which is required to co-operate to ensure that it can perform its duties effectively. This includes a commitment to participate with the independent review panel and to provide any information and assistance that may be necessary. We therefore do not believe it would be necessary or appropriate to provide the Oversight Trust with further powers in legislation for it to perform its current mandate effectively.
Access to up to £500,000 per annum from the English portion ensures that it can draw on sufficient resources to fulfil these important objectives. We are confident that this enables the Oversight Trust to meet its objectives, but we continue to keep that under review. Last year the Oversight Trust published its first quadrennial review, which focused on Big Society Capital, with the review of Access following in June this year. The next review, which will be of Fair4All Finance, is due next year.
I am very glad that the noble Baroness has had the opportunity to meet the Oversight Trust. Since Committee, my noble friend Lady Barran has met the trust as well, to press the importance of in-depth quantitative impact data. The trust has been working with the four organisations that it oversees on this issue, including through its annual governance review meetings. The trust provides robust governance, transparency and accountability over the four organisations’ use of dormant assets funding in England. As ever, though, we are mindful of our commitment to consult widely and with an open mind about the best social or environmental uses of this money.
When the Government consider the outcome of this consultation, we will also need to determine the best approach to ensuring continued good governance over the scheme. This could include asking the Oversight Trust to consider expanding its role to oversee any additional bodies if necessary and appropriate. If so, we would review whether the trust would need additional resources to fulfil a broader remit. It is worth noting that the trust would not be involved in decisions around what, if any, new distributing bodies may be chosen in England.
As it is too early to pre-empt the outcome of that assessment and, given that the Oversight Trust is independent and not an arm’s-length body, I hope the noble Baronesses will agree that it would be inappropriate in the Bill to mandate its role in the way that the amendment suggests. However, we have included a requirement to report on the uses of dormant assets funding as part of the Government’s Amendment 7. The National Lottery Community Fund will also remain responsible for ensuring that funds are distributed in line with legislation. We hope that this, alongside our record to date in ensuring that the distribution of funds is appropriately monitored, will provide the noble Baronesses with reassurance that this is an area that we will continue to take very seriously.
While the Minister is on his feet, could he tell me with a straight face whether he thinks that £500,000 a year is sufficient for the wide range of responsibilities that he just described? He might wish to talk to some of his colleagues who work in the world of consultancy.
We do; we keep it under review and, if the oversight trust took on a broader role, would review whether it would need additional resources. For the reasons I have set out, we cannot accept Amendment 9, and I hope the noble Baroness will be content to withdraw it.
My Lords, I thank the Minister for his full answer. It will come as no surprise to him that we do not intend to seek to put the amendment in the Bill, but the issues we have raised have a great deal of merit.
When we met Sir Stuart Etherington, the chair of the oversight trust, he set out clearly to us, as the Minister just has, exactly what the responsibilities of the trust are and how it goes about discharging them. He said that, although it has a responsibility to look at governance and management arrangements that impact on reporting, and has the power to remove directors and the chair, the oversight trust regards that as being a nuclear option—it would have to be something rather major for it to do that. By the time it got to that stage, there would already have been a significant scandal. That is what we are worried about with this whole scheme, and have been since the very beginning, because there are so many loopholes.
However, I hear what the Minister says about this being kept under review, alongside the periodic review of the whole scheme. With that assurance, I am quite happy to withdraw the amendment.
Amendment 9 withdrawn.