Dormant Bank and Building Society Accounts Bill [HL]

My Lords, I thank the Minister for outlining the purposes of the Bill. It has a fairly dull name for an incredibly exciting and life-enhancing Bill; I am an enthusiast for it. I should declare my own position. For some years I have been a trustee of the Joseph Rowntree Reform Trust Limited; I am chairman, a director and a trustee of the Joseph Rowntree Charitable Trust. We are not averse to money coming in but, because these are endowed funds, we are mainly donors. Therefore I have some understanding of the grant seeker. I also founded in 1990—I am now a vice-president—a community foundation for my own community, Calderdale. It was my major voluntary activity for nine years. From nothing in 1990 we have put together £6 million now. That organisation is looking for money and I shall say more about it later. It is now 11 years since I penned a pamphlet for DEMOS entitled The Building Society Bounty. I was concerned about the demutualisations that were taking place and, whatever the principles involved in whether it was right for a mutual to remain as it was or to be demutualised, my concern was whether it was right for a specific generation to pick up all the benefits of intergenerational equity that had been built up, often over 150 years or so. It was like the parlour game of pass the parcel; the music stopped and those that happened to have a pass book ran off with all the assets. The Bill has limited aims. It is about gathering in, holding and spreading out to good causes. There is a definition of ““dormant accounts”” and a suggestion that they are accounts that have not been touched for 15 years. It has been suggested also that that is too long; that perhaps it should be 10 or 12 years. This has happened in other countries and we hope it will happen in the UK. I have read that in one country the period is three years. I do not argue with 15 years because it may be right. We could perhaps cope with 10 or 12 years but I am not going to argue that point. We all understand that a big effort has to be made to reunite the dormant money with the rightful owner—that is only right and proper—and then, at the appropriate time, to transfer it to the intermediate agency, the reclaim fund. After weighing up the probabilities of a reclaimer appearing, the reclaim fund will transfer dormant money from large banks and building societies to the Big Lottery, or from smaller ones with under £7,000 million in assets to a local trust or foundation. That is allowed for in the Bill, but it is all voluntary. There is not enough prescription in the gathering-in but there is too much in the spreading out. There has been a fair period of consultation on the gathering-in, but some say there has not been as much consultation on the spreading-out as there might have been. The Government have looked at the position in Ireland, which is ahead of us in this work, and I have read and carefully considered the report of the Treasury Select Committee of the other place on the work it has carried out on this. The Bill is too limited in scope. Before it was published, it was the draft Unclaimed Assets Bill; now it is the Dormant Bank and Building Society Accounts Bill. Is this just the start? It covers two specific areas: banks and building societies. However, in Ireland, post office accounts—equivalent to National Savings here—have been brought within the scope of the equivalent legislation, as were unclaimed life assurance policies two years later. What about shares and dividends? We should look at non take-up following demutualisations. I have the latest figures for Standard Life, the Scottish life assurance company. It issued shares in July 2006. It put out a press release in January 2007 stating that 235,000 members had yet to claim £236 million worth of shares. In April, it put out another press release stating that the number of members was 220,000, but that the value of the shares had increased to £261 million. It might well be less now. That is only one company. There is a rich seam to tap. Government savings are important. The Treasury estimates that there is just short of £1 billion in them. There should be a level playing field with the private and mutual sector. During the past four or five years, I have looked in detail at the Northern Ireland budget and kept my eye on the Ulster Savings scheme. It was closed by the Government in March 1997. I suggested four or five years ago that the unclaimed assets of that scheme went to the Community Foundation for Northern Ireland, but was told that it was ““too early””. However, I had to raise the matter again a few months ago, because it was the last time that the assets were in the Budget book before going off the edge. I received a letter from the noble Baroness, Lady Amos, who stated that the cash was not ring-fenced and that the balances had already been used to fund public services. She said that a few months ago, but I could have been told four or five years ago. The Government have not been clear about that. Pages 59 to 61 of the Treasury Select Committee’s report refer to what happens in the US state of Vermont, for which it lists 110 different categories of unclaimed asset. The Bill deals with two. The Bill makes provision for four orders and three regulations, plus sub-orders for Scotland, Wales and Northern Ireland, but why does it not make provision for an order to extend the provisions of the Bill to other forms of asset? I turn to the definition of dormant bank and building society accounts. The Bill refers to 15 years—I could have been persuaded of 10 or 12, but I shall leave that aside for now. However, what about the starting point? Reference has been made to the voluntary banking code, which states: "““If you have money in a dormant account, it will always be your property (or if you die, it will become part of your estate). This is the case no matter how many years pass””." However, the banking code was first introduced in 1992, which, amazingly, is 15 years ago. We are therefore talking about assets that, in terms of the Bill, were dormant before the banking code was introduced. The code followed the Jack committee and was established in 1992. What about earlier years? When did history start? The Halifax Equitable Benefit Building Society, the precursor to the Halifax, was started in 1871. In terms of the Halifax, is that the starting point? I shall share with your Lordships an experience of my own. I found in a drawer an account book for the Yorkshire Bank. The account was opened just after my wife and I were married. The book states that it was opened on 5 March 1966. I thought that it was mine, but it was my wife’s. There must have been a specific savings plan, because a few pounds were put in, then they were drawn out. There now remains, 41 years later, the princely sum of five shillings and 11 pence. It does not matter; it is from more than 41 years ago; it is a very small sum; it will not buy a postage stamp. I am now in my third matrimonial home. What if the book that I had found had belonged to a great-great-grandfather and the balance was £500? Would that be available now to be written off? Or would it be available under this scheme, had it not been found, to go to good causes? What happened before the introduction of the banking code? Did banks and building societies write off money to profit, or did they write off to a suspense account, which meant that the bank or building society would have greater capital? The start is important. It is important, too, in terms of a level playing field for all banks and building societies. I turn to the voluntary or compulsory nature of the scheme. What is in it for the volunteers? The British Bankers’ Association and the Building Societies Association say that they will be in it, but will they? How can we be certain? What about the overseas element? We know, for example, that the Bank of Ireland and the Allied Irish Bank are in business here in the UK. Has any dormant money there already found its way under the Irish Sea, or is it in a separate UK bank or subsidiary? What about overseas ownership? The demutualised Abbey National Building Society is now part of the Bank of Santander. Is the decision whether to join the voluntary scheme to be made here or in Spain? Similarly, the Yorkshire Bank is now Australian-owned. Other changes in ownership of banks and building societies, if they demutualise, can take place. Could banks volunteer now, then be taken over, and backtrack later? Apart from the BBA/BSA indication, the only really persuasive issue is the comfort of indemnity via the reclaim fund. I shall not say too much about it—I understand the indemnity point—but I have one question for the Minister: does he have any idea of the generosity/caution ratio of the reclaim fund? The reclaim fund will have to say, ““Yes, 15 years have passed and we’ve tried very hard, but we haven’t been able to reunite, but, you never know, something might crop up””. What will be the balance? To what extent will it be able to say: ““Well, we think that we could put in 80 per cent””? Or will it be 60 per cent? Does the Minister have any indication of that? On spreading out the money to the good causes and the main scheme, I was—as previous speakers have said that they were—surprised at the specific prescription of the money being provided for, "““services, facilities or opportunities to meet the needs of young people… or connected with… the development of individuals’ ability to manage their””—" own affairs, or— "““the improvement of access to personal financial services, or… made to a social investment wholesaler””." I asked myself, ““Is there a problem here? Is it to do with the manifesto?””. The Labour Party manifesto of 2005 said: "““There are many bank accounts that are lying dormant and unclaimed, often because people have forgotten about them or because the owner has died. We will work with the financial services industry to establish a common definition and a comprehensive record of unclaimed assets. We will then expect ""banks, over the course of the Parliament, to either reunite those assets with their owners or to channel them back into the community””." So there is not the precision there that is now in the Bill. Bearing in mind the source of the money, the category about assisting the financially excluded is bang-on right, and there is no question of that. I would have expected housing to be mentioned, however. Think about what building societies were set up for. If Shelter could use a significant grant, that would be quite appropriate. Furthermore, although I am very much in favour of supporting youth, I would have said ““youth and community””. We are talking about capital money—although there is no problem whether we are talking about capital or revenue, ultimately, in how the money is used. But you would not want a place to be built in a rural area that could be used only for youth when it was quite obvious that it could be used for the community more generally. It would be out of keeping with today’s thinking not to have a place that is multi-use. I highly approve of the position for the second scheme, involving smaller banks or building societies, and that resources can be used locally. However, there is a problem. This is where I come back to the nine years that I put into the Community Foundation for Calderdale. In a place such as Halifax, the Halifax Building Society was, and HBOS is, an incredibly important part of the community. If you are looking for money from the private sector in a community whose major employer and institution is so huge, it can well be the first port of call. Under this scheme, if HBOS followed the BBA advice, it would have to sign up to the main scheme. There should be a compromise so that with organisations as big as HBOS, which clearly have an incredible local involvement but whose depositors, former members and shareholders are UK-wide as well, we balance the national interest in the incredible potential resource nationally, which is obviously beyond the local need, with the local need that is clearly still there. In other words, we have a cliff edge in this Bill. We are told that there are 60 building societies, 52 of which are below the cut-off line of £7,000 million. I shall give a little case study of the Skipton Building Society. The figures are easy to cope with. That building society is based in Skipton, in the Craven area of Yorkshire. It has been a successful and progressive building society and is now number six in the list of building societies. Its asset base of £10.5 billion puts it in the top eight, and it is above the £7,000 million for the alternative scheme. Would the Minister agree that there should be a way of avoiding the cliff edge, so that there is an element of local generosity available? I happen to know that in Skipton there is a community foundation called the Craven Trust, which in my view would be particularly well placed to look after local money. Number nine on the list of building societies is Derbyshire Building Society, with £6 billion. There is also a community foundation in Derbyshire—and again, that would be an appropriate body to use the money. There would be something wrong in my book if Derbyshire could benefit locally and Skipton and Craven could not. We should be thinking about the opportunities available to ensure that there is some possibility of doing things differently, so that there is some local element. Because the numbers fit, my suggestion would be that if £7,000 million is seen as the correct figure—and in the case of Skipton the figure is £10.5 billion—two-thirds could be distributed locally and one-third nationally. Of course, when you get to the big ones, such as HBOS and Nationwide, a tiny percentage would be local. Clearly, with a very large institution, the local element would be very small as a proportion, but it would be incredibly worth while.