Dormant Bank and Building Society Accounts Bill [Lords]

The hon. Member for Cheltenham (Martin Horwood) makes a powerful case on behalf of mutuals, but his case is sometimes somewhat weakened by ill-judged comments elsewhere in his speech. He would be better off sticking to substance, which he does very well, than making cheap party political points that are badly placed, badly timed and badly delivered. I welcome the Economic Secretary to the Treasury to his new role. The hon. Member for Clwyd, South (Mr. Jones), who has long campaigned on the issue, made an excellent speech. For as long as I can remember, this has been a live issue. In fact, the money that might be raised has been spent several times over in party political pamphlets, debates and so forth. Our debating the issue today is horrendous timing, but at least the measures are finally forthcoming. I say ““horrendous”” because we are taking money out of the banking sector today only to put it back in next week. I am sure that the accountants will say that the money is both an asset and a liability, and therefore does not affect the capital adequacy ratios, but that misses the point somewhat. It is relevant to the point about liquidity: it is cash in the bank, and the capital adequacy ratios are designed only to measure liquidity—they are not the fundamental themselves. It is right that the Government have gone down the voluntary route, rather than that taken in places such as US, Ireland, Australia, New Zealand, Spain and Canada of a more compulsory system. Listening to the debate, I detected a massive amount of confusion. If I received £1 every time a different figure was mentioned for the amount in dormant bank accounts, I would be a very rich man. My experience, both in this debate and outside the House in preparation for it, shows that where there is a compulsory system, the amount of money brought in is much larger than anticipated. The figure of £20 billion is the highest number that I have heard of, and it appeared in an article in The Times in late 2006. For a long time, the banks were under pressure to give up all that money. They thought it might be mandatory to do so, and that it would be expensive to administer the process. I probed the Chief Secretary to the Treasury at the beginning of our debate, because the numbers cited by the British Bankers Association and the Building Societies Association were low, and historically, were pushed down by the banks to depress both the amount of money they would have to give over and the administration involved in doing so. Turning to the 15 years rule, the hon. Member for Taunton (Mr. Browne) made a good point about asking the Treasury for a cash flow of likely moneys. If we obtain that information before Committee, we will be able to tease out some of the numbers involved. What will be the one-off hit in year one, next year, and so on as the money comes out? The Economic Secretary is shrugging his shoulders, but it would be useful to have such an indication. Clearly, we will not have exact figures, as it would be quite complicated for the banks to provide them, but there are basic assumptions at which the Minister and his civil servants could look. I am sure that, deep in the Minister's briefing pack, is information on phase 2 of ““Know your customer”” and information about money laundering for banks. The focus in that process on money laundering compelled the banks to contact many of those customers, even if the accounts were dormant. As a result of ““Know your customer””, either the banks will fail in not observing the money laundering regulation or they will indeed have codes against each account and each connection of accounts, even if that is across a number of financial instruments or, indeed, geographic locations, that will say that they tried to contact those customers, particularly about the large amounts, but were unable to do so. Clause 12 deals with the triennial report to Parliament. Subsection (2)(f) deals with a report on the operation of the dormant account arrangements, including"““the desirability and practicality of establishing similar schemes for other categories of assets””" which may have become dormant. I am deeply concerned about what that may include, and throughout the debate, I have grown increasingly concerned. My list of three or four issues has developed into a list of 10 across a range of financial instruments, including physical assets associated with proxy financial holdings such as gold and things such as safe deposit boxes. Why, if someone went to HSBC and deposited £100 in an account 16 years ago, should that sum be taken away and considered dormant because there has been no contact? However, if they put £100 in an HSBC deposit box 16 years ago, the Government are not suggesting that that should fall within the realms of the measure. In a number of banks, there are safe deposit boxes containing a large number of assets, some of which would be considered dormant under the definitions in the Bill. Alongside those boxes are share certificates and bearer bonds without any name. Taking that to an extreme, the wording in the Bill does not include unused assets, which some people would consider financial assets such as, for example, a buy-to-let house or a house that used to be rented that has fallen into disrepair. I would imagine that in most parliamentary constituencies there is a house that blights a corner of a particular street: no one is quite sure who owns it, and it has fallen into disrepair. Would that be included in the measure? The Bill will have a major impact on a number of industries. Hon. Members have spoken about people not collecting gambling revenues. If someone won several hundred pounds on the horses, they would know about it: they would follow the race, and they would be likely to collect their winnings. However, if they bought a raffle ticket in the lottery, they would be less likely to know about a win. Who owns that unclaimed asset? If someone has made a purchase for a small amount—£1—perhaps they do not value the ticket as they would if they made a large deposit. However, sitting behind that ticket may be a large revenue or income stream. There is a broader issue, too, about insurance policies. I am reminded of a business that I read about that sold travellers cheques. The main revenue from that business did not have anything to do with the selling of travellers cheques; it was the revenue that was left in a bank account for everyone who lost their travellers cheques but did not exchange them for cash. Who owns that money? A number of businesses will be concerned that their fundamental business model will be wiped away in that three-year report and by the picking-up of disused funds. A number of Members have spoken fluently about wanting a clearer definition of dormancy, and I was superficially persuaded early in the debate that that was a good idea, but I very much fear that, given that this is a voluntary system, there will be banks and building societies that want to hand the money over, but are concerned about how they do so under the definition of dormancy. They may get it wrong or go into a scheme and not pick up some accounts as a result of the Government's definition of dormancy. If there is a voluntary system, it is probably better not to have that definition. Turning to the Big Lottery Fund, I ought to exercise caution, given that it is coming to Southend next week to show us some of the good works that it has undertaken. My experience to date, however, is that big donors seem to get bigger, and the money is tied up in bureaucracy and administration. People try to get the money out of the lottery. I have visited many community groups that want help to fill in forms to get money, but it eventually transpires that they are not eligible for such money or do not fit into a category. That is the complete opposite of one or two other funds that I know such as the Essex Community Foundation and the Southend Fund, which touch a number of charities, and donate small amounts—£1,000 or £2,000. I cannot help but think that the Government have missed a trick by going to the Big Lottery Fund. [Interruption.] My hon. Friend the Member for Broxbourne (Mr. Walker) says that it is not big by national standards, but at a local level it is still millions of pounds, and perhaps organisations that deliver small packages of thousands of pounds would be a more effective distribution channel. Perhaps we should focus on microfinance, particularly social enterprise.