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7th Report, 2010 (Session 3)

Subordinate Legislation

Remit and membership


To consider and report on the Scottish economy, enterprise, energy, tourism and all other matters falling within the responsibility of the Cabinet Secretary for Finance and Sustainable Growth apart from those covered by the remits of the Transport, Infrastructure and Climate Change and the Local Government and Communities Committees.


Ms Wendy Alexander
Gavin Brown
Rob Gibson (Deputy Convener)
Christopher Harvie
Marilyn Livingstone
Lewis Macdonald
Stuart McMillan
Iain Smith (Convener)

Committee Clerking Team:

Clerk to the Committee
Stephen Imrie

Senior Assistant Clerk
Joanna Hardy

Assistant Clerk
Gail Grant

Subordinate Legislation

The Committee reports to the Parliament as follows—

1. At its meeting on 23 June 2010, the Economy, Energy and Tourism Committee considered the following affirmative instrument—

the draft Dormant Bank and Building Society Accounts (Scotland) Order 2010 (SSI draft/2010).

2. The details of the draft Order and the explanatory notes can be found on the website of the Office of Public Sector Information.1


3. The Dormant Bank and Building Society Accounts (Scotland) Order 2010 (“the Order”) is made in exercise of powers conferred by section 20(1) of the Dormant Bank and Building Society Accounts Act 2008 (“the 2008 Act”).

4. The UK Parliament passed the Dormant Bank and Building Society Accounts Act 2008 to enable banks and building societies to pass money from dormant bank accounts, on a voluntary basis, to the Big Lottery Fund for distribution for social and environmental purposes. Dormant accounts are defined in the 2008 Act as those which have seen no customer-initiated activity for at least 15 years.

5. Money from dormant accounts will go into a Reclaim Fund set up by the banks and building societies. The Fund will be independent of government and will be authorised and regulated by the Financial Services Authority. The Reclaim Fund will:

  • Receive funds from dormant accounts;
  • Assume the associated liability for any claims from customers;
  • Determine what proportion of the funds needs to be held back to meet any future claims from customers and to meet the Fund’s own running costs.

6. It is expected that the Big Lottery Fund will commerce distribution of the monies from the Fund in mid-2011. The Scottish Government intends that the Big Lottery (Scotland Committee) will be the distributor in Scotland.

Policy Objectives

7. The Order restricts the purposes for which, and the kinds of person to which, a distribution of dormant account money may be made under the 2008 Act. The distribution of funds will be administered under directions given to the Big Lottery Fund by the Scottish Ministers under sector 22(5) of the 2008 Act.

8. Article 3 provides that distributions may be made to third sector organisations on or connected with services, facilities or opportunities which promote strong, resilient and supportive communities.


9. Following the completion of the public consultation exercise in 2008, the Minister for Enterprise, Energy and Tourism consulted and had discussions on the Order and the dormant bank account funding process with political parties, third sector organisations and the Big Lottery Fund.

10. In addition, views were expressed to the Big Lottery Fund by the Scottish Ministers in July 2009 which emphasised the importance of outcome-focussed funding and the need to align the eventual spending of the sums generated by this Order with the Scottish Government’s five strategic objectives.

11. It should be noted that the public consultation exercise was based on the UK Government’s estimate at June/July of the transfer in the initial year to the fund being between £400-£500m for the UK as a whole and around £40m for Scotland. However, according to the Scottish Government, the UK Government has revised this estimate and assuming Barnet formula proportions, Scotland can now expect to receive an initial windfall amounting to around £12m per annum for the first two years and around £1.5m year-on-year thereafter.

Financial Impact

12. According to the Scottish Government, the Order will have no adverse financial impact on the Scottish Government, or on third sector organisations. Under section 26 of the Act, the Big Lottery Fund may recover out of dormant account money any expenses incurred by it as a consequence of the Act. In addition, section 26 allows the Big Lottery Fund to pay into the Scottish Consolidated Fund, such amounts as the Scottish Ministers determine to be appropriate for recovering expenses incurred or to be incurred by them under the Act.

Issues by the Committee

13. During the Committee’s deliberations, the Minister was asked why the Scottish Government’s preferred priorities for future expenditure from the Reclaim Fund were not set out on the face of the Order. The Minister indicated that the 4 broad policy themes would be set out in the policy directions that would be issued later in the year, following discussions with the Big Lottery Fund.

14. The Minister and his officials noted that the 2008 Act (s20(2)) requires the Scottish Ministers to consult with the Big Lottery Fund. They also expressed a view that the 2008 Act required Ministers to first seek the approval of the Scottish Parliament for the Order before the Scottish Ministers issued the Big Lottery Fund with final policy directions and before instructing the Big Lottery Fund to prepare a strategic plan for Scotland.

15. A number of members of the Committee expressed concerns with the sequencing of events as set out above and requested that the Minister provided the Committee and the Parliament with a copy of a draft of the policy directions before the Order was discussed in the Parliament. The Minister indicated his assent. The Minister also indicated he would be pleased to return to the Committee in the Autumn to provide an update on the progress of the strategic plan and the detail of the process to be used to decide how the monies in the Reclaim Fund would be disbursed.

16. Some of the issues on which members requested further detail in due course included:

  • Whether it is preferable to more tightly constrain the types of projects that can be supported (e.g. to those involving young people and youth development) given the relatively small sums involved?
  • How the Big Lottery Fund will ensure a degree of geographic distribution of the funds?
  • Whether there will be a wider definition used for “social and environmental projects” and how the needs-based assessment will be carried out;
  • Whether it would be preferable for a possible project to relate to more than one of the four policy areas currently identified as the areas on which monies can be spent;
  • Whether projects will have an emphasis on measuring the success of the intervention in a manner which is not exclusively focused on final outcomes but also intermediate gains;
  • Whether the Minister will favour the creation of an endowed trust model or some other form of governance and what the relative advantages and disadvantages are of each.

Subordinate Legislation Committee report

17. In its report to the lead Committee, the Subordinate Legislation Committee (SLC) considered this instrument and agreed that no points arose in relation to the instrument.2


18. After the debate had concluded, the Minister moved motion S3M-06478—

That the Economy, Energy and Tourism Committee recommends that the Dormant Bank and Building Society Accounts (Scotland) Order 2010 be approved.

19. The motion was agreed to by the Committee with the proviso that the draft policy directions which he will issue are sent to the Committee prior to the debate on this Order taking place in the Chamber and that the Minister comes back to the Committee in the Autumn to discuss progress. The Minister indicated his agreement to both of these points during the Committee meeting.

Recommendation to the Parliament

20. As a result, the Economy, Energy and Tourism Committee recommends that the Dormant Bank and Building Society Accounts (Scotland) Order 2010 be approved.


2 Subordinate Legislation Committee, 33rd Report, 1st June 2010.