§ 1.40 p.m.
§ Mr. Clinton Davis (Hackney, Central)
On the face of it the subject of dormant funds held by the Supreme Court would not appear to be a very exciting one to raise just before Christmas. I hone to establish that the positive and constructive use of these funds can be of con- 1816 siderable value to the community and can, if approached positively, tax the ingenuity of the Government as to the way in which they should be used.
I am indebted to Alderman Sir Samuel Fisher of the London Borough of Camden who drew my attention to this somewhat perplexing matter. If the Government decide to do something positive about this, a considerable debt of gratitude will be owed to him. Dormant funds in court represent cash and securities under the control of the Supreme Court of England standing to the credit of accounts which have not been dealt with for upwards of 15 years. A fund is transferred to the dormant funds only if it is anticipated that there will be no further dealings with that fund. I understand that the vast majority of funds credited to this account comprise small amounts not exceeding £150.
What is of interest is the volume of these unclaimed sums and the use—or rather non-use—which is made of them. I sought to derive some information from the Attorney-General on 4th December about this and raised a number of Questions. I asked specifically what was the total amount of the dormant funds under the control of the Supreme Court and what was the total capital amount of dormant funds under the control of the court in each of the years from 1966 to 1972. A table was published in the OFFICIAL REPORT. It is less meaningful than the Football League tables. In one column we have the cash sterling for 1972 standing at £2,788,272.2p. We come to the next column "value not expressed" where the figure given is 1. That is extremely mysterious. I do not understand that, and perhaps the Solicitor-General will be able to explain this mysterious figure of 1 which has consistently appeared from 1966 onwards.
In the next column we have a list of securities expressed in sterling terms from 1966 to 1972. The present figure is in excess of £2 million. I am not sure whether this is intended to suggest that the current value of these dormant funds is close to £5 million or close to £3,500,000. What is plain from the figures is that the amount of dormant funds has increased fairly regularly each year from 1966 onwards, from at least £2,321,573 to £2,788,000. The fund is 1817 fairly substantial and I suspect that this is only partly represented by the way in which the income has been used to swell the capital sum. I may be wrong about this but the statistics are not very meaningful.
What use is made of the capital of these funds—remembering that they—or at least the vast majority—have been unclaimed for at least 15 years and that the Government say that there is little prospect, indeed none at all according to an answer I received from the Attorney-General, of any claims being made?' The answer is that no real use is made of them at all.
In Eire in 1966 a Bill was presented to the Parliament there called the Funds of Suitors Bill. It became law in 1966 and it deals with the equivalent of dormant funds. The Irish Government took powers to utilise a sum not exceeding £450,000 as the Minister for Finance required.
It also provided that not more than £415,000 was to be applied towards the rebuilding of the Abbey Theatre including the Peacock Theatre in Dublin or to enable the Exchequer to repay any grants which had already been made for that purpose. Similarly, it provided that £35,000 could be utilised towards the rebuilding of the Opera House in Cork. I am sure everyone will be delighted to know that they still sing in Cork. In addition, what is important is that the Act provides a complete indemnity from the Minister to meet any possible, although I stress most unlikely, deficiencies should there be any claims on the part of suitors. The Irish Government used these moneys well. They built the magnificent new Abbey Theatre. It is clear that that project would probably not have been undertaken if this legislation had not been enacted. I do not know what has happened about the Cork Opera House but I hope that it will soon rival Covent Garden or La Scala, Milan.
Why are the Government of this country—and not only the present Government but a succession of Governments—so coy, so unimaginative, about the use of our dormant funds? Sir Samuel Fisher raised this matter indirectly in correspondence with the Lord Chancellor. In his reply the Lord Chancellor raised a number of arguments. 1818 First he doubted whether a scheme similar to the one in Eire would commend itself to the suitors or to the public at large. He argued that the dormant funds were invested in the same way as other money in court so that if a fund was subsequently claimed the beneficiary was entitled to all the accrued interest. I stress that these are suitors who have not been identified, and who appear to be unidentifiable, certainly for a period in excess of 15 years.
This is emphasised by the figures for withdrawals from the dormant funds since 1966. These were referred to in answer to a Question I raised, again on 4th December. In 1966 withdrawals amounted to £1,599; in 1967 the figure was £413; in 1968, £3,882; 1969, £203; 1970, nil; 1971, nil; and 1972 £1,856. These are miniscule withdrawals compared with the value of the corpus whether it is £3.5 million or £5 million.
The second point raised by the Lord Chancellor was that the National Debt Commissioners applied dormant money for the benefit of suitors generally, particularly because the more cash they have in hand the higher the rates of interest they were able to pay. How does this benefit the suitors generally? Perhaps the Solicitor-General can explain. These suitors are unidentifiable. Should it not become necessary, if this was so, for the interest to be added to each account in the dormant fund? That is the only way in which these mysterious suitors could be directly assisted.
Thirdly, the noble Lord argued that it was wrong to use funds for extraneous purposes because the court is, in effect, in a position of trustee and he did not think it was right for the funds to be appropriated even if there would be no tangible loss caused to the beneficiaries. That argument is totally inconsistent with the reply of the Attorney-General when he said that the income was already surrendered to the Consolidated Fund and was therefore available for national purposes. If there is such a solemn trust as the noble Lord suggests, how comes it that the income is already used for unspecified national purposes by the Government? Some trust! Some trustee! What are the purposes for which the income is used through the Consolidated Fund? How do the suitors 1819 benefit from the use, or possibly misuse, of the income?
What of the public? This is another point which the Lord Chancellor raised in his reply. The Lord Chancellor said that such a constructive use or application of dormant funds as had occurred in Eire would not commend itself to the public. That is an extraordinary assumption. Did not the building of the Abbey Theatre commend itself to the Irish public? Has there been a whisper of criticism about it in Eire? How much more positive has been that line of thought than the sterile attitude adopted by the Lord Chancellor. Perhaps he has not considered the matter sufficiently deeply, but I cannot help thinking that he prefers to pay homage to the dead at the expense of the living. Ninety-nine per cent.-plus of the funds are well and truly dead, even if they are not yet officially interred. Should not dead funds be used for the purpose of the living, even if, like the Liberal Party, there are occasional flickerings of life from the less than 1 per cent. indicated in the Attorney-General's answer to my Question? But the Government could always indemnify against loss.
I do not suggest that it is necessary to use 100 per cent. of the corpus of the fund, but a very substantial proportion could be utilised for all sorts of worthwhile purposes. Possibilities for the constructive application of a substantial proportion of the dormant funds are legion. I was once told during a debate on housing that it was wrong to introduce politics into the House, but I propose to do so on this occasion. The dormant funds could be used by the Secretary of State for Education and Science to give a Christmas bonanza. They would enable her to give the "kids" back their free school milk, because if they amount to £3.5 million that is about what it would cost. Alternatively aid could be given for the thalidomide victims; or there would be no need to introduce the much resented museum charges. The funds could be used for all sorts of artistic and cultural purposes which are so much in demand but which are so often unsatisfied. Help could be given to orchestras, opera groups or to the Sadler's Wells Theatre, close to my constituency, which provides so much joy to Londoners, par- 1820 ticularly East Londoners, and which rightly complains that it is deprived of the funds which it needs to develop its artistic purposes.
If it was felt that there should be some connection between the use of the funds and the law, what about helping to establish more legal advice centres to enable the deprived and inarticulate to become aware of the remedies and redress of which many of them are unaware and to be represented before tribunals where at present effective representation is not available to them?
We could even offer the Norwich City Football Club, after its unfortunate mishap the other night, a new set of floodlights to burn through the fog which deprived the club of its victory against Chelsea.
All sorts of possibilities for the use of the funds are available to the Solicitor-General. I have never debated with the hon. and learned Gentleman in the House before and I therefore hope that this debate will provide him with an opportunity to show generosity. I have a very high regard for him and I hope that it will not be diminished by a sterile reply today. The Government have the opportunity to announce a policy which can give hope that the Government propose to think ambitiously and purposively about these matters.
Christmas is almost upon us, and I commend to the Solicitor-General the concluding passage of "A Christmas Carol':It was always said of him"—that is, Scrooge—he knew how to keep Christmas well, if any man alive possessed the knowledge. May that be truly said of us, and all of us"—including the Solicitor-General. There are many Tiny Tims. I hope that the hon. and learned Gentleman will indicate that he is prepared to reward some of them.
§ 1.55 p.m.
§ The Solicitor-General (Sir Michael Havers)
A debate on dormant funds should perhaps be taken rather later in the day than it has been today. It is said, only as a rumour, that the paving stones of the Royal Courts of Justice must frequently be relaid or levelled because of the actions of the spirits of dissatisfied litigants. I hope that this debate 1821 will not awake too many other dormant spirits which were quietly laid to rest many years ago.
I congratulate the hon. Member for Hackney, Central (Mr. Clinton Davis) on raising this topic which I do not think has been considered in the House before. Although it involves matters of importance as to what use could be made of this money—and I could readily advance some of my own hobby-horses—as an ex-recorder of Norwich I, too, like the hon. Member, would have liked the floodlighting at the city's football ground to be sufficiently effective to enable the club to establish its position, as I hope it will eventually.
The subject of dormant funds, which is the responsibility of the Accountant-General of the Supreme Court, is very much a curious sequence of history. The moneys in the dormant funds are sterling securities, foreign securities and, curiously enough, boxes and packages of unknown value. Sometimes the outer coverings of those packages break with the passage of time and their contents have to be put into tin boxes. But those who do that job are not allowed to investigate the contents of the packages.
The funds arise in a number of ways: sometimes by reason of a payment into court by order of the court as security for costs; payment into court by a defendant in satisfaction of the cause of action; sometimes as a result of company actions in which moneys are due to shareholders whose identity is unknown. Also, a life assurance company may pay into court moneys payable on a policy for which no sufficient discharge can otherwise be obtained. A trustee can pay money into court and there may be doubt about who is entitled to it, the beneficiary may be abroad or there may not be anybody who can give a good discharge.
The funds have been building up over the years. They were set out by my right hon. and learned Friend the Attorney-General in his answers to the Written Questions tabled by the hon. Gentleman at the beginning of the month. The hon. Member has asked me to deal specifically with the curious phrase "value not expressed" which recurs year after year. Apparently that is an Exchequer order made many years ago for the payment of £5 per annum. It is 1822 described as a life annuity and it has not been claimed since 1795. Perhaps in those days it was quite valuable.
There are many other circumstances in which moneys can be paid into the fund. Each division of the High Court keeps a record of the funds in the current suitors' account. The dividends paid on securities in a current suitor's account are credited to that suitor's account. If the fund exceeds £10, it must be placed on deposit. If it exceeds £50, it may be placed on deposit or placed to a short-term or long-term investment account if the court so directs.
These matters are covered by the Administration of Justice Act 1965. The interest paid on deposit is 3½ per cent. and on short-term investment 7½ per cent. The interest is credited to the suitors' accounts as a book entry, and the moneys are credited into a main cash account at the Bank of England in the name of the Accountant-General of the Supreme Court. A substantial sum, nearly £2 million, is kept in hand to meet the day-to-day requirements of payments out of court.
Of course, the Accountant-General does not deal only with dormant funds. The surplus is transferred to the National Debt Commissioners and is invested by them. That would be surplus over the interest to which the suitor himself is entitled. The moneys held by the commissioners are held as an aggregate fund and are not particularly identifiable. That fund is invested to provide interest on the short-term accounts and is largely invested in Government securities. Surplus income is credited to the suitors' accounts. The income derived from the aggregate fund is credited to the suitors' accounts in the amount due, and any surplus is paid into the Consolidated Fund. Equally any deficiency, if it should arise, would have to be made out of the Consolidated Fund.
Dormant funds arise in this way. When a suitor's account has not been dealt with for 15 years and no further dealings are anticipated it is transferred from suitors' accounts to the appropriate dormant fund. There are two dormant funds. The "A" fund contains accounts which are of a value of anything from 1p to £50. The "B" fund accounts for anything of larger value. Moneys held in dormant 1823 funds are treated as a surplus to day-to-day requirements and consequently remain in the control of the National Debt Commissioners. They are long-term investments which are purchased by the Accountant-General. The funds have been increasing over the years.
The income derived from these dormant funds is not credited to the dormant funds. If a successful claim is subsequently made the account is reconstituted and credits made for interest and dividends which may have accrued. In effect, therefore, the income derived from the capital of dormant funds is used for national purposes subject only to its being credited retrospectively to a successful claimant if somebody comes out of the dim past of history and if his successor in title or somebody else is entitled to that claim.
As one sees from the answers which my right hon. and learned Friend has given, it happens from time to time in respect of dormant accounts that an account is transferred on the order of the court to the books of the division which is dealing with the account and which made the original order. If it is a single account with only one interest, no order will be made unless a valid claim has been made, and the money is thereupon paid out of court. If it is a fund in which a number of people are concerned, or against which a number of claims may be made, it may be transferred to the appropriate division even for a single share to be paid out, and in this instance the remainder, after it has been paid out, will be kept on the books of the division of the Supreme Court as a suitor's account, and if no other claim is made after the following 15 years, back it goes into the capital of the dormant fund.
County courts have no dormant funds, and after 15 years these accounts in county courts are paid over to the Consolidated Fund through the Accountant-General and the National Debt Commissioners. The same principle follows if a successful claim is made.
The activities so far as the National Debt Commissioners are concerned are, of course, the responsibility of the Treasury, and let me say at once, although I hope to say it again at the 1824 end, that this is a matter in which the Treasury and my right hon. Friend the Chancellor have an interest.
Various questions have been raised by the hon. Member. Securities in rands, which is South African currency, are something over £200. A rand is about 50p in value. It fluctuates a bit in exchange value. The securities are listed at a nominal value. Their true value, unfortunately, is only about one-third of the amount listed. So the total funds involve something over £3 million.
As I have said, the commissioners like to keep some of this money liquid to meet withdrawals which occur from time to time and the balance is invested as I have said.
The object of the investments is to cover interest to be paid, whether below or above £50, because there is a duty to pay that back to the courts in order that claims can be met and there is an obligation to credit interest in respect of individual suitors as soon as any claim is made.
The position in regard to what has happened in Ireland is that it is absolutely right that there is power under the Funds of Suitors Act 1966 to pay out sums not exceeding £450,000 as the Minister might require, but the hon. Member will note that in Section 3 of that Act provision is made that if it happens that the funds of suitors are at any time reduced to a sum not sufficient to meet payments, the Minister there has to afford indemnities to suitors. They are advances out of the central fund or its growing produce of such sum as he may think necessary, but not exceeding £450,000.
So in case any substantial payment out of this fund had to be made to any one of the many competing claims it is necessary to keep in the fund the amount necessary to meet the sum to be paid. The balance would then fall to the Consolidated Fund.
§ Mr. Clinton Davis
The hon. and learned Gentleman would concede, I am sure, that this is a minuscule risk. Having regard to the statistical information available, should one pay undue attention to this minuscule risk when considering the possibilities of positively using this corpus?
§ The Solicitor-General
I accept that that is a risk which is in reality not very likely to occur, but it is a risk which must be borne in mind and perhaps rather more by my right hon. and hon. Friends at the Treasury than by me, as to whether a claim upon the Consolidated Fund might arise to meet a sum which had been paid out.
I was also asked, and it was put in this way, about the benefit to the public. No doubt those who live in Dublin and in Cork benefit by an order of the Minister under the Act of 1966, but the philosophy which has been followed in the past and over many years, as the hon. Gentleman has pointed out, has been that this money has been held in trust for these people and if there is a surplus it has to be applied to the benefit of the public at large. I suppose there might be some difficulty here whether in fact a national theatre in London would be of benefit to the public at large.
It is certainly an attractive argument, but I would say to the hon. Member, having listened to him and his dealing with it with the care he did, that the Government will note and will consider what he has said to the House, although it appears that there are not many Members here to support him. I note that he raised this with his right hon. and learned Friend the Member for West Ham, South (Sir Elwyn Jones) who wrote the letter from which the hon. Member quoted. The present view is that dormant funds are all part of the suitors' funds held by the court as trustees for the suitors, and therefore it would be not right—I think one can say it thus—to raid these funds for capital purposes of another kind.
We should like to know rather more about the comparative background of the situation in Ireland and in particular the obligations, if any, of the Irish courts to pay not only interest but anything by way of capital which might arise on their suitors' accounts.
The hon. Gentleman mentioned the idea of a new theatre for London. No doubt he has seen the White Paper on Public Expenditure which was published on 19th December. If not, I refer him to pages 66 and 67 which set out in detail the Government's proposals for the arts over the next few years.
1826 I am grateful that this topic has been raised, and I give an undertaking that the matter will be put fairly and squarely before the Treasury.
§ Mr. Davis
As the Irish precedent is obviously of considerable value, as the hon. and learned Gentleman has conceded, will he undertake to arrange for discussions to take place with those who were responsible for administering the dormant funds in Ireland so that he can obtain a clear idea of the thinking that lay behind all this? If he is prepared to undertake that research can he say when results are likely to be available?
§ The Solicitor-General
I am not able to give an undertaking, but I will certainly draw attention to what has been said. Bearing in mind the background, I suspect that there is an historical connection and similarity between the fund in the Irish Republic and the fund here, because the similarities in the use of words and one's knowledge of the historical background make that very likely, but I do not know. That is something which could well be looked at when the matter is passed to the Treasury.