My hon. Friend is absolutely right. The work that my hon. Friend Justin Tomlinson has done on financial education will be crucial in getting people to understand the reality of what taking out a loan means and all the potential hidden costs, including the real cost of interest over whatever period it is charged, which is often far more directly important than levels of APR.
I had an interesting meeting about debt issues with members of Worcester’s Tolladine mission, which works with a number of local churches in one of the poorest areas of my constituency. They strongly supported the initiatives we have heard about to support credit unions and make them more accessible. They also made it absolutely clear that financial education will be key. It is a huge victory for my hon. Friend and his cross-party campaign to have secured financial education in the national curriculum, but that is only the start. We should not kid ourselves that writing something into the national curriculum will solve the problem. We will have to make sure that it is taught well and that a generation of teachers who came through the system when financial literacy was not a key component get the best opportunity to take it forward. There will be real challenges along the way in doing that.
The Government are doing a lot to support credit unions, as did the previous Government, but there is still much further to go to catch up with the levels of credit union engagement in other countries. Achieving that should be a constant challenge. Tragically, in Worcestershire we lost our local credit union, not necessarily because it did not have support but, unfortunately, due to bad lending. Capacity in credit unions is another vital aspect. I am very glad that Six Towns credit union, from elsewhere in the midlands, is now looking to move into our area.
On overall levels of debt, it is important that all Governments set out policies that help people not to get into debt, which the coalition Government are trying to do by making sure that people keep more of the money they earn and by raising the income tax threshold.
We need an incentive to support the growth of credit unions and responsible lenders. As I argued when we debated the Bill, I think it would be wrong for the Government directly to subsidise the credit union industry, because that would undermine its business model when we want such businesses to be able to stand on their own two feet. I suggest that we should go further than even the CAB argues in its briefing paper, which welcomes the extension of the Money Advice Service levy to payday lenders, and consider putting a higher levy on high-cost lenders. We should create an incentive for people to go to credit unions, and the higher levy would create a fund to support financial advice services, financial education and all the other good things that can help people. Yes, we should support the credit unions, but we should do so indirectly by giving them that competitive advantage.
There is a straightforward way to do that. The Government have set a cap on lending for credit unions. If we start the levy at the top of that cap and apply it to all lending over that amount, it could create a valuable revenue stream to support the free financial advice industry and the financial education industry. I urge the Government to look again at the provisions in the Bill and to examine what they can take from it, because it made some well-thought-through recommendations.
I welcome today’s debate and the consensual way in which it is being conducted. Parliament can do a lot on this issue and we should continue to concentrate on it.