It is a pleasure to follow Paul Maynard. I, too, want to focus on new clause 7, but I also want to mention breathing space, which is addressed in new clauses 22 and 23, and the statutory debt repayment scheme, which is dealt with in clause 32. We all know that BNPL has exploded in the past year. More and more retail outlets, and even online gambling companies, are using it, and it is being sold to companies on the basis that, on average, customers spend 40% more. It is also being sold to customers as an easy way to spread the load, with the thought, “There are no credit checks so it is not debt.” But of course it is, because people are using someone else’s money to pay and it then has to be repaid. I looked into the business model for one company and found that 25% of its income is predicated on late fees and people being unable to pay on time. Surely that has to ring alarm bells, with the echoes of the high-cost lenders and their practices. The regulation is needed sooner rather than later and I look forward to a swift response to the Woolard review.
Breathing space is welcome, and I have long called for it; 60 days will often be enough, but there will be a need for flexibility in exceptional circumstances. The scheme was designed prior to the pandemic, where people are furloughed, have lost their job or have a period of illness, and 60 days is not long enough to give people time to recover from a temporary financial difficulty caused by the pandemic and set up a long-term solution. People affected by the pandemic simply need a bit more time to straighten themselves out. I also think that the midway review needs to be looked at again. It simply wastes time and resources, which are scarce in the debt field.
Breathing space alone is not enough, however, given the impact of coronavirus on household finances. Bailiffs’ visits should be suspended, as they were during the first national lockdown, and other enforcement action should be halted when a debt adviser alerts the creditor that a client has financial or other issues due to coronavirus. We should also be suspending the use of non-priority benefit deductions from universal credit and bringing forward plans to extend the repayments over a longer period.
Moving on to the statutory debt repayment plan, I am pleased that the intention is that people seeking debt advice should not be charged for any aspect of the plan. It has always seemed counterintuitive that people in debt should be charged to get out of the very same debt. However, there are areas that need to be tightened—for example, where creditors are objecting to the level of payments. That needs to be seen within the existing debt advice methodology and budget standards. We cannot have creditors objecting just because they do not like the level or they think that someone else has more. There is a common standard, and creditors need to accept that.
In general, the Bill is a welcome step forward in assisting people in debt, but the landscape of debt solutions is complicated and difficult to navigate. I believe that a full review of all debt solutions needs to be undertaken to clarify and simplify, and to ensure that people in debt are always able to access the solution that best suits their needs.