I speak in support of new clause 2. I must stress to the Minister that debt advisers in Salford have already warned me that the Government’s debt respite scheme is inadequate. First, debt advisers should be provided with the discretion to extend breathing space. Secondly, the midway review requirements will waste valuable resources and should be eliminated. Thirdly, there must be the option for debtors to access breathing space on more than one occasion in a 12-month period when needed.
Those minor changes would be extremely helpful, but, of course, any breathing space can only be successful if there are effective and accessible debt solutions at the end of it. Sadly, that is rarely the case, and the pandemic has exacerbated this, with millions more households now in financial difficulty. The situation is dire, and the Minister must recognise that to encourage any level of growth as we rebuild after the pandemic, we must tackle the impending tsunami of household debt.
One solution the Minister could consider is to cap interest rates. Another is to cap the total amount that can be paid in overdraft fees or interest payments. A more comprehensive solution, however, would be the creation of a consumer version of UK Asset Resolution, the public finance company set up to purchase problem debts from the banks during the financial crash. As we know, many lenders will sell on their problem debts for a fraction of their value, only for them to be enforced again by debt collectors at their full value. Such a public vehicle would allow the offloading of these problems debts to be refinanced at affordable rates for borrowers. Only Government can borrow at low interest rates to make that happen effectively.
Lastly, the debt jubilee is the option of writing off some debts for households and businesses that will simply never be able to repay them, even at more affordable rates. Even the former Chancellor George Osborne has advocated this for small and micro businesses that have been given emergency coronavirus loans. In practice, this could mean that if a lender decides that an outstanding loan simply will not be repaid, it could discharge that debt and be given a tax break. Of course, to be truly fair, such a policy would require stringent checks and balances.
I hope the Minister will examine those proposals urgently, because to be frank, if the Government do not set out radical policy options on how to tackle the tsunami of debt, we can wave goodbye to a recovery, and many people across Salford will have their lives destroyed. If these proposals were good enough to bail out the banks in 2008—and they were—they are good enough to bail out the people.