asked Her Majesty's Government:
Whether lower and middle income people have adequate access to debt and pensions advice.
My Lords, we believe that there is a need for generic financial advice, which is why we have asked Otto Thoresen to consider how a national service could be provided. We await his report.
In the mean time, we are spending £31 million this year to provide additional face-to-face debt advice. This is targeted especially at the financially excluded, many of whom will be on lower incomes. The Government are also contributing to the National Debtline. The Pensions Advisory Service and the Pension Service offer information at the end of a phone, on websites and in a range of booklets on private and state pensions.
My Lords, I thank the Minister for that Answer, but noble Lords will see that it is too bitty and does not begin to add up to the scale and urgency of the problem. Does he not accept that the queues outside Northern Rock have hammered what is left of the savings culture in this country and that there is now only one name, one trusted brand, that people will respect; that is, Citizens Advice? Its resources are being cut, but surely it should be made the key to giving advice to the many people with deepening financial problems in this country.
My Lords, I acknowledge the fantastic work done by Citizens Advice. In relation to debt, it dealt with some 1.4 million inquiries last year alone. A range of people are engaged in providing financial and debt advice. We need to see this in the context of the Government's financial capability strategy. Specifically on debt we have the BERR face-to-face advice, the National Debtline, CLS Direct run by the Legal Services Commission, and some 2,750 agencies across the country, ranging from housing associations to Citizens Advice, which advise on these matters. In relation to savings, there has been a substantial increase—72 per cent in real terms since 1997—in household assets.
My Lords, does my noble friend agree that while there are plenty of organisations to which a debtor can go for advice, it is not always possible for the debtor to distinguish between those which offer independent, objective and unbiased advice and people who purport to give advice but who may not fully reveal their own personal and commercial interests in some particular scheme which they would prefer to impose on the debtor?
My Lords, I agree with what my noble friend says. It underlines the importance of the need for generic financial advice, which of course is unregulated advice, which takes account of the specific financial circumstances of the individual but which does not result in any particular product recommendation.
My Lords, the Minister says that quite a lot of advice is available in these circumstances, and of course I accept that. However, is not means testing, rather than the lack of access to financial and debt advice, the real deterrent to those on low incomes saving more, which of course is what we would all like to see? Why will not Her Majesty's Government give thorough consideration to lifetime savings accounts rather than dismissing them out of hand, as they did during our consideration of the Pensions Bill earlier this year?
My Lords, I think that the debate we had around lifetime savings accounts was connected with the taxation treatment; in particular, the desire for some to parcel and use the pensions system to avoid or mitigate inheritance tax. So far as advice is concerned, we have through the personal accounts encouraged, and will continue to encourage, investment in pensions. The Government have done a lot, for example, through ISAs; something like 17 million households are currently saving through ISAs
My Lords, when adding to the list of those who give advice, should not the Minister have added trade unions? Is it not the case that more than 150,000 people would not have had proper advice had it not been for trade unions, which are fighting tenaciously to ensure that they have a pension?
My Lords, I agree with my noble friend: I was remiss in not identifying trade unions. They have a long and proud history in helping working people gain their just rights in relation to pensions and many other things.
My Lords, perhaps I can build on that question. Does the Minister agree that credit unions are an excellent way of helping those on low incomes to manage their finances, in contrast to some of the unregulated savings schemes that have proved so disastrous? If he does agree, what steps are the Government taking to help the spread of credit unions?
My Lords, I do agree. The DWP is rolling out a £42 million growth fund to increase access to affordable credit, mainly through credit unions.
My Lords, what is the current level of personal indebtedness in the United Kingdom compared with 10 years ago? Will he also reflect on the social consequences of indebtedness and those agencies which encourage indebtedness in this country?
My Lords, the aggregate level of household indebtedness stands at £1.4 trillion, but that should be seen in the context of total household assets, which are worth £7.5 trillion. The relationship of debt to assets has remained broadly constant over recent times. In fact, the relationship of debt to household income has improved since 2004.
My Lords, of course we do. We have a strong record in terms of the stability of our economy, which is very helpful in sustaining the household balance sheet that we have at the moment.