Consumer Credit Bill

– in a Public Bill Committee on 23rd June 2005.

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[David Taylor in the Chair]

Photo of David Taylor David Taylor Labour, North West Leicestershire 8:55 am, 23rd June 2005

I have one or two preliminary announcements. I remind the Committee that there is a money resolution and a Ways and Means resolution in connection with the Bill, copies of which are available in the Room. I also remind hon. Members that adequate notice should be given of amendments. As a general rule, my co-Chairman and I do not intend to call starred amendments. Finally, all hon. Members should ensure that mobile phones, pagers and related equipment are turned off or on silent mode during the Committee’s proceedings.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I beg to move,

That—

(1)during proceedings on the Consumer Credit Bill, in addition to its first meeting at 8.55 a.m. on Thursday 23rd June, the Standing Committee shall meet at—

(a)2.00 p.m. on Thursday 23rd June;

(b)10.00 a.m. and 4.30 p.m. on Tuesday 28th June; and

(c)8.55 a.m. and 2.00 p.m. on Thursday 30th June;

(2)the Bill be considered in the following order, namely, Clauses 1 to 55, Schedule 1, Clauses 56 to 59, Schedule 2, Clauses 60 to 69, Schedule 3, Clause 70, Schedule 4, Clause 71, new Clauses, new Schedules and remaining proceedings on the Bill;

(3)proceedings on the Bill shall (so far as not previously concluded) be brought to a conclusion at 5.00 p.m. on Thursday 30th June.

I welcome you to the Chair, Mr. Taylor. Most mornings, I have the great pleasure of taking my breakfast with you. I know that that will not affect the impartiality of your approach to the Committee, but it is good to know that a friend sits in the Chair.

As you will know from Second Reading, we all care about the Bill, which means a lot to our constituents. We have consulted on it extensively with the industry and consumer groups, and I know that the Committee will look in great detail at many of the issues that were raised on Second Reading.

I am delighted, Mr. Taylor, that your co-Chair is the hon. Member for Old Bexley and Sidcup (Derek Conway). Like me, he is a former Whip. I used to work with him in the Whips Office, so I feel at home with the Chairs of our Committee.

I am pleased to welcome the hon. Member for Wealden (Charles Hendry) as the Opposition Front-Bench spokesperson. I know that he will bring words of wisdom to the Committee during our deliberations. I am also happy to see the Opposition Whip and my own Whip working closely together to ensure, I hope, that the Bill’s passage is speedy, but thorough.

I welcome the hon. Member for North Norfolk (Norman Lamb), who leads for the Liberals, and his colleague, the hon. Member for Argyll and Bute (Mr. Reid). I extend a special welcome to the new Members of Parliament who are serving on the Committee. I hope that they will enjoy it and that their experience will stand them in good stead in the House. They will see at first hand how Bills are scrutinised line by line.

There is a great deal of knowledge and expertise in the Committee. That is certainly true of the experienced Members on the Labour Benches, and I look forward with interest to the many points that they will raise with me. I always say that it is good to have been a Whip, because I still have the files on many of my older hon. Friends. If we disagree, I am sure that I can find ways of convincing them.

Photo of Charles Hendry Charles Hendry Shadow Minister (Higher Education and Intellectual Property), Deputy Chair, Conservative Party

I join the Minister in welcoming you to the Chair, Mr. Taylor? Conservative Members also look forward to serving under your chairmanship and that of my hon. Friend the Member for Old Bexley and Sidcup. At times, the Minister probably had a more harmonious relationship with my hon. Friend, Whip to Whip, than some Conservative Back Benchers did. It remains to be seen quite how things will work in Committee, although I have dined with my hon. Friend rather more often that I have had breakfast with him. I tend to have breakfast with my children, which is not quite so useful for gaining an insight into how the Committee may be run. Indeed, our conversation this morning was about how to pronounce diplodocus, the name of a type of dinosaur. That might be useful for certain aspects of politics, but it is not particularly useful for dealing with consumer credit legislation, although I know that some Labour Members see the Conservative party as close to the dinosaurs. Let us pass swiftly over that, however, and deal with the meat of the Committee.

I am extremely grateful to the Minister for his generous words, and I shall endeavour to live up to them. Throughout our discussions so far, he has shown a determination to take a constructive and co-operative approach, and we welcome that. This is important legislation, and we all welcome the attempt to ensure that both sides of the House agree wherever possible. Nevertheless, we are a little disappointed that we have not seen more detail so far. That issue came up regularly on Second Reading, and I think that it will recur in Committee. I hope that the Minister can be tempted, despite his Whip-like resolution, to give us more detail on some areas. The industry and borrowers are both keen to have that in order to understand the full implications of the legislation and the way in which it will move forward.

The Bill has already had a Second Reading and been through Committee in the last Parliament, when my hon. Friend the Member for Tewkesbury (Mr. Robertson) tabled many amendments. We do not plan to revisit the issues raised then as many people would see that as a waste of time—the Minister showed that he was unwilling to give way and amend the legislation   on many issues—but we have tabled a range of new amendments that go to the heart of relevant issues, particularly that of clarity.

In general, following discussions with the Minister and through the usual channels, we are satisfied with the programme motion and the time that has been made available to us.

Photo of Norman Lamb Norman Lamb Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury)

I, too, welcome you to the Chair, Mr. Taylor. I am sure that it will be a pleasure for all of us to serve under your wise chairmanship.

I shall keep my remarks short. The arguments have been rehearsed many times, so they do not bear repeating too many more times. There is a substantial measure of agreement about the Bill and its value and importance. It is long overdue, so it is good that it comes now. None the less, it does not cover two areas with which there are significant problems. The first is data sharing, which seems to be at the root of the problem for many people who get into real difficulties taking on debts with substantial numbers of lenders. They end up with cumulative debts that they cannot manage, yet that information has not been shared adequately.

A solution could be achieved through voluntary agreement by the industry, perhaps with a steer from the Minister to push it in the right direction. The banking code is there to achieve such things; I believe that Which? put forward a sensible, practical suggestion that there could be a standard wording in credit agreements to allow borrowers to consent to the sharing of information in return for commitments as to how it would be shared and the limitations on that. What does the Minister have to say on that? If there were some encouragement from him, there might be some progress. The issue has been talked about for a long time, but no progress has been made.

The other issue that is not covered in the Bill is the calculation of interest. It is great that there is a single APR on credit cards, but that is pretty meaningless in terms of achieving greater transparency if there are 10 different methods of calculating interest. No one can tell from the single APR what the interest cost will be. Unless there is a move toward a scenario in which one can see the cost of credit in pounds and pence, or there is a measure of agreement, perhaps through the banking code, on a single method of calculating interest, there will still be a complete lack of transparency in terms of borrowers understanding how much credit will cost them. I would welcome a response from the Minister on how he sees those outstanding issues being tackled.

I share the concerns of the hon. Member for Wealden about lack of clarity, specifically surrounding the test of unreasonableness and how it will be interpreted. It seems to me that it will end up being interpreted by a court, so that courts will be giving guidance rather than Parliament. That is not an attractive proposition.

However, we are happy with the programme motion, given that it has been debated so often. I would welcome a response from the Minister.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

I am pleased that the Opposition find the timetable appropriate, and I welcome the comments about not going over old ground in too much detail. I shall try to answer in Committee and, ultimately, on Report the charge of lack of clarity.

We must be careful about seeing the Bill in isolation from the other things that are taking place around consumer credit, consumer and financial education and indebtedness. Hon. Members may be aware of the indebtedness strategy that the Government announced last year. We are also trying to do many other things to co-ordinate a response, particularly to those people who find themselves in hardship.

The issue of data sharing to ensure that there is some movement is close to my heart, so I shall be pushing it during discussions on the Bill and elsewhere.

Photo of Norman Lamb Norman Lamb Shadow Spokesperson (Treasury), Liberal Democrat Spokesperson (Treasury)

I wonder whether the Minister would say whether that idea could work. What advice has he had on that matter? Is it worth discussing it with the industry?

Photo of David Taylor David Taylor Labour, North West Leicestershire

Order. I think that the issues being raised are probably relevant to the clause to be debated later on.

Photo of Gerry Sutcliffe Gerry Sutcliffe Parliamentary Under-Secretary (Trade and Industry) (Employment Relations and Consumer Affairs)

Thank you for your guidance, Mr. Taylor—and for my not having to answer the question. That is always helpful. We will return to that matter later in the debate, but there are clearly issues that we need to discuss. The programme motion is appropriate and I look forward to a considered debate.

Question put and agreed to.