New Clause 3 - Review of the bank levy

Finance (No. 3) Bill – in a Public Bill Committee at 2:30 pm on 9th June 2011.

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‘(1) The Government shall lay before Parliament a review of the bank levy which will consider whether the levy should be applied to groups judged by the Financial Services Authority (or its successor body) to have engaged in high cost credit lending which is detrimental to consumers. This review shall consider the following matters—

(a) the impact such an application could have on the provision of high cost credit to consumers;

(b) the timetable for imposition of the banking levy to prevent further consumer detriment in the provision of high cost credit;

(c) the consequences of a failure by Government to intervene in the high cost credit market for UK consumers; and

(d) at what level the levy should be set at for such bodies so as to discourage lending in a manner which is detrimental to consumers.’.—(Stella Creasy.)

Brought up, and read the First time.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under your chairmanship this afternoon, Mr Gale. The new clause opens a debate that I hope we will have with the Treasury throughout the passage of the Bill. It offers an opportunity to look at a  number of issues that are of concern to many people in Parliament. I tabled the new clause because, as we discussed earlier, the Bill opens up a range of policy concerns around the use of taxation to tackle social and economic problems. I am particularly concerned about problem lending and the way in which it encourages debt in the UK.

First, I want to set out what that problem is and to describe an aspect of a particular type of lending that is very problematic, the behaviours that are of concern and how this new clause offers the opportunity to have a first debate about it before looking at a more formal proposal on Report. Many people will be well aware of my long-standing concern about personal debt in the UK and my particular worry that one of the strategies that the Government are using to deal with the deficit is to take national debt and put it on to individual households.

We in the UK have always had a different attitude to debt from that of our European neighbours. We are culturally much more comfortable with borrowing and holding debt. However, increasing numbers of people are finding that using debt to run their family finances is unmanageable. We have one of the highest levels of personal debt in the world. In the last year, people in Britain owed more than £1.4 trillion in private debt alone. That is not necessarily a problem if it is debt that can be managed, but I am worried about the concept of unmanageable debt.

The number of people who are finding their debts unmanageable is increasing. There is a division between those who may be getting into debt in response to the current economic conditions but will be able to manage their debt in the next couple of years and those whose response to their debt creates long-term problems for them and future generations. That is particularly what I want to discuss. One reason why people are facing problems with the options that they have to manage debts is that mainstream banks are not lending not only to small businesses but also to households and individuals. Mainstream credit is essentially drying up for thousands of people across the country. That means that they are more and more dependent on other forms of unsecured lending and, in particular, what I call the high-cost credit market.

That industry has certainly benefited greatly in the past year from the economic conditions that we face and some of the choices that the Government have made. In Business, Innovation and Skills questions today, we saw that it is the one topic that the Government do not want to discuss at all. The Ministers in the Department for Business, Innovation and Skills feel comfortable about misleading the House about their willingness to discuss the issue. I am hoping that the Ministers in the Treasury will take a different view, but I note that they are yet to respond to my letter of 28 April. I hope that that is simply because there has been so much correspondence and that the response is on its way to me.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I am sorry, I meant, “Will the hon. Lady give way?” She may be good, but she is not that good.

My first point is that the hon. Lady, in a reference to Business, Innovation and Skills questions earlier, suggested that hon. Members were misleading the House. I will not do the Chair’s job for him.

My second point is that my office has been in contact with hers to invite her for a meeting, and she is yet to reply.

Stella Creasy rose—

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Substitute Member)

Order. Just to clarify the situation, hon. Members do not mislead the House. There is a fine line between identifying a person and making an accusation of misleading about a group of people, which is a slightly greyer area. That is why I did not intervene, but the point did not go unnoticed.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

Perhaps it would help if I clarified what I meant. There was a discussion in the House earlier about whether evidence had been requested from my office. That is not a request that my office has received. I am pleased to hear that the Treasury Ministers will now meet me in the way that their colleagues in the Department for Business, Innovation and Skills have said that they will not, because I really want to take the debate forward. To date, my office has not made me aware of the Minister’s request—we were talking about it just before I came in—but I am pleased to hear it, and let me put it on record that I am pleased to see that one part of the Government is taking the issue seriously, even if another does not.

I want to talk to the Minister about the high-cost credit industry, the way that it is growing and the consequences for the way in which debt is held in our society, which is unmanageable for communities. We know from a freedom of information request that the Government were aware in November last year of the rapid growth in the high-cost credit industry over the past 18 months. It has grown by nearly a third to become a £2 billion industry in the UK. When I speak of high-cost credit, I am referring to several types of credit. First, and perhaps most famously, there are the pay-day lenders and the cheque-cashing industry, which offer to lend money for short periods of time at high rates of interest. Those are the Wongas, the QuickQuids and The Money Shops of this world.

Secondly, there are hire-purchase agreements, which have interest rates and mark-up rates are put into them. Companies such as BrightHouse, for example, will put a mark-up on white goods such as computers or washing machines—other companies will sell cars with a mark-up—and then they will charge interest on the amounts that are paid back each week, so that the cost far exceeds the initial price of an item.

Thirdly, there is doorstep lending, where lenders go to people’s homes offering money. Many people have such companies in their constituencies now and know the rates that they will charge for that service.

Fourthly, there are pawnbrokers, which have been with us in this country for centuries, but it is the same principle. A company will offer to lend money at exceptionally high rates of interest in exchange for property deposited as security.

I contend that the way that the market is growing and affecting people in the UK is not least because of a lack of regulation and of attempts to try to understand  the impact of how such companies operate, which is entirely legal in the UK, and what that means for consumers.

Photo of Ian Murray Ian Murray Labour, Edinburgh South

I am delighted that my hon. Friend has given way, because one reason why pay-day loan companies are acting aggressively in this country is that they are curtailed elsewhere. I believe that 14 countries in Europe, as well as 35 states in America, curtail the interest payable on such loans. Those regulations elsewhere have caused their market share to be driven up in the UK, because is it is a prime market for them to be in.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow 2:45 pm, 9th June 2011

My hon. Friend is right, and those companies have said that that is precisely why they are targeting the UK. Dollar Financial is an American company—it will be better known to people in the UK as The Money Shop—that has said that the lack of regulation is what brings it here. In 1992, it had just one store in the UK, but by 2009 there were 273, and it has announced plans for a further 800 this year in the UK alone. I am sure that many Members have that company on their high streets now. In Walthamstow, there is not only The Money Shop; I have Oakam, BrightHouse and a range of companies. They have grown very quickly in my area alone, and I am sure that that is true in others.

Photo of Ian Mearns Ian Mearns Labour, Gateshead

Certainly, these companies are targeting places such as Gateshead for the expansion of their services. Areas that have low family income but high personal debt are ones in which such companies make their return. They also advertise on television, during daytime TV, or into the evening. Frankly, the small print on their adverts is eye-popping—interest rates of 1,700%, 2,500% or even 4,000% are being charged by pay-day lenders. Doing nothing on this matter would be a massive abdication of responsibility.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I thank my hon. Friend for his intervention, and for revealing himself to be a viewer of “The Jeremy Kyle Show”. He also shares a common concern that many people have raised with me about this matter, which is that when they see the interest rates—

Photo of Ian Mearns Ian Mearns Labour, Gateshead

I admire my hon. Friend greatly, but will she please withdraw that assertion?

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I withdraw my remarks entirely. I believe that it was “Cash in the Attic”. When people see the adverts for these companies and their products, they often express surprise and disbelief, thinking that they have misread where the decimal point might be, which is an issue that my hon. Friend and I agree on.

We are seeing an explosion in the number of people using such companies, and 5% of the population in the UK have taken out a pay-day loan in the past year, which means 2 million people have used such products. The number of people who say that they are struggling to make it to pay day has increased to 46% of the British population. They say that they cannot make the money that they get each month meet their expenditure. Of that 46%, 10% say that the reason they are struggling is that they have taken out a high-cost credit product. I  want to address that problem with the new clause and in the debate by pushing the Government to take action on this market. In and of themselves, such products are creating debt problems for people who are already struggling at the margins of their financial future.

Photo of Neil Parish Neil Parish Conservative, Tiverton and Honiton

I want to tell the hon. Lady that I am inclined to agree with her. The previous Government failed to do anything about the issue, but it is right for this Government to look at it. If someone is charging several thousand per cent. interest because the security risk is so great, such people should not be given the money, because it puts them in a worse situation. These loan sharks are going around estates where people have huge problems—in my constituency, too. It is something that we must look at seriously, because the interest rates that are being charged are enormous, which is totally unfair.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I thank the hon. Gentleman for his intervention, and I agree with him on a lot of things. One point that I want to make is that this is a relatively recent explosion in the market. The previous Government should be commended for work that they did on illegal loan sharking. Let us be clear: we all agree that illegal loan sharking also needs perpetual action. When people struggle financially, illegal loan sharks act. One challenge, however, is that such companies are working entirely within the law, which is why it is right for us, as parliamentarians, to ask what we can do through the law to challenge their behaviour. That is what this new clause is about.

Photo of Bridget Phillipson Bridget Phillipson Labour, Houghton and Sunderland South

Does my hon. Friend agree that it is important that consumers are aware of the terms of the products that they are taking out with such companies? Sometimes these companies are far from clear, particularly about the interest rates they intend to charge. My predecessor, Fraser Kemp, raised the issue of advertising standards with regard to Quickquid, one of the worst offenders, which would bring cash directly to someone’s home, but not advertise the fact that the interest rate was over 2,000%.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

That is right, and I echo the point made by my hon. Friend and by the hon. Member for Tiverton and Honiton. One of the contentions of the new clause and my work on the Finance Bill is that the models used by those companies cause the problems. Yes, consumers need more information, but the way the market works and the pressures on consumers are such that intervention and regulation form the best course of action.

I want to talk about the margin people are on, before looking at what might push them over, and why the behaviour of those companies is such a problem. I hope I will give the Minister plenty of food for thought for when we talk about this. We are seeing a growing number of households at that margin. They face problems in how they borrow and the products through which they borrow. The growth of the industry would not be a problem in itself if it were regulated. However, the fact that it is not regulated means that it is contributing to the pressure on people who are already struggling, and causing them to tip over into that problem area.

Photo of Alec Shelbrooke Alec Shelbrooke Conservative, Elmet and Rothwell

I am listening carefully to the hon. Lady, who is making some good points. Will she expand her point and say whether she believes it would be better if the credit company said how much in pounds that credit would cost, rather than saying 2,000%? For example, companies could say that borrowing £100 would mean paying back £400 over a period, rather than just giving an interest rate.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

The hon. Gentleman makes a fair point. My proposal for regulation includes a cap on the cost of credit. That is for a number of different reasons, trying to learn from where caps on interest rates have not worked and what could work. It would certainly take account of that point.

With the new clause, I am considering how the market works and whether taxation could be used to address some of the inequalities it creates. My proposal, the Consumer Credit (Regulation and Advice) Bill, suggested a cap on the cost of credit because that is the most effective way to deal with the matter. The unwillingness of the Department for Business, Innovation and Skills to consider or act on those issues means that we must look for other ways to try to address the problems caused for consumers. That is what the debate is about.

We know that most households have debt-to-income ratios of 10% or less, which is relatively manageable, but almost one in five has debts worth more than 100% of their annual income, so they owe more than they could ever hope to repay. One in 10 is spending more than 30% of their income on their repayments on unsecured debts, while 7% are spending more than 40%. It is no surprise that the proportion of households in three-month arrears on their debts is about one in 10, and it remains persistently at that level.

Furthermore, 6% of households have some kind of formal arrangement to repay their debts, so they have had to enter into a debt management programme; 1% have been declared bankrupt; 1% have had an individual voluntary arrangement; and about 5% are in a debt management plan. That means that 12% of households are in some kind of formal financial difficulty; they have reached the stage where they have had to make a formal arrangement with their creditors to try to deal with their problems.

We see households using a range of unsecured types of credit to deal with their financial difficulties; they are using not just credit cards. I welcome the Government action proposed on tackling the interest rates charged on credit cards, but they are also using pay-day loans and personal loans. My concern is that, by not squaring the circle and regulating the rates of interest charged on all forms of unsecured credit in the interests of the consumer, we are leaving a big hole into which an increasing number of people will fall. The mainstream forms of credit are being cut off to them. It is noticeable that those using unsecured credit are not necessarily who we would think, and the Consumer Credit Counselling Service reports that home owners owe double what renters owe, partly because they can access secured loans, although they are also getting into unsecured loans. A range of people are at risk not only of getting into debt, but of losing the roof over their head. Furthermore, some of the people at the poorest margins of our communities, including 11% of lone parents, use only such forms of unsecured credit.

Considering the pressure on people, no wonder personal insolvency has reached a record high in the UK, and it is only going to get worse. The number of people saying that they are likely to use an unauthorised overdraft has doubled in the past year to nearly 1.6 million. Interest rates are low at the moment, but the number of people who have savings and flexibility available should they incur an additional cost in their life—if their washing machine breaks down, or if they need to pay for repairs on their car—is very low. The people turning to those products do not have money in their bank account to manage any additional spending.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

If people living on a wage with not much disposable income fall into such debt and have to get to the end of the month without enough money, they will no longer have money to spend in the local economy. Surely that will affect the economy across the country, because such people do not have any spending power whatever. That makes this a Treasury issue.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I agree. Credit is important to an economic recovery. I am not advocating wearing a hair shirt, but the way people access credit is so damaging to them and to the economy that it is causing a problem that could threaten our economic recovery. It is not hard to see that families taking on high levels of debt are not going to want to keep spending, which is what our economy needs.

Having set out some of the challenges that people are already facing, I want to address some of the pressures that are likely to make those concerns worse. We are seeing a perfect storm of wage freezes, higher cost of living and shrinking access to mainstream credit.

Photo of Nicholas Dakin Nicholas Dakin Labour, Scunthorpe

I was speaking to somebody from the debt management industry the other day, and he described what is about to happen from his point of view. He was cautious in using this language, because it is not very nice, but he said that there is about to be a tsunami of debt. In many ways, that is exactly what my hon. Friend is describing. If that is the case, are not the measures in the new clause essential?

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

That is precisely what I am concerned about. We are already seeing a rapid increase in the number of people with such unmanageable debts, and we are about to see further pressure that will make the number of people likely to get into such debt even worse. I am concerned that, although there may be people who can manage the debts they are getting into in response to current economic conditions, lots of people will not be able to manage such debts. Those debts will create further problems for such people, their families, their local community and, ultimately, us as a society in trying to address them.

We are already seeing the pressures caused by a high cost of living; I am sure that everyone in this room has had constituents talking to them about the cost of living right now. As a London MP, I get that every single day. People are worried about making ends meet. Prices are going up twice as fast as incomes. With high inflation and a small increase in earnings, it is not difficult to see how the maths does not add up for  people who cannot make ends meet. It is no surprise that nearly half of households cannot make their pay cheque last until the end of the month.

Asda has done some interesting work on tracking the pressures on family incomes, and it has found that petrol costs alone account for 12% of budgets. On average, families now have £13 a week less than they did last year. To some, £13 a week may not sound a lot, but for many families it makes a big difference. That gap is widening, too.

Yesterday, we heard about the likely increase in energy costs and what that will do to family incomes. As the Resolution Foundation points out in its low earners’ audit, those on low to middle incomes spend a higher proportion of their income on goods and services that are harder to cut back on. They spend 40% of their income on housing, fuel, transport and food. In comparison, the proportion for higher earners is 26%. Low to middle earners are most sensitive to increases in the cost of petrol, energy and food. The rate of repossessions has been lower than was predicted last year, but I am concerned that it will not remain so. If and when interest rates rise, that will also affect such people. Remember that home owners are getting into higher levels of debt than people who are renting.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Substitute Member) 3:00 pm, 9th June 2011

Order. I have been listening carefully and with great interest to everything that the hon. Lady has said. I understand that she is seeking to set out the background, but I have to draw her attention to the fact that she is moving a new clause. She really must now address her remarks to the thrust of the new clause rather than to the whole background of the economic situation.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I was just about to come on to that. My point is that these pressures are coming through, and there is a lack of action from the Government in introducing a cap on the total cost of credit, so we have to look at what else we can do. The Bill opens the Pandora’s box of using taxation to affect problems that we have identified in society. The concept of problem drinking has been very clearly indentified, and I argue that we should be looking at problem lending. My understanding is that the Government have been influenced by the work of Richard Thaler and “Nudge”. I know that the Minister is not keen on people being too clever and referencing academic work, so let us be simple about this: nudging talks about Government being choice architects, helping people to make good choices by ensuring that their default option is a positive one. That is what the new clause is about, and the review would offer the opportunity to do that.

I want to test whether the Government think that the bank levy would be an appropriate nudge option for those companies, to make the default option for how they lend beneficial rather than detrimental to consumers. I also want to ask whether we might look at other forms of taxation during consideration on Report.

Photo of Ian Murray Ian Murray Labour, Edinburgh South

My hon. Friend talks about nudge theory, which is the theme of the new clause. She may be aware that Margo MacDonald, an independent Member of  the Scottish Parliament, is introducing a private Member’s Bill in Scotland to make it a criminal offence under Scots law to charge unusually high interest rates. She will be advancing that legislation to encompass a limitation and a cap on interest rates. Although my hon. Friend is sensibly going down the nudge route, Margo MacDonald was so disappointed by the Government’s previously kicking this into the long grass that she is looking at using Scots law to make it a criminal offence.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

That is another fascinating example. I have heard today that Islington council is considering a byelaw to try to deal with the pay-day lenders in its locality. It worries me that, at a regional and local level, people are trying to take action while the Government seem hesitant to recognise the challenges. I appreciate that the Chair recognises that there is a problem that we need to address and wants us to move on to discussing particular behaviours. I hope that the Government response to the new clause will at least recognise that the high-cost credit market and what it does are problems that deserve attention.

Such a review might look at these five types of behaviour that the high-cost market engages in and consider whether there is a better default scenario. First, the high-cost credit market makes use of the fact that its customers lack access to other forms of mainstream credit. Were I to put solar panels on the roof of my property, I might be able to take out a personal loan from my local bank, but a quarter of the customers of high-cost credit companies cannot access any other form of credit. As consumers, therefore, they do not have the power that we might have to shop around for other forms of credit that are more acceptable to them and more manageable to pay back.

Secondly, high-cost credit companies’ models encourage repeat lending. There is the concept of roll-over, for example. Many people will remember painful Thursday afternoons of double maths at school studying compound interest, which is what makes profits for those companies. Because the companies have fixed costs, they make more money by repeatedly lending to people. Their business models are geared towards repeat lending so that they can roll over loans and charge interest on interest, making use of the compound interest that we all so much enjoyed learning about at school.

Thirdly, people who get involved in borrowing through such companies have no credit record, so they cannot transfer to the mainstream credit industry. People can be very good customers of Quickquid and they can be regular payers, but they cannot transfer that information to their mainstream banks and use the fact that they have built up a history to borrow from Barclays, Halifax or wherever. In Walthamstow, Oakam targets newly arrived communities who do not have a relationship with mainstream banking in the UK and uses that to trap them into borrowing from such companies, because they cannot show that they can maintain their payment records.

Fourthly, as has been mentioned, the rates charged do not reflect any economic rate. One of my frustrations in running this campaign has been that none of those companies will explain to me the rates of interest that they charge, yet they all vary markedly. For example, pay-day loans can go from 4,500% with Wonga to 2,500% with Uncle Buck, or 1,200% with Payday UK,  or 1,700% with Kwik Cash. One might argue that they are just making the numbers up because they can. Above and beyond their fixed costs, they can charge what they like. That lack of any pressure to address the way they are lending is very negative.

Fifthly, the market itself encourages those bad behaviours. That is exactly the point that the hon. Member for Tiverton and Honiton made. Because the market is uncompetitive, there is little to drive interest rates down. For example, in the home credit market, Provident, a company that many people may know well, owns 60% of the market, so there is no competition to offer consumers the alternative to shop around. Wonga is a company that I have had a long and extensive communication with and it will often lend people more than they earn because it wants to keep people borrowing. A 20-year-old man, who came to me, earns just £200 a month but was given a £400 loan to be paid back within a month. It is obvious that he will not be able to make the repayments, so he will need to keep borrowing to try to maintain what he owes. Of course, interest will be accrued.

Looking at whether the bank levy could be used to affect such behaviours might lead us to that positive, choice-architect moment—the default choice that those companies make being better for consumers. Let me be very clear: I am not seeking to put those companies out of business, although I want to ensure that the way they operate is better for British consumers. Our British consumers deserve that, because we are one of the few countries in the world not to have taken action to ensure that this high-cost credit market is good for consumers as well as effective.

We have seen in other countries, particularly across Europe, some really effective capping mechanisms that have made a difference to the rates of debt that people get into. One of the big myths is that if the interest rates that those companies charge were capped they would not lend to people, who would turn to illegal loan sharks. I urge the Minister to look at the European Commission research published this February, which comprehensively rebuts that. It shows very clearly that countries with caps on interest rates have lower levels of illegal lending, so it is good for consumers and good for public law.

We also must recognise that some of the alternatives that we all would like to see grow cannot keep pace with our rate of demand in the UK. Not only are we a country that is more comfortable with borrowing a lot of money, but because of the pressures and the cost of living, many people need to borrow more now.

I am a passionate defender of credit unions. We have a fantastic credit union in Walthamstow, which has 4,000 members, but the way people are using credit unions and social finance in the UK is not an option right now to address the concerns about the kinds of debt that people are getting into as a result of those companies. In contrast, 50% of the population in Ireland are members of credit union. The figure is 40% in America and Canada, but in the UK it is around 2%. Now, 86% of people are technically covered by credit unions, but they are not a good alternative, so, in the true spirit of nudge, there is not a good default option out there for people. We need to address in particular the way the high-cost credit market works.

A Department for Business, Innovation and Skills and Treasury review of consumer credit is under way, and there have been many evidence submissions involved, highlighting that market. I am looking for a commitment from the Government to act on the impact of those companies on people’s debts and to look at how the costs of credit can be capped. I would be happy to talk to the Minister about that proposal to cap the total cost of credit—I appreciate that that is not part of the new clause, which is why I have not set it out in detail—and the technicalities of how it could work.

I want to look at what could be done through taxation to try to effect change—to encourage those companies to behave in ways that are positive, not detrimental, to consumers. Once the Pandora’s box of using taxation to address such things as problem drinking has been opened, we can rightly ask for it to be used to address problem lending. We want to do that because we know the people at the heart of the matter. We know the families who are struggling; we know the people worried about losing their jobs, keeping a roof over their heads and how to feed their families. We know that 50% of people in debt have a common mental health problem, and that people facing debt are three times more likely to develop severe depression.

We have seen the figures and we know the families, who are arguing about their finances in the current economic condition and for whom those companies are becoming not a short-term option, but a long-term debt. Most worryingly, a lot of those companies are targeting our younger residents. I know of a 16-year-old given a loan of £300 by Provident. He was not in work and had no chance of paying it back on the terms he was given, and is now stuck, at 16, building up debt. We all know of students being targeted by companies such as Wonga, using the online focuses to get them into borrowing and all the negative behaviour I have set out.

I recognise that the Treasury might not feel that that is its primary concern, because high-cost credit markets are regulated by BIS. However, I hope that, because it has opened the Pandora’s box of using taxation to affect behaviour, the Treasury will look positively on the proposals and see what it could do. If we get lending and credit right, that will help the recovery and those families who are struggling now, whom we are keen to see supported.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I will keep my remarks brief. My hon. Friend has addressed the issue in detail and I congratulate her on the work she has done on her campaign on high-cost lenders. She is particularly to be congratulated on the ingenuity with which she has found different ways to raise the issue on the Floor of the House, in Committee and in other forums. As she said, we have perhaps been more comfortable with debt than other countries, but we have reached the stage where people are using credit just to make ends meet: 2 million people have recently used a credit card to pay their mortgage or rent, and the OBR figures show that under this Government, household debt is set to rise from 160% of household income in 2010 to 175% in 2015. That is after household debt fell between 2007 and 2010.

Photo of Karl McCartney Karl McCartney Conservative, Lincoln

The hon. Lady has slipped in some interesting statistics. Does she have the figures from 1997 to 2010 on the increase in household debt?

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I do not have the figures in front of me. The point I am making is that the trajectory was in the right direction.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Let me help the hon. Lady. In 1997, one family in 10 had no savings. At the start of the financial crisis, that had increased to one family in four with no savings.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

Those are interesting figures but nothing to do with the statistics I quoted, which are about household debt. There might be some correlation between the number of households with savings and those with debt, but there could be a rise in the number of households with savings and a rise in the number of households in debt. Under the Labour Government, household debt was falling, up to 2010. It has now increased to a worrying level and is predicted to rise to 175% by 2015.

As we have discussed at length, the Government have taken a range of measures that will reduce family disposable incomes even further: tax rises and cuts—to benefits, tax credits and services. While the Government are trumpeting their plan to reduce the public sector budget deficit, they have not focused on the increasing indebtedness of ordinary people. Some commentators have even claimed that the Government’s deficit reduction plan essentially involves shifting debt from the public sector on to households. Either way, it is clearly unsustainable.

I have pointed out the problems faced by people for whom high-cost credit is the only option, because of the rise in their indebtedness, as my hon. Friend the Member for Walthamstow has highlighted. The previous Government made some progress in improving access to financial education and advice. In my constituency, there are financial capability lessons and qualifications for sixth form students. That is important, because we can teach people about citizenship and so on, but it is also important to teach them to manage finances, and to understand the basic elements of managing budgets and what products are in the market. Before the election, there was cross-party agreement about the creation of the Consumer Financial Education Body, which now operates the Money Advice Service, which was obviously a good move.

The Minister has recognised, however, that we must also look at the financial products that are available to consumers. His consultation on new simple financial products aimed to

“help everyone to make better choices” by ensuring that the right products were available to them, which is important. As somebody mentioned during the debate, if, instead of being couched in terms of the interest rate payable, products were couched in terms of how much they cost, that would be a massive step forward in ensuring that people do not go down the seemingly attractive route of getting a quick loan. People do not appreciate how much additional debt they can incur by going down that path.

My hon. Friend’s new clause aims to draw attention to the high-cost credit industry and the effect that it has on people who are typically already facing financial difficulties. I applaud her for bringing the clause forward  and allowing us to have this debate. The Government can do more to ensure that those people have better choices and to help them get out of their debt problems, rather than make them worse.

Photo of Pamela Nash Pamela Nash Labour, Airdrie and Shotts 3:15 pm, 9th June 2011

Mr Gale, it has been a pleasure to serve under your chairmanship over the past few weeks.

At a time when there are ever-increasing pressures on family finances, I am worried about my constituents turning to high-interest lenders. I want to take the opportunity to congratulate my hon. Friend the Member for Walthamstow on tirelessly campaigning on this important issue and keeping it at the forefront of all our minds in Parliament over the past few months.

I can understand that the lure of short-term loans to plug a gap in home finances is extremely tempting. However, such loans lead to serious long-term problems for those who actually need help with their domestic finances rather than a short-term fix. People cannot pay back the loan and quickly start to suffer from mounting, enormous interest payments. When speaking to my local citizens advice bureau recently, I was told of rising numbers of people who are finding themselves in dire straits. The worrying thing is that those people who fall into the trap of high-interest loans are not the usual suspects. They are from a variety of different backgrounds and incomes. Luckily, some of them are finding help from local credit unions, but it is still too easy to go up most high streets and be sold a product that will cost much more than it first appears. Those products are being sold to those who simply cannot afford them. In the past few weeks of examining the Bill, the rapid rise in living costs has come up repeatedly. Coupled with high unemployment, frozen salaries and banks unwilling to lend, that rise is just a recipe of delight for companies who offer unsecured and high-cost loans to some of the most vulnerable in our society. People are finding themselves in a spiral of debt.

One of the most frightening statistics that we have in front of us is from the Association of Business Recovery Professionals, which my hon. Friend referred to earlier. From July 2010—less than a year ago—the number of people per month in the UK expected to use an unauthorised overdraft has risen from 900,000 to 1.6 million people. That highlights just how quickly the number of households that are struggling to make ends meet each month is increasing, and the temptation to take out high-cost, unsecured loans seems like a quick fix. I only need to walk into Airdrie town centre to find a store such as BrightHouse, which offers extremely high interest rates, or a number of outlets offering high-interest pay-day loans and pawnbrokering facilities. I am sure that it is not just me and my hon. Friend the Member for Walthamstow who can find such stores in their constituency.

These companies are not only multiplying but ambitiously advertising their wares. As my hon. Friend the Member for Gateshead pointed out earlier, they have bright, friendly neon signs, which give little indication about the dangers that lie within. Interest rates of 1,000% certainly do not appear in any window displays in Airdrie. I fear that the problems caused by the situation are set to mushroom, and if the Government do not address the problem and take action against high-cost lenders, they will be doing all our constituents a great disservice.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Thank you, Mr Gale. It is a pleasure to serve under your chairmanship this afternoon.

I congratulate the hon. Member for Walthamstow on finding a hook on which to peg her campaign. I have to say that at the end of her speech, I am still none the wiser about how her new clause would work in practice, but let me try to explain what I think the challenges are, in relation to her remarks and the proposals in the new clause. The hon. Lady has been assiduous in raising the profile of this issue. She tweeted before she got up to speak that she would return to this matter on Report, and we look forward to that. I do not know, Mr Gale, whether you are a follower of the hon. Lady on Twitter, but I gather her other campaign is to rebrand Walthamstow as “Awesomestow”. I wish her good luck in that task.

There is no disagreement between the two sides of the House about the issues raised by the hon. Lady. I, too, am concerned about high-cost credit. Although I represent a relatively affluent constituency, the main street in Fareham has similar shops that offer payday loans. Companies such as Provident are active there, and I do not think any part of the country is untouched by some of these issues. We recognise the impact that very high levels of debt can have on people’s day-to-day lives, especially for the lowest paid and most vulnerable. It is not only a concern for this Government; the previous Government expressed similar concerns, too, and they asked the Office of Fair Trading to review the high-cost credit market. The review indicated that on the whole, the market was working reasonably well for consumers, but there were some areas of concern. To address those, the OFT made a number of recommendations that are included in the ongoing review of consumer credit and personal insolvency, which is the joint consultation that the Treasury and the Department for Business, Innovation and Skills are carrying out.

The challenge for us is to agree not so much about the analysis as about the appropriate solution. We need to pause and think carefully about some consequences that could flow from taking the wrong actions. We do not want to end up harming those who are trying to help. I am concerned that measures that may deny credit to those who need it can push the most vulnerable customers into the arms of illegal loan sharks. It is not scaremongering to say that the alternative to regulated lenders is much more dangerous for vulnerable consumers, as anyone who has listened to the stories that have come out from the illegal money-lending teams will know. There is no need for me to elaborate on that today.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central

I am grateful to the Minister for giving way, because it gives me an opportunity to congratulate my hon. Friend the Member for Walthamstow, as others also have, on the excellent work she is doing on this issue.

The Minister is identifying what he sees as the flaws in my hon. Friend’s proposals. However, given his apparent support for the principles behind them, I hope that during the course of his remarks he will say how the Government propose to deal with some of the issues and points raised by my hon. Friend. I hope that his response will not be an outright no.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Gentleman must be patient. As he knows, the Committee can go on until any time tonight, so there will be the opportunity to explain what  we would like to do in this area. I know that his friend, the right hon. Member for Delyn is booked on the 17.10 from Euston, but I am sure that his ticket is flexible.

We need to be careful that we do not end up introducing solutions that make the situation worse.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I know the hon. Gentleman is eager, too, but may I continue? I do not know what train he is on from King’s Cross tonight.

Punitive action against the high-cost credit market could leave us in a situation in which only the middle classes and the rich can access credit, which would defeat the purpose of looking carefully at the market.

Photo of Tom Blenkinsop Tom Blenkinsop Labour, Middlesbrough South and East Cleveland

It is interesting that the Minister remarked on the interesting stories coming out of the illegal moneylending teams, because the Government have cut funding to the teams, which are no longer based in the regions.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

I was prepared for that. On a helpful note, I gather that the hon. Gentleman is on the 4.50 Grand Central train from King’s Cross, so we know what time scale he is working to.

We have announced further funding for the illegal moneylending programme through 2011-12. The project will receive £5.2 million of funding in this financial year, and we expect the figure to be similar in 2012-13. To deliver even better results and produce a more efficient service, we have sought to reorganise the structure of the teams by moving away from regional teams to a structure in which there is one team across England, alongside national teams in Scotland and Wales. Action to tackle illegal moneylending in England will be co-ordinated by the Birmingham-based team, which already covers five regions and has proved to be extremely successful. As well as providing its current service, the hon. Gentleman should note that the team will provide a service in the north-east. It will provide its service to the east midlands and the south-west as well as the existing five regions. That will bring efficiency savings and will ensure that the money is focused on tackling the problem, rather than tackling administration.

Photo of Ian Mearns Ian Mearns Labour, Gateshead

I am pleased to report that I have a ticket that I can use on any train.

It is a great regret to people in the north-east that the illegal moneylending teams have been centralised in Birmingham. Although that may have brought managerial savings and economies of scale, I honestly do not think that taking the unit out of the north-east, where there is a significant problem, is the answer. It is not good enough for the Minister to say that doing something real and tangible with legal moneylenders will further drive people into the arms of illegal moneylenders. Two wrongs do not make a right. The whole point about illegal moneylenders is that they are illegal and can be dealt with.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

Yes, they are illegal, but dealing with them is not perfect. Let us be honest, some people’s decision to take out credit is not a voluntary choice—it  may be the washing machine that breaks down or the fact that their money has run out before payday, but they need credit to live. I am concerned that the wrong measures will lead to a reduction in the supply of credit to those who need it most. If someone needs credit and cannot get it because their usual legal credit provider has closed down and withdrawn its service from their area, who do they go to? That is the challenge that we face, which is why we have to be careful about the consequences of some of the measures in the new clause.

I cannot remember which hon. Member said that interest rate caps worked effectively in Europe, but let me report on some research by Policis, which has looked at interest rate caps quite carefully. The report was commissioned by the previous Government and concluded that interest rate caps in France and Germany had resulted in lower APRs. But the cost of credit for high-risk borrowers has not fallen because insurance charges and other charges routinely added to contracts add significantly to the real cost of credit. The survey also highlighted that credit exclusion is a significant problem and more people are excluded from mainstream credit in France and Germany than in the UK. The survey also found that illegal lending was significantly lower in the UK than in France or Germany. That study was welcomed and supported by leading consumer groups including Citizens Advice, the Association of British Credit Unions Ltd, the Institute for Public Policy Research, Which? and AdviceUK. The hon. Member for Walthamstow will say that that research was carried out in 2006—

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

2004. But the point that I am seeking to make is that it is easy to look at what is happening elsewhere and say, “That’s a great answer,” but it may well deliver the wrong solution for the people whom we are all trying to help.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow 3:30 pm, 9th June 2011

I have read in detail all the research on the topic, partly because I recognise that the challenge is getting right the intervention that is made in the market, and I am pleased to hear that the Minister is looking at what interventions he might make. I wonder whether he has also reflected on the 2011 European Commission research, which I briefly mentioned, which has looked at all the different rates. One of the issues is the lending culture in those countries, but the research also looked at the different floating caps. In France and Germany—I am sure that we will have a wonderful conversation about different technical responses to interest rates when we meet—there have been changes to the way in which these rates have been applied, partly in response to some of the things that have been raised. That is something we could learn from in the measures that we introduce in the UK.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

We will look at all research, but I am making a very straightforward point: we need to think through the consequences. Just because we think that  something—such as the idea in the new clause—should be done, it does not mean that it should be done without thinking through the deleterious consequences for our constituents.

The hon. Lady mentioned in her speech that consumer credit is regulated by the OFT, not by the FSA. If she were to bring her clause back on Report, she would need to think about who was responsible for the regulation of consumer credit. I am not sure that it will help to tackle these issues, however. Yes, we know that companies in this market are there to make a profit—if they could not, they would not provide the service—but it is an open market, and we know that, where profits are excessive, new competitors come in. It is clear from the hon. Lady’s speech that this is an open market, which new competitors have entered because they have seen some advantage. One of her colleagues cited the different rates for different types of high-cost credit, so there is competition in the market, which is important.

We accept that companies charge a high interest rate, but we need to be careful about bandying these percentages around. I am sure that the hon. Lady will recognise some of the consequences of doing so. Those high percentages are a consequence partly of the fees on the interest rate they charge, and of the relatively short duration of some of the loans. Rates are high, but let us not forget that a loan of £100 might be repaid a week later at a cost of £110. Now, £10 does not sound like that much, but expressed as APR it could be many hundreds or thousands of per cent., depending on the duration of the loan. We need to be careful; an APR of 4000% has been mentioned, but that does not necessarily mean that someone would borrow £1 and pay £4,000 interest.

Photo of Paul Blomfield Paul Blomfield Labour, Sheffield Central

One of the problems with the way in which these loan companies operate is the pressure that they put on people once one loan is concluded, which is something that I have discovered from talking to my constituents. A home visit is followed up by a discussion about other potential family needs, to sell the next loan. A number of people get trapped into a series of rolling loans, in which the example that the Minister has just given about the low cost becomes irrelevant.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Gentleman makes an important point about the roll-over effect. One challenge, which the hon. Member for Bristol East has mentioned, is how we equip consumers to make better decisions about their financial future. The Money Advice Service—the rebranded Consumer Financial Education Body—yesterday launched a financial health check, which is a web-based service that will help people to make better choices and plan for the future. That is available to people of all income classes. We need to ensure that we equip people with the confidence and the capability to make those decisions. Part of that is about ensuring that they have the right information so that they can compare the cost of credit, which is something the OFT proposed in its review of high-cost credit. We need to think about those things quite carefully.

Nic Dakin rose—

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Gentleman seems keen to intervene.

Photo of Nicholas Dakin Nicholas Dakin Labour, Scunthorpe

I thank the Minister for giving way. Does he agree with the hon. Member for Tiverton and Honiton, who said on improved information to make consumers better able to take decisions that it would be helpful if companies had to state the exact cash cost, not simply the interest rate?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

A great challenge in these debates, which features in a series of financial services issues, is ensuring that people are given good-quality information that enables them to understand the consequences of their decisions, and the disclosure of the cash cost is an interesting idea. I have been keen to ensure that credit card companies provide much better information—for example, about how long it would take to repay a balance if only the minimum payment were made. Rather than saying that it would take longer, they should say how much longer. Good-quality information is key. If we have the right information and give people the capacity and confidence to take decisions, we will get to a much better place.

The new clause requires a report on the application of the bank levy to high-cost lenders. The levy is a new tax designed to ensure that banks make a fair contribution in respect of the risks they pose to the financial system and wider economy. It targets risky short-term funding, which led to the serious liquidity problems that played a key role in the financial crisis. Attempting to target the levy on providers of high-cost credit would be a marked change of direction in its objectives and would consequently require an extensive redesign, which would inevitably add complexity. We have no evidence that companies in this market create the risk for which the bank levy would be the solution.

The hon. Member for Walthamstow is keen to talk about tax as a tool for changing behaviour, but it is quite a blunt tool. I do not think that tax is necessarily what the authors of “Nudge” would say was a nudge, and I am a keen supporter of nudge. The tax would not necessarily result in a default to the right choice. [Interruption.] If the hon. Lady stops tweeting for a moment, I might be able to explain.

Applying the bank levy to those lenders would not have any obvious positive impact on how consumers were treated; it would not create the lower-cost default behaviour that the hon. Lady seeks. Rather, the additional costs would be likely to be passed on in higher fees or interest rates. In fact, it would probably increase, not reduce, the cost of credit. Her proposal is counter-productive and she needs to see that. I am pleased to see that she has already tweeted that I made reference to “Awesomestow”.

To reiterate, we need to be careful that we do not get the wrong outcomes from the solutions imposed. Frankly, adding more costs to high-cost lenders, which will be passed on to consumers, would be wrong and not what we want to do. I do not think that it is what the hon. Lady would mean to achieve as a consequence of the new clause. A lot of people who pay high-cost creditors are relatively insensitive to the price. That is why they are prepared to borrow such small sums at such large rates of interest. There is that insensitivity to price and the cost would be passed on to consumers. Frankly, the benefit would be to the Exchequer, not to the taxpayer, and in this case I do not think that that is the right action.

To keep the hon. Member for Sefton Central interested, I shall respond to his intervention. [Interruption.] He says from a sedentary position that he is tweeting, too, which perhaps explains the Opposition’s lack of success—they spend too much time tweeting and not enough time thinking about politics. The Government are seeking to take action in this area. In October last year, we issued a call for evidence in support of the consumer credit and personal insolvency review, which is the right step to take before we introduce new rules, or else risk unintended consequences. The review included recommendations from the OFT review on high-cost credit and had a number of recommendations, such as providing information on the cost of high-cost credit to consumers through price comparison websites, introducing a wealth warning on high-cost credit products, collecting essential information on the high-cost credit sector so that the OFT can track developments in that sector, and the Government and the industry developing a code of practice. To address the point made by the hon. Member for Walthamstow, as it is temporarily named, it recommends working with credit reference agencies to explore ways in which pay-day lenders could provide suitable information about the payment performance of their customers. That is absolutely right. It is important to ensure that people can build a credit history to get access to mainstream credit.

Photo of Bill Esterson Bill Esterson Labour, Sefton Central

I want to be clear that I heard correctly. I believe that the Minister used the term “code of practice”. Will he clarify whether that will be voluntary or compulsory? Members here would appreciate the distinction and the importance of the difference, as voluntary codes often have every intention of doing good but lack the teeth to be effective.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Gentleman makes an important point. We have to be careful, if we go down the voluntary route, that we feel there are more gains to be made than by going down the statutory one. That is a wise warning to make.

I wish to make a couple of further points. The hon. Member for Walthamstow referred to the lack of access to alternative sources of credit. The Government have taken steps to strengthen the credit union movement, with additional funding. Like her, I feel credit unions have an opportunity to meet some of the demand for alternative sources of credit. She mentioned doorstep lenders. She will know that a study was done relatively recently looking at the possibility of a not-for-profit doorstep lender. Even on that model, the APR was about 120%.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Lady can intervene or tweet, whichever is more effective. It is interesting that in the light of the evidence of that study, which I think was funded by the Joseph Rowntree Foundation, the not-for-profit sector has been reluctant to bring forward a home-credit model. That is partly due to concern about the reputational risk of charging higher rates of interest. Banks could fill the market, but I know that for many of them the prospect of charging relatively high rates of interest—50% or 60%—would be a concern in respect of reputational damage. It would not take long before  we all wrote to the banks complaining about rates of interest. There are issues about bringing alternative sources to the market. I think credit unions are a good way to do that. I have already referred to the work of the Money Advice Service that will help to equip consumers to tackle those issues with more confidence and better-quality information.

People across the country need short-term credit. That is clear from everything that has been said. There are circumstances where families need access. It is the role of Government to ensure that there are no abuses or behaviour that is detrimental to consumers, and we are taking steps to address that. I agree that we must take action. However, I say to the hon. Lady that a differential tax rate will not solve any of the problems; in fact, it could exacerbate them by either increasing the cost of credit to those who need it or reducing the availability of legal sources of credit, and I do not think that is her intention.

As I said earlier—I think the hon. Lady has taken up my offer—I am happy to meet her to discuss this area. It is important and I am keen to get it right. That requires deliberation rather than knee-jerk reactions.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

I am little concerned that the Minister has jumped the gun. I know he is clearly an avid reader of Twitter, but perhaps he should read the new clause closely. It calls for a review and for work to be done to look at whether the bank levy would be an appropriate way to address the behaviour I talked about. I am sorry that I have not been able to convince him that the way the market operates is in itself a problem for consumers, above and beyond their ability to influence it through the choices they make. I also encourage him to read “Nudge” again, a little more closely, where he will find the example of Minnesota, which looked at using tax and tax policy to affect behaviour.

The new clause also looks at the consequences for consumers and the British economy of doing nothing. If we all recognise there is a problem, there is not just a solution; there is also the option of doing nothing. I hope I have convinced the Minister that that is an important piece of work for the Treasury to undertake. There is also the importance of having better information on the nature of the market and the ability of consumers to act.

The Minister talks about an open market operating to bring downward pressure on the rates that companies are charging. That is clearly not the case. The point is that the lack of regulation has allowed a market in which rates are going up or down and across. They are not affecting what consumers are paying because the rates at which they start are so deleterious.

A review is so important because I do not think that as consumers or even as parliamentarians we should set a specific, singular interest rate. As I briefly mentioned in my comments to the hon. Member for Elmet and Rothwell, I am not calling for a cap on interest rates. I am calling for something different, reflecting on the evidence we have from other countries about what has and has not worked and where lenders have tried to get  around it by applying other forms of charges. We must also recognise that there are different types of products to take account of whether people are borrowing over a shorter period or a longer period for perhaps a hire purchase agreement or a car. All those issues could be dealt with in a review.

I am pleased that the Minister has obviously thought very carefully about whether taxation could be used in this process, but thinks that the bank levy may not be the right thing to do. That has given me much food for thought in considering where else taxation could be used in this process. I am not necessarily convinced that, having dismissed the new clause, the Minister’s response to the problem that we all agree needs to be tackled is appropriate. Even armed with the best information in the world about the different choices available, consumers cannot make good choices because of the nature of the market and the way in which lending is applied to them. We all accept that there will be certain categories of consumers who will be lent to at higher rates of interest.

I note that the Government are looking at capping the rate of interest on credit cards. Credit cards have interest rates of 20% to 30%. Most credit unions will start at interest rates of 30% to 40%. So clearly the way we do this needs to respond to the market and the needs of the people who are borrowing. However, something should be done. It is good to hear that the Treasury is interested in looking at the matter. I will reflect on what the Minister has said about whether this is the right tax to use, but the problem will clearly not go away, so something must be done and the right intervention has to be crafted.

We will return to the matter on Report. I will therefore seek to withdraw the new clause and bring back further proposals because the people of Awesomestow and Walthamstow need me to do that. Every day we see the consequences of not doing anything. Even though we have an active credit union and active social finance organisations, many more of these companies are targeting my local community and people are getting into debt with them. Doing nothing is not an option. Doing the right thing very much is. It has to be about more than consumer information because of the nature of the market itself.

Photo of Richard Harrington Richard Harrington Conservative, Watford 3:45 pm, 9th June 2011

I just wondered whether the hon. Lady had thought of Walth Vegas as an alternative.

Photo of Stella Creasy Stella Creasy Labour, Walthamstow

Perhaps when we get the Walthamstow dog track back that might be an option.

Awesomestow reflects our pride in our community. I have a responsibility to those people to fight for these cases. As I was simply concluding, doing nothing is not an option. Relying on consumers themselves to make good choices in a market that is not fair to them does not seem an option to the Opposition. Further reflection is needed on whether taxation can be used to address the behaviours of those companies that I described. I accept that the bank levy may not be the right measure. I will reflect further on this and come up with a proposal on Report. I hope it will receive support from across the House because if everybody accepts that there is a problem and yet nobody does anything we are all culpable  for the debts that people are getting into. We will continue to press the issue, if perhaps not with this new clause. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

Clauses92 and 93 ordered to stand part of the Bill.

Photo of David Hanson David Hanson Shadow Minister (Treasury)

On a point of order, Mr Gale. I am pleased to see that in the spirit of the policies of the Lord Chancellor and Secretary of State for Justice, we have had some early remission on this Committee. I thank you, Mr Gale, for your chairmanship of the Committee. I ask you to pass on the thanks of the official Opposition to Mr Hood for his chairmanship, and I would also like to put on the record my thanks to Mr Patrick for clerking the Committee.

I would particularly like to thank my hon. Friend the Member for Bristol East, my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East, who is the shadow Whip, and my hon. Friends on the Back Benches for their contributions. I place on the record my thanks to the three Ministers who have served on the Committee for their courtesy and their responses to the points we raised. Through them, I would also like to thank their officials, who will have prepared many hours of briefing that we have not used and who have, on occasions, waited around for us to reach a particular point in the debate. I hope that they will appreciate the fact that we have undertaken some scrutiny.

I put on the record my thanks to the Government Back Benchers, even those whose only contribution has been to say the word, “No.” They have played their role effectively. On behalf of the official Opposition, I would also like to thank the very hard work that has been done by the Doorkeepers, the police and our colleagues from Hansard, who regularly turn gibberish into sensible reading the following day—gibberish obviously from the Ministers, not from the Opposition.

Our deliberations have involved 12 Divisions and 14 sittings, and they are best summed up by the following motto I discovered this morning: “was, is and will be.” “Was” because we had done some of this before we came here; “is” because we are still doing it now; and “will be” because we will return to it shortly on Report. For hon. Members’ interest, that is also the motto of TheDaily Telegraph.

Photo of David Gauke David Gauke The Exchequer Secretary

Further to that point of order, Mr Gale. I put on the record my thanks to those who have contributed to and assisted with our scrutiny of the Bill. As the Committee knows, we received more than 200 responses to the draft legislation and I thank representative bodies and the other interested parties who came forward with suggestions for improving the measure. The Bill is the better for it and I hope that we will receive a similarly enthusiastic response when we publish draft legislation next year.

This is the first full Finance Bill that the Government have introduced and it contains some significant changes. We have learned some unexpected things during the course of our proceedings. We have learned of the delights of the Blue Anchor pub near Sefton and of Wurzels concerts; we have learned that perhaps Opposition Members do not delight in “The Jeremy Kyle Show”, whatever that is; we have touched on the European extra large telescope and the love of the hon. Member  for Edinburgh South for Led Zeppelin; and we have learned that what goes on during an American exchange tour stays on tour.

Of course, our focus has been on the important issues covered by the Bill. We have discussed the need for growth in the economy, how we should help struggling families, the risk posed by tax avoidance and the importance of support for a greener society. Whether partisan or not, the approach of all hon. Members has been to ensure that the Bill is the best it can be. Hon. Members have brought their expertise to these matters. For example, on the debate on alcohol duty, we had contributions from the hon. Member representing the town of Shotts and from the hon. Member for Walthamstow, who is herself named after a high-strength lager.

The shadow Ministers—the right hon. Member for Delyn and the hon. Member for Bristol East—have provided vigorous and considered opposition. I thank them for that. I thank them and other Opposition Members for their constructive approach, although I apologise to the Committee for not having broken down these responses on a regional basis. I would also like to thank the Whips. First, the Opposition Whip, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, who we have learned is the parliamentary pool champion. If I may move the analogy to snooker, with which I am slightly more familiar, at times the pace in Committee has been reminiscent of Alex Higgins at his peak—in fact, more often it has been reminiscent of Cliff Thorburn, but there we go. I also want to thank my hon. Friend the Member for Scarborough and Whitby, the Government Whip, for his excellent work in ensuring that we won all 12 Divisions, even though there were one or two close shaves, which is more than can be said for the hon. Member for Sefton Central during the first week or so of the Committee.

I thank all my hon. Friends: first, those on the Back Benches for their patience, presence and occasional contributions. To echo the right hon. Member for Delyn, I would like to thank those who said only, “No”—in fact, I would especially like to thank them. I also particularly thank my ministerial colleagues, my hon. Friends the Members for Fareham and for Putney for their support.

I would like to thank you, Mr Gale, and Mr Hood, for your help in ensuring that we got through the debate smoothly. In this context, it would be remiss of me not to thank Mr Murray for his brief period conducting the Committee. When he went to the Chair, I was reminded of Michael Foot’s comment about David Steel, who became leader of the Liberal party in 1976. He said that he had

“passed from rising hope to elder statesman without any intervening period whatsoever”.—[Official Report, 28 March 1979; Vol. 965, c. 577.]

I congratulate him on that fast—

Photo of David Gauke David Gauke The Exchequer Secretary

Well, it is something to aspire to.

I would like to thank the officials from HMRC, the Treasury and other Departments. Parliamentary counsel, of course, have been of great assistance, and I would particularly like to thank them for their speed in response  when some of us Ministers were struggling for the right words. The hon. Member for Wirral South described them as very wonderful, with which I entirely agree. As always, I would like to thank Mr Patrick, Hansard reporters, the police and the Doorkeepers, all of whom ensure the smooth running of the Committee.

I feel that I should now end my thanks, or I will face a “Whoa”, from the right hon. Member for Delyn. I look forward to Report, and to the Bill’s final stages.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Substitute Member)

In keeping with the wonderful traditions of the House, absolutely none of that constitutes a  point of order for the Chair, but I am sure that Mr Hood will enjoy reading it as much as I have enjoyed listening to it.

I add my thanks to the Officers and staff of the House, without whom our work would not be possible. I also thank all Members, on both sides of the Committee, for the diligence, courtesy and good humour with which our proceedings have been conducted. It makes everybody’s life a lot easier, and it is greatly appreciated.

Bill, as amended, to be reported.

Committee rose.