UK Policy Implementation for Wales and Scotland

Baroness Bennett of Manor Castle Excerpts

Wednesday 19th May 2021 Lords Chamber

[Lord True (Con)]

Of course I thoroughly endorse what the noble Baroness says about the importance of the United Kingdom. It was a pleasure to see our two parties stand shoulder to shoulder on that issue in the recent elections north of the border. I have indicated that the Government attach importance to the IGR discussions and the way forward there. I cannot add anything more to that but I assure noble Lords that we will report to the House on further developments in that area. I take the noble Baroness’s point about the importance of the United Kingdom; that is absolutely paramount in everything that this Administration seek to do.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I declare my position as a vice-president of the Local Government Association. Policies and laws in and between England, Scotland and Wales are becoming increasingly devolved. Obviously that is the point of devolution and is only likely to increase after the recent election results. Is the Minister confident that the Government are providing sufficient support, particularly to English councils and police forces, to tackle the resulting issues? These range from, to give two examples, so-called smacking bans in Scotland and Wales but not in England—I have heard that this is creating problems for children’s services—to the fact that the possession of the extremely dangerous poison carbofuran, which is used regularly in the illegal slaughter of raptors in Scotland and England, is illegal in Scotland but not in England.

[Lord True (Con)]

My Lords, the noble Baroness went into a number of detailed issues. Given that the Green Party has, very sadly, endorsed the break-up of our United Kingdom, it comes oddly from her to suggest that things should not be different in Scotland from how they are in England.

Kalifa Review of UK Fintech

Baroness Bennett of Manor Castle Excerpts

Tuesday 27th April 2021 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, the Government recognise the importance of fintech in our economy. Indeed, that needs to flow through to the curriculum; we have extended the number of pupils studying computer science at A-level, for example. In the Cabinet Office, in my role overseeing the Government Digital Service I pushed that out to Bristol and Manchester to engage much more closely with FE and HE in those cities. My noble friend is absolutely right; continual focus on this is needed.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, the Chancellor of the Exchequer said at the UK FinTech Week conference that the Government would

“push the boundaries of digital finance”.

Does the Minister acknowledge the risk that, in cheerleading the latest technology, the Government will fail to count the costs of runaway financial innovation: both the obvious environmental costs—Bitcoin climate emissions are equivalent to those of the whole nation of Norway—and the dangers to the security of our real economy and lives? This was the world experience of 2007 and 2008, which they risk forgetting.

[Lord Agnew of Oulton (Con)]

The Government absolutely recognise the risk of a financially weak system. We learned important lessons 12 years ago and they are very much part of our institutional memory.

Financial Services Bill

Baroness Bennett of Manor Castle Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

The noble Baroness, Lady Tyler of Enfield, has withdrawn, as she is speaking in Grand Committee, so I now call the noble Baroness, Lady Bennett of Manor Castle.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I welcome the government amendment in this group. We are seeing regulations catching up with financial innovation. As ever, it seems that the regulator is being forced to chase after advances that are screaming into the future with potentially very disturbing results.

However, I chiefly wish to speak to Amendment 35, in the name of the noble Lord, Lord Holmes of Richmond, and to offer my support for it, or at least for its principles. As the noble Lord said, we are talking about innovation, but innovation that is actually for the common good—innovation that works for people, and particularly, innovation that works for the most vulnerable in our society. The figures really are deeply shocking: estimates of 1 million unbanked people; 8 million people with debt problems; 9 million people with no access to mainstream credit. One thing that is not adequately recognised is the poverty premium: the fact that not having a bank account or access to mainstream credit means much higher costs for everything from utility bills to borrowing and very well documented impacts on health and wellbeing.

This seems like an apt time to ask the Government whether they have given further consideration to the recommendation from the Select Committee on Financial Exclusion, which reported in March 2017. It called for a Minister responsible for financial exclusion. Is this something that the Government are really going to focus on by means of this Bill? The noble Baroness, Lady Noakes, may have concerns about the structure of this, but the intentions of the noble Lord, Lord Holmes, are very clear. Are the Government going to take action?

[Baroness Neville-Rolfe (Con)]

My Lords, I offer a few words of caution on the subject matter of Amendment 35 in the name of my noble friend Lord Holmes of Richmond, who has done so much to promote financial and digital skills since we joined the House together in 2013. The amendment is concerned with the very real problem of the “financially excluded”, in today’s jargon. This problem is of long standing. Under the description of the poor, the New Testament informs us that “they will always be with us”, and similar quotations can be made from the Old Testament. More recently, as just mentioned by the noble Baroness, Lady Bennett, we have had good reports on the subject from our own committees.

Experience shows that another ancient saying is also relevant and helpful. I refer to the injunction on doctors when seeking to treat disease—“first do no harm”. Unfortunately, this latter injunction was not followed when the United States authorities sought to improve the lot of the financially excluded, which arguably led to the subprime crisis of 2008 in the United States, or at least made that crisis much worse than it would otherwise have been. Noble Lords will recall that, when it came to the attention of the federal authorities in the United States, some communities, called marginalised groups, received fewer house loans per head than others. The lenders concerned were threatened with prosecution under federal laws on discrimination. That was a major factor behind many subprime loans being made, which those receiving them had no real likelihood of being able to repay. Such loans were included in bundles sold to investors, which in many cases inevitably defaulted. The end result was a crisis in which some of the worst affected were those who had received the subprime loans in the first place—namely, the financially excluded, whom we are trying to help.

None of this argues against the amendment before us proposed by my noble friend Lord Holmes, although I note that my noble friend Lady Noakes has some reservations. We always need to listen to her because of her great expertise in this area. However, it shows that, in efforts to improve the lot of the financially excluded, we need to proceed with as much prudence and attention to the risks to them and more broadly, as we do in pursuing other wider objectives.

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I fully accept that there is more work to do to prepare parents and young people for the transition to legal adulthood at the age of 18, but this amendment does not solve this problem of a failure of planning. Therefore, regretfully, I cannot support it.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Finlay of Llandaff, and her—as always—expert contribution, which has made me think again about that amendment. I put my name down for this group chiefly to speak to Amendment 27, in the name of the right reverend Prelate the Bishop of St Albans, also signed by the noble Lord, Lord Sikka, and me. The reasons for this amendment have been broadly canvassed, notably by the noble Lord, Lord Foster of Bath, well known for Peers for Gambling Reform, which I was recently pleased to join. I do not feel that I need to make this case again, but there is a useful reflection to make—drawing also on what the noble Baroness, Lady Finlay, just said, and sharing the frustration of the noble Lord, Lord Addington—about how, in this group of apparently disparate amendments, we see a real problem in the nature of our lawmaking in the difficulty of making progress. What we have here, as we had earlier with the sharia-compliant student loan, are apparently small, easily fixed issues, on which some very expert, knowledgeable, extremely capable people have spent years working, without progress being made. This particularly applies to Amendment 16 in the name of the noble Baroness, Lady Meacher. Something clearly needs to be tackled and dealt with, and it looks simple; we need to see regulation, oversight and protection, but it is not happening.

In the interstices of what has been a rather hectic day for me, I was looking at the Law Society briefing for the National Security and Investment Bill, which is coming tomorrow. The Law Society does not have any party-political issues to raise on that, but it has looked at the Bill and has seen that we are creating huge problems. Somehow, our legislative process is not identifying issues. With commendable frankness, the noble Lord, Lord Blunkett, earlier identified his role on the issue that arises in Amendment 37C. Somehow, things are not coming together and delivering us workable laws. We need to think, as a House and as a society, about how we can end up getting more workable laws. I suggest that we need more co-operation, listening and input at the early stages, rather than a sudden decision by the Government to do something, which then results in a Bill.

We are not sure that there will be any votes on any of these amendments, but we clearly need action and I commend to your Lordships’ House the need for action on all of these, particularly Amendment 27, to protect vulnerable people.

[Lord Naseby (Con) [V]]

My Lords, Amendment 37C is an issue of fundamental importance to young people who are disabled and have taken up child trust funds. The amendment before us is key. We had a thorough and competent speech from my noble friend Lord Young of Cookham, but I have just listened to another speech from the noble Baroness, Lady Finlay of Llandaff, and we have to find common ground between the two.

I declare a past interest as, when I joined the Commons in February 1974, I took an interest in the friendly society movement, which I continued until I left in 1997. I was then asked to become chairman, which I was from 1998 to 2005, of the Tunbridge Wells Equitable Friendly Society. That interest was declared at that point. In the days of the child trust fund, the Tunbridge Wells Equitable Friendly Society traded under the brand of the Children’s Mutual. It is my recollection that the Children’s Mutual was a brand leader, and we put a huge amount of effort into it. We liaised with the authorities involved at the time—not just the Government of the day but others. I am saddened and disappointed that, somehow or other, this issue got through the net. Unfortunately, the coalition Government tragically decided—George Osborne was one of the key players, of course—to wind it up. That was a great error, in my judgment.

We come to the current position, and I am pleased to hear the industry’s concerns, but I am disappointed that there has been no mention of the Association of Friendly Societies. I am sure that the majority of child trust funds were sold by the friendly societies, and I would advise those involved to make sure that the Association of Friendly Societies is involved now. On my own initiative, I will contact the Tunbridge Wells Equitable Friendly Society to suggest that it helps and is involved.

I am not sure why we have the same problem with junior ISAs. I declare an interest here, because I contribute to the junior ISAs of my four grandchildren, who are eligible. I am disappointed, although I was not involved in the legislation on junior ISAs in depth, that the same problem appears. I do not want to add to the concerns of my noble friend on the Front Bench, but, until recently, a large number of grandparents had been buying National Savings certificates, and I wonder whether the same problem is lying there and has not been raised by anybody else.

This is a serious problem. I have faith in my noble friend on the Front Bench, and I hope that he and those involved will look at it seriously. If there is anything that I can do to help resolve this issue, I will do my best to, because it is important.

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[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I apologise for the need to withdraw from the previous two groups, but I return to speak to Amendment 37 in my name, which was also kindly signed by the noble Lord, Lord Sikka. I look forward to his contribution to this debate.

I hope noble Lords recall that I had a similar amendment in Committee, in a debate rather truncated by the pressure of time. At that stage, I circulated an associated briefing addressing what is commonly called the finance curse or the problem of too much finance—the subject of growing and now extensive academic and policy commentary, which prompted this amendment. That briefing discussed, as I canvassed then at some length, the cost of too much finance, which was calculated for the UK between 1995 and 2015 as £4,500 billion, or 2.5 years of average GDP across the period, by Professor Andrew Baker and colleagues at the Sheffield Political Economy Research Institute.

I will not go through all that again, but I will go back to the exchange that I had with the noble Earl the Minister through Committee about the source of the Government’s figure, stated as the value of the financial sector to the UK and set at £76 billion in tax receipts. As was acknowledged, that includes £42 billion borne by customers in the form of VAT and by employees in the form of income tax and national insurance contributions.

The noble Earl kindly acknowledged to me by letter, after my initial question, that the source was PricewaterhouseCoopers, clearly not an independent source without an individual interest in playing up the financial sector of which it is part; although, to be fair to PwC, it does not claim, in that figure, to count costs. It is looking at only one side of the equation and adds the rider that it has

“not verified, validated or audited the data and cannot therefore give any undertaking as to its accuracy.”

I wonder, given that I raised this question in Committee, whether the Minister has given any more thought to, or asked any more of his officials about, how they might look at the complete equation—the costs and benefits of the financial sector. Perhaps if the Government are not prepared to accept this amendment, or write one along their own lines, they could look into this in other ways. That is the key question I put to the Minister tonight.

I provided Members last time with that one calculation —one massive cost—but surely, if the Government are making decisions that will impact on the size of the financial sector and, in consequence, other areas of the economy, they have, or at least plan to have, a methodology for doing that. As your maths teacher might have said, you need to be able to show your working and have a result you arrived at yourself—or at least that you can source to an independent, respected reference.

When we talk about finance, people often feel daunted and concerned about apparently technical matters, so I shall draw a parallel with something many people in communities around the land are well familiar with: the planned arrival of a new out-of-town supermarket that promises 100 or so new jobs and growth for the town—a calculated economic benefit. Permission is given, the supermarket is built and then the residents notice, a bit later, that one week the greengrocer closes down. A few weeks later, the butcher’s goes. Then the stationery shop that supplied lots of small businesses also closes down. Spending has not increased but shifted. There is a limited market, a limited amount of resources, and they have been shifted to one central location.

That analogy works rather well for the financial sector, not just because, as I talked about last time, a maths PhD graduate going into finance is not going into manufacturing, agricultural research or considering education statistics, but because the financial sector, particularly the most lucrative parts of it, is overwhelmingly concentrated in London—indeed, within the City of London that is often used synonymously with the financial sector, even if a huge percentage of the actual money is held offshore in tax havens. I am sure that some Members of your Lordships’ House will leap up to point out that there are jobs in cities around the land. That is true, but that is not where the real money is.

It was clear that from the noble Earl’s answer in Committee that the drafting of my amendment then was unclear, so I have attempted to tidy it up somewhat. I have clarified the reference here to inequality, to explain that I am talking, at least chiefly, of regional inequality: that is something, of course, that, with the Government’s levelling-up agenda, I would expect them to be greatly concerned about. After Committee, I also honed the reporting areas, taking out references to risks that were not the major aim of the amendment.

I hope that the meaning is clear now, for in his answer in Committee I am not sure the Minister, although I acknowledge that the pressure of time undoubtedly truncated his answer, grasped a major point of the “too much finance” argument. He referred to the Bank of England’s Financial Policy Committee having the responsibility to identify, monitor and take action to remove or reduce systemic risks, and the Office for Budget Responsibility producing and presenting a fiscal risks report to Parliament every two years. In his answer in Committee, the noble Earl said that

“the FCA and PRA are required to prepare and lay annual reports before Parliament, assessing how effectively their objectives have been advanced. These objectives are set by Parliament”.—[Official Report, 10/3/21; col. GC 733.]

However, what this amendment aims to do is to produce the information that could inform those objectives, to see whether the finance sector, as the SPERI report suggests, and as I would contend, is too large. How can those objectives be set in a fog, relying only on a clearly partisan source of data not presenting a complete picture?

The Buddhist text Udāna, dating back to about 500BC on the Indian subcontinent, refers to a group of blind men each touching part of an elephant. That produces a great deal of disagreement, as they debate what it actually is. I have my own view of the financial sector—I doubt that Members of your Lordships’ House have much doubt about what that is—but I am not asking your Lordships’ House, or the Government, to take my view, but just to have a complete, full view of the costs and benefits.

For the avoidance of doubt, I am not planning to push this amendment to a vote this evening. This is, as I think my speech has made clear, a continuing discussion which I plan to continue to push the Government on, which I also invite opposition parties to do—and, indeed, Members from the Government’s side, including the noble Baroness, Lady Neville-Rolfe, who in her Amendment 24, as she often does, calls for a cost-benefit analysis or impact assessment, an approach that would be improved and strengthened by Amendment 25 in the names of the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer. Both speakers thus far have stressed the need for information for proper scrutiny. I ask them to join me in thinking about the need for a full and complete view of what is undoubtedly the financial sector elephant stomping across the British economy.

Global Minimum Corporate Tax Rate

Baroness Bennett of Manor Castle Excerpts

Wednesday 14th April 2021 Lords Chamber

Asked by

[Baroness Bennett of Manor Castle]

To ask Her Majesty’s Government what plans they have to support the proposal by the government of the United States of America for a global minimum corporate tax rate (1) as part of the United Kingdom’s Presidency of the G7, and (2) in other fora.

[The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)]

My Lords, the UK has an established record of being at the forefront of initiating global action on international tax. It is no different here: during our G7 presidency, we are leading the way to ensure the delivery of G20 commitments that we secured in January 2019 for a comprehensive global solution based on two pillars. Pillar 1 would deliver on ensuring that businesses are taxed where they make their profits, and pillar 2 would deliver a global minimum tax.

[Baroness Bennett of Manor Castle (GP) [V]]

I expect that the Minister will acknowledge that, with their plan to raise the UK corporate tax rate, the Government have, at least implicitly, acknowledged that the 30-year-long global race to the bottom on corporate tax rates has led to major multinational companies not paying their way, while reeling in profits, building inequality and starving public services of essential funds. I also expect that the Minister will know that the recommended and UK-planned 25% minimum rate, as recommended by the Independent Commission for the Reform of International Corporate Taxation, would raise more than £22 billion for the UK Exchequer. Given that, and given that Germany, France and the Netherlands rapidly supported the US intervention, why is the UK not at the forefront, as the Minister said, but trailing well behind? Why have we not stepped in and backed this plan?

[Lord Agnew of Oulton (Con)]

My Lords, we have always been a Government who want to reduce taxation wherever possible. However, the Government have been very active in dealing with the abuse of corporate taxation over the last few years—for example, with the corporate interest restriction rules, which prevent multinationals from avoiding tax using financing arrangements, raising £1 billion a year since 2017. Other examples are the diverted profits tax, which has led to an additional £5 billion by countering aggressive tax planning, and the tax charge on offshore receipts in respect of intangible property, which is forecast to raise £1 billion a year.

Budget Statement

Baroness Bennett of Manor Castle Excerpts

Friday 12th March 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

I declare my position as a vice-president of the Local Government Association. I welcome our tranche of maiden speakers and start with three other welcomes.

First, my noble friend Lady Jones of Moulsecoomb addressed what she called the pathetic layer of greenwash that covers this budget, and I welcome the words of the noble Lord, Lord Lansley, who said that every fiscal event has to be directed towards achieving our climate objectives and made it clear that this Budget does not.

Secondly, I welcome the opening words from the noble Lord, Lord Eatwell, attacking the disastrous impacts of austerity and the fallacy of the thinking behind it in a way that Labour was singularly failing to do in 2015, when I was taking part in general election debates.

Thirdly, I welcome the modest increase in corporation tax in the Budget—a reversal, if a delayed one, of the encouragement of the increasing parasitism of giant multinational companies sucking wealth out of our communities and failing to contribute to the infrastructure and services that make those profits possible.

Some ideas, however, have yet to move on. The noble Lord, Lord Balfe, while opposing pay rises for our NHS workers, spoke of “living within our means”. He is, I say respectfully, talking economic tosh. The fallacy that a national budget is like a household one has clung on in the UK, when it has long been a historical artefact elsewhere. Of the £485 billion being borrowed in the financial year 2020-21, £450 billion will be owed to the Bank of England, which is not going to send in the repo man.

However, while the rhetoric of austerity has at least changed, the reality has not for many areas of government, particularly local government. Having dealt with the brunt of the Covid crisis, councils are being forced to raise council tax to fill the holes in their social care budgets. The National Audit Office tells us that at least 25 local councils are on the brink of bankruptcy. Local government provides the services that people use and rely on every day: libraries, bin collections, bus services and social care. The austerity will be seen and suffered. That is the choice made in this Budget by the Government.

Financial Services Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage & Lords Hansard
Wednesday 3rd March 2021 Grand Committee

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Rooker, and I very much agree with his view on freeports. These are entirely the wrong direction of travel, opening up the UK even further to corruption and fraud. I also agree with him about the need to help small companies. They face an extremely un-level playing field of heavy enforcement, while they do not have the same options—happily—for tax dodging, fraud and corruption as the large ones have and, all too often, exercise.

I commend the noble Lord, Lord Eatwell, for his hugely powerful speech. I will use social media to ensure that it gets as wide a circulation as possible. I offer the Green group’s support for Amendments 49 and 50. I disagree with the words of the noble Lord on only one point. He asks what is going wrong. I would say that this is not a failure of design; it is not things going wrong from intention. This is what our financial sector has been designed to do and has refined its practices for over centuries. We have been robbing the world blind for centuries.

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Moved by

[Baroness Bennett of Manor Castle]

55: Clause 34, page 40, line 30, at end insert—
“(4B) The regulations must also include the following as part of the scheme—(a) provision to ensure that any debts appearing on a repayment plan, which have either—(i) been sold by originating lenders to debt purchasing companies prior to the debtor entering the scheme, or(ii) been sold by originating lenders to debt purchasing companies whilst the debtor is in the scheme,are subject to what is to be known as a “fair debt write-down”; (b) that the level of the fair debt write-down must be calculated by the amount paid by the debt purchasing company for the debt plus no more than twenty per cent of the value of the debt;(c) that no more than the amount calculated under paragraph (b) may be collected in respect of any debts to which a fair debt write-down applies throughout the course of the debt repayment plan; and(d) that at the end of an individual’s debt repayment plan, any outstanding amount in respect of debts to which a fair debt write-down has applied is unenforceable against the debtor and must be treated as if fully discharged by virtue of section 251I of the Insolvency Act 1986 (discharge from qualifying debts).”Member’s explanatory statement
This amendment seeks to ensure that debts which have been sold by originating lenders on the secondary debt market are written down to a fair level.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I beg to move Amendment 55, which appears in my name and has attracted the most welcome support of the right reverend Prelate the Bishop of St Albans. I thank all noble Lords who have put their names down to speak in this group.

The amendment is modest in scope but highly practical in action. It addresses actions that could greatly improve the lives of people who desperately need that boost, as the noble Lord, Lord Tunnicliffe, said in summing up the previous debate. It also relates to Clause 34, but I think it makes a large enough difference to the plans that it needs to be considered alone, as useful and helpful as many proposals in the previous group were. It brings in a concept of debt write-off or debt write-down—something that I suspect will become part of many debates in your Lordships’ House in the coming years.

We were talking in the first group of amendments about flows of billions of pounds, Russian moguls and massive lumps of cash. Here we are talking about the lives of people for whom a 50p cup of tea in the local café is a luxury, for whom the disintegration of a long-nursed pair of shoes is a crisis. In the previous group many speakers referred to how Covid has made millions of debtors’ lives much harder, but this is not —or at least not just—an emergency pandemic measure.

If we look back a decade ago, debt often arose because of a sudden crisis, such as a car breaking down or a washing machine failing to start, or sometimes because the siren call of the payday lender or predatory credit card provider had proved irresistible. However, over the past decade, for hundreds of thousands of households, the persistent inadequacy of income, in most cases income coming through work with added benefits, has still not been enough, week after week, month after month, year after year, to meet basic needs. Debts have built up: essential debts such as council tax, and gas and electricity bills, even when resort to a food bank provided some brief moment of relief. For millions of Britons, finance—we are taking about the Financial Services Bill—means being trapped and overindebted. That is the situation of one in five adults, more than 8 million people, according to the Financial Conduct Authority. Even if we were to suddenly miraculously snap our fingers and lift the minimum wage to the real living wage and ensure that benefits met the level needed to pay essential bills—a very loud snap indeed—there would still be a huge mound of debt remaining.

I pay tribute to the Centre for Responsible Credit, which has done extensive work on this amendment and from which I think noble Lords will have received a briefing. This is not a political amendment but very much a practical one to address an issue that I hope the Committee will allow me to explain at a little length. In the debate on the last amendment, we were introduced to the Government’s debt respite scheme, which is intended to provide people who seek debt advice respite from enforcement proceedings for 60 days. Clause 34 creates an additional statutory debt repayment plan, a formal plan with creditors to repay all debts over a manageable period with protection from the bailiffs in the meantime. Crucially, that timeframe will generally be seven years, although it may be up to 10.

To set the scene for why we need this amendment, why we need a fair debt write-down, I will explain the other three means by which unpayable debt can be dealt with. Perhaps the best known is bankruptcy, which is reserved for debtors with significant assets that need to be liquidated and the proceeds distributed among creditors. Generally, the debts are discharged in full after one year. Next in terms of debt scale are individual voluntary arrangements, which were originally intended to allow home owners with significant levels of surplus income, after taking account of essential outgoings, to retain their home and secure a partial debt write-off. Resolution is generally achieved over five to six years. Remember, the idea is that people will still stay in their home. At the bottom of the income scale are debt relief orders. These were brought in 2009 for low-income, low-asset debtors, who see their debt discharged after one year. Access is by approved debt advisers but, to be eligible, conditions are tight.

However, many people fall in the middle, between IVAs and debt relief orders, and increasing numbers of IVAs are failing. There is a significant number of reports of them being mis-sold. Changes to debt orders are planned to enable them to encompass more people, but many will still fall in the gap between these two groups. Significant numbers of people are likely to be taking out statutory debt repayment plans, but as currently constituted there are problems. People are being assessed to see if they can repay the entirety of their debts over up to 10 years, based on a calculation of surplus income using the standard financial statement spending guidelines provided by the Money and Pensions Service. During the period of the plan, any increased income will be directed towards repayment of creditors, trapping people and actively discouraging them from taking up any opportunities that might, with a different plan, improve their circumstances. I also note that we have a transparency problem here with the standard financial statement not being in the public domain due to the Money and Pensions Service licensing terms. In summary, though, the key issue is that people under SDRPs are being trapped for up to 10 years, and certainly seven years, and locked into circumstances for at least double—and, potentially, 10 times—the length of other schemes.

I turn now to question of the debts and the companies that hold them. A large portion of these debts have already been written off by the originating lenders and sold on the secondary debt market. In 2018, the Financial Times reported that more than half the money being collected through debt management plans had been sold on in the secondary market. A presentation by the chair of the Credit Services Association in 2019 indicated that, in the preceding year, the total value of debt purchased by such firms was more than £55 billion. According to the 2019 annual report of one of the main debt purchasing firms, Cabot Credit Management Group Ltd, the average long-term purchase price for the debt averages 9p in the pound. So we have a potential 10-year debt repayment period, with 10 years of dragging fear, worry and poverty, and an industry that has purchased the right to impose that weight for less than 10% of the cost of the face value of the debts.

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[Lord True (Con)]

My Lords, we have already spoken at some length about the statutory debt repayment plan, so I will restrict my remarks to the amendment in front of us. Amendment 55 would require regulations to include a provision that would mean debts that have been sold by one creditor to another are subject to a fair debt write-down when they are included within an individual’s SDRP. Both my noble friend Lady Noakes and the noble Baroness, Lady Kramer, illustrated, from their position of great experience in these areas, some of the important issues that would need to be considered in an intervention of the kind proposed. The noble Lord, Lord Stevenson of Balmacara, made the same point from a slightly different perspective.

As its name suggests, the SDRP is intended to support the repayment of debts in full, over a manageable timeframe. The policy is not intended to provide debt relief, but a fair and sustainable way to improve debtors’ finances and returns to creditors. Other statutory debt solutions, such as debt relief orders, offer debt relief to people for whom repayment is not a realistic prospect. The Government recently launched a consultation on raising the financial threshold criteria for individuals entering a debt relief order.

The noble Baroness’s amendment would apply to debts which have been sold on, and not to other qualifying debts. The Government do not agree that it is necessary or desirable to treat these debts, or the people who owe them, differently from other debts and debtors in the scheme whose debts have not been sold on. People entering an SDRP will be in financial difficulties regardless of who the debts are owed to, and they all deserve fair and equitable treatment. I can, however, reassure the noble Baroness that, as per the 2019 consultation response, accrual of most interest, fees and charges will be prevented during a SDRP, so the amount of a person’s debt should not increase while they are repaying, regardless of who the debt is owned by or sold to in that period.

This amendment would also require any outstanding amounts owed in respect of sold-on debts to be treated as if fully discharged at the end of an SDRP. As the SDRP supports debtors to repay debts in full, it is not envisaged that there will be any outstanding amount left to pay at the end of a completed SDRP. Including such provision would be contrary to the policy intent of the Bill and to the broader arguments put forward by noble Lords in the course of this brief discussion, so I hope that the noble Baroness will feel able to withdraw her amendment.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I thank all noble Lords who have contributed to this debate, particularly those who have supported Amendment 55. I particularly thank the right reverend Prelate the Bishop of St Albans, who painted a powerful picture of the impact of what we now know was the early stages of the pandemic, as set out in the churches’ Reset the Debt report. He spoke movingly about the increase in demand at food banks and church food pantries, which have been essential in helping so many households through. However, the food bank does not pay the gas bill or the council tax demand.

The right reverend Prelate stressed, as we would expect, the strong moral case for this fair debt write-off—who better to do so? The noble Baroness, Lady McIntosh of Pickering, highlighted the pressure of council tax being felt by so many households. Of course, council tax is funding essential services as budgets are being squeezed by slashed funding from Westminster. I should perhaps declare at this point that I am a vice-president of the Local Government Association. I also thank the noble Baroness for stressing the issue of zero-hours contracts, which affect so many households.

I strongly thank the noble Lord, Lord Davies of Brixton, for making a powerful argument for something much larger than this, as I said at the start, modest proposal; for making the parallel with the bank write-offs of 2007-08; and for calling for consideration of a more wide-ranging debt jubilee. That is why I went to a number of NGOs and campaign groups with a proposal; they came back to me with this, saying that it could and should be practically delivered right now. The noble Lord also made a useful point about the macroeconomic impacts and the sheer drag of debt.

As for the contribution of the noble Baroness, Lady Noakes, I am sure that we will find something to agree on one day, but I thank her for her thoughtful exploration and exposition of the detail. I am not sure, looking at the clock on my computer, that this is the ideal time in the evening to go through her worked example in detail, but I will point out that what is proposed here is not retrospective. In fact, I do not think we even have the power to do such a thing. The price of the debt purchased in the future would reflect the legal change and so would still allow a profit to be made. I also think, given that the secondary debt market is currently paying less than 10 pence in the pound, that her example reflects little understanding of the practical reality of the lives of many in society and in many communities. Perhaps she is thinking more in the range of the market of Greensill Bank, which we have seen collapse today.

I very much agree with what the noble Lord, Lord Stevenson of Balmacara, said on the need for a broader debate on debt, reflecting also what the noble Lord, Lord Davies, said. I do not agree that we should not act now: we are in an emergency situation and, as the discussion on the previous group highlighted, we need to give some certainty and hope. Given the noble Lord’s reflections on how people are appalled and horrified to find themselves in this situation, I thank him for sharing those experiences.

On the remarks of the noble Baroness, Lady Kramer —I will take a look at them in Hansard to ensure that I understood them clearly—there may be some misunderstanding at their heart. Being in debt in the secondary market is not about creating a situation where extra charges can be laid. We are not talking about people going out to borrow money. We are talking about council tax bills, and gas and electricity charges.

The noble Lord, Lord Tunnicliffe, said that we really need broader debates on these issues. Indeed, I said in my introduction that I expect to come back to them many times in the coming years. At the moment, we have had a useful debate; I take on board the noble Lord’s suggestion of a general debate. Perhaps those on the Front Benches, who have much more access to such occasions, would consider originating such a debate. My action at the moment is obvious.

Again, I thank everyone who has contributed here today and everyone who has contributed to this discussion outside this Committee. For the moment, I beg leave to withdraw the amendment, but I reserve the right to consider bringing it back. I invite any noble Lords who are interested in working with me on this matter to approach me.

Amendment 55 withdrawn.

Political Parties: Expenditure Limits

Baroness Bennett of Manor Castle Excerpts

Monday 22nd February 2021 Lords Chamber

[The Lord Speaker (Lord Fowler)]

I call the noble Baroness, Lady Bennett of Manor Castle.

[Baroness Bennett of Manor Castle (GP) [V]]

[Inaudible.]

[Lord Ashton of Hyde (Con)]

The noble Baroness is muted at the moment.

[Baroness Bennett of Manor Castle (GP) [V]]

Apologies, my Lords—I will try again. In recent general elections, the wealthiest and largest political parties have used their very generous national party spending limits—in 2019, it was close to £19 million—to cover a variety of non-national costs, including targeting a lot of individual constituencies with generic leaflets, billboards, et cetera. Independent candidates and smaller rising parties do not have this additional spending option. Will the Government be open to consider rebalancing the two types of spending limit in the interests of fairness as well as to prevent swing seats being barraged with messaging? Will they put far tighter limits on individual contributions to political fundraising, so that we do not all get the politics a few people pay for directed towards a small percentage of the population?

[Lord True (Con)]

My Lords, I have not noticed the Green Party fail to target its efforts on specific constituencies, but the noble Baroness may be able to advise me otherwise. I do not think it would be sensible practice to seek to reduce donations to levels that might be achieved by the least popular parties in the country. The truth is that many individuals—whether trade unionists or others—contribute a great deal of money to the larger parties, and I think their contributions should be welcomed and esteemed.

Financial Services Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 28th January 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I join the House in universally welcoming our two outstanding maiden speakers. Given that the noble Lord, Lord Hammond of Runnymede, discovered a long-hidden rebellious streak in the other place, and that his title has links to the Magna Carta, I hope that we will be seeing even more rebellion on the Benches opposite with his arrival. I also welcome the noble Baroness, Lady Shafik, who is clearly a powerful new voice on our Cross Benches. I was very glad to hear her mention green finance. I hope we will be hearing a lot more from her on that, as we just powerfully heard about those issues from the noble Baroness, Lady Sheehan. I will, as you might expect, be backing many of the amendments to which the noble Baroness, Lady Sheehan, referred.

However, on the Bill, I must begin by thanking Macmillan Cancer Support for its extremely useful briefing. I shall take its conclusions and extend them far more broadly than it ventured to do. Macmillan calls for an amendment to the Bill requiring organisations to have a statutory duty of care for customers. The charity suggests that that is the best way to ensure that financial service providers take a pre-emptive approach to ensure that they act in the best interests of their customers.

As you might expect, Macmillan focuses on the financial difficulties of people with cancer but also notes that the Financial Conduct Authority concludes that one in two people will become financially vulnerable at some point in their lives. I suggest that, in a complex and fast-changing world, overloaded with pressures on time and attention, with so many people stressed by the struggle for mere survival and the fear of rampant insecurity, the sensible approach would be for everyone to be treated as vulnerable and to acknowledge that our whole society is acutely vulnerable. If we created a system that works for the most vulnerable, it would be one that will work securely, resiliently and safely for everyone.

We know that our current system is not working for many at an individual level. Just look at the practical and topical example of the disastrous performance of the insurance sector when it came to business interruption insurance for small businesses in relation to Covid-19. The financial sector is utterly failing at a structural level to meet the collective needs of our whole society, acutely vulnerable as the Covid-19 pandemic has shown us to be. A system that works best for everyone would involve a financial sector that it a utility: a provision of essential services for the real economy—the economy that feeds us, builds our shelter, clothes us and provides the other essentials of life.

Instead, following decades of financialisation of everything from the care sector to the so-called water industry, we have a financial sector as parasite, sucking funds out of the real economy—all too often to tax havens—and loading essential provisions and services with unsustainable debt. If noble Lords think that I am being radical here, I invite them to read the extensive coverage in the Financial Times of the impact of financial engineering on the water companies.

We are more than a dozen years on from the 2008 financial crash, when the cash machines nearly stopped working. In the age of Covid-19, we are surely more aware now of the need for resilience and stability in this age of shocks. Yet I note that an Oxford University Faculty of Law conference held in 2018 on financial regulation concluded:

“We are safer, but not as safe as we should and could be.”


And that was just the thinking in the financial sector’s own terms.

I listened carefully to the Minister’s typically detailed and careful introduction and heard quite a bit about limiting risk. However, I did not hear the words “climate” or “nature” once. But we know that we need a financial sector that does not continue to fund the trashing of the planet and societies, supply funds to fossil fuel operations that are destroying the planet, pour money into the destruction of the rainforest, stuff the oceans with plastic or spread poverty and inequality through funding sweatshops and outright slave labour.

On 25 January, the US Federal Reserve and the European Central Bank simultaneously said that they would make climate considerations a central part of finance, the importance of which the noble Baroness, Lady Hayman, highlighted. It appears that we are not world-leading but world-trailing, yet again.

We are, of course, world-leading in dirty money, as explained earlier in considerable forensic detail by the noble Lord, Sikka. The issue was also mentioned by a number of Members of the House in an earlier question session on our relationship with Russia. We are a major global centre of corruption. The City is an Augean stables and the Bill is clearly sparing in its distribution of shovels. I give the House notice that I intend to support a proposed amendment to create a new corporate criminal offence for companies or bodies regulated by the FCA of failing to prevent economic crime. I also look forward to working with the noble Lord, Lord Hendy, on the issues of liability that he raised.

In summary, we obviously need a Financial Services Act, but the Bill is nothing like what we need. We are seeing increasing numbers of communities around the world understand that the model of economy, society and finance needed is one that allows us to live within the doughnut, as the saying goes—in the essential space that respects planetary limits while meeting human needs, thereby ensuring that everyone is treated with respect and given dignity, as defined by the economist Kate Raworth in her book Doughnut Economics. We need a Financial Services Act that sets out how our financial sector can meet the need to do that—a very differently structured sector that takes care of all our needs, instead of risking our security and future. We are in an emergency state in 2021. Your Lordships’ House has a responsibility to act to transform our planet-trashing, poverty-creating financial sector, as the other place has very clearly failed to do.

SolarWinds Cyberattack

Baroness Bennett of Manor Castle Excerpts

Monday 25th January 2021 Lords Chamber

[Lord True (Con)]

My noble friend makes some important points. Obviously recognising the increasing importance of this area, the government security group is leading the development of a government cybersecurity strategy—which will sit underneath the national strategy —to deal with some of the issues my noble friend refers to. We also have a wide range of advice and support to help private sector organisations protect themselves.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, my question follows on from that of the noble Lord, Lord Harris of Haringey, and concerns resilience and the impact on operational technology, rather than simply IT, where experts say it may take months for difficulties to appear. Credible analyses suggest that the simple network management protocol—SNMP—fails to meet the tests of confidentiality, integrity and availability. It is not going to be replaced quickly, but are the Government at least looking at ways in which it can be reinforced across their own systems, while ensuring that that happens right across vital private systems in our country?

[Lord True (Con)]

My Lords, I apologise; I found it quite hard to catch every part of the noble Baroness’s question. I hope this is not an inadequate answer, but I am unable to comment on operational detail at this stage. However, as I have assured the House, the NCSC is working to mitigate all potential risks, and this work is ongoing.

G7 Summit

Baroness Bennett of Manor Castle Excerpts

Thursday 21st January 2021 Lords Chamber

[Lord True (Con)]

My Lords, certainly, one of the key declared aims of the G7 presidency is tackling climate change and preserving the planet’s biodiversity, as I stated. I can certainly tell the noble Lord that we very much welcome the prospect of bringing the COP 26 UN climate conference to Glasgow, to Scotland, in November and will be working on the important agenda that the noble Lord outlines.

[Baroness Bennett of Manor Castle (GP) [V]]

Following the question of the noble Lord, Lord McConnell, I was going to ask about the climate emergency. However, following the Minister’s answer, it is also important to ask: will the Government also focus on the social elements of our sustainable development goals, such as ending poverty and hunger, and dealing with inequality?

[Lord True (Con)]

My Lords, obviously those objectives are encompassed in the agenda set out by the Prime Minister. Promoting future prosperity for all is vital. Incidentally, I am certain that the noble Baroness will welcome the invitation to the Government of Australia to participate.