Consumer and Personal Debt

Baroness Meacher Excerpts

Monday 23rd October 2017 Lords Chamber

[Lord Bates]

I was nodding as the right reverend Prelate made his point about this irresponsible lending—it is very tempting—but of course the Financial Conduct Authority was set up to be an arm’s-length body and to advise the Government on what should be done. As he rightly says, the FCA has produced a report, which it is putting out to consultation, and will be announcing some policy changes in this area. Previously, we have seen the introduction of things such as fee-free bank accounts, which are now benefiting 4 million people, and the cap on payday loans—I pay tribute to the most reverend Primate’s role in bringing that about. These are making a practical difference to people and we need action there too.

[Baroness Meacher (CB)]

Is the Minister aware that as universal credit is rolled out, personal debt is going to increase to unprecedented levels? This is not the fault of the individuals but results from the fact that new claimants have to wait, on average, seven to eight weeks for their first payment. They then get a payment for four weeks. It is not possible for them to survive, and of course we know that their benefits are reduced by the bedroom tax and all the other things, and then debt withdrawals. We heard this morning at a meeting that apparently people are resorting to burglary in order to pay their debts. Can the Minister help them by consulting his colleagues?

[Lord Bates]

There is no need for people to engage in any of those kinds of activities. Help is there, including in the shape of the advance, which over 50% of people now take advantage of, and which can be based on that element. We need to remember that universal credit was brought in with cross-party support, with the very purpose that it would stop the perverse incentives which meant that, under the previous benefit system, people could work more hours and be worse off, and move them to a system where people would always be better off if they worked. We now need to address the details, which my right honourable friend the Secretary of State is doing.