Creditworthiness Assessment Bill [HL]

Lord Davies of Oldham Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Lord Best (CB)]

My Lords, from the Cross Benches, I support the noble Lord, Lord Bird, and oppose the amendment. I know that the motivations of the noble Lord concern mostly poorer people who need credit to buy white goods and the rest—we have known for many years that the slogan, “The poor pay more”, has been more than true—but I want to refer to those members of Generation Rent who have a chance, albeit a sometimes slim one, of being homeowners and need every help in getting their creditworthiness to the highest-possible status to move from being a tenant to a homeowner, and who are held back by the way in which credit agencies operate. It may be said that the people in Generation Rent do not wish to be homeowners —that they live an “Uber lifestyle” in which you do not own a car; you call Uber. That can apply to many aspects of life. However, surveys continue to show that people wish to be homeowners and for very good reason: home ownership brings with it security, which you do not get in the private rented sector. Even if your tenancy is for a full year, a lot of people find that it is hardly enough to enable you to settle down and, certainly, to bring up a family—we are now seeing ever more families in the rented market.

Home ownership remains an aspiration. Although you might be paying more for a mortgage on day one—if the mortgage company can provide a loan for you—rents will rise roughly at the level of earnings, which is RPI or CPI plus 1% or so, year after year and, in 25 or 30 years, those rents will be enormous. When you come to retire as a tenant, a lifetime of tenancy means having to move home on retirement because your income will drop but your rent will keep rising. Home ownership gives you not just the security of tenure but the financial security of knowing that, although it may take 25 or 35 years, eventually you will be free of debt. Anything that inhibits people from breaking into home ownership, which is what people aspire to, is extremely important.

People say, “Nowadays in London and the south-east, what is the point of talking about home ownership? Prices are so far beyond the reach of those on ordinary incomes this will never happen”. We now have planning consents across London for an enormous number of new apartment blocks. We are seeing come out of the ground 520 apartment blocks of more than 20 storeys for residential use. A massive housebuilding programme is coming down the line. Those who have built those apartment blocks, some of them overseas investors, believe that the starting price will be about £500,000 for the majority of the flats. Someone who is on £50,000 a year—there are not that many people on such a salary—will be able to get a mortgage of £250,000 and not £500,000. The trouble is that we are running out of Russians; we are running out of overseas buyers who are prepared to pay £500,000. I predict that home ownership, which has been in sharp decline, will come back into fashion. The opportunities will recur; prices will have to come down to meet the incomes of those who aspire to own. We should ensure that the credit lines for them are as clear as possible, which is what the noble Lord, Lord Bird, would do.

[Lord Davies of Oldham (Lab)]

My Lords, I indicated at Second Reading that Her Majesty’s Opposition were very much in favour of this Bill. In a debate in Westminster Hall, the shadow Finance Minister made it clear that he too was in favour of it.

I appreciated the way in which the noble Lord, Lord Blencathra, introduced the amendments—it was more probing than assertive. He will have recognised that representatives of almost every part of the Chamber have been against the amendments and said that the Bill should stay as it is in this crucial provision. The noble Lord, Lord Bird, is more qualified than me to respond to all these points and I shall therefore defer to him, but he must have been encouraged by the enormous support across the Chamber for his Bill as it stands.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I strongly support the Bill in its unamended form and do not support the amendments proposed by the noble Lord, Lord Blencathra. When the noble Lord responds to the debate, can he tell the Committee a little bit more about who the members of the Consumer Credit Association are? I do not know whether BrightHouse is a member of the CCA, but if he could tell us it would be helpful.

I grew up on a council estate in the 1960s and 1970s. Both my parents worked and made sure that they paid their rent—it was the first thing they ever did. My dad had two jobs to ensure that our rent and rates were paid. It is important that people who meet their financial obligations week in, week out have that taken into account when they seek credit. As the noble Lord, Lord Best, said, it is always the poor who pay more, and that is totally unfair—of course, that goes for many things in life. When I go into my local newsagent, I see people queueing up with their little fobs to get their electricity; they pay more. And there are other things—it is just unfair. What the Bill does, on which I congratulate the noble Lord, Lord Bird, is begin to make sure that, if you have a good credit record, that is taken into account properly, so that when you seek credit you can get a fair price and will not always have to pay the most.