Spyware

Lord Stevenson of Balmacara Excerpts

Wednesday 21st July 2021 Lords Chamber

[Lord True (Con) [V]]

My Lords, Her Majesty’s Government are committed to defending the UK from online threats and boosting national resilience to cyberattacks, which the noble Lord rightly asks about. In the past five years, the national cybersecurity strategy has begun to transform the UK’s fight against cyber threats. We do not comment on individual cases or intelligence matters, as noble Lords will know, but while we cannot comment on the specifics, for operational reasons, I underline to your Lordships that we very strongly condemn the targeting of UK individuals.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, the National Action Plan for the Safety of Journalists was, coincidentally, published yesterday. It says that

“A world where journalists are silenced by either fear or censorship is a much poorer one.”


It also says that the Government are committed to keeping journalists “as safe as possible”. It has a number of initiatives, which are to be welcomed, but it is silent on the question of the NSO spyware just referred to, which clearly poses exactly these threats. What plans do the Government have to protect our journalists from such spyware in future?

[Lord True (Con) [V]]

My Lords, I reiterate the Government’s determination within the cyber strategy to protect all our citizens. I strongly agree with the noble Lord that freedom of the press is an integral part of the United Kingdom’s democratic processes. The Government are committed in every way to protecting the rights and values we hold dear, including the protection of journalists.

National Science and Technology Council

Lord Stevenson of Balmacara Excerpts

Wednesday 23rd June 2021 Lords Chamber

[Lord True (Con)]

My Lords, I am very grateful for what the noble Lord has said and the general welcome he has given. I pay tribute to him for his own work. I can certainly assure him that, for example, the role of the new technology adviser covers a breadth of issues that necessarily make it a UK role, but the office for science and technology strategy is expected to engage regularly with chief scientific advisers and officials on how science and technology are being deployed across the United Kingdom. This will and does include the chief scientific advisers and officials in the devolved Administrations.

[Lord Stevenson of Balmacara (Lab)]

My Lords, prime ministerial initiatives of this kind usually reflect unhappiness with the status quo. In this context, what relationship will the new council have with UKRI, our largest public funder of research and innovation, which has widespread support from academia and industry and whose mission statement states that it exists

“to build a thriving, inclusive research and innovation system that connects discovery to prosperity and public good”?

As a scientist, I welcome more investment in science and technology, as my noble friend did, and I note that announcements such as this can generate good headlines, but can the Minister explain why it is in the public interest for the Cabinet Office to set up a similar, parallel operation to existing BEIS structures?

[Lord True (Con)]

My Lords, there are a whole range of bodies and organisations—the academic world, business, the scientific community, universities—and a whole range of people contributing to our effort in harnessing and developing science and technology. This new initiative is not intended to supplant the work of anybody but to signify at the very highest level—a new Cabinet committee—the determination of the Government to move forward and exploit these opportunities in a fully co-operative manner.

Ireland/Northern Ireland Protocol

Lord Stevenson of Balmacara Excerpts

Thursday 29th April 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, I assure my noble friend that we very much encourage the Commission—at all levels, from Vice-President Šefčovič and his team down—to engage with those who have experience of the negotiation of the Belfast/Good Friday agreement and everything that followed from it. We do everything we can to drive home the importance of protecting it as central to stability in Northern Ireland. Of course, I will be happy to meet my noble friend and colleagues to discuss this further.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, when he responded to the question from my noble friend Lady McIntosh of Hudnall, the Minister repeated his response to my question on this issue last month, which confirmed that bilateral discussions with European member states were the way forward and were continuing. The Culture Secretary in Northern Ireland and Great Britain desperately needs clarity on the short-term visa issue. Can the Minister say which EU states are involved in these discussions and give us a sense of the likely timetable for their resolution?

[Lord Frost (Con)]

My Lords, this is indeed an important and urgent matter. Our ambassadors and embassies are talking to member states to establish the facts around what kinds of visas and processes are required and, importantly, to get them to improve their guidance on how to apply. We are also trying to improve our own signposting to that guidance. Our rules for touring professionals are comparatively generous, of course. We hope that, out of these discussions, some member states will signal a wish to change their rules so that they look more like ours and enable this great touring activity to continue.

Mobile Telephones: Public Emergency Alert System

Lord Stevenson of Balmacara Excerpts

Wednesday 21st April 2021 Lords Chamber

[Lord True (Con)]

My Lords, I cannot give a specific target date, for the reasons I have given. I said that we are ensuring the timing is carefully aligned with the Covid-19 strategy to avoid confusion. However, my noble friend is absolutely correct: technology advances. Our anticipation is that somewhere between 60% and 80% of phones may be contactable by this system when it comes in. As he and the noble Lord opposite said, we also have to be aware that anything which is broadcast is also able to be received by terrorists.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, given the imminent obsolescence of the country’s analogue PSTN system, what assessment have the Government made of the impact their plans will have on the rollout of a voice over internet protocol technology and other communication systems, such as the red button alarm which is relied on by so many elderly people?

[Lord True (Con)]

My Lords, the system that is envisaged would be complementary to, and would not eliminate, other existing means of contacting people in danger and emergencies.

Financial Services Bill

Lord Stevenson of Balmacara Excerpts

Report stage
Wednesday 14th April 2021 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I am delighted to support government Amendment 14, and congratulate my noble friend and the ministerial team on listening to concerns expressed across the House, and in particular, in echoing my noble friend Lord Holmes, for introducing the follow-up provisions under the affirmative procedure. I will also address, perhaps more supportively than other noble Lords, my noble friend’s Amendment 35. I must say that I am increasingly envious of my noble friend Lady Noakes and, in particular, the rather splendid account that she had previously with the Bank of England. She must be torn, not wanting to destroy her rather splendid cheque book. For security purposes, she might err on the side of caution and do so.

My noble friend Lord Holmes of Richmond has done the House a great service by raising this issue. Yes, we can debate whether it should be a Bank of England account, which I understand no longer exists; perhaps this is not the right time to revisit that. I have become increasingly concerned—as, I know, have many in consumer circles with much greater knowledge than I about this—by the way in which one’s credit score can be disadvantaged. All sorts of extraordinary things seem to be happening at the moment, without us even knowing. We are apparently encouraged to do regular credit checks; I did, and was delighted to see that on one, the Experian account, my credit score was sound. But apparently the Government have discontinued Experian, so I do not know to whom to address that in future.

This raises the issue of those who have a poor credit score and are having trouble finding a bank account. My noble friend Lord Holmes has identified the difficulties in doing so. If it is not the wish of the Government to support the terms of Amendment 35, I hope that the Minister responding to this debate will nevertheless look carefully at the circumstances by which it is becoming increasingly difficult for those with poor credit scores to access even the most basic banking services.

I understand what my noble friend Lady Noakes said about how we are coming under increasing commercial pressure to make banks’ retail services financially viable. This is causing great concern for those of us in rural areas, because it is increasingly difficult to keep small rural branches open. To me, they perform a social function as much as anything, particularly for local shops, in banking their cash, allowing them to access bank accounts and, for example, banking their money when there has been a local mart. My noble friend has identified these very real concerns and I hope that the Government look on them sympathetically.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I will speak briefly on government Amendment 14 and say a few words in support of the noble Lord, Lord Holmes, because of his ongoing campaigns and successes in making us think harder about financial inclusion and the use that could and should be made of fintech, in reaching out to those who are not provided for by the financial system. Government Amendment 14 has our support because, as seems obvious from the Woolard review and other comments, there is an issue around this new-technology approach to purchasing.

Buy now, pay later has all the ring of a scam around it although, having talked to some providers and looked at their business plans in more detail, it seems to be a well worked-through and carefully crafted approach to the process of trying to buy goods, mainly. It may also apply to other services. Those on reasonable budgets who are unable to pay, with confidence, the amount for the goods that they are purchasing get the benefit of the opportunity to spread the payment over more than one month—the majority are for three months—largely at the expense of the retailer. The amounts are small and the sanctions applied by the providers are severe: you get dropped if you miss a payment or two.

There does not seem to be a sense of some of the fringe approaches that were available in other schemes that the House has looked at and which we have read about in the papers. In a sense, this may not be quite the scam and worry that we thought it was when the Woolard review came out, but the Government are right to ensure that the regulatory book is in order and that there is an opportunity to keep a close watch on this, and to act, as and when required.

Therefore, although it is unusual for the Opposition to offer powers to the Government in this way, we are reassured by the way that they have approached this, having brought us into the discussion and debate. We are aware that any regulations brought forward will, in practice, be under the affirmative basis and therefore open to scrutiny within your Lordships’ House and elsewhere in Parliament. We support this approach, even though to do so is slightly unusual. We think that doing it this way is a good move by the Government and hope that it will not be necessary, in the sense of some of the scare stories that we have read about. But if it is, at least the powers are banked.

[Lord Naseby (Con) [V]]

This is an important Bill and I record my formal thanks to my noble friends on the Front Bench for the way that they listened to the earlier debates. Here, we have evidence in this first set of amendments, certainly Amendment 14, that not only have they listened but we are getting a positive response.

Amendment 14 is good and I support it. I am delighted to hear that we will have a consultation with stakeholders. I wonder whether Her Majesty’s Government could produce a list of those whom they think they are going to consult, because a number of us know a fair amount about the fringes of the financial world and there may be a section missing.

On buy now, pay later, I remember that when I started buying things that I could not afford there was a technique called hire purchase. That was very similar and there were all sorts of arguments when I got into politics, while HP was still active, on the nuances of the HP world. The same applies now, so I say well done on Amendment 14. I look forward to seeing the consultation and hope to take part myself. As someone who has sat in the chair, I will welcome enormously having an affirmative resolution when it comes back. I also ask my noble friend the Minister to make sure that the Financial Ombudsman Service and claims management companies fall within the circumference of this consultation, because they are important to this large market. It is buy now, pay later, in a sense, but not the modern version; it was historically called home-collected credit.

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Moved by

[Lord Stevenson of Balmacara]

17: After Clause 40, insert the following new Clause—
“Bills of Sale Act 1878 and Bills of Sale Act (1878) Amendment Act 1882
(1) The Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882 are repealed.(2) In consequence of the repeals made by subsection (1), the following are also repealed—(a) the Bills of Sale Act 1890;(b) the Bills of Sale Act 1891;(c) section 23 of the Administration of Justice Act 1925;(d) in Schedule 11 to the Constitutional Reform Act 2005, in paragraph 4(3), the entry relating to the Bills of Sale Act 1878;(e) in Schedule 13 to the Tribunals, Courts and Enforcement Act 2007, paragraphs 17 to 19;(f) in Schedule 9 to the Crime and Courts Act 2013, paragraph 15.”Member’s explanatory statement
Bills of Sale are mainly used for “log book loans”, one of the last sources of high cost credit. They are governed by two Victorian statutes which the Law Commission recommended in 2017 should be repealed. This amendment is to further probe the Government's plans to review that recommendation.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I am speaking to Amendment 17, which has been retabled in the same form in which it appeared in Committee. I am grateful to the noble Baroness, Lady McIntosh of Pickering, for her support, and I look forward to her contribution and that of the noble Lord, Lord Holmes, in due course. I also thank other noble Lords who have spoken on various amendments we have considered over the passage of this Bill that all relate to the devastating impact that high-cost credit can have on those who borrow from such providers. We are gradually reducing the number of these providers, which is a good thing, but we still need initiatives for the growth of low-cost credit sources, which are urgently needed to replace them.

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[Lord True (Con)]

My Lords, again I thank all those who have spoken in this slightly shorter debate. I thank the noble Lord, Lord Stevenson of Balmacara, very much for his continued engagement with all aspects of the Bill and with the underlying issues of credit—on which he has long been such a distinguished advocate—and for his interest in this issue. I hope I will be able to give him an assurance that he will find satisfactory.

First, however, I must respond to my noble friends Lady McIntosh of Pickering and Lord Holmes, who asked about the Law Commission report. The noble Baroness, Lady Kramer, also alluded to it. I set out in Committee the reasoning behind the Government’s decision not to take forward their proposed goods mortgages Bill, which had followed from the Law Commission report, in 2018. That Bill would have repealed the bills of sale Acts and replaced them with a new goods mortgages Act, and it was the result of the Law Commission’s report on bills of sale, to which my noble friends referred.

However, when the Government consulted on the proposed goods mortgages Bill, the consultation responses—not all of them, I confess, but the serious responses—showed that while there was broad support for the proposed approach set out in the Bill, some stakeholders raised significant concerns about the degree of consumer protection afforded by the proposed regime. Furthermore, there was a risk that a more modernised, streamlined regime for consumers could lead to more consumers using goods that they already owned as security for a loan, which is inherently a higher-risk form of borrowing. Given the concerns raised in the consultation and the shrinking size of the market, the Government decided not to take forward the goods mortgages Bill. Still, I highlight again that the use of logbook loans has fallen substantially and continues to decline: the number of bills of sale registered at the High Court has fallen from 52,000 in 2014 to just 3,758 in 2020—and a little higher the previous year. Obviously, we will watch this figure.

A number of other points were also raised in Committee. The noble Lord, Lord Stevenson, raised the cost of logbook loans. It has been suggested that some of these loans have very high interest rates. There is already a power for the FCA to cap the cost of all forms of credit, including logbook loans. It will use that power where it thinks it is necessary to protect consumers. Most recently, it capped the cost of rent-to-own products in March 2019.

My noble friend Lady McIntosh questioned in Committee why a model that used hire purchase could not be used for logbook loans. Hire purchase is a financing option that allows borrowers to hire a car and then gives them the option to buy it by the end of the contract. This model would be inappropriate for borrowers who already own their vehicle, as ownership of a vehicle should automatically revert to the borrower when they have repaid their loan.

I turn to the amendment itself. As I explained in Committee, it is likely to have unintended consequences that could lead to a greater risk of detriment, particularly to borrowers. The repeal of the bills of sale Acts would not necessarily prevent this type of credit being offered. Rather, it would remove the statutory framework that governs this type of credit, which could inadvertently lead to a greater use of such lending through the removal of some of the frictions to which some who have spoken have alluded—“frictions” is a polite Treasury word—that the bills of sale Acts impose. Given that, the Government do not believe that repealing the bills of sale Acts would be an effective way of increasing protection for borrowers. Furthermore, the Government do not believe that it would be proportionate to introduce new legislation to specifically implement a replacement for the bills of sale Acts, given the continued decline in their use.

However, I recognise the strength of the feelings of the noble Lord, Lord Stevenson, on the subject of logbook loans, and I have heard the echoes that his resounding voice has provoked. I understand that he wants to know what plans the Government have to review the regulatory treatment of logbook loans. I have had the opportunity to discuss this issue with the noble Lord. As we look beyond the Covid-19 crisis, the Government are keen that work should progress to consider reform of the broader consumer credit regulatory framework to ensure that it remains fit for purpose. That is a substantial piece of work. As part of it, I can give the noble Lord the specific assurance that he asked for: the Government will consider the extent to which that regulatory framework can provide robust protections for logbook-loan borrowers and third parties who may unknowingly buy a car subject to a logbook loan. On that basis, I hope the noble Lord will feel able to withdraw his amendment. I have every confidence that, even if he does, he will continue to knock at the Government’s door.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank all those who have spoken on this amendment and those who spoke in Committee on this issue. It must be obvious that I think the case for reform here is unanswerable and that we need to move forward as soon as we can. The Minister made a kind reference to my assiduous pursuance of this over the last four years; I can assure him I have only just warmed up. I have plenty more capacity now that I have stepped back from the Front Bench and this remains one of my main targets—so I will be calling again in the near future.

I was slightly struck by the rather defensive notes in the early part of his speech, because I do not honestly think there is much you can say about bills of sale other than that, ironically, when they were first introduced—although not in Scotland—they were in essence an early form of consumer protection. What has gone wrong, of course, as he mentioned, is that the considerable collateral damage to subsequent purchasers of goods subject to bills of sale has been devastating for many people. Yes, it is true that the numbers are down, but I do not buy the argument that it is okay to let this egregious behaviour carry on simply because there are not very many. Every single person affected by this is affected in a most extraordinary way, and it should not happen.

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[Lord Sharkey (LD) [V]]

Thank you. I think I was talking about Amendment 21 being prescriptive; it sets out exactly what must be done and by whom.

It has two sections. The first reduces the currently usurious SVR paid by mortgage prisoners by capping it at two percentage points above the bank rate. This is what, in the end, Martin Lewis thought was necessary. He said:

“Yet in lieu of anything else, I believe for those on closed-book mortgages it is a good stopgap while other detailed solutions are worked up, and I’m very happy the All-Party Parliamentary Group on mortgage prisoners is pushing it.”


He also said:

“This would provide immediate emergency relief to those most at risk of financial ruin … No one should underestimate the threat to wellbeing and even lives if this doesn’t happen, and happen soon.”


This is all necessary, but not sufficient. SVRs are not the normal basis for mortgages, as I have already mentioned. What is needed is access to fixed-rate mortgages, as provided by normal active lenders to 90% of mortgagees. The second part of Amendment 21 sets out how that is to be done.

This is, of course, all very prescriptive, and we understand the Government’s reluctance to write such details into the Bill. That is why we have also tabled Amendment 37B. This amendment takes a simpler and non-prescriptive approach. It places the obligation to fix the problem squarely on those who caused it—the Treasury. It is explicitly fuelled by the overwhelming and undeniable moral responsibility that the Treasury has for the terrible situation in which mortgage prisoners have long found themselves. The amendment sets out what must be achieved to relieve mortgage prisoners, by whom and by when, but it does not say how. It leaves that entirely for the Government to work out.

Amendments 21 and 37B give the Government a clear choice. Amendment 21 prescribes a detailed method of solution; Amendment 37B says what the Government must achieve but leaves the mechanism to them. The Government caused the mortgage prisoner problem, which has caused and continues to cause much suffering to many families. I hope that the Government will recognise their moral responsibility and adopt Amendment 21 or Amendment 37B.

This has all gone on much too long, and it has caused, and continues to cause, far too much misery and desperation. If the Minister is not able to adopt either amendment, or give equivalent assurances, I will test the opinion of the House. I beg to move Amendment 21.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I speak in support of the amendments just proposed by the noble Lord, Lord Sharkey, which I have signed. One’s heart goes out to him—it must be very difficult to make a speech of this complexity and passion with all these breaks. Despite the technical difficulties, however, he has made the case for action very well, and as co-chair of the all-party parliamentary group on these issues he is very well briefed on the situation faced by these fellow citizens of ours, and the extra costs that they face. It is indeed a very difficult situation, and one hears a lot of despair when one talks to these people.

I am sure that when he responds the Minister will, as the noble Lord, Lord Sharkey, hinted, dwell at length on the numbers of this group in various categories. There is of course a debate on how the prisoners can be split up—I think that the only thing that we agree on is that the total is probably about 250,000. As with the noble Lord, Lord Sharkey, however, my argument is not about the numbers. Simply put, it is clear that a significant number of people, through no fault of their own, cannot exercise the choices about their mortgage that the rest of us can. While some would argue that this is the direct fault of the Government, I think that someone needs to take responsibility for providing a fair outcome for those who are in a position to take advantage of it.

As the noble Lord, Lord Sharkey, says, this group of amendments offers two options: one that focuses on what the FCA might do within the parameters set by the Bill and another—37B, a late amendment that we drafted for Report—that suggests that the Treasury might wish to take powers to act in the way that is most suitable for it. Both have merits, in their ways. As the noble Lord, Lord Sharkey, said, they have detailed implications that need to be followed through carefully. My preference would be for Amendment 37B, for the very good reasons set out by the noble Lord, Lord Sharkey. If, as he said he might, the noble Lord decides to test the opinion of the House, we will support him.

[Baroness Noakes (Con)]

My Lords, the amendments in this group are misconceived, for a number of reasons that I shall explain. I have much sympathy with the plight of mortgage prisoners, who find themselves in a difficult position as a result of taking on debt when market conditions and regulation allowed mortgage lending in ways that are not generally possible now. We have to remember that many of the borrowers we are talking about would not qualify for a mortgage in today’s environment, either because of the type of mortgage that they have or their own financial circumstances. This is not to blame them, but it is a relevant fact.

Mortgage prisoners are not the only groups who are facing financial problems. Covid-19 has brought financial stress for many individuals and families, and indeed the problems of mortgage prisoners may have increased during the pandemic. Any solutions for mortgage prisoners need to be put in the context of all who are facing debt problems, and we must be careful that solutions for one category of financial distress are fair and proportionate.

Covid-19 has also caused delays in the implementation of the FCA’s initial solution, which relaxed the regulatory affordability rules. We do not, therefore, know how effective those will be in solving the problems of mortgage prisoners, and we should be wary of leaping to further solutions until existing remedies have had time to take effect.

Although a number of statistics have been cited by the supporters of the amendments, hard data on the mortgage prisoner population are not readily available. This was underlined in last year’s report by the London School of Economics, and the FCA has never claimed to have a perfect picture. Although the report by the group UK Mortgage Prisoners purports to offer a definitive analysis, its membership is only a fraction of the number potentially within the mortgage prisoner net, so its report should be treated with appropriate caution. It is hard to make policy in this environment.

The amendments include a cap on standard variable rates—SVRs—for all mortgage prisoners with inactive or unregulated lenders, plus two approaches for making new fixed-rate deals available to those who are basically good payers. The proposal to cap SVRs responds to a fairly vociferous demand from lobby groups. Amendment 21 would cap SVR rates at 2 percentage points above base rate. The result would be a rate broadly aligned with the competitive rates available in the active mortgage market, but those rates are available only to low loan-to-value ratios, and to borrowers with the most robust financial profiles. The market rates for riskier high LTVs are probably twice that level, even if the personal financial profile of the borrower is resilient. In addition, there is not an unlimited supply of fixed-rate deals. Many lenders simply do not offer fixed-rate deals on high LTV loans, especially when combined with weaker personal financial profiles.

The amendment says that mortgage prisoners with inactive or unregulated lenders should have rates that are available only to other mortgage borrowers who have completely different loan and borrower characteristics, and it would apply to them even if they did have opportunities to switch mortgages, which the FCA estimates is roughly half the total population. It is unsurprising that the LSE did not recommend this, and noted that it could create market harm. The FCA’s own analysis, comparing the rates paid by mortgage prisoners who are stuck on SVRs and cannot switch, indicates that the real problem is only about 40 basis points, if the correct comparator is used. I do not accept the assertion of the noble Lord, Lord Sharkey, that that is an incorrect calculation. Those 40 basis points are no proper foundation for market intervention.

As the noble Lord, Lord Sharkey, explained, the proposals for the availability of fixed-rate mortgages for good payers in Amendments 21 and 37B take slightly different approaches. Amendment 21 says that FCA rules should

“make new fixed interest rate deals available to mortgage prisoners”,

while under Amendment 37B the Treasury must provide for them to be offered fixed-rate mortgages. Neither amendment says how this can be achieved.

In the case of Amendment 21, it would be a startling new direction for regulation if the FCA could tell regulated lenders that they were obliged to offer particular deals to people who by definition are not their own customers. As for Amendment 37B, clearly the Treasury will not itself be providing loans, as it is not in the business of retail lending. The Treasury also has no power to tell banks or building societies to make any particular loans. If either of the amendments resulted in regulated mortgage providers being told that they had to lend to certain groups of non-customers, the impact on the financial services industry would be chilling.

It might be possible for the Treasury to procure that regulated lenders offered fixed-rate deals if the Treasury itself guaranteed all or part of the debt, as it does for some first-time buyers. But that is not what Amendment 37B says, and it would not be a plain reading of the proposed new clause to cover such an intervention.

As if telling lenders what products they should offer and to whom were not bad enough, both amendments go on to try to cap the price of these fixed-rate deals. Amendment 21 would do this at a rate to be fixed by the FCA, using LTV ratios and average rates available to customers of active lenders. This ignores the basic fact of life that mortgage prisoners who have not remortgaged are not like other borrowers, and do not satisfy the lending criteria of most mortgage lenders—whether that is because the LTVs are too high or because the other financial characteristics of those borrowers place them outside the risk appetite of active lenders. For some borrower circumstances there is no market rate at all, and it is not right to assume otherwise.

Northern Ireland and Great Britain: Trade

Lord Stevenson of Balmacara Excerpts

Thursday 25th March 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, the noble Lord is absolutely correct to say that the future of the protocol depends on the consent of the elected representatives and the people of Northern Ireland. If that consent is not maintained, it is difficult to see how the protocol can be genuinely durable. All sides must work to sustain it. The EU needs to be aware of the impact its decisions have had on the ground in Northern Ireland in recent months, and continue to work to implement the protocol in a pragmatic and proportionate fashion.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, touring and performing in Europe is crucial to our creative industries in Northern Ireland. Will the Minister take the opportunity to put on record today the reason why HM Government rejected the offer made in the EU draft legal text of March 2020 to exempt musicians and artists from any new visa requirements or restrictions on short-term work on the continent?

[Lord Frost (Con)]

My Lords, the British people voted to end free movement in 2016 and that was a central part of our approach to the negotiations in 2020. The specific proposal made by the European Union would not have dealt with all the difficulties that cultural workers face. The proposal that we made would have, so we regret that agreement on it was not possible, but we continue to discuss this matter bilaterally now with European member states.

Taskforce on Innovation, Growth and Regulatory Reform

Lord Stevenson of Balmacara Excerpts

Wednesday 17th March 2021 Lords Chamber

[Lord True (Con)]

I fear I was not able to catch all the matters to which the noble Lord referred. While I do not favour opportunism, I agree that there is great opportunity out there, which flows from the kind of innovation that he describes. Britain certainly intends to be a world leader.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, given the recent Supreme Court decision in the Uber case, does the Minister agree that it is time to unscramble the unnecessary and divisive distinctions still made in statute between workers and employees, and to remove the taxation differences that affect both groups?

[Lord True (Con)]

My Lords, I note the noble Lord’s comments and will obviously refer them to the Ministers responsible.

Budget Statement

Lord Stevenson of Balmacara Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I welcome those making their maiden speeches today.

As the noble Earl, Lord Clancarty, said, the creative industries are a major UK success story, integral to our economy, our culture and our image abroad. The UK is recognised as a global hub for creativity and innovation, and our creative sectors have recently been among the fastest-growing elements of the economy, generating £116 billion of GVA and employing 2.1 million people. Their success makes it obvious that the sector must be supported so that it can survive and grow again.

However, today’s NAO report on the cultural recovery plan confirms that the Government risk destroying this sector, so I would be grateful if the Minister could explain the following three points. First, when did the Government decide that the CRF should aim to preserve only 75% of the organisations at risk at the start of the Covid pandemic? It cannot generate a very co-operative environment when those hoping to receive funding from their own sponsoring department learn that it aims to cull a quarter of our creative capacity.

Secondly, why have the Government prioritised London, which got 31% of the revenue grants, while the north-east got 4% and the north-west only 12%? I thought that we were on a levelling-up agenda.

Thirdly, the loan elements of the CRF have, unsurprisingly, been undersubscribed—this is not a sector that can borrow. Only 50% of the Culture Recovery Fund has actually reached organisations so far. At the same time, the Government have not adjusted the furlough scheme or the SEISS to ensure that the 750,000 freelancers and self-employed who make up the sector’s workforce get the support they need. Could the current underspend not be used to match the excellent Welsh scheme, already referred to, which has backed up this gap, in support for our creative economy?

Financial Services Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Holmes of Richmond (Con) [V]]

As I was saying, lead generators are involved in misleading and misrepresentation by holding themselves out as organisations such as the Money Advice Trust or StepChange, or representing themselves as government to pull in for financial gain those who sought help for their debt difficulties. It is a pernicious practice, preying on those who are, without doubt, extremely vulnerable as a result of debt. It is unfortunate that the arena for their taking is the world wide web—one of the greatest gifts to humanity from one of the greatest of great Britons, Tim Berners-Lee. It is such a tragedy that his world is populated by these tawdry takers.

Amendment 111 would amend the FSMA to bring lead generators into the world of regulation to end this pernicious practice and to address the current asymmetry in FCA regulation: if you are introducing creditors that is a regulated activity; if you are introducing a debt advice service or the like, that is currently unregulated. The problem is large: StepChange and the Money Advice Trust estimate that at least 10% of those in need who seek their help and that of other debt advice services are caught up in and misdirected by such lead generating practice. That is an extraordinarily high figure.

We often see the world in a grain of sand when we consider personal testimony. One man said: “I am caught up in this world of these people. I am called, if not once, five times a day. Fortunately, I’ve managed to sort out my debt problems, but this harassment from these organisations is almost as bad as the debt itself. It’s having a detrimental effect on my life; it’s having a detrimental effect on my mental well-being.” That is the outcome of this mendacious practice, of this fakery and falsehood, from these tricksters and takers.

When my noble friend the Minister considers Amendment 111, would he agree that when individuals look for support in their hour of need as a result of a debt situation, they should find help, not harm? I am delighted that the amendment has the number 111; it is a single Nelson of an amendment. It is a single amendment with a single intention: for it to pass to make one single, simple change that will help hundreds of thousands. Will my noble friend the Minister channel his inner Nelson and give Amendment 111 its victory?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I declare my interest as a former chair of StepChange Debt Charity. I thank the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, for their kind words about the work we have done with StepChange and all the other groups involved in supporting the repayment of debt and the management of unmanageable debt. It has been a pleasure to work with them and I have listened to their words very carefully, but it has also been wonderful, over the years I have been working on this issue in your Lordships’ House, to see the number of people who have become interested in it and who are prepared to join in and support it grow. It is now a very solid group with very firm views about how things should move forward, as we just heard.

I was very struck by what the noble Lord, Lord Holmes, said about the way people prey on those who have problems with debt. When I was working at StepChange we decided to change the name from the rather uncomfortable Foundation for Credit Counselling, which no one ever used. It was not a foundation, we did not deal with credit, and we did not counsel. It was a problem to get across what we did do, but we decided to be bold, as one is when coming to a new organisation and thinking about how you might change it. We decided to go for a name that took us away from any descriptive elements, and came up with StepChange.

One thing that we did not expect, which plays back to what the noble Lord, Lord Holmes, said, was that within 24 hours of our name being announced to the world there were between 15 and 20 groups preying on the same group of people we were trying to help, in exactly the way that the noble Lord described: they had changed their names to variations on StepChange. They also changed their colour coding, the whole look of their websites and the whole way that they approached potential customers. It was a wonderful example of the difficult area in which we operated. Here we were, trying to help people who were desperate to repay the debt that they had got themselves into. They were, by and large, decent, ordinary people for whom something had gone wrong with their lives and as a result they were spiralling into unmanageable debt. Yet here were these other companies trying to make money out of them, as the noble Lord explained. It was just awful, and to do so in a way that showed that they were watching how we operated in the market and were prepared to copy our techniques to get people to pay them money which they could not afford in order to get out of debt, was an extraordinary basis.

That leads into the amendments in this group, which are largely about trying to work with the Government in their good and well-thought-through plans, which are slowly coming to fruition. Perhaps they could go a little faster, but that is part of this discussion. My principal point is that I want us to support what the Government are doing because they are on the right track. We would like to do anything that we can to help them.

I have two amendments in this group and would have signed others, but I did not need to because they have a lot of support in other areas. Amendment 54 probes the nature and content of the regulations that will establish the statutory debt management scheme, which is complementary to and foreshadowed by the debt respite scheme mentioned by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes of Richmond. Amendment 70 calls for a formal review of the debt respite and statutory debt management schemes within a two-year period after Royal Assent. It looks very straightforward on the surface but when the Minister responds I am sure that he will realise where the amendment is trying to take him. It has the same impact as the points made by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes, which is that we are a bit worried about the time that it has taken to get this scheme going. The idea was—

[The Deputy Chairman of Committees (Lord Caine) (Con)]

My Lords, as there is a Division in the Chamber, the Committee will adjourn for five minutes.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I will move on to the first of my amendments: Amendment 54. Clause 34 as drafted, is quite short, and it is hard to reconcile it with what I understand to be the Government’s ambition. I would be grateful if, when he comes to respond, the Minister could confirm whether plans remain to replicate the Scottish statutory debt management plan, which has worked well for debtors and creditors. The reason for Clause 34, at its heart, is to take the necessary powers to ensure both that creditors participate in the scheme and that they contribute towards the funding so that the full range of advice and support for the SDMP is available.

The experience of the scheme in Scotland is that the Government are on the right track. Recent discussions with Ministers have been very reassuring, and I thank them for their time. However, it would be helpful if we had a little more detail put on the record; whether he is able to do this in response to the points I am about to make, or whether he would like to write to me, I should be grateful to hear further from the Minister in relation to some of my points.

One point is that the breathing space regulations—SI 2020/1311—define a debt advisor as having FCA permission for debt counselling or a local authority. That is quite a wide group: when he comes to respond, can he make that a little bit narrower? Presumably, this is a local authority which is currently offering a full debt advice system. Of course, that has been badly affected by cuts in recent years, so I hope that more detail will be provided on that. Can he confirm that this definition used in relation to debt advice will also be available for the debt-advice component of the statutory debt-management plan?

Secondly, the Minister will also be aware of the concern that debt advice should continue to be available for free. There is considerable evidence that many people do not get access to the debt advice that they need. The pandemic is obviously a worry that may yet crystalise into concern about, interest in, and need for debt advice. We have not seen the numbers increase very significantly recently, but that is because the Government have been effective in getting the funding necessary to maintain people’s continuing existence at the moment. However, when those schemes wind up—and it will be some time before they do, but they will wind up—then there will, of course, be some concern about the amount of debt advice available and whether it will be fundable on a continuing and sustainable basis.

In this context, my third point is that the Government have said that they wish to restrict the funding of the SDRP providers to 9% of the effective debts. This sounds like a reasonable proportion, and there might be a lot of support for it, but it exposes a gap in the current arrangements, which are based on a fair share plan of 13%, so it is a reduction of about 4%, including the costs that are currently absorbed within the structure being made explicit and being met by the overall system. This is a detailed point and I am sure that the Minister will be pleased to hear that I do not expect a very detailed answer at this point, but it would be helpful if more detail could be provided in a letter. We need to know the basis on which the direct cost of the statutory debt management scheme will be operated and that there will be funding available for debt advice, which is the other part of the equation that needs to be funded.

My final point on this list is the question of timing, which has already been addressed by the noble Baroness, Lady Coussins, and the noble Lord, Lord Holmes. I do not think it is sensible to set an artificial time limit for the Government on this. It should come through as and when the Government can get it right and get it out, but I hope that my Amendment 70, which is couched in the form of an amendment asking for a report, is a sufficient stick to suggest that a little more effort on this would be very welcome all round.

We have already touched on my next point in relation to those who seek to benefit from people who are suffering from unmanageable debt by offering them commercial services. A number of companies offer this, and a number of other amendments deal with this, but it is important to establish that the scheme that the Government are supporting is entirely on a non-profit basis. Clearly, if there were to be profit-seeking FCA-authorised debt advice providers also included in this group, it could mean additional costs for the scheme or else a reduced service for those participating. I cannot believe that it would be in the public interest to have a situation where people were obtaining commercial returns from what should be a free service. I accept that the original policy statement by the Government said that debt advice providers would not be able to charge fees in addition to the FairShare scheme, but I should be grateful if, when he comes to respond, the Minister can confirm that that will be set out properly in the regulations.

I have two final points. Can the Minister confirm that the reference to the Crown in Clause 34(4) means that all public body debts will be included in the scope of the statutory debt management plans? It is important to get that confirmation. It is really good that the Government have accepted that Crown debts will be included but, obviously, a significant number of debts are also owed to public services, which are not officially within the Crown, unless I am unaware of a definitional point here; that particularly applies to local authorities.

In that respect, it is also important that we can get confirmation that while individuals are in the debt respite scheme or the SDMP, they will be protected from enforcement action—particularly bailiff action. This has been one of the most welcome measures in the pandemic moratorium affecting those people in unmanageable debt. The suspension has released a great deal of concern that people had about this. It seems unlikely that the Government would want to see a scheme that, on the one hand, protects those who are attempting to repay their debts by obtaining breathing space and then entering a plan to do so but, at the same time, does not seek to restrict the possible bailiff action that would have such a deleterious effect on them.

We will come back to this issue in a later group because there is now an amendment around it—that may well be a better time to discuss it—but I would be interested to have an initial response from the Minister when he comes to respond.

--- Later in debate ---

The supporters of this amendment might not care very much whether it is possible to parcel up consumer debt subject to a debt respite scheme and sell it off, but the sale of debt is a normal part of financing arrangements for financial institutions. It frees up capital and liquidity from the original lending institution and allows that lender to use that capacity to make more consumer lending. Without access to that, some lenders would struggle to carry on where some of its debts are in semi-default via a debt respite scheme. I urge the noble Baroness, Lady Bennett of Manor Castle, and the right reverend Prelate to think very carefully about what they wish for.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, that was a very interesting intervention from the noble Baroness, Lady Noakes, which enhances her reputation as a banker of some repute. I am sure her figures are absolutely right; I was still writing them down as she finished. She has made the case that you need to be able to do these sorts of sums and mathematics if you are dealing with the sorts of debts we have been talking about for most of the afternoon.

I put my name down to speak on this debate, but not because I have a particular view on the merits of the amendment, which I thought was extremely well argued by the noble Baroness, Lady Bennett of Manor Castle. She raised issues on the wider context of how debts are managed in society, which I think the Committee will be very grateful for having on its mind as we focus on the issues. She gave us a tour d’horizon of the various ways in which those who run into unmanageable debt have to deal with the process of repaying, absent a debt respite scheme and absent a scheme under which statutory repayments are organised. They are extremely tough and, to go through an IVA, a debt relief order or full bankruptcy is not something that one would recommend to people if there was another way of doing it.

Indeed, part of the debates we have been having are about how wide we should take this discussion. As my noble friend Lord Davies of Brixton mentioned, the way debt impacts on society is something that is worthy of wider consideration in a more general sense rather than in relation to the particularity of the processes that we are involved in.

That said, it is good that we are having this debate about the wider context within which debt operates in society. It is not a debate that you hear very often, and it is an area of policy that could be afforded a lot more consideration. As such, I will join with the noble Baroness, Lady Noakes, in suggesting that the amendment should not progress at this stage, but for completely different reasons. I think there is a better way of dealing with this relating to the way debts are sold.

The argument that the noble Baroness, Lady Noakes, made, which is that this is how financial institutions obtain the liquidity necessary to maintain the cycle of lending on which we all depend, means that we need to have a better understanding of what happens when debts go wrong and when big institutions of the type that she talked about have to deal with the consequences. I do not mean to go through that in any real detail, but perhaps when the Minister responds he could take into account some of the thinking on this for when we look in detail at the regulations that he has promised us sight of on the statutory debt management plan, and in relation to what I think will be necessary at some point in the not-too-distant future: a reconsideration of the role of the debt relief order and the IVA’s structure, which is part and parcel of the process of dealing with this.

The essential point here is about how, and on what basis, those who have decisions to make about debt make them about individuals who have repayments to make. My understanding, picked up over the time that I was at StepChange, was that, by and large, we are not dealing with a very large proportion of society who are feckless about incurring debts. What tended to come across to me from looking at StepChange’s clients, listening in to the calls that were made to it and observing some of the emails and discussions around electronic systems was that most people—the huge majority—were appalled to be in unmanageable debt situations and were desperate to make a repayment. However, they did not have the financial knowledge and understanding of the system and the world in which they were operating to deal with it themselves. They needed help, which led to the debt advice and the subsequent process of repayment that we have been talking about.

However, at the heart of this is the same calculation that the noble Baroness, Lady Noakes, made: if someone in a credit card organisation or bank is lending money to someone and learns that that debt is going wrong, then there is an immediate calculation of the likely return from it. While we in this country stick to the idea that the creditor must always be repaid in full—or as close to it as possible—the reality is, as the noble Baroness, Lady Noakes, explained it, that a decision has to be reached about what proportion of that debt will be repaid and over what timescale.

My impression is that we are talking about a very large difference in perception. I return to the noble Baroness’s example of a £100 debt that goes bad—she says that one in five will not repay. In a sense, that is the start of the conversation that the person who made the loan has to have with their boss to assess what rate of recovery the loan will have. I believe that we need to have further understanding—not necessarily today or on this Bill—about how that process needs to work better for society. I agree with my noble friend Lord Davies of Brixton: a social issue needs to be addressed at some point, not necessarily today.

If it is true that a loan of £100 has a default rate of at least one in five—I suspect it is higher than that—then we should not be thinking in terms of trying to get a 100% return; we should set in our minds a figure that society could accept and which would be more reasonable in relation to the overall quantum of debt, better afforded by those who need to make repayments and more acceptable to those who do the lending. We are not yet there, and I do not have a solution to this; we are probably too early in the process of discussion and debate. I look forward to the Minister’s comments. This is a conversation that we should have more generally, away from a Bill, on a broader understanding of debt in society.

[Baroness Kramer (LD)]

My Lords, the noble Baroness, Lady Noakes, and I very rarely seem to agree on the types of issues covered in this amendment, but on this one we are totally of one mind. I am very grateful because I tried to write an explanation of how this process would work and it was so inferior. The noble Baroness, Lady Noakes, not only explained it very clearly, step by step, but included numbers, which makes it much more evident.

I think there must be some misunderstanding. As the noble Baroness, Lady Noakes, explained, it is perfectly normal for an originating company to sell off the loans it has, sometimes because it can sell them to someone who has a different funding profile or a different tolerance for the average duration of the book of loans being sold, or because somebody may take a different view on how many of the loans will pay in full, pay in part or default. It is a perfectly standard process and provides liquidity to the market. As the noble Baroness, Lady Noakes, said, if an organisation had to keep all the loans it generated on its books and could not sell them off, it would find very quickly that it was constrained in doing any new business. That would be hugely damaging to many of the people who go out and borrow. It tends to be a completely different business that will buy loans in the secondary market.

The question that underpins this is: is the Statutory Debt Repayment Plan right and fair when it is put in place? If that is true, it should not matter if the money is paid to the originating company or to the secondary buyer. Within the portfolio, there will be some people who can and do meet the full obligations of the Statutory Debt Repayment Plan, and surely that is appropriate. There will be others who fail and end up in bankruptcy, and whoever is holding the loan will lose out.

My question is whether there is any read-over from the kind of issues we have had with mortgage prisoners. It is important that where there are expectations about how the original lender will behave, they are carried over to the secondary lender. For example, if the original lender is quite likely to offer an alternative loan or new terms and conditions or whatever else, you would expect to see that reflected in the secondary lender. I would not want a situation where the secondary lender was able to levy additional charges or put additional costs on the borrower that would not have been expected by the original lender but perhaps are not covered in the minutiae of the contract.

Otherwise, the honest truth is that I just do not understand this amendment. I am absolutely certain that it completely seizes up any possibility of having a secondary market, and the people who will pay the greatest consequence for that are those who need to go out and borrow from time to time and are at the margins of being appropriate borrowers.

Financial Services Bill

Lord Stevenson of Balmacara Excerpts

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

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I declare an interest as a former chair of StepChange Debt Charity.

I congratulate the noble Lord, Lord Hammond of Runnymede, on his maiden speech. In your Lordships’ House we do a good line in former Chancellors of the Exchequer; in normal times, when the House is sitting on a regular basis, there is almost a full Bench of them. He joins an exalted group, and I am sure he will quickly make his mark, even among that competition.

I will focus on Parts 6 and 7. I echo the noble Baroness, Lady Coussins, and the noble Lords, Lord Davies and Lord Holmes, in welcoming these proposals. I want also to raise the specific issue of high-cost credit, which the Government should stamp out.

Clause 34 amends Sections 6 and 7 of the FGC Act. I participated in the debates on that Act a few years ago. We welcome the clause, which will, as the noble Baroness, Lady Coussins, said, compel creditors—including all public sector creditors—to accept amended repayment terms, provide for a charging mechanism for debt advice, and underpin the instruction of the Statutory Debt Repayment Plan. But the Bill is short on detail. We hope to take this further in Committee. We assume and hope that the scheme will be modelled on the successful Scottish scheme.

More details will be needed in Committee about the timetable. Debt respite, which is being introduced in May, and debt repayment should go together. How are the powers to be framed and what role will Parliament have? What will be the arrangements for creditor agreements and the veto, if any, on the quantum of payments? Should there be a wider reform of debt collection practices, particularly the use of bailiffs by local government? The noble Lord, Lord Holmes of Richmond, raised this.

Clause 35 deals with successor accounts to Help to Save and inserts a new clause into the Savings (Government Contributions) Act 2017. This will provide regulation-making powers in respect of orphan funds or where no instructions have been provided to the director of savings. Although the Government sensibly propose to take powers for this eventuality, there are currently no plans to implement them. Why not? What circumstances would trigger action? We can return to this in Committee.

My other area of interest is in repealing the Victorian bills of sale legislation, which permits an egregious area of high-cost credit to continue and flourish. For those who are not aware of them, bills of sale are a way that individuals can use goods they already own as security for loans while retaining possession of them. The use of bills of sale has grown from fewer than 3,000 in 2001 to more than 30,000 in 2016. The numbers have dropped recently, but are probably in the order of 15,000 a year. They are mainly used for what are called “logbook loans”, where a borrower grants security over their vehicle. Borrowers may continue to use their vehicle while they keep up the repayments but, if they default, the vehicle can be repossessed without the protections that apply to hire purchase transactions and very few consumer credit concerns.

Bills of sale are currently governed by two Victorian statutes, the Bills of Sale Acts of 1878 and 1882. This legislation is archaic and wholly unsuited to the 21st century. In September 2014, HM Treasury asked the Law Commission to review the bills of sale legislation and to make recommendations for reform. A consultation paper was issued and a report was published in September 2016. In February 2017, the Government asked the Law Commission to draft legislation to implement its recommendations. These plans have now been shelved. Lenders and consumer groups agree that the law is in urgent need of reform. The current law creates hardship for borrowers and private purchasers. It imposes unnecessary burdens on lenders and restricts access to finance for unincorporated businesses and high net worth individuals.

The great majority of bills are issued for logbook loans, often taken out by borrowers who have difficulty in accessing other forms of credit. These borrowers are particularly vulnerable to inadequacies in the existing law. To make this clearer: the current APR in a recent advertisement for a car logbook loan was 450%.

The Law Commission says that the statutory form for a bill of sale, as set out in the 1882 Act, confuses borrowers rather than helps them to understand the consequences. The bills of sale Act provides only minimal protection to borrowers, and their goods can be repossessed if they default. The FCA has rules about this and logbook lenders must have policies to deal with default, but lenders differ radically in their approach to repossession. There have been complaints that some lenders use threats of repossession to demand unreasonable and unaffordable sums.

This is an area that should be cleaned up. Action should be taken. A simple way would be simply to repeal the Acts that I have mentioned and I will bring forward amendments in Committee to do that.