Oral Answers to Questions

Paul Blomfield Excerpts

Tuesday 10th March 2015 Commons Chamber

[Mr Gauke]

My hon. Friend is absolutely right. The important point here is the output, not the input. I should point out that the number of staff employed in enforcement and compliance has gone up over the course of this Parliament.

[Paul Blomfield (Sheffield Central) (Lab)]

17. A young man in my constituency had his jobseeker’s allowance taken away because he missed an early morning appointment, despite having notified the jobcentre of the illness that prevented him from attending. He is just one of many vulnerable people affected by the sanctioning regime imposed by this Government. According to the House of Commons Library, the amount lost in tax evasion and tax avoidance exceeds the entire spend on JSA by £2 billion. Does the contrast between the persecution of the most vulnerable and the Government’s failure on tax avoidance not say everything about their priorities?

[Mr Gauke]

Over the course of this Parliament, the number of prosecutions for tax evasion has gone up fivefold. The reality is that the Government are taking more measures to deal with tax avoidance and tax evasion. We have done that consistently at every Budget. Ever since the 2010 spending review, there has been a greater focus on HMRC being able to bring in the yield. The numbers, as my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) pointed out, speak for themselves.

amendment of the law

Paul Blomfield Excerpts

Monday 24th March 2014 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

I do not know whether you, Madam Deputy Speaker, or other Members of the House caught the recent BBC programme “Mind the Gap”. It was not about the perils of travelling on the underground but the growing problem of our country’s two economies—the way in which London and the south-east are sucking economic activity away from the rest of country. Judging by their policies over the past four years, this Government clearly do not mind the gap; indeed, they have widened it. It is not just a north-south problem; it is London versus the rest. The Chancellor’s Budget fuels the gap.

Let us spend a moment looking at two-economies Britain under this Government. Public funding has been diverted from areas where it is needed most by their local government finance settlement, as highlighted by my right hon. Friend the Member for Leeds Central (Hilary Benn). Regional development agencies were scrapped as soon as this Government got through the door.

[James Morris]

Can the hon. Gentleman remind us of what happened to regional inequalities when the RDAs were in existence under the previous Government?

[Paul Blomfield]

I would cite the extremely successful advanced manufacturing research centre, which is a pioneering collaboration between the university of Sheffield, Boeing and Rolls-Royce. It has been highlighted by the Government as a model of industrial innovation. However, it simply would not be there if it had not been for RDA investment.

London also thrives with arts and culture funding, with subsidies worth £68.99 per head, while the rest of England gets just £4.58 per head.

The Budget does not just ignore those issues; it is making them worse. Research by Sheffield political economy research institute has exposed the Chancellor’s flagship increase in the income tax personal allowance as not benefiting the lowest paid and not addressing regional inequality. In many ways, it has made that inequality worse.

This situation is not inevitable. We simply need the political will and the policies to reverse the trend. Let us build on our regional assets, such as our universities, which are uniquely positioned around the country to drive growth through innovation. Let us ensure that there is effective investment in research and development across the higher education sector.

We need an active industrial strategy that does not simply pick winners but supports growth in key sectors across the country, such as the nuclear sector. Of course, one of the early actions of the Government was to undermine that sector in my city by scrapping the loan to Sheffield Forgemasters.

We need a fairer distribution of public funding that puts need at the heart of funding allocation and that recognises the role of public investment in stimulating local economies. The Government should use the levers of public sector employment to address the regional imbalance. They should move Departments, not just minor agencies, out of London. Why can the Department for Education not move lock, stock and barrel to Sheffield? Let us move the Department of Health to Leeds. Let us take the Department for Work and Pensions to Hull.

Government Members have raised concerns about the impact of what they describe as “generous public sector pay” on private sector employers in the regions. However, we cannot accept the argument that there must be a race to the bottom on pay and conditions for there to be regional growth outside London. All regions benefit from decent, well-paid jobs. They fuel our local economies and put money in people’s pockets that will be spent in local businesses. Moving Departments out of London would be good not only for the regions, but for London. For evidence of that, we need only ask those who are struggling to rent or buy in the overheated housing market in the capital.

Moving Departments of State to the regions would not just provide economic benefits, but would ensure that policies were no longer shaped by people who live and work in London, and who see everything through the prism of the metropolis. One of my constituents, Amy Hall, who is a biophysicist, wrote to me last week and said:

“We need to be less London-centric as this seems to be blinding some of the key policy makers to the situation elsewhere.”

Amy was right. There are things that we can do to make that happen.

Moving Departments out of London is not a new idea. It was pioneered by the Labour Government in the ’70s. I remember the Manpower Services Commission coming to Sheffield as a result of a Government decision in 1976. More progress was made under the last Labour Government in moving civil service jobs out of London. According to the information I have been given by the House of Commons Library, that progress has halted under this Government.

We need to take action to achieve a one nation economy, not a one city economy.

Money Transfer Accounts and Remittance Sector

Paul Blomfield Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Kevin Brennan (Cardiff West) (Lab)]

Bore da, Mr Owen. For those who do not speak the language of heaven, that means good morning.

I am grateful for the opportunity to probe the Government on their steps to support money transfer accounts and the remittance sector. According to a recent blog from the Africa Research Institute, the Secretary of State for International Development has described this issue as

“one of the most important things I have dealt with in my political career”,

so is at least as important as HS2, and therefore the Government should devote at least as much effort to, and invest at least as much political capital in, trying to sort it out. At a recent meeting at Ealing town hall, she assured UK Somalis that the

“best experts on the planet are working on a solution”

and that the Prime Minister has recognised that a rapid solution is needed to a problem that he has described as “massively important”. I hope that the Minister will update us on the Government’s steps so far, clarify their position, answer frankly any questions from hon. Members and tell us about the action that will be taken to provide a rapid solution to what the Prime Minister has described as a “massively important” problem.

The problem came to a head in May 2013 when Barclays announced that it intended to close the accounts of most of its clients in the money transfer and remittance business. The decision was delayed, probably due in part to a debate in Westminster Hall in July 2013, which was ably led by my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali). She is in the Chamber today, and she has led a brilliant campaign on the matter, supported by other hon. Members in the room.

Although the decision on the closure of accounts was delayed, unfortunately that was of little use to the constituent I mentioned in the 2013 debate, Mr Anwar Ali, whose business, Trust Exchange UK Ltd, was ruined by Barclays’s decision. As I said during that debate, that business was a model of the sort of small businesses that many hon. Members on both sides of the House would like to see in their constituencies. It not only offered a service to constituents who needed to transfer money to relatives overseas, but engaged in such things as charitable work and aid projects, especially in Bangladesh.

[Paul Blomfield (Sheffield Central) (Lab)]

As my hon. Friend knows, Sheffield is fortunate in having one of the largest Somali communities outside London. That community has made strong representations to me about the issue. The specific point is that an inability to transfer money causes not just domestic and individual family distress. A survey of diaspora communities in Sheffield that I carried out showed the important contribution that remittance giving makes in supplementing aid, so the issue also involves international development. Does he agree that that makes it much more important that the Government take action?

[Kevin Brennan]

I thank my hon. Friend for giving me the opportunity to acknowledge everything he said, including the Somali community in Sheffield. His intervention also allows me to remind the Chamber that Cardiff—my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) is also in the room—has one of the oldest Somali communities in Britain, going back to the 19th century. The community plays a hugely important and positive role in the life of our great city. What my hon. Friend the Member for Sheffield Central (Paul Blomfield) said was right, and I shall say more about aid later.

Pub Companies

Paul Blomfield Excerpts

Tuesday 21st January 2014 Commons Chamber

[Vince Cable]

The hon. Lady is stating in her own way what I have already said several times and what I think is the consensus. There is an imbalance in the relationship, which is not equal. The market does not deliver a fair outcome, which is why we are considering how we can change it.

We did not want to reopen the fundamental issue about the pub tie, but to decide how to address the unfairness of it, and the consultation revealed the depth of feeling on the subject, which all the interventions that we have had so far have reinforced. The responses came not just from the pubcos and the tenants, but from supply chain companies, consumer groups and trade bodies, all of which fed into the consultation, and they were so many and diverse that we published them just before Christmas so that hon. Members were aware of what was being said before we came to a conclusion on how to respond.

As I have said already, we want to respond as quickly as possible. We fully understand the problems, not just because distressing cases are continuing but because people in the industry want clarity, and it is perfectly reasonable for people to want regulatory certainty. We do not want to rush into a decision. We want to get this right, but we realise that there is some urgency because people need to make investment decisions. We are trying to get this absolutely right and we want the intervention that we make to be proportionate and properly targeted.

[Paul Blomfield (Sheffield Central) (Lab)]

I thank the right hon. Gentleman for taking a further intervention and for all the others that he has taken. He makes the case for urgency, which is reflected across the House. Does he not accept that his failure to answer the question from the shadow Minister and the Chair of the Select Committee, together with the wording of the Government’s amendment, will be seen widely throughout the country as an attempt simply to kick this issue into the long grass? Will he reassure the House that that is not the case by giving a commitment that legislation will come forward in this Parliament?

[Vince Cable]

There is no attempt to kick this into the long grass. We are trying to do this properly. I can assure him that it will be dealt with in a timely way. We are not cutting corners. As I said at the beginning, we have a large number of responses and different strands of evidence that we are trying to reconcile and respond to properly. We must do this right.

The whole issue of the beer tie, the relationship with the pubcos, is crucial, and we must take action in the way that we have discussed, but it is not the only set of measures for the pub industry. We are sometimes in danger of losing sight of the bigger picture. Thanks to interventions from Government Members there was reference to the budgetary measures that have been taken, and I would add to that the action taken on business rates, including the capping of the business rate increase, the continuation of business rate relief, the £1,000 discount for retail outlets, which include pubs, and some of the action taken by my colleagues in the Department for Communities and Local Government, for example the pub is the hub scheme and the community right to bid to keep pubs open. A lot needs to happen and a lot is happening on a broad front, and I reassure the House of my commitment, which remains as strong as ever, to addressing the unfairness in the relationship between pub companies and their tenants.

Debt Advice (FCA Levy)

Paul Blomfield Excerpts

Tuesday 21st January 2014 Westminster Hall

[Paul Blomfield (Sheffield Central) (Lab)]

Thank you, Mr Hollobone—no pressure at all then. It is a delight to be here with you in the Chair, and I congratulate the hon. Member for Worcester (Mr Walker) on securing the debate. He has been a committed champion of the cause and one of several colleagues on both sides of the House who have sought the effective regulation of payday lending.

The reason for today’s debate is simple: the need for free and independent debt advice is growing, which is due in no small part to the unscrupulous practices of payday loan companies. We now have a unique opportunity to tackle the problem without cost to the public purse. Payday lenders, as the hon. Gentleman pointed out, will soon have to pay the FCA levy to fund free debt advice. When they do, we need to ensure that they pay an amount commensurate to the problems that they cause and, crucially, that the total pot of money collected increases to fund the additional advice that is needed. There certainly should not be any levelling down of payments simply because more financial service companies will be paying the levy.

As has been pointed out, the Money Advice Service is consulting on its draft business plan as we speak. Extraordinarily, it is suggesting keeping the budget for debt advice unchanged. That cannot be right and, to my mind, it brings into question the organisation’s judgment. MAS’s own research, which was conducted last year by YouGov, indicates that

“there is a growing need for impartial money and debt advice in the UK”.

It estimates that 8.8 million people are over-indebted, from struggling students to working families, and that only 1.5 million of those people are getting advice. That is an extraordinary figure, but it is only the tip of the iceberg, because a further 900,000 have said they were planning to seek such advice and another 1 million said that they were actively considering it. The FCA’s very welcome proposal that payday lenders should signpost borrowers to free debt advice at the point of roll-over means that the demand for debt advice will only grow. Indeed, many of us think that the signposting should be on the initial health warning, too.

According to the Office of Fair Trading, one in every three people who take out a payday loan seek debt advice, which is a sure sign of the link between the payday loan product and the problems it creates. The number of people contacting the StepChange debt charity for help with payday loan problems increased sevenfold between 2008-09 and 2011-12, as has been pointed out, while Citizens Advice has seen a tenfold increase. In the past two and a half months, my local advice bureau said that it had one new case resulting from payday loans every day. One new case might not seem a problem, but in a stretched local advice it is, given that these are complex problems—they involve not quick interventions, but detailed engagement in which people need considerable support. As I said, those who are actively seeking help at the moment are just the tip of the iceberg.

As well as increasing overall funding for free debt advice, it is important that the FCA looks again at how it calculates the levy paid by each firm. For example, StepChange has argued that rather than looking at a firm’s income and write-off rate—companies would, perversely, be encouraged to pursue vulnerable borrowers more aggressively if having fewer write-offs was rewarded—a better formula for calculating the levy would take account of default rates, the number of complaints made about lenders to the Financial Ombudsman Service and intelligence on repayment difficulties from debt advice agencies. The aim of the levy, after all, is to fund support for people when things go wrong. If the business model of the payday lending industry means that things go wrong relatively often, the lenders, rather than profiting from that, need to pay to help to pick up the pieces.

None of the arguments that will be made this morning negate the need for better regulation, and many of us who are in the room made that case yesterday in the Chamber. If such regulation works, we might look forward to a time when there is less need for debt advice. That would be something that we could welcome, and we could review the levy at that stage, but at the moment there is more need for debt advice, so we should not miss the opportunity for it to be funded by those responsible for the problems. I hope that the Minister will reassure us, while recognising that this is a decision for MAS and the FCA, that he and the Government will support such a funding increase.

--- Later in debate ---

[Paul Blomfield]

I am a little bit concerned by how the Minister is counterpoising money advice and debt advice. I think that all hon. Members in the Chamber would agree that money advice is important, although there are questions about how MAS delivers it, but that does not overshadow the need for effective debt advice. Given all the contributions that have been made and all the evidence there is, does he agree that the demand for debt advice is growing?

[Sajid Javid]

I agree that demand seems to be growing, and evidence on that is emerging. It might help the hon. Gentleman if I move on to how MAS determines its budgets for money advice and debt advice, and how it has to take demand into account.

--- Later in debate ---

[Sajid Javid]

As my hon. Friend will find out, I am coming on to how MAS determines its budget. As we all would hope and expect, the budget is based on demand. More generally, MAS has a statutory responsibility to consult on its budget for the forthcoming year. Right now, MAS is consulting on its budget for 2014-15. This debate, the Business, Innovation and Skills Committee report and the information from stakeholders, which we have heard about today, are important in providing MAS with the information it needs to develop its budget for the future. That makes a big contribution to how MAS decides the correct allocation of resources for forthcoming years.

MAS’s budget is based on what it needs to achieve its statutory objectives. Although it is right that payday lenders contribute to that funding, it is also right that the funding is based on demand and that it delivers value for money. In the year ahead, MAS’s budget for debt advice will be based on its assessment of demand for such advice. MAS must consult on its plans for providing debt advice each year, which must then be approved by the FCA.

The National Audit Office recently commended MAS for delivering value for money in its debt advice provision. As we have heard, MAS is also carrying out ongoing research to ensure that the debt advice it funds has the best impact on consumers and that it reaches those who need it most. MAS recently conducted an in-depth study of where in the UK debt advice is needed most. The study shows that 21% of over-indebted people do not even recognise that they are in debt and that 44% of people who are in debt are not aware of the solutions available to them. It is important that MAS reaches such people and engages with them successfully to give them the help that they need. MAS will use the report to inform how it funds debt advice, thereby ensuring that it targets those who need it most. It is important to note that more money does not necessarily mean better provision.

[Paul Blomfield]

I accept that more money does not necessarily mean better provision, but the Minister has acknowledged that there is increased demand and that that increased demand is only the tip of the iceberg. He will also know that many of those delivering services on the ground have been hard pressed because of the reduction in other resources, especially those available through local authority funding. In many parts of the country, citizens advice bureaux are trying very hard to reorganise provision. In my own city of Sheffield, there is a comprehensive reorganisation to deliver value for money and ensure that the challenge can be met. Nevertheless, given the escalating demand for debt advice, which he has acknowledged, would he not also acknowledge that there is now an opportunity, which should be addressed, for that increased demand to be matched with additional resources?

[Sajid Javid]

Where there is emerging evidence of increased demand, I would expect MAS to respond. I am looking for the actual numbers, but off the top of my head, in 2012-13, the most recent financial year, MAS planned for 150,000 face-to-face debt advice sessions, but provided 158,000 sessions. The trend increased in the first six months of this financial year.

Payday Loan Companies

Paul Blomfield Excerpts

Monday 20th January 2014 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

On this occasion, it is a pleasure to be called at the end of the debate, Mr Speaker, because it provides me with an opportunity to reflect on the contributions, where two things have stood out. The first is the deep concern on the issue and the positive points that have been made about the Financial Conduct Authority and its proposals. The second is the unanimity across the House that the FCA is moving in the right direction, but not going far enough. After it launched its proposals in October, Members from every party represented in this House came together to launch the “Charter to Stop the Payday Loan Rip-off”, not only outlining a holistic intervention on how we could regulate the sector, but critiquing the FCA proposals. That has subsequently been backed by civil organisations ranging from Unite to the Women’s Institute, and by councils of all political persuasions, as the hon. Member for North Swindon (Justin Tomlinson) pointed out. It is also supported by every major debt advice and consumer organisation.

Many Members have cited shocking statistics and research to back the case for further action, but I thought I would share the case of one Sheffield woman and ask how she would be helped by the FCA proposals. She has asked to be kept anonymous so let us call her Susan, and her case is all too typical. She was struggling to keep up with bills and to make ends meet, she took out a payday loan to help tide her over but still found that she was short at the end of the month. By rolling over the initial loan and taking out new ones to pay off that debt, she found herself in a spiral of increasing debt, with three payday loans, costly default fees and mounting interest.

My first question is: would the FCA proposals on advertising have protected Susan? She took out that payday loan because of the advertising she had seen. Too often, such advertising makes borrowing look easy and stress free. The hon. Member for Gosport (Caroline Dinenage) made the point that the FCA is focusing on tackling misleading advertising, but we should be focusing on tackling irresponsible advertising. We have all seen “Wonga: the movie”, which illustrates the problem of advertising that makes loans seem aspirational and life-improving, whereas payday loans are in fact the worst form of credit anybody could take out. So Susan would have been failed by the proposals on advertising.

My second question is: what about roll-overs? Once Susan had taken out her first payday loan, why was she encouraged to keep rolling it over? How could she have taken out two further payday loans when she was clearly having difficulty repaying the first one? The FCA’s proposal to limit the number of roll-overs to two is a step in the right direction, but the Select Committee is right to say that there should be a limit of one. Is the need to roll over more than once not a sign that the borrower is in trouble?

Similarly, we must look at repackaging loans and the problem of multiple loans. On the issue of multiple loans that pushed Susan into the spiral of debt, I recall that in a debate on 11 December on the Financial Services (Banking Reform) Act 2013, there was great agreement across the House on the need for real-time data to prevent irresponsible lending. As my hon. Friend the Member for Makerfield (Yvonne Fovargue) pointed out, Callcredit, with great support from Wonga and the Consumer Finance Association, announced the establishment of some data sharing. However, that scheme will not stop irresponsible multiple lending.

Let us consider these questions. Are all lenders signed up to this data sharing? If not, and Susan went to one that was not, they would not know that she was struggling to pay back her initial loan. Will the scheme identify lenders who are breaching FCA rules by, for example, rolling over loans too many times, and report them to the FCA? If not, Susan’s loans could be rolled over, just as now, with the FCA left to play catch-up once it has received its six-monthly data report from lenders. Will it establish a benchmark of affordability and assess whether that is being met by lenders? If it is not, will it report those lenders to the FCA? If it does not do that, Susan will still be trapped by unaffordable loans. The answer to each of those questions is no, so we still need the FCA to establish a database, require all lenders to use it, and use the data to enforce its rules. The case for that database is as strong now as it ever was, and I hope that the Minister and the FCA will pay heed to it.

There is also the issue of the continuous payment authorities. I welcome the fact that the FCA is suggesting that CPA administration be limited to two unsuccessful attempts, but it does not go far enough. It still provides lenders with the opportunity for a strategic intervention into somebody’s account to drain them of all their resources at a critical point in the month when they need that money for rent and other vital payments.

The code of practice that the sector has established, to which my hon. Friend the Member for Makerfield referred, suggests that lenders should provide three days’ notice of using a CPA, and yet, assessment of the sector by Citizens Advice suggested that 60% were not complying with their own good practice. The three days’ notice should be accompanied by a reminder of the right to cancel, which has been deliberately obscured in the case of many people who have got into difficulties with CPAs. I agree with the hon. Member for Worcester (Mr Walker)—I will be supporting him tomorrow morning—that we should use the opportunity of the new levy on payday lenders to increase the overall resource that is available to support free and independent debt advice, which has grown in response to the growth of the payday lending sector.

[Mike Crockart]

The hon. Gentleman has talked about being able to cancel the CPAs. He said that only 23% of lenders were explaining the situation, but the figure for those lenders explaining the ability to cancel is even worse, standing at only 5%. Does he agree that that is absolutely abysmal?

[Paul Blomfield]

I agree with the hon. Gentleman. The level at which the good practice surrounding the administration of CPAs has been obscured by lenders has caused enormous difficulties for many people. It underlines why we need a clear regulatory framework for the use of CPAs, in which any lender participating in the sector must comply.

My hon. Friend the Member for Glasgow North (Ann McKechin) was right when she said that, although the FCA is moving in the right direction, it is currently behind the curve. I hope that it listens to the debate tonight, gets itself ahead of the curve and listens to the voice of Parliament.

Financial Services (Banking Reform) Bill

Paul Blomfield Excerpts

Wednesday 11th December 2013 Commons Chamber

[Andrea Leadsom]

Yes, my hon. Friend is absolutely right. There are huge parallels between the banking closed shop and the energy closed shop. That is something I have been picking up, and I was recently in the media with him addressing this very subject.

Giving direct access to the payments infrastructure to all banks will reduce the barriers to entry, so I want further to congratulate the Minister on accepting the Treasury Committee’s recommendation that the PRA should have a specific competition objective. That is key, because the barriers to entry do not just relate to access to the payments system; there are regulatory barriers to entry. In other words, “If you are small, you cannot become a bank. Until you become a bank, you cannot become big. Therefore, you cannot ever become a bank.” We have created an environment where there are massive barriers to entry, so the payments system changes will really start to unravel that closed shop.

Importantly, I wish to put in one plea for full bank account portability. I know that the Minister has absolutely agreed that one of the first jobs of the new payments regulator will be to undertake a full cost-benefit analysis of account number portability. That would mean that if I want to switch banks in future, instead of waiting for even seven days, having to change all my direct debits, standing orders and bank account details, and having to be issued with new credit cards and cheque books and so on, I would simply be able to have my bank account details re-pointed at a new bank and so everything would remain the same. It would be instantaneous account switching.

When we move our mobile phone account number now, we can take our phone number with us. In a world where we had full number portability, we would also be able to take our bank account details with us. That would be a radical game changer for competition. New entrants could come in and attract new business on the promise that if a consumer does not like them they can always move somewhere else tomorrow. Banks would lie awake at night wondering how to retain their customers through excellent customer services rather than what next they can fleece them with, which happens all too often now.

Competition is not the only issue. There are two other items I wish to mention. The first is about resolution. We have put in all this effort to try to ensure that, in future, a bank cannot fail. We have increased capital requirements and changed the regulatory structure, which is all to the good. None the less, we know that in future, as sure as eggs are eggs, a bank will fail. What bank number portability will do is to give an instant means of resolution to avoid ever seeing again queues of people down a street trying to get their money out of a bank that they are concerned about.

If we in the UK become the first country to introduce full bank account number portability, we will be leading the world. By creating a shared infrastructure for payments, we will create a massive business opportunity for UK plc. I congratulate my hon. Friend, the Minister, but urge him to go even further and to support, when the time comes, the prospect of full account number portability.

[Paul Blomfield (Sheffield Central) (Lab)]

Like my hon. Friend the Member for Makerfield (Yvonne Fovargue), I rise to speak on amendment 155. The Minister has acknowledged that data collection is at the heart of effective regulation. Like many Members on both sides of the House, I welcome the Government’s conversion to capping the total cost of credit, but we need to recognise that it is not a silver bullet.

When I was fortunate enough to have the opportunity, through the private Member’s Bill ballot system, to prepare the High Cost Credit Bill back in July, I brought together Members from both sides of the House—I am pleased to see that one of them, the hon. Member for East Hampshire (Damian Hinds), is in his place—and all the major consumer voice and debt advice organisations, such as Which?, Citizens Advice, StepChange and the Centre for Responsible Credit, to try to develop a holistic approach to the regulation of payday lenders, with appropriate interventions at every stage of the relationship that lenders have with their borrowers from advertising right through to debt collection. At many points in that relationship, the issue of real-time data collection is absolutely vital to tackle multiple lending. We know that multiple lending is the source of many of the problems that people face. Unable to repay one loan, they are forced to resort to taking out additional loans, moving from a single unaffordable debt to multiple loans, creating completely unmanageable debt.

As my hon. Friend the Member for Makerfield has pointed out, the current reporting framework for credit reference agencies of 30 to 60 days simply cannot protect people from the problems that result from multiple lending. Only real-time data collection can effectively do that.

Secondly, we have the impact on the market. As part of the debate on payday lending, many people have argued that we cannot solve the problems by regulation alone and that we need a wider range of more affordable products. That is absolutely right, and real-time data are key to that too, because they will enable lenders to assess risk.

At a recent hearing of the Business, Innovation and Skills Committee, one of the lenders selected by the Consumer Finance Association as a representative of the industry said:

“We do not know in real-time what loans the customer has with other lenders.”

He said that they would

“love to know that information.”

It is impossible for lenders properly to evaluate risk, set interest at manageable levels and develop new products. As other Members have said, the opportunity that real-time data would provide for new entrants to the market is also crucial.

Above all, real-time data are essential to ensuring affordability, which is at the heart of the measures needed to protect people. The industry works in a distorted market. We know that: success is measured by the time it takes to get money into somebody’s bank account, not by the ability to repay. It sounds perverse that many lenders are not primarily concerned about ability to repay. As the OFT has highlighted, up to 50% of payday lending revenue comes from 28% of loans—those that are unaffordable—so providing real-time data is at the core of shifting the business model for payday lending from speed of lending to affordability and is the key to protecting people from spiralling and unaffordable debt.

I mentioned the recent Select Committee inquiry, which will report soon. My hunch is that it will say something along the lines of the report we published two years ago—that real-time data collection is critical to transforming the payday lending industry. We have heard from a number of Members that debt advice agencies are clear that we need real-time data collection and sections of the industry also want it. As the shadow Minister, my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), has pointed out, the industry has been slow to respond. It has been considering the issue for two years and has failed to find a solution that all participants will buy into. As the industry has failed to produce an initiative, it is our responsibility to step in and secure real-time data collection.

I would cite in support of that assertion the response of the Financial Services Consumer Panel to the Financial Conduct Authority’s consultation on its proposals on payday lending. As Members will know, the Financial Services Consumer Panel is the statutory body that monitors how far the FCA fulfils its statutory objectives for consumers. It is a critical voice in this debate. The panel has said that

“better creditworthiness assessments must be underpinned by real-time data sharing capabilities.”

On affordability, it has stated:

“In order for this information to be available we believe the establishment of real-time data sharing is vital.”

It has also stated:

“In addition to limiting rollovers, the Panel also feels that real-time data sharing is essential in ensuring people do not end up with excessive numbers of loans at the same time.”

It goes on:

“The speed at which loans are granted is often cited as the reason for”

unaffordability and rollovers, and:

“Real-time data sharing would overcome this and should be something the FCA encourages…There are examples of other jurisdictions, such as Florida…where this has been achieved.”

Indeed, the Minister cited Florida as an example earlier.

The panel comes to the conclusion that it strongly calls for the establishment of real-time data sharing and I hope that the Government will listen to that.

[Sajid Javid]

With the leave of the House, Madam Deputy Speaker. I thank all hon. Members for their contributions. It has been a good debate and a number of important issues have been raised, so I want to take a few minutes to respond.

The shadow Minister, the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), started by making a number of points on the payments system regulator. One issue she raised was whether there could possibly be a gap before the payments system regulator came into full force. That is a reasonable question and of course we will do all we can to minimise that.

It is worth pointing out that although the Payments Council, to which my hon. Friend the Member for Chichester (Mr Tyrie) referred, has not always done a spectacular job as an industry body, particularly on cheques, it has recently put in place some useful innovations under the influence of the Government, such as the current account switching service. It is also developing a mobile phone database. We have been assured that such initiatives will continue and will not slow down because of the plans to set up a payments system regulator.

Oral Answers to Questions

Paul Blomfield Excerpts

Tuesday 14th May 2013 Commons Chamber

[Danny Alexander]

That is an important question. My hon. Friend will have seen the statements published today by the Minister of State, Department of Health, our hon. Friend the Member for North Norfolk (Norman Lamb), and we will address the issue seriously in the spending round. I am not going to pre-announce what we will do, but my hon. Friend will know that in the 2010 spending round we ensured that additional resources amounting to £7.2 billion were available over four years to support social care services. If we are to deal with these important issues while also reducing the strain on the national health service, further such transfers will clearly be necessary.

[Paul Blomfield (Sheffield Central) (Lab)]

T3. In just over an hour, in an unprecedented move, the bishops of Sheffield and Hallam and a delegation of civic, community and faith leaders will present a petition to No. 10 from thousands of Sheffielders calling for a fair deal for our city. Will Ministers accept their argument that the unfair distribution of cuts is having a disproportionate impact on cities such as Sheffield, widening inequality, hitting those who have least the hardest, and weakening the capacity of the council and the voluntary sector to support them?

[The Financial Secretary to the Treasury (Greg Clark)]

The hon. Gentleman should support the Sheffield city deal, which has been enthusiastically endorsed by civic and business leaders in Sheffield. The point of the deal is to improve the city’s record for getting people into work, thus ensuring that the growing businesses there can access a high-quality labour force.

amendment of the law

Paul Blomfield Excerpts

Monday 25th March 2013 Commons Chamber

[Paul Blomfield (Sheffield Central) (Lab)]

It was good to see the Chancellor pop into the Chamber a few moments ago, although I wish he had been here a few moments before that to hear the hon. Member for Spelthorne (Kwasi Kwarteng) accuse him of “absolute madness” for saying in opposition that he would back Labour’s spending plans, right up to the world financial crisis in 2008. That was the case, however, and the truth is that it was not Labour’s spending, which repaired the damage of the Thatcher years, that caused sub-prime lending, the collapse of Lehman brothers or the world financial crisis.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Paul Blomfield]

No, I will not, simply because of time; I would love to otherwise.

That crisis created choices, and the Conservative-led Government have consistently made the wrong choices. The Liberal Democrats also have something to answer for because during the election they argued—rightly, and alongside Labour—that the post-2008 Tory austerity plans were wrong: wrong because they caused pain and wrong because they would damage the economy. They were elected on that basis; they have no mandate for this ideological assault on public spending and the welfare state.

The Secretary of State opened the debate by talking about housing. That is a good topic because it says a lot about this Government’s wider economic policy: wrong choices and missed opportunities, epitomised by the lack of investment in housing. The Government have cut direct support for affordable housing by 60%. The stagnating economy has limited private sector investment, and as my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) said, there was an 11% fall in housing starts last year.

The Secretary of State, who is currently checking his BlackBerry, attacked Labour’s record on housing. The Labour Government did not do enough, but let us set the record straight—[Interruption.] He should keep checking his BlackBerry. It is worth remembering that housing starts have been lower in every quarter since April to June 2010, the last quarter that Labour was in power.

The Chancellor claims he will solve the housing crisis with his latest right to buy scheme, but we have heard that before. Back in November 2011, we heard that the NewBuy scheme would help 100,000 people to buy their own homes. How many did it help? Only 1,500 people, just 1.5% of the target.

For many young families, the alternative would be social housing, but it is not. With nearly 5 million people on local authority waiting lists, the Homes and Communities Agency has reported that affordable housing starts collapsed in the last financial year by 68%. It has been estimated that as many as 60,000 extra homes would have been built had the Chancellor used the Budget to lift borrowing restrictions on councils and arm’s length management organisations. He could have done that, but he failed to do so.

Ideology and not practical policies drive the Government, so instead of helping with social housing, the Chancellor extended the right to buy, which is at the root of much of the problem of social housing supply. As private landlords win out, we lose vital social assets. When the Government extended the right-to-buy scheme in April 2012, the Secretary of State—he does well to smile—promised one-for-one replacement. How many have we seen? Three hundred and eighty-four new homes have been built to replace 3,495 sold, which is a 90% loss of socially rented stock.

Finally, the new homes bonus has an unfair impact. It is designed to incentivise local authorities to approve new housing development but is calculated on the value of property, which means that areas with low property values lose out. In my case, resources moved away from Yorkshire to wealthier areas, and from Labour councils to Conservative and Liberal Democrat councils. For example, it is estimated that Sheffield council lost more than £3.5 million as a consequence of the scheme. The Secretary of State might well smile, but people in Sheffield are not smiling.

As with the economy overall, so with housing: we need a plan B, and we need it now.

Economic Policy

Paul Blomfield Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

We have to reduce spending and, as I have said, we will have a spending round later this year. We are reducing the share of national income taken by the state. When we came to office, almost 48% of national income was taken by the state, which was a completely unsustainable position. That position was never advocated by the Labour party when it sought office, but that is how it left the country. It now apparently wants to return to that position. As far as I understand the shadow Chancellor, who shakes his head, he does not support a single cut the Government have made.

[Paul Blomfield (Sheffield Central) (Lab)]

There is an issue of accountability. In the Chancellor’s February 2010 Mais lecture, which was still on the Conservative party website this afternoon, he said:

“in order to bring some accountability to economic policy, I have set out eight benchmarks…against which you will be able to judge whether a Conservative Government is delivering”.

The first benchmark is that the Conservatives

“will maintain Britain’s AAA credit rating.”

How will he be held accountable for his failure?