Financial Services Bill

Paul Maynard Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

The Treasury Minister will also be aware that the Bank of England base rate is currently just 0.1%. That is not the rate for many consumers, who are paying 25% interest on credit card debt, or payday lenders, who can charge up to 0.8% a day, nearly 3,000 times the Bank of England base rate. It is time the Government brought forward legislation to curtail these appalling interest rates. When debt was a problem for the banks in the 2008 crisis, the Government intervened to lift the burden of bad debts. It was good enough for the banks, so I suggest that the Government examine the work of Johnna Montgomery, who is calling for a similar long-term refinancing scheme now to lift the debt burden from our hard-hit constituents. They need the Government to act to lift them out of potential poverty and penury now.

[Paul Maynard (Blackpool North and Cleveleys) (Con) [V]]

It is a pleasure to speak in this debate in support of new clause 7, which is in the name of the hon. Member for Walthamstow (Stella Creasy), who I gather will speak shortly. It is absolutely vital that we accelerate regulation of this newly emerging sector before we see the sort of problems that emerged in the rent-to-own sector in recent years.

I am glad to hear that the Government, the FCA and the sector recognise that regulation is necessary, but I also note that there is little consensus over what that regulation should consist of, nor what legislative vehicle it could be contained within. I further note that support from the sector is conditional on it being, in its view, in consumers’ interest. I am not sure it should be the judge of what is in consumers’ interest.

Clearly, it is far better for people who can afford to pay just once to do so, but I recognise that there is a legitimate market for a well-regulated “buy now, pay later” sector. However, it has to ensure that consumers are not taken advantage of. The sector likes to point out that the fastest rate of growth is in the over-40 market, thereby suggesting that its users are among the more financially responsible, but younger customers represent the majority of those missing payments and putting themselves at risk by having recourse to risky forms of lending. As innovative as “buy now, pay later” might be, that innovation is driven by competition—by a desire for market capture by the major players. So while one proposes a voluntary code of conduct, another chooses not to sign up to it. That makes me worried as to the willingness of the sector to co-operate with the regulators. What we do not want to see is regulatory capture by these major players.

I want to ensure that those who miss their payments are unable to make further purchases with not only one provider, but all providers of BNPL. If Klarna prevents a further purchase by a consumer because they have already missed a payment, they should not be able automatically to switch to Laybuy, Clearpay or one of the other providers. Moreover, these providers should not be a default purchasing option on a website when a consumer seeks to make a purchase; this is a clear example of the growing lockdown phenomenon of ‘emotional e-commerce’. I recognise that this Bill is not perhaps the right vehicle to manage how the websites are laid out, but this is a clear driver in the growing use of this form of payment.

I have already seen the problem debt my constituents have accrued in the rent-to-own sector, and those firms also sought to portray themselves as acting responsibly to protect consumer interests. I do not want to see those same constituents using BNPL schemes and getting into a similar situation, with a similar rhetoric from those providers. Regulation is now needed sooner rather than later, before these commercial models become ever more entrenched. With every week that passes, the influence of BNPL increases, the more we see the adverts on the TV and the more we see it appearing when we make online purchases. The lack of consumer protection in this regard puts more of those purchasing online at risk.

I very much welcome what the Minister has had to say to me, both in the House and privately. I look forward to seeing the Woolard review and hearing the next steps that will be taken to make practical progress on this very pressing matter.

[Yvonne Fovargue (Makerfield) (Lab) [V]]

It is a pleasure to follow the hon. Member for Blackpool North and Cleveleys (Paul Maynard). I, too, want to focus on new clause 7, but I also want to mention breathing space, which is addressed in new clauses 22 and 23, and the statutory debt repayment scheme, which is dealt with in clause 32. We all know that BNPL has exploded in the past year. More and more retail outlets, and even online gambling companies, are using it, and it is being sold to companies on the basis that, on average, customers spend 40% more. It is also being sold to customers as an easy way to spread the load, with the thought, “There are no credit checks so it is not debt.” But of course it is, because people are using someone else’s money to pay and it then has to be repaid. I looked into the business model for one company and found that 25% of its income is predicated on late fees and people being unable to pay on time. Surely that has to ring alarm bells, with the echoes of the high-cost lenders and their practices. The regulation is needed sooner rather than later and I look forward to a swift response to the Woolard review.

Breathing space is welcome, and I have long called for it; 60 days will often be enough, but there will be a need for flexibility in exceptional circumstances. The scheme was designed prior to the pandemic, where people are furloughed, have lost their job or have a period of illness, and 60 days is not long enough to give people time to recover from a temporary financial difficulty caused by the pandemic and set up a long-term solution. People affected by the pandemic simply need a bit more time to straighten themselves out. I also think that the midway review needs to be looked at again. It simply wastes time and resources, which are scarce in the debt field.

Breathing space alone is not enough, however, given the impact of coronavirus on household finances. Bailiffs’ visits should be suspended, as they were during the first national lockdown, and other enforcement action should be halted when a debt adviser alerts the creditor that a client has financial or other issues due to coronavirus. We should also be suspending the use of non-priority benefit deductions from universal credit and bringing forward plans to extend the repayments over a longer period.

Moving on to the statutory debt repayment plan, I am pleased that the intention is that people seeking debt advice should not be charged for any aspect of the plan. It has always seemed counterintuitive that people in debt should be charged to get out of the very same debt. However, there are areas that need to be tightened—for example, where creditors are objecting to the level of payments. That needs to be seen within the existing debt advice methodology and budget standards. We cannot have creditors objecting just because they do not like the level or they think that someone else has more. There is a common standard, and creditors need to accept that.

In general, the Bill is a welcome step forward in assisting people in debt, but the landscape of debt solutions is complicated and difficult to navigate. I believe that a full review of all debt solutions needs to be undertaken to clarify and simplify, and to ensure that people in debt are always able to access the solution that best suits their needs.

Covid-19: Access to and Acceptance of Cash

Paul Maynard Excerpts

Thursday 3rd December 2020 Westminster Hall

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

I beg to move,

That this House has considered access to and acceptance of cash during the covid-19 outbreak.

It is a pleasure to serve under your chairmanship, Mr Mundell, however unexpectedly. I am a great believer in innovation in the Standing Orders, so it is good to see it happening in real time. I thank all hon. Members for attending this debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interest. I have been a member of the LINK Consumer Council for all of three days, but I should make everyone aware of it none the less.

It is strange. A year ago, we were all debating who should appear on banknotes—which famous historical figure deserved the right to appear on our currency. Now, 12 months on, we are debating whether banknotes even have a future. I open my wallet and the moths fly out, not because I am stingy in any way but because I now use banknotes only to pay my window cleaner or my drycleaner.

Members will know that this topic is twofold, being about acceptance of cash and access to cash. The two are closely interlinked. Members have been arguing for some time about the preservation of ATMs to preserve access to cash, and I pay tribute to the hon. Member for North Ayrshire and Arran (Patricia Gibson), who has done a lot on that in the past. We are now seeing a growing trend towards as cashless society that affects all ATMs by reducing the consumer’s need for hard cash and making that infrastructure unviable. The key question becomes: what is the point of preserving access to cash if there is nowhere to spend it in the first place?

The trend has affected us all, but particularly the most elderly and vulnerable. Some may be nervous about using technology, or they may to struggle to remember a personal identification number or manage their personal finances. They may be among the 1.8 million people who are still unbanked and rely on a jam-jar approach to monitoring pots of money for bills, which cannot be done with a card. Recently published research from the consumer organisation Which? showed that two in five people reported being unable to pay with cash at a shop and did not have another payment method at the point of purchase. Indeed, two in 10 could not then buy medicine that they needed.

We see regional differences. London clearly leads the way: 75% of card usage there is now cashless, compared with 50% in my region of the north-west. I am also conscious that, as Members representing the highland fastnesses of the far north of Scotland can attest, there are many remote rural areas with very poor broadband, so it is not possible simply to install an iZettle—a little handheld device that permits cashless transactions.

Even in the three years up to lockdown, there was a drop of 20% to 30% in ATM withdrawals. Of course, when lockdown hit, that usage fell off a cliff. It has now recovered to some three quarters of what it was, but I very much suspect that the remaining quarter is unlikely to come back. We are turning cashless almost without noticing it, and certainly without discussing it. The trend is accelerating. LINK predicts that as few as one in 30 transactions will involve cash within the next five years or so.

There are many regulators in this field. One of them, the Payment Systems Regulator, has delayed its consumer tracker due to covid, even though it is more needed than ever. The PSR is rightly now focusing on access based on deprivation, rather than just on geographical area. We have indeed seen, just as in my constituency, a much sharper reduction in free-to-use ATMs in the more deprived areas.

A key noticeable feature of the initial lockdown was the sudden drop-off in the number of shops accepting cash. I saw that in my constituency. A fruit and veg shop suddenly went cashless—something that never would have occurred to me as likely to happen. Part of the trend of shops stopping taking cash was the fear of the virus remaining on banknote and coin surfaces. In the past week, I have noticed that the Bank of England has sought to clear up that myth, and I hope that shop workers and customers will start to feel more confident that using banknotes and cash does not put them at greater risk of contracting the virus.

Which? said that the reduction is also due to the underlying challenge of handling cash. Perhaps it means driving further to deposit a day’s takings at the bank, given the number of bank closures, or queuing for up to half an hour to make a deposit in a post office, which means that the working day is extended. Each time they have to go, the unit cost goes up, as fewer use cash. That drives more businesses cashless for simple economic reasons.

We have seen innovation from ATM providers and FinTech. LINK continues to have the role of ensuring that protected ATMs are replaced when needed and subsidising low-volume ATMs. It pioneered other approaches such as a community right to request an ATM as well as a range of schemes focused on promoting local cash recycling and more use of cashback without purchase in shops. However, even if the cashback without purchase pilots prove successful, it still requires the Government to renew the regulations concerning what is called PSR 2 for them to continue. That is critical because the pilots end soon. Will the Minister confirm that the regulations will be tabled in due time so that the industry can make sure it continues that good work? Will he also extend them to include deposits, so that local businesses have more options for where to take their cash at the end of the working day? In case he thinks this is a rather obscure point, he might wish to be aware that there is one pilot at a SPAR in Castle Street, Hereford, which is one of the trialled pilots. Perhaps he is more likely to be found in the Waitrose by the football ground rather than in SPAR on Castle Street, but he might wish to visit to see how it is working in practice.

I know the Government have promised an access to cash Bill. The Treasury is starting a review of access to cash as well, but can the Minister comment on the timing of the Bill? I am very concerned because we need a Bill sooner rather than later. The changes are happening now. Cash is disappearing now. Even if we do not get the Bill soon, I hope that some of the structural changes needed in the sector that do not require legislation can be accelerated by the Treasury.

The Government have set up so many institutional bodies. The Joint Authorities Cash Strategy is a key one, which is trying to reduce the cost of the hidden cash infrastructure that distributes notes and coins by consolidation and removes duplication. We do no talk about this often enough; we just look at what the consumer does, not at what happens behind the cash machine or cash register, which is just as important. In addition, the Payment Services Regulator now has a steering group for consumer working groups, each meeting weekly and coming up with solutions to immediate and medium-term problems. One might argue that there is far too much going on. The National Audit Office report, “The production and distribution of cash”, published in September, made that point and highlighted five separate bodies with an oversight role in cash infrastructure. This surely needs rationalising to make it more effective. Many bodies recommend that the Financial Conduct Authority takes on responsibility for protecting access to cash.

Serious thought is being given to the public utility model for cash infrastructure by another group that the Government set up, the Wholesale Distribution Steering Group. I would support that model, as the minutes from the steering group’s meeting on 18 November stated,

“without some action being taken the current wholesale cash distribution system would not remain efficient or effective against the backdrop of declining cash volumes.”

That puts it in a nutshell. We must not allow vested commercial interests to veto much-needed reform, particularly if all we end up discussing is interbank rates, so will the Government accelerate the proposal for a public utility model so that we can reduce the £5 billion cost of the hidden wiring that makes up the infrastructure?

We also need a long-term solution. We cannot pretend that we are not heading for an almost wholly cashless society at some point in the future. The question surely is: how do we get there? I very much hope the Government’s access to cash Bill will include a commitment to set up a body a bit like Digital UK, which managed the transition from analogue to digital TV. It is perfectly possible to create a guiding hand that knits together all the different interest groups, working with both the infrastructure providers and the charities that work on debt advice or support the elderly. They could manage that transition and make sure that those at greatest risk of being marginalised are helped through the process. I confess that is not my idea. I cannot claim the credit. That goes to Natalie Ceeney, who chaired the initial access to cash review.

I would also like the Government to probe into whether we should enshrine a legal right to pay cash for bills up to £100, as Denmark has done. It could perhaps be time limited until such point as the transition is completed. A more radical idea still might be a short-term legal requirement for shops to continue to accept cash as a primary way to protect both the acceptance of cash and by extension the cash infrastructure, including ATMs. That might be controversial if unit costs continue to increase for businesses, but I want to know the Minister’s views before I start planning my amendments to the Bill when it finally appears.

The sector is innovating, even though it is hamstrung by competing commercial pressures and some arcane internal debates. The Government have at least identified the problem and have raised the sense of urgency, and not just because I have started pestering the Economic Secretary to the Treasury whenever I pass him on the street. He now crosses the road very quickly when he sees me coming, and I do not blame him! I still think we need to have a wider national conversation and a much greater sense of urgency about how we manage the process. The transition is happening as we speak and not many people are noticing it. There will rapidly come a time when people ask, “Why did we not think about this more clearly at the time it was happening?” As the deputy chairman of the Swedish Riksbank, Cecilia Skingsley, said:

“If we don’t do anything we are looking at a future where money is spontaneously privatised.”

I do not think any of us in this House want to see that. We all have constituents who fall into the potentially vulnerable categories. We want to make sure that their interests are cared for as technology forges ahead. The Government have made a good start, but they need to follow through and much more speedily than is currently the case.

I look forward to hearing what other hon. Members have to say.

[David Mundell (in the Chair)]

Thank you for that excellent start to the debate, Mr Maynard. I call Yvonne Fovargue to contribute next.

--- Later in debate ---

[Paul Maynard]

I thank the Backbench Business Committee for enabling what I thought was an excellent debate. We are at our best in this place when we find consensus and agreement in the search for common solutions to common problems, so I consider the debate quite a success, unlike many other debates that I have sat through.

I particularly thank the hon. Members for Makerfield (Yvonne Fovargue) and for Luton North (Sarah Owen) and the shadow Minister, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), for raising the interplay between free-to-use and pay-to-use ATMs in deprived areas. That is a particular problem in my constituency, where the poorest areas are nearest the town centre, so geographical proximity actually does not help constituents living there to access free-to-use ATMs.

My constituency is also just 8 miles by 2 miles, so hearing from Members for much larger rural areas in Scotland was particularly helpful in understanding the broader picture of access to cash. I say to the hon. Member for North Ayrshire and Arran (Patricia Gibson) that I am too young to even know what a postal order used to look like, let alone what it now looks like. I am grateful that the hon. Member for Strangford (Jim Shannon) chose to grace us with his presence; it may be because Strangford has no track record of coal mining that he could draw on to speak on that issue in the main Chamber. His points on the high street were well made.

I am grateful to the Minister for his response. I may have to write to the Economic Secretary to the Treasury on the tabling of regulations to enable the cashback pilots to continue, which is an urgent matter that the Government need to address. They have weeks to do that. It cannot wait for a Bill, or even the consideration of a consultation. I love Government consultations. As a Minister, I would take them home over the Christmas holidays and read them over the turkey, and then come back and rewrite what was going on, so I hope the Minister will request that the Economic Secretary, in this time of lockdown Christmas, locks himself away with all the consultation responses, which I know will be of very high quality.

I once again thank all Members who participated in what has been an excellent debate. I am sure that it will not be the last time that we come back to this issue. Thank you, Ms Ali.

Question put and agreed to.

Resolved,

That this House has considered access to and acceptance of cash during the covid-19 outbreak.

North of England: Infrastructure Spending

Paul Maynard Excerpts

Wednesday 25th November 2020 Westminster Hall

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gray. I am relieved to see a Treasury Minister here who has also been a Transport Minister, so we might have a good chance of a response to our debate, given the focus on transport.

This should be a technocratic debate as much as anything. There is no Labour philosophy on pouring concrete to build a new road, and no Conservative philosophy based on an exegesis of Edmund Burke on how to erect a gantry for overhead line electrification. This is predominantly technocratic. I could spend an entire four minutes trying to demolish the per capita regional spending figures that I have heard quoted for the past 10 years. They are a myth and deeply misleading, but the political class seems universally to have drunk the Kool-Aid.

More topically, it is worth thinking about the review of the Green Book announced today and the impact it will have on benefit-cost ratios. As a Minister who had to focus on BCRs time and again, I can tell colleagues the input to deliver any BCR they wish to find. BCRs on their own do not allow projects to move forward. They are a useful tool in comparing projects that achieve a similar objective—for example, how to improve trans-Pennine links. We can then compare different ways of achieving that and work out the best value.

What BCRs do not do is allow us to choose between north and south projects. It will still be a political choice whether to opt for Crossrail 2 or Northern Powerhouse Rail, and the sequences in which one might do that. In particular, and I will disappoint my hon. Friend the Member for Southport (Damien Moore), it will not get us any new rail carriages—as I know from experience—because a BCR does not take into account the fact that any new rail carriage does not mean more passengers travelling. Therefore, there is no benefit in the Treasury’s mind in that regard.

It is also worth considering that one of the problems that the Treasury has created—and a rod for its own back—which I have been unable to solve over many years, is that it has numerous fantastic projects across the north of England that cannot proceed, because they are predominantly private sector-led. A good example right now is Peel Holdings, which owns Doncaster airport. It wanted to build a short four-mile spur of the east coast main line into the airport. The Department for Transport has just turned it down, despite it being private sector-led. That is because, despite a Treasury and DFT joint review, we could not find a straightforward and simple way to keep such projects off the public purse—that meant that they would have counted towards our debt figures. That still needs to change if we are to properly unlock the true potential of all the private sector-led schemes out there.

Since my three minutes have gone—very quickly—I will make one final plea. I am struck by the fact that I have never detected such a dislike of devolution at any point in the past 15 years from the Government and most of my colleagues. In my view, and in my experience, it is only by devolving power to Metro Mayors, combined authorities and our regions that we will get these smaller projects through and get the compromises that are needed between the regions to deliver some of the more strategic projects. In all my conversations with Metro Mayors and combined authorities—with one notable expectation that Members can probably predict—they have always been apolitical, sensible and constructive and have improved decision making because of the quality of local transport planners. If we move away from devolution, we will have a much less effective transport policy and must less infrastructure built, so please show a little confidence in why George Osborne chose to devolve during the coalition Government. That is my four minutes up.