Covid-19: Household Debt

Stella Creasy Excerpts

Thursday 8th July 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

It is a pleasure to take part in the debate, and I pay tribute to the work that my hon. Friend the Member for Makerfield (Yvonne Fovargue) has done on these issues for many years.

I agree with every word from the hon. Member for Blackpool North and Cleveleys (Paul Maynard); I fear that consensus will break out in the House on the need to act. Whether we have different ideas on how we should act may be another matter, but I think the concern that debt has been the quiet winner of the covid crisis is widely shared across the House. The two excellent previous speeches reflect that. The talk of people saving more may well be true, but we know that, in our communities, many people are drowning, not waving. Frankly, they were already in deep water before the pandemic hit.

The two previous speakers gave some excellent statistics on the debt in our country. I am mindful that StepChange tells us that more than 19 million adults have experienced a loss of income during the pandemic, while 11 million people have built up £25 billion of arrears and debt—not because they have been sat at home ordering consumer goods to entertain themselves, but to pay for essentials. As we know, those debts are not equally distributed within our communities. In particular, renters, those from minority ethnic communities, and women and mothers, as Women’s Budget Group research shows, have borne the brunt of the debt crisis that is building up in our communities. In April, a quarter of mothers from black and ethnic minority community backgrounds reported that they were struggling to feed their children, and 32% of young women said that they were finding it hard to pay for essentials.

So, the question for us all is, what are people doing to make ends meet? Some 26% of those affected by coronavirus have borrowed money to make ends meet, most commonly through credit cards or an overdraft facility, and a million of those people have used some form of high-cost credit product. Crucially, Citizens Advice research also shows that people from shielded groups are four times as likely as others to be behind on utility bills such as council tax.

Understanding the nature of the credit tsunami that is coming towards us due to the debt that underpins our economy and underpins the response to credit is vital not only for people’s individual lives, but for our public sector. The reality is that research increasingly paints a grim picture for many of our constituents. Some 48% of consumers told the FCA review of high-cost credit that they had to cut back on other spending to make their loan bills, while 37% said they missed payments on their rent or mortgage or on utilities, with council tax the top payment that many are forgoing. Some 16% of customers reported that their most recent borrowing was to repay debt that they had already taken on. People were being drawn into a spiral whereby they were borrowing from Peter to pay Paul, from Paul to pay Sarah, and from Sarah to pay Peter.

The truth is that this is not a new phenomenon in our country. We have always had an economy that was increasingly reliant on consumer debt, and we have always had millions of people for whom that reliance was toxic. As my hon. Friend the Member for Makerfield set out so well, it is very expensive to be poor in this country. Credit cards and high-cost credit, whatever form it takes, are expensive for people on low incomes. Indeed, a sub-prime credit card costs around £200 more a year, and personal loans cost around £500 more a year. The issue is not just about the credit that people can access, but about the way utilities are sold. Being on the best energy pre-payment tariff could still be £131 more expensive than the best online-only tariff.

We must not be complacent—I know the Minister is not—and we must not encourage a consumer spending bubble. I urge the Treasury to change tack and be like the Grinch, but for good cause, owing to the problems in our communities. The debt advice services tell us that they have not yet seen hundreds of thousands of people coming to them, but we know it takes time for people to get to the point when they admit that they need help. The true impact of the pandemic on debt advice is yet to be seen, although we are already seeing some incredibly worrying trends. The Financial Wellness Group tells us that around 24% of the customers it has advised on utility debts each owed about £1,000 in arrears, but that has risen to £2,000 over the last year. We can see that when people seek help, they are already in a position whereby it is much more difficult to help them. In particular, they flag up housing costs.

I recognise the point about incomes made by my hon. Friend the Member for Makerfield, but I represent a community in London—supposedly an affluent area—that has the 10th-highest level of child poverty in the country due to the cost of housing and of keeping a roof over people’s heads. We must focus on the poverty that we see in our communities and on the impact it has on people’s spending. With the eviction ban ending, with no end in sight for high rents and with no action taken on them, it is clear that people will struggle to manage the cost of trying to stay in the community where their children go to school and where they can be as close as possible to whatever work they can get, especially if they have experienced unemployment during the epidemic. Indeed, the Financial Wellness Group tells us that more than one in three customers to whom it has provided free debt advice have had negative disposable incomes—their priority living costs exceed their income. For many of those people, it is about housing costs.

Like others, I welcome the Breathing Space process, but I believe we need to have a much more fundamental rethink of how we help people to manage their finances and how we put consumers front and centre in what is often an unfair fight. I recognise the point made by the hon. Member for Blackpool North and Cleveleys about not taking a whack-a-mole approach, but I hope he will forgive me if I take a bite out of some legal loan sharks that I have been concerned about and spoken about to the Minister for some years now—the “buy now, pay later” industry, which has been one of the overall winners in the pandemic.

Since the pandemic started, there has been a massive increase in people using “buy now, pay later”, because they have been able to do online shopping. It has even been suggested that £1 in every £4 spent last Christmas was “buy now, pay later”. Several years ago, few of us had heard much about that industry. It is now huge.

As my hon. Friend the Member for Makerfield said, the impression being given is that the issue is all about fast fashion and young women buying too many pairs of shoes, but the brutal reality coming from the research is that it is not about that at all. People are using the options provided by websites to make ends meet because there is too much month at the end of their money. In particular, families are suffering and having to use that form of credit. As my hon. Friend said, the Which? research is incredibly compelling. People are using “buy now, pay later” to access credit at a stressful and challenging time in their life—for example, when they face redundancy, or when they might not have been able to access help because they are one of the 3 million excluded in our country, in particular those who have children to keep clothed, fed and warm.

Missing a credit bill or payment can be a major life event. The odds of using “buy now, pay later” go up by about a third when someone is made redundant, has a baby or has to move because they can no longer afford to live in their home. We know that, as a result, those people’s credit records are affected. We know they have been referred to debt collection agencies and that they have experienced mental distress. We know that it does not have to be that way.

I welcome the fact that, over the past year, the debate has changed from the idea that this is somehow just a new wacky way to use the internet to shop more simply to a recognition of the damage and the danger that this form of credit, which is unregulated—and still is unregulated today—represents. The FCA report was clear about that.

We know from Citizens Advice that almost 40% of people who have used “buy now, pay later” did so without realising, as a lot of the retailers push people to use that as the first option on their sites because they are officially paying the fees for it. Almost the same number of people thought it was not proper borrowing and really did not understand what they were signing up for. If we consider the research from the Money and Mental Health Policy Institute, which shows that 3 million people with mental health problems have found it much harder to control their online spending since lockdown, in part because of the design of online retail sites, the need for urgent action grows ever stronger. As I have repeatedly said to the Minister, we have to learn the lesson of the payday lending industry. We did not act quickly enough, so even now we are seeing millions of people who still have problems as a result of borrowing seven or eight years ago through payday lenders.

The public know that we need to act because they do not believe the adverts. They know this is a problem. Indeed, the Hastee Workplace Wellbeing Study showed that 59% of workers had applied for high-cost credit knowing that they would struggle with repayments, but feeling that they had little option. Yet over the past couple of months, rather than the industry recognising its responsibility to its consumers and recognising the support from across the House that the Government would have for regulation, we have seen it simply changing the wording. Such entities no longer call themselves “credit”. They call themselves “a money management tool”. They offer debt advice themselves. It really is turkeys talking to us about how going vegan at Christmas is a good idea. The industry is moving quicker than the Government. That is why I urge the Minister, when he knows he has cross-party support and when he has the evidence, that there should be no further delay in regulating those companies on the issue.

We need to tackle the way in which the companies see affordability. It is clear from the evidence that their definitions of affordability are not ones that we accept in other industries. We need to challenge the product design and how those companies are evolving so quickly to evade what is commonplace evidence about credit regulation—many of the things the Advertising Standards Authority has tried to pick them up on. However, they are moving quicker than Government. We need to make sure that we have a proportionate regulatory process.

One of the things I am extremely concerned about is hearing Ministers suggest that somehow these companies would not have to follow the same rules around credit regulation as other companies, as if they were special and as if they were not as bad as some others. There are two things about that. I hope the Minister will set out for us why he thinks there might be exemptions. What particular elements of our consumer regulation would he not apply to “buy now, pay later” industries? Why does he think that would not create a race to the bottom across the consumer credit industry, as companies variously tried to argue that they were not the bad guys ripping off our constituents? Has he spoken to the Competition and Markets Authority about this? Setting out a situation whereby we allow companies to pick and choose which regulations they abide by is not going to help our constituents.

On that point, I agree with my hon. Friend the Member for Makerfield that we need to review the FCA. The failure to act quickly enough on Wonga, BrightHouse and Amigo Loans is an example of why we need the regulator to be better. Too often, the Financial Ombudsman Service has intervened on behalf of our constituents, rather than the regulator, which has been working with the companies. It is right to review now the FCA and whether it is working effectively, when people are without the compensation they are due from those companies, many of which have gone bust. Some people are not going to get the compensation they are entitled to, but they are also being chased by the creditors of those companies because they owe the companies money. Something is fundamentally wrong in that balance.

Finally, I again agree with the hon. Member for Blackpool North and Cleveleys that we need to ensure that there are good credit options, which is why I urge the Minister to talk to his colleagues—not just in the Treasury, but in local government—about our credit union movement, which is on its knees as a result of the pandemic. As a proud Co-op MP, as well as Labour, I believe that social finance initiatives are critical to helping people out of this crisis. Minister, the people who are drowning, not waving, need us to offer more than a life raft such as Breathing Space. They need us to deal with all these legal loan sharks, which are circling them and pulling them down—once and for all, in truth. The Minister will have my support, and I know the support of Members across the House, if he takes that robust, proactive approach, but right now all we can see is more fins in the waters ahead.

[Mr Peter Bone (in the Chair)]

It might help Members to know that five Back Benchers want to get in before I have to call the Front Benchers at half-past the hour; if people keep their remarks to five minutes or less, we will get everyone in.

Business Rates Reduction Services

Stella Creasy Excerpts

Wednesday 26th May 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Hollobone. It is also a pleasure to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake), who has been a doughty campaigner on this issue, and rightly so. He said that 13 of our colleagues are affected. I suspect there are many more but that they have not felt able to raise the issue.

Let us be honest: we recognise that we may not be the main event this morning in Parliament, but these issues are our bread and butter as MPs. They cut across the political parties because a rip-off is a rip-off. When we see companies preying on and exploiting our constituents, who are trying to do that most basic and important thing of setting up businesses and being successful in our local communities, selling a wide range of goods and services to those communities, it inspires anger in all of us and frustration that we cannot do something more quickly to help. I recognise that we may not be the box office hit this morning that we would want to be, but I agree with the Minister—consensus is breaking out—and I hope that we can make progress today on something with a longer lasting effect, because in some sense this should be a simple open and shut case.

Like the hon. Member for Thirsk and Malton, I was contacted by a local resident absolutely at their wits’ end dealing with RVA as a company. They have a small business with one or two employees—not a large multinational—and are trying their best to understand and navigate the range of regulations and rules that they have to abide by, and to understand what they can do to give their business the best fighting chance. Six years ago, like the hon. Gentleman’s constituent, my constituent was contacted by RVA and offered what appeared to be assistance. There are many different companies that would offer assistance to small businesses that seem, on the face of it, to be helpful. It is not just about small business rate relief; often it can be about recycling or rubbish collection—all sorts of areas where there are different rules for businesses than for individuals. For a small business, particularly a sole trader, having someone help them to get their head around them seems like a blessing. Unfortunately, it was anything but a blessing.

The stories are very similar, which is why some of us have been exasperated by the lack of reaction to the company —it has been going on for many years. My constituent was contacted and told that they could reduce their business rate cost; RVA visited the office and took measurements—allegedly on behalf of the council, as though it was part of a public service—and then billed the company for the savings on small business rate relief. But those savings would have been automatically due to the company anyway. My constituent, not unreasonably, did not know the ins and outs of business rate relief. I am sure that if the Minister gave us all a test on it, I would wager that the hon. Member for Thirsk and Malton would beat me, but even he would not know everything about this scheme. To expect our constituents who are setting up a business to know all that information is simply unreasonable. That is why I completely agree with the hon. Gentleman when he uses the term “carpet-bagging”. There might be some more choice terms, but I am very conscious that they would not be not parliamentary language.

My constituent is now part of a long-running legal battle with that company—I will limit what I say to ensure that there is no issue for them but, like the hon. Gentleman, they have issues with the documents that appear to have been falsified and claims about signatures. RVA claims that my constituent agreed to a seven-year contract, when they only had a five-year lease on the premises. It does not make any logical sense. My constituent has had years of torture, causing real distress, through the court case and the impact on their ability to run their business at all.

When people come to us—I am sure the Members participating virtually have had the same experience—we want to help. I thought, surely, this is almost a police matter if fraud is involved. To find that this company is able to continue to operate to this day, ripping off businesses around the country, is deeply distressing. Like the hon. Gentleman, I have pursued this issue with trading standards in the area where the company operates, but I am told that they cannot act. Many moons ago I scrutinised the Consumer Rights Act 2015, where we talked about providing a reasonable service at a reasonable timescale for a reasonable price. None of that is reasonable. I am at a loss to understand why we cannot have stronger enforcement. We have not seen stronger enforcement, which is why this debate is so important.

I hope the Minister is open. I know that he, like me and the hon. Member for Thirsk and Malton, would be aggrieved at seeing people ripped off. My constituent asks for a simple solution: she says that the small business rate should be automatic. Actually, the Federation of Small Businesses has been talking about licensing those companies, partly because, as I say, I do not think the rip-offs are restricted just to companies talking about business rate relief. Small businesses, especially in the post-covid environment, have really struggled over the past 18 months and are getting back on their feet, and they will desperately want help and advice about how best to navigate the new environment that they are operating in. It is entirely reasonable for the FSB to call for those companies to be licensed. We should be thinking about licensing business service companies so that we can stop what the FSB itself calls cowboy practices.

This is a matter for Government, not least because it is changes in Government policy that these companies are exploiting. When changes in business rates relief happen, these companies make their money; they make their money in a way that undermines the very policy of the Government. Governments of all political persuasions have tried to support small businesses. They are trying to pass on money—they are trying to help small businesses with their costs—yet, because of the practices of these companies, they can inadvertently end up charging them more, because the bill comes for the fact that the relief has changed.

I hope the Minister will listen and be not just sympathetic, but proactive, in calling to account the Insolvency Service, asking for an investigation into RVA, and in helping to shut down this awful company once and for all, as well as in learning the lessons from this situation on how we can best support small businesses when it comes to regulation.

We cannot have a debate in this place without talking about the B word, Brexit, and I always thought the concept of red tape and how much more of it might be coming was ironic. Here is a very clear example of where removing red tape could really help to support our constituents and make sure that people are not being ripped off, if only we have the political will to do so. I genuinely hope that the Minister will listen to this cross-party call for action and respond accordingly.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for having secured this important debate on a matter that is of considerable public interest generally, but also locally in his constituency and to those affected by this company. It is a pleasure to speak in a debate that is not disfigured by party politics; all Members have made very constructive contributions, and I am grateful for them.

I will start by expressing my sadness that, inevitably, proceedings elsewhere in this House at the moment are going to be overshadowed by this very important consideration of business rates. I only hope that the media will find some time to indulge Mr Cummings in his comments in between reporting on this vital topic. In a slightly more serious vein, I apologise that the Government have not been able to supply a Minister with specific responsibility for this area to respond to the debate. As the hon. Member for Glenrothes (Peter Grant) rightly said, its focus is not on business rates—although there has been the occasional attempt to crowbar the rest of the business rates system in—but on the reduction services aspect that my hon. Friend raised. That aspect is a matter of business regulation, and therefore falls to the Department for Business, Energy and Industrial Strategy. He and the hon. Member for Walthamstow (Stella Creasy) have also focused on some individual cases of predatory practice by specific companies, and they will understand that I cannot comment in any detail on specific cases. It would set a very bad precedent for a Financial Secretary to do so, given the connection to the tax system in a different context.

I think Members recognise that, at its core, the system of business rates is a relatively simple and straightforward one. Companies and individuals who occupy non-domestic properties are liable for business rates. The rates bill is the product, in the literal, mathematical sense, of the rateable value of the property and the multiplier for the financial year concerned, offset by any rate reliefs. The rateable value is set by the Valuation Office Agency and, broadly speaking, it is the rental value at a set date —presently 1 April 2015.

In cases where businesses are unsure about the rateable value of properties, there are plenty of helpful resources on the website of the Valuation Office Agency. For example, I can go online and see a detailed valuation of No. 2, Marsham Street, which is the headquarters of the Home Office, and an explanation for how its valuation has been reached. You will be pleased to know, Mr Hollobone, that it has rather a high valuation, as befits its position in central London.

If ratepayers are unhappy with their rateable value, there is an online system known as check, challenge and appeal, which allows them to check the facts and, if necessary, to dispute the valuation that has been reached. This system was introduced to provide ratepayers with a service that is easier to use and understand than its predecessor and that enables quicker resolution of cases. An evaluation of the system last year found that it is working and that ratepayers are getting their cases resolved faster, without the automatic need to make appeals.

Rate reliefs are applied by individual local authorities, but most of these are automatic or require minimal information from the ratepayer. For example, transitional relief, which is used to phase in the effects of revaluations, is entirely automatic. For small business rate relief, rate- payers need only provide a little information about other properties on which they pay business rates, before being able to claim. All rate bills must explain the various reliefs available, and local authorities have many excellent websites that explain how to claim those reliefs.

Much of the £16 billion of relief that the Government have provided to the retail, hospitality and leisure sectors in response to covid-19—this was picked up by the hon. Member for Strangford (Jim Shannon)—has been applied automatically to rates bills. So there are many automatic methods of applying reliefs currently within the system. The relevance of that to the present debate is that there is no reason why a ratepayer should have to use an agent to claim rate relief. If they believe they are eligible for relief, they should instead contact their local authority. Of course, that is not in any sense to criticise people who have been found to be clients or would-be clients of the predatory organisations that have been highlighted by Members in the debate.

Let me pick up on the nature of some of the protections that exist within the system, of which there are several. One is the rules that apply to business-to-business contracts and that arise from the Business Protection from Misleading Marketing Regulations 2008, which prohibit advertising that misleads traders. There is also the Misrepresentation Act 1967, which may also apply to business-to-business contracts, and which says that if someone has entered into a contract following misrepresentation by the other party, they would be entitled to rescind that contract. Additionally, if they have suffered loss, they can claim damages against the other party.

Small businesses can seek help through other channels. If a ratepayer feels that there may have been illegal or fraudulent activity, they can choose to take court action, as I understand a number of businesses have successfully done in at least one of the cases under discussion. Alternatively, my hon. Friend the Member for Thirsk and Malton mentioned the Insolvency Service, which offers some protections, although they appear not to have been availing in this case.

It is worth just picking up the point about consumer protections. At present, the services are provided to the businesses that I have described, and consumer protections do not apply in the case that we have described. I note, and my hon. Friend the Member for Thirsk and Malton has argued, that microbusinesses share many of the characteristics of consumers, and he and other Members have therefore argued that they are worthy of protections in their own right. Members have highlighted the predatory practices of the companies they have discussed, which are, I am afraid, also exercised by a relatively small number of other companies, and cause extreme distress to the people who are affected by them.

It is important to note that, in other markets—for example, financial markets—it has proved possible to differentiate between protections afforded to different kinds of people in the client relationship. Therefore, there is a clear case here for the Department for Business, Energy and Industrial Strategy to revisit this area and to assess what further protections can, in principle, be provided. Let me conclude with a very simple message.

[Stella Creasy]

I hesitate to stop the Minister in full flow, because it is very interesting to hear what he is saying. I just want to come back on a point he made about businesses being entitled to rates relief automatically. Of course, that does require businesses to know about that. I agree with him, and I think we all agree, that differentiating between businesses—often small businesses —and consumers does not make any sense in terms of the expectation of protection, which is the reason why we have consumer regulations.

However, might he be convinced that it would be helpful in these instances for Government to be proactive in telling people that they might be entitled to rates relief? One reason why this company has been able to exploit people is a lack of awareness of the scheme. Although the Minister may feel that it is relatively straightforward, for a new business, the idea that there might be some things that do not have to be paid and others that do adds complexity. Is there a case, perhaps, in the absence of the further consumer protections we are talking about, for requiring local authorities, when they send a bill, to say, “Most small businesses would be entitled to rate relief, and therefore it is worth your time investigating”?

[Jesse Norman]

I thank the hon. Lady for her question. I have already said that all rates bills are required to explain the various reliefs available and that local authorities have, in many cases, excellent websites that explain how to claim the reliefs. Of course, the fact that reliefs in the cases I have described are automatic means that they flow through in and of themselves. That is a very attractive feature, where that can be engineered into the system. Where it cannot, it is for good reasons, and it may not be possible.

I do not think it is right to suggest—I do not think anyone who has participated in this very thoughtful debate would suggest—that there is any easy fix here, but there is a clear case to be addressed. I thank my hon. Friend the Member for Thirsk and Malton for bringing it to our attention and for raising it with the Government. I think the Government—across my colleagues and myself—need to consider what more can be done, both by themselves and in their further discussions with local authorities.

Financial Services Bill

Stella Creasy Excerpts

Monday 26th April 2021 Commons Chamber

On that basis, I am happy not to support the amendment and not to vote with the Government. This is the closest I have been, in six years doing this job, to voting against the Government. Nevertheless, I am reassured by the conversations I have had with the Minister and am willing to work with him to try to make sure that we can find solutions, as rapidly as possible, to solve the plight of many tens of thousands or even hundreds of thousands of people.

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

I associate myself with the powerful speech by my hon. Friend the Member for Feltham and Heston (Seema Malhotra). I understand where the hon. Member for Thirsk and Malton (Kevin Hollinrake) was coming from, but I really believe that we could make some progress on this issue this evening. That would be of great benefit to many people affected by the issue, so I will certainly support the relevant amendments.

We know how important this legislation is. I pay tribute to the Minister, who has been listening to concerns throughout the Bill’s passage. I wish to comment on two particular issues in respect of which I would like him to tell us further information; I hope he might be able to. We know that this legislation matters desperately because between a fifth and a quarter of adults have experienced a reduction in income in the past year. That is mainly because of furloughing but is also true among the self-employed. It is crucial to get financial services right as we come out of the pandemic to help to make sure that people are not stuck in interminable circles of debt.

We knew that one in five people were already struggling to pay for housing, food and energy and were unable to meet their credit commitments. That proportion has now risen to two thirds among people who were already suffering from financial problems before the lockdown. There has never been a more important time to get right how we regulate our financial services. StepChange points out that 26% of those affected by coronavirus have borrowed money to make ends meet, usually using their credit cards or an overdraft facility. At least £3.3 billion of new debt has been taken on since the start of the crisis. The question for us is whether the Bill is going to do enough to make sure that that credit is offered at a fair and affordable price for people.

Given that 6 million Britons have already fallen behind on a household bill, this is a question for the state as well as for our economy. Mothers, lone parents, those from black and ethnic minority backgrounds, the young and the disabled are most at risk of debt. In April, a quarter of all mothers from minority community backgrounds reported that they were struggling to feed their children, and 32% of young women reported finding it hard to pay for essentials. That is not just a financial problem; it is a mental health issue. There is a mental health crisis coming to our country, with one in every 12 people who are over-indebted experiencing mental health problems.

I know that the Minister shares the concerns I am outlining. That is why I have been a terrier when it comes to the “buy now, pay later” industry—because of my concern about the way in which it engages in lending to our communities. The Minister knows the speed at which the industry has grown during the pandemic. The FCA found that 11% of consumers in this country—roughly 5 million people—have used a BNPL product since the start of the covid outbreak, and many of them say that they use “buy now, pay later” credit because they cannot manage their financial distress, which is directly related to the crisis, without it.

BNPL companies have exploded. Within a year, Clearpay now has 1 million customers in the UK, lending to them on average eight times a year. Klarna, perhaps the most well known, reports that its worldwide revenue for 2020 grew by 40%, to $1 billion. The founder of Laybuy expressed concern and surprise that fraud in the UK market was huge in comparison to that in New Zealand and Australia. That just shows the problems of the industry coming and exploding at such a rate in our communities without regulation.

Compare the Market tells us that “buy now, pay later” schemes are being used 35% more than they were in the pandemic, with most customers saying that it is because they cannot afford to make purchases outright. We are a nation with a massive debt bubble underneath our economy and we need to ensure that, when these companies operate, they do not exacerbate it.

I welcome the Woolard review, which was clear that the “buy now, pay later” industry needs to be regulated because people were in financial distress and difficulty because of these products, that the products were not good value for money, and that many of the things their lobbyists had told MPs were simply not true. Indeed, the review also found that consumers may not be applying

“the same level of scrutiny to their decision-making as they would for other credit”

companies,

“including consideration of the potential consequences of failing to repay”,

because they were not getting the right information. The Minister will know—we tried to tell him at the start of the Financial Services Bill—of the case that we needed to take to the Advertising Standards Authority about the way in which Klarna was advertising its products.

Finance (No. 2) Bill

Stella Creasy Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

This week the shops have opened, many of us have finally had a haircut and some have even had their eyebrows done. Vaccines are being given out and unemployment has started to fall, which we all welcome. We know how hard this year has been for our constituents and the challenge of how to help weighs heavily on the minds of many across the House. Some would say that that challenge is just about the impact of the pandemic and that this week shows that it is slowly being addressed—that it has been a horrific year with the loss of loved ones, and the shutdown of businesses made necessary to prevent transmission, but we are making it through. And let’s be honest, some people have done well in the last year. We have seen them: the ones who have been able to spend time with their families and to work from home okay—wi-fi willing. They are the ones the Chancellor is counting on to spend their savings and make his sums work—the people to whom short-term measures to keep pumping up our housing market and spending on DIY will appeal.

Thanks to the Chancellor’s efforts and legislation such as this, everything is neatly in place for a classic short-lived consumer-led boom. Cheap borrowing costs and the stamp duty holiday mean that the residential property market is red hot. Indeed, last November, this country paid back more than it had borrowed on its credit cards for the first time since July 2013. But to say that we are heading out of the woods and just to keep going is to fail to recognise why we are so vulnerable in the first place, why the UK economy collapsed so badly over the last year and why our communities were so at risk of harm from the virus that our death rate has been so high—the underinvestment and austerity that mean that our productivity rate is so sluggish, our poverty rate is rising and our people are not waving but drowning in their debt. We do a disservice to our communities if we underplay these issues or the scale of the task ahead.

We need a Finance Bill made not for the here and now, but for the long term. We cannot go back to normal when normal means 23% of our population living in destitution; when millions of people are sitting on debts and rely on insecure work in industries that will never be the same when furlough ends; when our health inequalities have worsened so dramatically over the last year.

In addressing those underlying problems in our economy, I can welcome much in the Bill. I recognise that it is right to look at corporation tax, given that those with the broadest shoulders should help the most with repairing our fractured economy. We should be tackling the devastating impact on our environment of plastics; with some amendments, the proposals could drive not only a reduction in use, but new industries. We should be trying to tackle tax avoidance, although I always tell Treasury Ministers that it would be simpler to ask my right hon. Friend the Member for Barking (Dame Margaret Hodge) what they should do next.

The truth is that the Bill takes a nut to a sledgehammer. We would do better if we were to start again, rather than continue on with the fantasy that, with a few tweaks here and there, everything can go back to normal—whatever normal is. My worry is that relying on the fantasy the Bill creates will leave millions of families abandoned who may have weathered the shock of the pandemic, but were always going to be sunk by continued austerity. While millions have benefited from working from home and being able to save, millions more are struggling to make ends meet, having lost their job or seen their income fall.

The Institute for Fiscal Studies found that last year the richest fifth of households swelled their bank balances by over £400 a month, while the poorest were about £170 worse off each month. This is not people spending to entertain themselves during lockdown. Citizens Advice shows that roughly 6 million people have fallen behind on at least one household bill during the pandemic. Most people visiting the citizens advice bureau for debt advice are not coming to ask about credit card debts or rent-to-own purchases; instead, they are in debt to the public sector because of tax credit overpayments, benefits overpayments, council tax arrears or utility bill arrears. The Trussell Trust tells us that over half of food bank users struggle to afford food and clothes because they are repaying universal credit debts. Anyone who questions why that extra £20 matters should look at that information and realise that it needs to become permanent.

In total, £10.3 billion of debt and arrears attributable to covid have built up in the UK, most often by those who were already struggling before the pandemic—people such as renters, young people, single parents and low earners; people who, now that evictions have restarted, have few options when it comes to keeping a roof over their head; and many who were excluded from Government help altogether. I see nothing in the Bill to change those facts. Indeed, instead of helping, the Bill is walloping them with a tax rise. It squeezes family finances by freezing the personal allowance, after many families will have struggled to pay their increased council tax bills as well. The Chancellor might think he is being clever by using the least visible taxes to raise funds, but I tell him this: the public will notice. They notice when nurses get a pay cut, when VAT goes up and when they have even less money left at the end of the month with which to pay their bills. They notice just how segregated this country has become, with the haves and the have-nots not just in income terms, but in the divides between town and city, north and south, because of our failure to invest in the people of this country.

“Freeports!” the Government cry in answer. The Bill suggests that this will somehow generate jobs and growth in communities that were struggling long before anyone had heard of covid-19, but no one can explain why, if regulation is bad for business in the Thames Gateway, it is not bad for businesses in my community in Walthamstow. This is not the levelling-up agenda we need. It does not recognise that we stand alone among OECD economies in the extent to which our productivity problems are regional rather than sectoral, or that a super-deduction scheme will do little to invest in the children of Hartlepool, Harwich or Hendon.

We need not just to build back better, but to build back for all. Andy Haldane has highlighted that around 10 million people in this country are on insecure contracts. Our economy was so hard hit by covid because it was over-reliant on services, which made up as much as 80% of our GDP, whereas just 14% was based in construction and just 6% in manufacturing. The Bill shows that the Government still have not learned the lessons about how we are able as a nation to handle future shocks and diversify; to invest alongside business and academia in new technologies; to learn from the vaccine programme and encourage co-operation and innovation alongside the state and not in spite of it; or, in the run-up to COP26, to provide the incentives to renewable energy manufacturing and production that could futureproof our economy for decades to come.

This Government have no answer to our research and development sector, which is crying out for support while they use this Bill to give a tax break that will go to the biggest corporations and venture capitalists. Our charity sector is on its knees, but it gets nothing from this legislation. Charities cannot claim the super deduction tax for their IT equipment, whatever the hon. Member for Hitchin and Harpenden (Bim Afolami) might suggest.

Other nations are investing in their people and infrastructure, yet our Business Secretary has chosen this moment to abandon the industrial strategy enacted just four years ago and replace it with something that is neither industrious nor strategic. Combined with the approach in the Bill, that will simply confirm what a lot of companies and investors have already suspected for some time—that it is unwise to expect any UK Government to stick to a programme of supply-side reform for more than a couple of years. Frankly, the UK has generally got away with muddling through economic crises in the past, but the scale of the challenges that we approach makes that inadequate at this point in time. And we have not even today even really begun to understand how the B-word—Brexit—interacts with these longer-term challenges, hitting as it does our high-productivity export sectors while covid hurt our employment-rich domestic service sector. But truthfully, nothing in the Bill will help those at the mercy of either factor—unless they happen to have shares in Amazon or Google, or possibly the Chancellor’s private phone number.

Austerity has weakened the very foundations of our economy, but it is a political choice that the Chancellor is making in this legislation to use straw dust, not concrete, to try to repair them. Parliamentary time is valuable, and tax and spending is crucial to get right in such a context, so I propose to the House that we reject the Bill today and instead demand better for all our constituents.

LGBT Conversion Therapy

Stella Creasy Excerpts

Monday 8th March 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

It is easily done, Mr Gray; please do not worry.

I am honoured to be able to take part in this incredibly important and powerful debate, which clearly has cross-party support. I start by paying tribute to the hon. Member for Carshalton and Wallington (Elliot Colburn) for the way he introduced the debate and, in particular, for centring the survivors of conversion therapy in his remarks. It is incredibly important in a debate like this to remember those whose voices may not yet be heard in this place, but for whom we need to speak.

I also pay tribute to the journalist Patrick Strudwick and to Vicky Beeching, who have done amazing work uncovering and talking about their own personal experiences, bringing to the fore an understanding of how toxic this treatment is. To everyone who has spoken so far and given their personal experience: that is what Parliament at its best does.

Like previous speakers, I want to take on some of the arguments about why conversion therapy should be made illegal. There has been a lot of focus on whether it works, as if there are any conditions in which such a therapy would be acceptable if it could be shown to be ethical. Many of the major bodies for psychotherapy in the UK have outlawed the practice and said that there is no semblance of an evidence base behind it. However, I believe that we have to make it illegal, to send the clear message that it is not about whether homosexuality is a pathology, because it is not. It is not about whether being trans is a pathology, because it is not. It is a part of who someone is. We in this place need to send the clear message that we will not see the behaviour in question indulged. We will not see the question as one of medical ethics, but as about a progressive, inclusive society that bans practices that demean, belittle and discriminate against people.

Where young people who are gay, lesbian, transgender or bi grow up in communities where they are not supported, they are eight times more likely to have attempted suicide, six times more likely to report depression and three times more likely to use illegal drugs. There are consequences of living in a society where what I am talking about is even a debate, in many different communities, but we know it is a live debate. Right now there are websites where people can go to book conversion therapy, and it is talked about as a matter of free speech. Let us put the argument to bed today. It is not a matter of free speech to cause someone harm in the way that conversion therapy does.

It is also claimed that the matter is about a conflict with spirituality. There is no conflict with spirituality. I will not give a platform to the organisations that can be found, but I want to give a platform to the House of Rainbow and the Reverend Jide Macaulay, who is a proud member of the local community in Walthamstow and our local faith communities too. He teaches every single day that God loves you, not that God cares about who you love. Those are the organisations that we should be supporting. But we also need to send a clear message that it is not just about the medical side; it is simply about living in a better society. We want to outlaw the practice, to protect people from the harm and damage that it does.

We know that it is possible to do that. Frankly, when countries such as China, Brazil, Argentina, Ecuador, Malta and even Samoa have a ban, we could have one in the UK, and quickly. As the debate shows, there is cross-party consensus for it, so I urge the Minister to use the energy from the debate and the support across civil society for action and not to delay further. Let us make Britain proud to be a world leader, for once, on some of those issues, rather than following the pack. Let us tell everyone in the community that we love them not for who they love but for who they are.

Ministerial and other Maternal Allowances Bill

Stella Creasy Excerpts

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Thursday 11th February 2021 Commons Chamber

[Jackie Doyle-Price]

I shall not detain the Committee unduly, given that I made many of my points on Second Reading. However, I would like to highlight how the hon. Member for Gower (Tonia Antoniazzi) illustrated beautifully how all our maternity rights legislation refers to “women” or “she” and reflects the female sex, which again makes the Bill something of a vagary.

I thank my right hon. Friend the Minister for her references to my amendments and for engaging constructively to try to work through to a solution, notwithstanding the constraints of the legislation with which she is working. My amendments would replace the word “person”, which is causing so much anxiety to women outside this place, with a word that reflects the position in employment law—in this case, “minister”. That would be consistent with the rest of the Bill, because for the Opposition positions the Bill refers to office holders. I am really grateful to my right hon. Friend for seeing whether that might be a solution. It is not ideal—I would much prefer to see “woman” placed in the Bill—but needs must, and we must pass the legislation so that we can send the Attorney General, my right hon. and learned Friend the Member for Fareham (Suella Braverman), Godspeed on her way to enjoy her pregnancy and her childbirth.

I am not minded to press the amendment if it is not a suitable way to deal with this issue. It was tabled in a constructive spirit, to try to take the heat out of something causing distress to women. However, we must ensure that this is not repeated in future legislation regarding maternity rights. If there were an opportunity to vote on replacing the word “person” with “woman”, I would be in full support of it.

[Stella Creasy]

I rise to speak to a number of amendments. Before I do so, I will acknowledge some Members across the House who have done such amazing work in raising issues of equality when it comes to pregnancy and maternity in this place. I believe there is a high degree of cross-party consensus that we need to act.

I also put on the record my support for the many men who have spoken today about the importance of fathers. Let me be clear: there will be no equality for pregnant women and new mums until fathers are able to step up and equally do their bit. It is not a zero-sum game; it is about parents being able to support each other, and the importance to women’s equality of not being left literally holding the baby.

Let me put on the record my thanks for the work of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman); my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who was a trailblazer in her time and continues to fight for women’s rights; my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper); and, indeed, my hon. Friend the Member for Enfield North (Feryal Clark), who spoke bravely and set out her own fears for what would happen. That is one of the tests we must face in this place.

I take the point that the Paymaster General is making when she says that this is not a perk, but I think it is quite difficult to make that argument when faced with another Member of the House who is in exactly the same position as the Attorney General but will be unable to access the maternity leave that we have all agreed it is important that new mums should be able to access.

I want to put on the record my support for the words of my hon. Friend the Member for Leeds West (Rachel Reeves). If Members have not read her books, trying to correct the record of the absence of our understanding of what women parliamentarians have done, they really should.

I also want to mention the right hon. Member for Basingstoke (Mrs Miller). I said in my earlier contribution that one of the things I thought was missing from the debate was a recognition of the legislation that she has proposed to try to help women facing redundancy in pregnancy, and to make real the promise, which I think we all expect for our constituents, that we will not make someone who is pregnant redundant. As we know, even before the pandemic, 50,000 women a year were facing that situation. I think about the narrow scope of this Bill and contrast it with what her Bill could do for thousands of women in this country. If she is able to bring it forward, she will have my support.

I also want to thank the current Chair of the Women and Equalities Committee, the right hon. Member for Romsey and Southampton North (Caroline Nokes), who is doing an amazing job. She spoke today about the importance of equalities impact assessments. New clause 1 is about exactly why that matters. Obviously, we usually expect those assessments to be done for any form of Government legislation, because we recognise that we cannot be blind to the consequences of legislation for different sections of our society.

We have an Equality Act in this country and we protect certain characteristics for a reason, because we know that not everyone in our society faces a level playing field. Pregnancy is a protected characteristic for just that reason—to enable us to say, “Actually, in our society in 2021, women who are pregnant in our communities face discrimination.” We recognise that if we address the challenges that they face and remove those barriers, we shall all benefit. This legislation seeks to do that, and I recognise that. That is why I will support it, and why I think it is the right thing to do.

However, as the Paymaster General herself said, this legislation does that for a maximum of 115 women. In a society of 70 million people, that cannot be enough. That cannot be the message that we send from Parliament. That is why it is important that we have an equalities impact assessment of this legislation, and that we recognise that it does not take place in a vacuum, but in an unequal society where women who are pregnant face discrimination. We see that in our public life. We have already talked about this place briefly, and I do want to return to that, because I think it is important.

I acknowledge that the Paymaster General has recognised the timetable that I am setting her. I want to put that on the record, because I think that should be part of an equalities impact assessment where I believe the discrimination is against those of us who are pregnant, and there are human rights elements of this. But we cannot be blind, either, to the message that this legislation, in the way it is crafted, will send to our sisters in local government and regional Assemblies, or indeed to our sisters who are employees of this House.

[Jim Shannon]

Will the hon. Lady give way?

[Stella Creasy]

Happily. In fact, if I did not give way to the hon. Gentleman, I would feel that I had missed out.

[Jim Shannon]

I thank the hon. Lady for what she is saying, because I wholeheartedly agree. An example of that is a young girl who works for me. She is my PPS but also a councillor. She was able to get maternity leave because she works for me in this place, but not for her role as a councillor. I want to quote quickly from her. She cried, for she felt pressurised to return to the council after a couple of weeks, not by any person in her group but because she knew that no one else could take over from her, vote for her or speak for her. Today we have an opportunity to get this right for Ministers and for MPs, but I believe we must do the same for the Northern Ireland Assembly, the Scottish Parliament, the Welsh Assembly and every council. This is about equality, and we need that for everyone.

[Stella Creasy]

I always knew that the hon. Gentleman and I would eventually find common cause, even if we have disagreed on other human rights issues. He is right; we have a leadership role to play. Indeed, I would argue that this is leading legislation, because we know that in other Administrations there are not formal maternity provisions. That is why it is so frustrating that we are missing this opportunity to go further and help our colleagues.

[Meg Hillier]

I thank my hon. Friend for giving way and congratulate her on her happy news. I have had the interesting experience of having three children: as a councillor, where I took six months’ leave; as a member of the London Assembly, where I was the first then to take six months’ leave; and as a Minister and a Member of this House, where I took six months’ leave. It can be done, but there is an important element to consider.

Proxy voting, for example, which has an important role to play, can be seen to tether a woman to her job during her six months’ maternity leave and make sure that she has to follow every twist and turn of her job. We need to be careful in this debate that, while, of course, this Bill is a good move and while there are still many other measures that need to be put in place, we reflect and recognise that maternity leave is there for a reason. It is there so that we can bond with and nurture our child and come back to work at the point that we are ready to do so, with our child and our situation in a good place. It is important to make sure that, with some of the mechanisms that could be proposed, we are not unnecessarily tethering a woman to her job.

[Stella Creasy]

I completely agree with my hon. Friend. The challenge that she is speaking to is the same as the one that the hon. Member for Strangford (Jim Shannon) spoke to with regard to his member of staff. The Bill is not just about pay, but actual cover. As I said earlier, it is the commitment that the current Attorney General will not get an immediate phone call saying, “We know you are on leave, but we need you because of X.” Somebody else will be formally overseeing that role.

It is not by accident that when I was pregnant, I thought about what I wanted to do for my community. It was not about money, but about being conscious that if I had been awake for two or three hours at a time, I probably would not be as useful to my constituents as someone who could focus fully on the job. As I discovered with my first child, those pockets of sleep for two-and-a-half to three hours—the point at which I saw coffee as a medicinal substance to keep going—were in the first few weeks and months after childbirth.

It is absolutely right that we work to protect the family life of any woman giving birth, so that she has that time to bond with her child and to properly take time out, but we cannot do that in this job if there is nobody fulfilling the role that we are doing. It is the same for a local councillor and the same in our Assemblies. That is the challenge that we are facing here, and why it is so important that we assess the impact of this legislation.

[Wendy Chamberlain (North East Fife) (LD)]

I am listening intently to the hon. Lady’s speech. She is making some excellent points. Does she agree that today, what she is asking for is even more crucial? Given social media and emails, Members of Parliament are arguably never off.

[Stella Creasy]

I completely agree with the hon. Lady. At this point I pay tribute to the hon. Member for Stroud (Siobhan Baillie), who found herself being abused because she was on maternity leave. She was also abused by members of my own party. I remonstrated with them, pointing out that that was not the progressive approach to take.

My concern about the hon. Member for Stroud, and why the legislation is a missed opportunity, is that she sought to get cover. She was an MP who, like me, tried to get a locum. I had a fantastic locum. In fact, my locum, Kizzy Gardiner, was too good. People in Walthamstow were desperate to keep her, because she was an absolutely fantastic example of why maternity cover matters. Nobody in my constituency batted an eyelid about having someone else not just doing casework, but out there representing our community, working with groups, going into local schools before lockdown happened, and then when the lockdown happened, leading on that role. Watching the hon. Lady being abused and attacked, and watching her also trying to cope with those first few weeks of having a new baby alone, fired my enthusiasm on this. We cannot sit around in this place, watching as other people get those issues right, but failing to take action ourselves.

It is not by accident that the number of times pregnant women end up in this place, or in local government or in the Assemblies, are few and far between. That is one issue that an equalities impact assessment can take a look at. We all talk about wanting to get more diverse people into our politics. Sometimes the barriers to that are blindingly obvious. I know from talking to colleagues in local government just how frustrated they are. I know from talking to colleagues in other devolved Administrations just how frustrated they are.

When we pass legislation in this House, such as this Bill, we cannot be blind to the message that we are sending about how we have determined who is important enough to have that leave. If we think that is not something that should be bestowed as a discretionary pleasure, or as a benefit like a company car, then we also have to recognise the consequences of behaving like that, not just here but in other places as well. If we want to ensure that there is no trade-off between family life and public life for either men or women, we must look at the message we are sending. The honest truth is that this legislation, as it stands, sends a message that a two-tier system is acceptable.

Consider for a moment what would happen were we to look at local government and say, “Well, it’s okay for just cabinet members in local government to have maternity leave”. We would be horrified for young female councillors, or indeed for young men who want to be good fathers and spend time with their children, and want to be supportive partners, yet that is exactly what we are doing here. Frankly, in no other workplace would this be acceptable. If someone came to us in our constituency offices and said, “This is the experience in my workplace”, we would say, “Well, that’s clearly breaching various regulations. We must support you. We must get you trade union representation.” I am very proud of the trade unions, which I know have made representations on this issue already.

--- Later in debate ---

[Patrick Grady]

The hon. Lady knows that she has the support of the Scottish National party for her amendments. Indeed, my hon. Friend the Member for Livingston (Hannah Bardell) wanted to make sure that her support in particular was recorded.

Until the pandemic, the only times that I acted as a proxy were actually for new fathers in our group; we have not had a new mother, at least in the time that I have been here. I have heard the case made on many occasions that the best stride that could be made for gender equality would be equality of parental leave. If that parental leave could be shared between both parents of a child, it would be an incredible way of helping to break through the glass ceiling—if the entitlement was there for everyone. The hon. Lady is absolutely right that this Bill and the clauses that we are debating just now do not make that distinction.

[Stella Creasy]

I completely agree with my colleague from north of the border. People’s ability to take shared parental leave is so important. Again, parental leave is not covered in this Bill, but an equality impact assessment could look at the consequences of failing to include it. That matters because the Bill talks about ensuring the income of a Minister, and, to put it bluntly, the biggest barrier to people taking up parental leave is that it is only open to those who can really afford to do so.

The gender pay gap is at the heart of some of these challenges. That is because for most women and their families, it is actually better for them to take time off with the baby than for their partner to do so. That means that they take the hit on their career and on their incomes, and we do not get the fathers’ involvement in children that we all want to support. Why are we sending the message that we are not even talking about ministerial paternal paid leave and therefore ensuring that fathers can be part of it? The Paymaster General said that it is already covered in existing provisions. That is because it is only two weeks. In the first two weeks post birth, parents are lucky if they see daylight and are able to go outside—or, indeed, to wear clean clothes, if I remember correctly—so having more time with their child is crucial.

I want to look particularly at what this legislation means for Parliament. The Paymaster General has pointed out that she gets this and she understands that we have to go much further, and I believe her. She talked about a timetable. Let me be clear why that timetable matters. I said earlier that I have a direct discrimination case, and I think that an equality impact assessment could look at this issue. She will have seen that the Independent Parliamentary Standards Authority has come out today and said, “Yes, we’re going to consult”, and it is having a meeting again today. That is all very welcome. I recognise that the new chair of IPSA takes a very different approach from the previous administration. I have worked on these issues for the last two years and I wrote to IPSA before the last election, begging it to come out and say that it was at least looking at these concerns so that nobody of childbearing age would be deterred from standing in the election, but it refused to do so, so it is welcome that there is movement.

But, as ever, the pace of change is glacially slow—for me, literally, because yet again I find myself in a position where I cannot be confident of what I can say to my community to answer the question posed by the member of staff of the hon. Member for Strangford: “What cover will there be?” I cannot even look my own staff in the eye because of the lack of cover that we offer staff in this place. If nothing else, that makes us terrible employees.

This legislation gives the lie that this is an independent matter. I have been told for the last two years that MPs’ employment status meant that it was impossible. Indeed, it says on the IPSA website:

“MPs as independent office holders are not employees and are therefore not eligible for statutory maternity, paternity or adoption leave.”

[Meg Hillier]

My hon. Friend will know that a Minister is on the payroll of their Department, so in that sense they are more of an employee. There is a really interesting issue here that we will need to consider carefully, and it is that MPs are not employees. We have a payroll, but we are not employees; we are obviously answerable to our constituents. That is one of the fundamental differences. For my part, when I was on maternity leave, I had a clear plan and support. Like my hon. Friend, I asked for some cover—some extra money for my staff—but it was not possible. There are certain things that an MP does that cannot be replicated by anybody else, as we know. This has obviously been well rehearsed. This is a complex area, and she is making some interesting points.

[Stella Creasy]

I thank my hon. Friend for her contribution. She hit the nail on the head when she said that it was not possible for her to have that support, so she had to put in place a system for herself. In what other workplace—

[Meg Hillier]

I just want to make it clear that I was not unhappy about the system that I put in place for myself. It was very clearly worked out: I had colleagues who were able to step up if my staff needed any extra support, and they had the right to be signatories. However, this was during the expenses scandal, and because my name was above the door, there were some things that it would have been very difficult to pass on to somebody else. So despite the great support I had, it was difficult, and I would have liked to be able to pay some of those staff a little bit more for the extra responsibility they were taking. That was the bit that I had the most issue with at the time.

[Stella Creasy]

I am grateful to my hon. Friend for sharing her experience. I think that speaks to the challenge of this legislation, in terms of the impact it will have in this place by setting up a two-tier system. For a member of the Cabinet or a Minister, it will now be clear what will happen and what their rights are. They can be confident and relaxed. I return to the honesty of my hon. Friend the Member for Enfield North in talking about how scared and worried she was and about the lack of clarity in the lack of parity on these issues, so that she felt she would be put at risk of people saying she was not pulling her weight or would not be able to support her constituents, or that she would be dragged back into work. We have a duty of responsibility and care to her, because she is in the same position as me, but a bit further on.

I want to be clear that this legislation recognises the Minister’s absolute right to a family life. That is an article 8 human right, and we need to protect that. We need to act to ensure that no one is discriminated against in that regard. The lawyers I have consulted tell me that it is arguable that this legislation breaches the human rights of those of us who are not covered by it but who are in the same position in seeking to do a job in this place, because article 14 says that we should not be discriminated against in terms of the rights that are accrued in the workplace. So for me, there is an arguable case here.

I do not want to be in the position of taking the Government to court. Frankly, I want to be in the position, especially now in the early stages of pregnancy, of being able to sit down and sleep for hours on end, and in later pregnancy probably just to sit down in general, but I know that it is vital for my constituents to have clarity about who will be covering the role that I do. The previous locum I had was fantastic, but we had to write the job description. We had to sort it out. In comparison to what the Attorney General and any other Minister will have, that is not parity. It is a form of direct discrimination because it affects the ability to have family life. I have been very clear with the Minister—

[Meg Hillier]

I wonder if my hon. Friend could clarify that last point, because I think we all approach our jobs slightly differently. Certainly, it was not at all an issue for me when I was laying out everything I did that would need cover. The description was really what I did already, so it was not a very difficult challenge. I would be very reluctant to have IPSA or somebody else write the job description for somebody who was providing support, whether it was my existing staff or anyone else. I would be interested if she could clarify that point.

[Stella Creasy]

I do not want to test the patience of the Chair of the Committee by going into what the different schemes might be.

The point we are making here is about parity, and the lack of parity as a result of bringing in this system. If we have clarity on the cover for the Attorney General and clarity about the amount of money that will be paid, it would be right to look at whether we should offer the same thing for Back-Bench MPs, and indeed set the standard for local government and the regional Assemblies, perhaps offering to work with them in terms of our experience.

My simple point is that this legislation blows a hole in the argument that has been given for the past two years that we could not look at these issues because it was all too complicated. As the Paymaster General set out earlier, the complications around ministerial employment have been overcome in a day because of the guillotine of having a clear deadline set by one Member of Parliament. One of the challenges that has created for some of the drafting is that this maternity right is following not the person who might be pregnant but the position that they hold.

My argument is that there is direct discrimination in this place because this says to my constituents that they are not as important. I am pleased that my hon. Friend the Member for Hackney South and Shoreditch was able to get cover, and I know that Kizzy, my locum, was invaluable for my community in ensuring that they got 100% of the service 100% of the time. I believe the residents of Walthamstow are owed that. That is why I will continue to fight for this, but I also recognise that it is for every MP to make that decision for themselves. The point is that we are now making sure that that decision can be made, but only by a select few. That has an equalities impact, and we should know that and recognise its impact on public life.

[Chris Loder (West Dorset) (Con)]

I thank the hon. Lady for giving way. I hope she will forgive my ignorance in some of my questions to her, but my understanding is that Members of Parliament are able to take maternity leave and their salary is paid for by the state, and that continues to be the case. My understanding is also that IPSA will provide contingency funding to support the offices of Members of Parliament, to allow them to have that leave and make provision for them to do so. Am I incorrect in my assumption?

[Stella Creasy]

The honest truth is that we do not know, because the only other MP who sought to take advantage of that system was discouraged and deterred, and was not able to do so. What I would say is that right now, it is not clear to me as a pregnant woman what support I would get. There is a conversation about pre-approved support; right now, I am one of the most expensive MPs in London because of the contingency application for maternity cover. I am sure the hon. Gentleman would agree that it is not appropriate to see maternity cover as an expense that might be reported to the public in that way. There is not parity, in the way that there is parity and clarity about what the scheme is for—

[Chris Loder]

rose—

[Stella Creasy]

I will happily give way, but I hope that explains the issue to the hon. Gentleman.

[Chris Loder]

I hope the hon. Lady will forgive me, but I am afraid I do not concur with what she has said. I think we are in one of the most fortunate situations in the entire nation. This Parliament has the ability to call on the taxpayer to support those who need to take maternity leave, to take care of their children and to physically recover from pregnancy, so if the hon. Lady will forgive me, I think she is wrong. We as a Parliament, as a state and as a nation are in the fortunate position that we do support our MPs, and we must be careful to not put out there that we do not, when there are many people who are struggling. I agree with the hon. Lady’s earlier point that across the nation, there are employers who do not necessarily fulfil their obligations, but I think we have to be careful about giving the impression to the nation that we in this place are hard done by, because I am afraid I do not agree.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Order. Just before the hon. Lady responds, I think it is quite important to note that this Bill is about Ministers, and we must not stray too far into the position of Members of Parliament as well.

[Stella Creasy]

I thank the hon. Gentleman for his comments. If he will forgive me, as somebody who has actually been through this process and actually understands what is available and what is not clear at present, I would gently encourage him to talk to his colleague the hon. Member for Stroud about her experiences.

It is really important that we are honest about the lack of clarity. As I have said, there is not a formal maternity leave scheme or formal maternity cover. Unless the hon. Gentleman is suggesting that if an MP disappears for six months, nobody would notice because they do not do anything, then there is work to be covered. The point about this legislation is that it recognises that. It is not about the pay—that is a red herring in this environment. It is about having somebody to cover the work we do outside of this room: the campaigns we run, the constituency events we attend, and the casework we do. For me, it was not acceptable to ask my staff to fill in everything that I did for six months, and expect my constituents to have a reduced service as a result, rather than to have somebody cover those roles.

I am very conscious of time and I do want to press on, but I would gently encourage the hon. Gentleman to look at what is actually being provided at the moment. It is not the same as what we are providing in this legislation, and that is my point: we want parity, because every woman should have six months’ paid cover so that they can actually take time off. Perhaps he might want to speak to my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), who was back doing casework three days after a caesarean section because, although people thought she could take maternity leave, the reality was that she could not. I know that it is not a situation in which the hon. Gentleman has found himself, but I hope that he can understand, through listening to those of us who have, why we need change. Certainly, I hope that he will join me in supporting paid parental leave for our male colleagues because that is really important. I have talked to many colleagues who find that this place takes them away from their families when we want to bring them together.

I want to highlight the other amendments that I have tabled. I recognise the cross-party support for new clause 1—I think the Paymaster General does, too—and the call for change and for us not to be blind about the messages we send from this place about the importance of paid maternity cover and ensuring that everybody can access it.

Amendments 1 and 2 are probing amendments to recognise some of the questions the Bill raises about the practical technicalities and what would happen. The Bill seems to take account of the idea that somebody might be demoted while they are on maternity leave and I am sure that the Paymaster General will want to clarify that. Although the Bill provides that no Minister would be in a financially difficult position if they were removed from their ministerial post while they were on maternity leave, it does not make the same provision for the small number of Opposition office holders. Will the Paymaster General clarify what would happen in that case? We all want to ensure that when any woman takes maternity leave, she can do so with confidence and certainty about her financial and logistical position.

There are still battles to be won, but I want every pregnant woman in this country who is facing problems right now to know that there are voices in this place that are prepared to stand up to those who tell them not to worry and to be grateful for the fact that somebody might employ them at all; not to worry about going home and being stuck with their children, and that equality does not matter to our economy. I know that there are voices and champions for the importance of not discriminating against pregnant women and new mums across the House, but it is time that we saw ourselves as we are now, and we are looking through the wrong end of the telescope if we do not understand the impact of the Bill on the messages that we send.

I know that the Paymaster General realises that we need to do the research. She is honest about how small the number of women affected by the Bill is. If she will not accept the amendment, I am keen to hear from her—because I do not want to have to take the Government to court—a clear timetable for action, a clear commitment by the Government to make parliamentary time so that we can resolve the issues in this place and support women of child-bearing age and their partners in local government and across the Assemblies as appropriate, for public life if nothing else. Deeds not words.

[Sir John Hayes [V]]

In George Orwell’s novel “Nineteen Eighty-Four”, protagonist Syme explains the objective of Newspeak:

“Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thought-crime literally impossible, because there will be no words in which to express it.”

Although there are those who do not understand or will not recognise this truth, language matters. It is through language that we understand, express, consider, challenge, think and articulate. Through language, we breathe life into sentiment. So we must ask ourselves a question. How did we get to a place where a Conservative Government bring a Bill before us that seeks in effect to abolish two beautiful words that have been used for centuries and embody goodness and truth: “mother” and “woman”? The Bill as drafted does just that. It rules those words out of law.

Is it now considered embarrassing to be described as a woman and to admit to being a mother? That seems to contradict the whole purpose of the Bill. After all, the Bill is about recognising the significance of motherhood and extending that recognition to those in the service of the Crown. Are we now acknowledging as a Parliament that the concepts of motherhood and womanhood are so radical that they must be censored?

You know as well as anyone, Dame Eleanor, that when tabling amendments, one is often seeking to make small, sometimes complicated technical changes to legislation. Today, with my hon. Friend the Member for Thurrock (Jackie Doyle-Price), my motivation is much more straightforward: to affirm the existence, worth and eternal value of womanhood and motherhood. By the way, if the need arose, I would do the same for men and fatherhood. By saying the words and including them in the Bill, we will cement the virtues that the Bill embodies in law.

As drafted, the Bill, in effect, extinguishes the ordained particular characteristics of human types. I do not know whether that is as a result of artlessness or heartlessness, but whichever it is, it anonymises and dehumanises. That is why I have introduced the two amendments that stand in my name, and I am grateful to Members from across the House for supporting them.

My speech will be uncharacteristically short but characteristically straightforward, because this is a matter of common sense—the common sense that prevails beyond this place and, clearly, beyond the wit or will of the people who drafted this legislation. Never underestimate the power of language, for there are those—those who are extreme and immoderate—who understand its power very well and those, as the hon. and learned Member for Edinburgh South West (Joanna Cherry) said, who seek to obscure the biological differences, which are, frankly, the very reason all of us are able to contribute to this debate, because we would not be here without them.

It is sad to see the attempts that have been made to blur the picture, muddy the waters and cloak this matter in denial. It is sad to see the descriptions of “drafting difficulties” and “legislative complications”, which were described to me today by one parliamentary lawyer, a distinguished one too, as entirely “clueless” and “baseless”. This is a matter not of drafting procedure, but of principle. Electors of all political persuasions and none, across our kingdom, from Caithness to Caerphilly to Cornwall, from Antrim to Arundel, from Kent to Kendal, expect us to do what they would anticipate is that common sense—to affirm womanhood and motherhood in this legislation, which is, after all, about maternity.

As Orwell understood, semantics matter, because through them, via meaning, we find truth. In the pursuit of truth, and in solidarity with every woman and mother in South Holland and The Deepings and beyond, I am proud to put forward the amendments that stand in my name, and I shall be seeking to divide the House on them at the end of this Committee stage, with your indulgence, Dame Eleanor.

--- Later in debate ---

[Wendy Chamberlain]

I am pleased to have the opportunity to speak in Committee, having been unable to do so on Second Reading. I start by wishing the right hon. and learned Member for Fareham (Suella Braverman) and the hon. Members for Walthamstow (Stella Creasy) and for Enfield North (Feryal Clark) all the best in their pregnancies. Indeed, it is particularly poignant for me to speak in this debate today because I am currently receiving updates on my stepson’s partner, who is in the early stages of labour; they are on the way to the hospital as we speak. Step-grannyhood awaits. I am not quite prepared for that.

The Bill corrects what is fundamentally a clear unfairness in relation to ministerial appointment legislation. Clearly, as we heard on Second Reading, there is support from all sides of the House for ensuring that Cabinet Ministers can take maternity leave, and rightly so. However, like many Members across the House, I find it worrying that this huge hole in legislation has been spotted only now. Sadly, I think that speaks volumes about this place, the current Government and—dare I say it?—previous Governments, in which my party took a part.

While today we may be updating antiquated rules, the Bill takes us not so much up to the present day as into the 1990s. Of course, a particular element of maternity leave is ensuring that a new mother can physically recover from the birth. I was a police officer for 12 years, and it was critical that we took time off work. That is why all mothers should take at least two weeks off work in the first instance. It was therefore incredibly saddening to hear of the experience of MPs who have been forced to attend this place either immediately prior to giving birth or shortly thereafter.

In 2021, there is wide acceptance of the fact that, no matter how a person is becoming a parent, they should be entitled to leave, whether it is maternity leave, paternity leave or adoption leave, to give the child that is coming into their family—the child should be at the centre of this—the very best start in life that they can. We should therefore expand the scope of the Bill beyond maternity leave, because that is clearly the direction of travel that we see in society. This must be a legislative first step, and I welcome the Paymaster General’s comments on Second Reading that it is. I look forward to hearing the timetable accordingly.

I worked for a number of different organisations throughout my career before I came into this place. I have seen a variety of policies on parental leave, and I have seen them change over time. In fact, when I was a police officer, they changed between the births of my children; when I had my daughter, I had six months’ leave, and when I had my son, I was able to take longer. However, I would have really struggled financially if it had not been for my mother, who was able to help us cover childcare. There was just no way that, as a family, we could afford the multiple days.

[Stella Creasy]

The hon. Lady is making an incredibly powerful speech. May I be the first person to congratulate her on her forthcoming step-grannyhood? I am sure she will be super-gran. One statistic that is very important in this debate is that a third of women get into debt when they take maternity leave. She talks about the financial penalties that she faced. Does she think that one of the things that we would need to look at if we were to have an equalities impact assessment is the different access to maternity leave and the time that people can have, due to the financial consequences for them of taking it because we have such poor maternity leave in this country?

[Wendy Chamberlain]

Absolutely; I agree. Continuing on my experience of maternity leave, I had to get my mother to help so that we could afford the childcare, but my husband was a police superintendent at the time of the birth of our son, and his two weeks’ paternity leave operationally did not really happen because there were a number of things going on. It just did not work for us as a family, and he certainly did not get the quality time he deserved.

I empathise with the comments made by the hon. Member for Truro and Falmouth (Cherilyn Mackrory) about the role of fathers. I simply would not be able to serve in this House if it were not for my husband taking the lead at home, although I have warned the children that I am checking Satchel One for progress on online learning on a regular basis.

The global drinks manufacturer that I worked for prior to my election introduced a parental leave policy in early 2019, which means that, regardless of whether it is maternity, paternity or adoption leave, employees are entitled to parental leave equating to six months’ full pay. I agree with the hon. Member for Glasgow North (Patrick Grady) that this has been transformative, not just for mothers but for fathers too. The biggest impact, I would argue, has been on men. For instance, the director of the global learning unit that I was part of, a man, took his full parental leave allowance, and that sent a very important message. It meant that many men on the supply and manufacturing side of the business in more operational roles felt empowered to be able to take that same leave. That is incredibly important.

--- Later in debate ---

[Wendy Chamberlain]

I agree. It is interesting that the Government are now much more supporting of proxies than they have been. The challenge around the pairing arrangements is not only the risk that they might be broken—that was certainly a very bad experience for Jo Swinson—but that the role that we play in this place is potentially much more visible than it has been in the past through apps such as CommonsVotes. People in our constituencies judge us, and rightly so, on our voting records, and pairing does not give people the opportunity to have their views recorded.

[Stella Creasy]

I have constituents who say, “I turned on the television and I couldn’t see you in the Chamber”, and I say, “Yes, that’s because I was working.” It is important to remember that only a third of what we do as Members of Parliament takes place in this room—there is also all the build-up to legislation, all the casework we do in our communities, and the role we play as an advocate for our localities. When we are considering the cover required, thinking only about what happens in this place and the end point of voting is a missed opportunity. We have to recognise what would happen in our communities if our role there was not played. Does the hon. Lady agree that we should not sell ourselves short with the idea that if we disappeared for six months people would not notice?

[Wendy Chamberlain]

I do agree. That would not only sell ourselves short but sell short the work done by our staff in our constituencies. Owing to the pandemic, it has been difficult for parliamentarians who came into this House in December 2019 to know what case workloads might normally look like, but I have experienced a very high level over the past year, and my staff have played a key role in relation to that. We need to be there to support our constituents. Constituents have said that they have had a better understanding of the role of MPs and what they can do as a result.

I do not want it to be thought that I do not agree with Cabinet Ministers being entitled to full pay and maternity leave. I absolutely support that; it is entirely right and in keeping with best practice, but it also potentially speaks to huge unfairness, on which other Members have touched. Secretaries of State will receive about £1,300 a week if they receive full maternity pay for six months, but millions of people around the country are eligible only for statutory pay, which after the first six weeks is just £151 a week—close to a 1,000% difference.

On Second Reading, the right hon. and learned Member for Camberwell and Peckham (Ms Harman) spoke eloquently about the deficiencies in maternity pay and allowances. It does seem odd to me for the Government to say, “This is the standard we are going to give to a Cabinet Minister,” and on the other hand say, “The statutory minimum is the standard by which you should treat your employees.” That seems a case of “Do as I say and not as I do.” The organisation that I worked for previously is now giving six months of parental leave, regardless of whether that is maternity, paternity or adoption leave. That is a big organisation.

--- Later in debate ---

[Wendy Chamberlain]

Again, I agree. We are not only paid on maternity or paternity—if Members choose to take time off—but we do not receive sick pay because we continue to be paid at that time as well. I acknowledge that during this period a number of people in my constituency and across the UK are really struggling because statutory sick pay provisions are nowhere near adequate.

I worked for a global organisation, but I am conscious of the impact of parental leave on small businesses. That is why the statutory support needs to be so much better. We would view it as unacceptable if the Bill said that the Attorney General would receive only basic statutory maternity rights, and yet fundamentally that will be the case for millions of people.

Hon. Members have touched on MPs’ staff and IPSA contracts, where I also have concerns. Many MPs employ staff who have worked for other MPs, especially after the churn of an election—indeed, I did that in January 2020—but to qualify for full maternity pay on an IPSA contract, a staff member needs to have worked for over a year. If staff members change MP, even if they have worked for a long time in Parliament, they effectively start a new employment and are penalised as a result. Although, like the hon. Member for Walthamstow, I was pleased to see in my mailbox this morning correspondence from IPSA on this issue, it was specifically related to MPs. I urge IPSA to consider MPs’ staff as part of the review. My first 15 months have certainly taught me that having excellent staff and supporting them is critical to success in this place.

I want to reflect on the work I have done with 50:50 Parliament since my election. I have spoken at a number of its events—obviously enabled by being online during the pandemic—and the common theme in the questions that come from women interested in or considering standing either in this place, at local authority level or, indeed, at the Senedd or at Holyrood are around how to manage family time and find a work-life balance, and having children as part of that. I continue to urge the Paymaster General to regard this Bill as a first legislative step. We have a real opportunity to send out a strong, positive message about diversity in this place, but someone who has served as a Cabinet Minister for less than a year is to receive full maternity pay. As I say, that is right, but we have an issue to address when a staff member who might have worked in Parliament for years would receive only statutory pay.

It is now a month before the Attorney General’s maternity leave, and it is worrying that the Government have only now realised that this is an issue. Obviously, the business changed last week to allow us to debate the Bill today. That tells me that equalities are not at the heart of the Government’s thinking. I always think about an inclusion lens: everything that we consider in this place should be looked at in the light of inclusion and therefore we will see the issues before they are pointed out to us latterly.

[Stella Creasy]

I agree with what the hon. Member is saying. Does she agree that it is concerning that normally an equalities impact assessment would be produced as standard and yet we do not see that because this legislation is being pushed through Parliament at short notice? We are all aware that the Government have had a deadline to work to, but they will have known of that deadline for some months, so there could have been time to do some of the work we are asking for in the amendment, with our better understanding the consequences of the legislation as a result.

[Wendy Chamberlain]

I entirely agree. Indeed, earlier I joked that this legislation brings us not into the 21st century, but into the 1990s. When I was a police officer, doing equality impact assessments, whether for operations we were carrying out or for anything else that was planned, was very much part of that. So it is disappointing that we are not seeing that in this place.

That lack of focus on equalities has become apparent over the past year, during the pandemic, and it is really disappointing. The hon. Member for Glasgow North mentioned my Liberal Democrat colleague Jo Swinson, who worked not only on parental leave but on gender pay gap reporting, which was one of the first business requirements to be jettisoned during the pandemic, and as yet there are no plans for its return.

When we watch the frequent Downing Street press conferences, it is usually a man we see at the lectern. These are potentially disappointing messages that the Government are sending out. In contrast, the pandemic has had a disproportionate impact on women, and I note the recent findings of the Women and Equalities Committee in that regard. Again, the hon. Member for Walthamstow spoke powerfully about this earlier. I, too, commend the work of Pregnant Then Screwed and wish them success in their case, but obviously I am saddened that it has got to that stage.

The Government talk a lot about levelling up, but clearly there is work to be done to get their own house in order when it comes to gender equality, both internally and in relation to the impact of their policies across the country. That is why I was very happy to co-sign new clause 1, tabled by the hon. Member for Walthamstow, which calls for that equalities impact assessment for this legislation, as she described so eloquently.

There has been progress over the past 10 years. Thanks to the efforts of Jo Swinson, we now have shared parental leave, which has been an incredible success, and I know that many people across the country have taken up that opportunity. I know that more businesses and organisations have been improving the amount of fully paid maternity leave on offer, going beyond the statutory levels. That was the case with my previous employer, and indeed in the police service. However, it is very important that, as we consider the Bill, we think about how we can move forward, particularly in relation to covid. Given covid’s impact on businesses, with business margins tight, there is a concern that one of the first things to go will be provision that is above statutory levels. I am very concerned about that. Having had 10 years of progress, we cannot afford to have a lost decade when things go backwards as a result of covid. I therefore urge the Government to carry out an impact assessment on this issue. I hope the Paymaster General will address that point later.

To conclude, the aims of this legislation are very welcome but there is much more to be done. I hope that today’s debate will be the beginning of a conversation on how we modernise parental leave laws, how we encourage business to engage with that, how we recognise family life in 21st-century UK, and how we ensure that the legacy of covid is one of more flexible leave entitlements, rather than a reversion to statutory limits. Ultimately, however, the sadness of today is the Government’s failure to address the issue sooner. Perhaps they could have done that by carrying out an equalities impact assessment sooner. Sadly, that means we are talking today about one woman and the specifics of her case, and that should never have happened.

--- Later in debate ---

[Penny Mordaunt]

Before I turn to the nitty-gritty of the amendments, I will address wider points that Members have made. I thank all Members for their contributions and their thoughtful remarks in this important Committee stage.

In particular, I thank the hon. Member for Hackney South and Shoreditch (Meg Hillier) for coming to the Chamber today, and for her interventions. Her experience is incredibly valuable. One of the key points that she reminds us about is the different status that a single person may have for different aspects of the jobs that they do here. The hon. Member for Walthamstow (Stella Creasy) spoke about the peculiar employment status of a Member of Parliament, which is distinct and different from that of a Member of Parliament who is also a Minister. A Minister is also an employee, and there are slight differences there. That is one of several reasons why this is a highly complex issue, but that does not mean it cannot be tackled.

In addition to the issues that have been raised regarding Members of Parliament and the challenges they face, there are still outstanding issues for Ministers in relation to shared parental leave, an examination of paternity leave—although, as I have outlined, there is provision there at the moment—and adoption leave. Sickness and bereavement is a grey area. We also have an additional issue for our colleagues in the other place who may be unpaid Ministers. That needs to be resolved, but it obviously plays back into the issue of maternity leave. These are very complex matters, and I reiterate again my gratitude to Her Majesty’s Opposition for their engagement on this.

Let me turn to IPSA. Clearly, it is an independent body, and in the work that follows today we will have to respect that independence, but the Government are none the less absolutely determined to bring forward proposals collectively.

[Stella Creasy]

Over the past two years of seeking progress on this matter, and trying to ensure that Members have the options and the support that we are giving to Ministers, one of the things that I have been told is that IPSA has asked Parliament to offer a view. Indeed, this rather anarchic approach to what our employment status is has had an effect. Will the Paymaster General therefore commit to our having parliamentary time for a debate on this? It does not need to be a Government-led debate, but we do need parliamentary time for it, and that is in the gift of Parliament. That way, if IPSA, on a very short timetable, asks the House to take a view, we will get that view, so that we can resolve the matter.

[Penny Mordaunt]

Although time on the Floor of this House is not in my personal gift, I hope that what I am about to set out will demonstrate to the hon. Lady that we are not just doing this as an exercise. These issues must be resolved. Yes, this is a matter that immediately affects Members in this place, but resolving this is also vital if we are to meet our ambition of ensuring that everyone who wants to sit on these Benches and is elected to do so has the working practices that they need to thrive, live their life and raise a family. That is very well understood.

We respect the independence of IPSA, and while we have to work with it—the Government have committed to supporting it—and the House authorities, all Members of the House will want to contribute to this important analysis. We want to look at custom and procedure. We also want to examine what legislative change may be required, particularly with regard to Ministers, which is the most complex issue. Recommendations by and to IPSA will be made through the usual channels. There has been quite a large amount of discussion about this already, with the help of the Opposition. As I have said, the Government will support IPSA on any of that work, and on any of the issues that we are all seeking to address. Its independence will be respected in line with its statutory footing.

Many colleagues who spoke on Second Reading are concerned about the impact assessment. We have undertaken to carry one out, but I add this caution: if Members want an impact assessment of this piece of legislation, that is very easily done, and will be really great for a very small number of people, but of no use whatsoever in advancing anyone else’s rights or opportunities. We want—we have set this out in a note that we have shared, I think with the office of the hon. Member for Walthamstow, and certainly with the Opposition; I would be happy to share it with other colleagues around the House—to undertake an impact assessment that looks at current legislation on the issues we have discussed this afternoon in relation to Members of Parliament. We will also take into account work already done, or in progress, by the relevant Select Committees, particularly the Procedure Committee and the Women and Equalities Committee. As I have said, I would be very happy to share that note with hon. Members. Perhaps the best place for it is in the Library.

There are a couple of other issues that I want to address before turning to amendments.

[Stella Creasy]

It is incredibly welcome that the Minister is talking about doing a much wider impact assessment. For clarity—this issue has been raised today—looking at the wording of it, can she confirm that it will look at the impact on not just Members of Parliament, but their staff? We are drawing this distinction between parliamentary staff and people who work in Parliament. We need to look at everyone, so that we can be confident that every single woman and potential partner of a woman in this place will get the support they need.

Ministerial and other Maternity Allowances Bill

Stella Creasy Excerpts

2nd reading & 2nd reading: House of Commons
Thursday 11th February 2021 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is an honour to be part of the debate and the work that we are doing to bring forward this legislation. Let me congratulate the Attorney General, the right hon. and learned Member for Fareham (Suella Braverman), and wish her well in her forthcoming maternity leave. What is so powerful about this legislation is not just the clarity over her income but the clarity about her actual cover: she will be able to spend time with her child and not receive calls at three o’clock in the morning when the Attorney General is needed.

I welcome the Paymaster General’s comment that we need to do more. It is that which I wish to speak on particularly, because, as she has recognised, the Bill benefits only a very small number of women. To benefit only a very small number of women at this time in this country’s life is to fail to recognise the peril that may come from this legislation, which is not about its drafting but its scope. We are sending a message that maternity leave should be a perk conferred by an employer as a benefit—just as a company car would be—if we only pass this legislation.

The Paymaster General said that the Prime Minister believes it is wrong that a woman might have to leave work to care for a child, but in truth that is happening in workplaces across the country, and it involves thousands of women. During the pandemic, one in four women who are pregnant or a new mum have said that they have faced discrimination, and that they are losing their jobs or being furloughed. In that context, to work only with that small number of women is not just a missed opportunity, but potentially sets up a two-tier system for maternity leave in this country. As the people who make the laws, we send such a message to businesses regarding how they should treat pregnant women at our peril.

The Government are currently being taken to court by Pregnant Then Screwed because, when they calculated the self-employment income support scheme, they forgot about women who are self-employed and who took maternity leave. We have heard from many Members about our concerns for public life. It is not an accident that most women who enter public life, not just in this place but in local government and our Assemblies, tend to be older women who have already had children, or those who have chosen not to have them. Even in this Bill, we have yet to begin talking about fathers.

The Bill tells the lie that I was told two years ago when I was pregnant and asked for a locum to cover work in my constituency, so that my constituents would not feel short-changed by having a woman of childbearing age as their MP. However, as MPs, our employment status was too complicated to enable us to act. If we can pass a Bill in a day in this place to address that issue, we could do so much more to ensure that our public life is open to all women. It is a missed opportunity not just for local government, but for the staff who have worked with us in this building, who have terrible maternity rights.

Two years ago I fought for a locum. No other MP has been able to have that, even though I know colleagues across the House who have had terrible experiences of being pregnant and trying to get support. We cannot say, “Don’t ask, don’t tell.” On that basis, let me be clear: the Government have made commitments today but, as the suffragettes said, this must be about deeds not words.

Yes, Mr Deputy Speaker, you may be looking and me and thinking that during lockdown I have been attacking the pies a bit, and you would probably be right. But I am also pregnant with my second child. I am early on in my pregnancy. I should not have to reveal that, but I am doing so today to be clear to pregnant women around this country that they will find champions in this place, and it is not enough for us to act only for that small group of women at the top of our society. We must act for every woman to be able to take maternity leave.

We must make sure that legislation such as that proposed by the right hon. Member for Basingstoke (Mrs Miller) is given time in this House, and we must stop IPSA prevaricating, as it has done for the past two years. We must give every woman in this place the same rights that we are giving the Attorney General. Please, Paymaster General, it is time for deeds not words when it comes to maternity and paternity.

[Mr Deputy Speaker (Mr Nigel Evans)]

The very best wishes of the House to you, Stella, on your great news.

Financial Services Bill

Stella Creasy Excerpts

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

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

I shall speak to new clause 7 in my name and those of over 70 other Members from across the House.

This Christmas, one in four consumers used “buy now, pay later” credit to pay for their Christmas shopping. It is a simple premise: these companies allow people to spread payments for items over a series of weeks, breaking what seems a high cost up-front into chunks they can take out on their debit or credit card, with no interest charged. There is a place for this industry in the UK, just as there is a place for payday lenders like Wonga, but Wonga is no longer with us because it used technology to exploit an age-old problem that many face: too much month at the end of their money. In lending to who it did and in the way that it did, ultimately Wonga went bust, but not before it had plunged millions in the UK into debt.

The companies in question say that it is not fair to compare—that this is just how millennials want to buy. Well, as old as I am, I do know this: when it comes to credit, if the deal is too good to be true, it probably is. Compare the Market research shows that these forms of credit have been used 35% more during the pandemic as everybody shops online. Most UK retailers have Klarna, Clearpay or Laybuy now as a payment option—indeed, it is often the first one people are given. Retailers pay for their services because they know that if people use them, they will probably spend more than they are meant to—on average 30% to 40% more. Which? research shows that 24% of users spent more than they planned to because such an option was available at the checkout. As the Minister said, many then end up taking out debt to repay that debt. If it looks too good to be true, it is.

Increasingly, consumers are being caught out, committing to more spending than they can afford. Twenty-seven per cent. of users said that they used the option because they could not afford the product they were buying outright in the first place. Currently, this slips through a regulatory loophole because the companies do not charge interest and make you pay within—[Inaudible.] It means that they do not have to abide by the existing information offers that other forms of credit have to.

FCA rules require lenders, before they lend, to highlight the key costs and risks of the credit product. Contrast that with the behaviour of these companies. Shortly before Christmas, the Advertising Standards Authority upheld my complaint about adverts by Klarna that involved social media influencers encouraging followers to use Klarna to buy products to improve their mood during lockdown: if they had mental health issues, debt was the answer. On its Twitter, it tells its customers who ask about its product that it is the “smoother” way to shop. You can get

“what you want, when you want”—

with no mention of what happens if you do not pay or checking of whether you can afford to repay. And because it is not regulated, there is no redress through the Financial Ombudsman Service either.

Ministers say, “Let’s wait for the FCA report”, and that they are ready to take swift and proportionate action. That is exactly what new clause 7 does. It ensures that whatever comes out of that review will get the parliamentary time to be put into practice within three months of the Bill becoming law. If we leave it longer, waiting and waiting as we did with the payday lenders, our constituents will suffer. Even the companies themselves, just like turkeys who think Christmas is a good idea, say that regulation should happen.

So much of the history of credit regulation in this country has been one of delay and dither—and debt as a result for our constituents. Constituents are now living through a time when millions are furloughed and many more are facing redundancy, so their income will get lower, not higher. I know that the Minister recognises that there is a problem here. I brought forward new clause 7 so that we can put his words into practice and make sure that it is not our constituents who end up paying the price later.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We come to Angela Richardson on a three-minute limit.

Financial Services Bill (Twelfth sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 12th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

[Abena Oppong-Asare]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 16

Consumer credit: extension of FCA rule-making duty

“(1) Section 137C of the Financial Services and Markets Act 2000 shall be amended as follows.

(2) In subsection (1A), substitute

‘one or more specified descriptions of regulated’

for ‘all forms of consumer’.”—(Stella Creasy.)

This new clause would extend the responsibility of the FCA to make rules with a view to securing an appropriate degree of protection for borrowers against excessive charges to all forms of consumer credit.

Brought up, and read the First time.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

New clause 17—Regulation of buy-now-pay-later firms—

“The Treasury must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non interest-bearing elements

to be regulated by the FCA.”

This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

New clause 22—Cost of credit: FCA assessment—

“In Schedule 6 of the Financial Services and Markets Act 2000 after paragraph 2F(3) insert—

‘(4) When considering the business model, the Financial Conduct Authority must have regard to the interests of consumers, in particular—

(a) the proportion of a firm’s revenues that are to be derived from re-lending, and

(b) whether customers are likely to be charged a total cost of credit in excess of one hundred percent of the amount borrowed both on the basis of the initial credit terms or following relending activities.

(5) Where the Financial Conduct Authority’s assessment concludes that a business model poses a significant risk that customers will be charged a total cost of credit in excess of one hundred percent of the amount borrowed, then the threshold condition will not be met.’”

This new clause would ensure that the Financial Conduct Authority assesses the business models of firms and does not allow excessive relending activity to take place, or for firms to be granted permission if there is a significant risk of customers paying more in interest, fees and charges, than the amount they have borrowed.

[Stella Creasy]

It is a pleasure to serve under your chairmanship this afternoon, Dr Huq—all of us who have one of those titles but never really use it probably ought to, not least with our bank managers on issues such as this.

The new clauses we discussed this morning were about when the FCA, having been involved with a company, has let down our constituents, and that is why we pushed new clause 21 to a vote: fundamentally, there are thousands of people in this country, many of them our constituents, who will be denied compensation because the companies that owe them compensation have gone into administration on the FCA’s watch.

These new clauses are about how we can get proper consumer protection so that we do not get into those positions at all, as well as taking on board what we have learned in the past seven years about what actually works to protect consumers, and the reality is that it is capping. Capping the costs of credit has been a very effective, cheap and clear form of regulation, which has benefited industry and consumer alike. These new clauses are about giving the FCA the power to use that evidence to help to protect our consumers, because, sadly, the detriment that made capping payday lending such an effective thing to do is now appearing in many other industries. That speaks to the whack-a-mole challenge that we have with credit in this country.

As I said this morning, the challenge is that the FCA moves very slowly, but this industry—credit in its broadest sense, not just high-cost credit—moves very quickly. We know that what has stopped consumer detriment is being able to cap what these companies can charge, and we know that most of all from the payday lending industry. The payday lending industry still exists in this country, but the reason we have not had people turning up to our surgeries, or seen these companies on our high streets or indeed in our inboxes, is that regulation has meant that people are not being exploited by them in the way that they were. The companies can still operate—those that want to lend to people in a short-term and effective way without exploiting them. However, the point at which people get into debt and cannot get out of it—that business model that was about hooking people in and keeping them paying—has ended, because of the cap.

In this country, if someone takes out a payday loan, they will never pay back more than double what they borrowed, including the interest fees and the charges. That is a really important point in these new clauses, because the whole point was capping not just interest rates, but the whole cost of a loan. As I said earlier, exploitation in the credit industry is like water: it finds the loopholes. These new clauses speak to other forms of loopholes.

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

The hon. Lady is making a very good point. Is she aware that the Young Women’s Trust has suggested that 1.5 million young women have lost income during the pandemic?

[Stella Creasy]

Absolutely. We know who such companies are targeting, and they are doing so deliberately. I hate to say this, as I do want to win over the Committee, but we might not be their target audience at this point in our lives, because we might not be actively reading the social influencer media posts. I might be completely wrong—I am sure some Government Members are regularly on their Instagram accounts looking at posts by ASOS.

Some 20% of those young people say they have missed a payment in the last year—the figure has doubled in the last year—because they thought that a purchase would cost a certain amount and that they had an income, but that income has gone. The companies will say that they are very good to their customers because they do not lend more than people need and they do not charge interest—the companies’ interest is in people paying back the money—but those companies go silent on what they do when people do not pay back. What happens to people’s credit references? How do they chase money? Do they use debt collection agencies?

Those companies are growing rapidly, just as the payday lending industry did. We watched that happen and, in that Cassandra-like way, all tried to warn of it, but it took too long for us to act. In 2019 Klarna was boasting that it had signed a partnership with a new merchant every eight minutes in this country. By the end of 2019, 6 million people had used its product, and it said that 55,000 were using it weekly. Imagine what it is like now, with people having been stuck at home and stuck on their phones.

The Money and Mental Health Policy Institute found that more than 3 million people with mental health problems have found it harder during the pandemic to control their online spending, and two in five said the BNPL industry has been “harder to resist”. Because it is not regulated, it does not have to follow any of the rules we might want to point to that protect consumers. That is why we see all those adverts saying, “No interest, no fees—don’t worry about it.” The industry does not have to provide the normal financial information we see in other forms of credit because it is not regulated in that way.

Just as with the payday loan industry, as soon as we started talking about these companies, along came the offers of dinners and discussions and talks, where the industry says it is in fact a misunderstood new technology. Those of us who are not regularly on the internet have obviously missed them.

[Mr McFadden]

rose—

[Stella Creasy]

I am sure the shadow Minister is about to tell us about his Instagram account.

[Mr McFadden]

No, I am not, but I am interested to hear that my hon. Friend got an offer of dinner. All I got was an email.

[Stella Creasy]

Sadly, during the pandemic, none of us has been able to take up any of those offers to explain our concerns to these companies directly, as opposed to on Zoom. It is a simple concern: the way in which these products are marketed encourages people to spend money as a way of dealing with the emotional and social impacts of the pandemic. The adverts, using those social influencers, say, “When you’re feeling low, sat at home by yourself with nowhere to go, there is something to make you feel better.” Essentially, the message is, “Get into debt. Don’t worry about it. You can spread the payments. Don’t worry about whether you can afford it.” They get away with saying and doing that because they are not covered by the regulations.

I know the Minister is looking at this issue—he said so—and that the FCA is doing so. I have made a series of complaints to organisations such as the Advertising Standards Authority about these issues, because, just as with payday lending, we have seen the rapid expansion of these companies. My worry is that if we take 18 months it could be too late in terms of consumer detriment. I do not doubt these companies when they say they want to have a sustainable business model, but it is for us in this place, in crafting the Bill, to decide what sustainability is and how they make their money. Otherwise, we are handing them our young consumers, in particular, on a plate to be exploited. The new clauses speak to those issues.

New clause 16 would ensure that all forms of consumer credit are covered by regulation, because the gap that Klarna and company have fallen into is arguing that they are not a form of consumer credit so they do not need to be regulated. We should always apply a sniff test: if somebody is giving us money to buy things on tick, that is a form of credit. If it walks like a duck and talks like a duck, it should be regulated like ducks should—see, we have moved on from the dinosaurs to ducks.

New clause 17 would make rules explicitly about the buy now, pay later industry. I do not believe we can wait another year or so before we do something. It makes sense to bring the industry under the FCA’s umbrella so that the FCA can act. The new clause would ensure that Ministers could act based on the industry’s actions, given the risks that come from them. Unlike customers of Amigo Loans or indeed the remaining payday loan industry—or even the credit card industry—nobody who uses buy now, pay later can go to the ombudsman for redress, so what do they do if they get into difficulty? I pay tribute to Alice Tapper from Go Fund Yourself, who has been collecting the evidence about young people getting into debt from unaffordable forms of spending with such companies and not knowing how to get out of it.

--- Later in debate ---

[The Chair]

I call Stella Creasy PhD.

[Stella Creasy]

As well as winner of a Titmuss prize, I think you will find, Dr Huq. My father got excited that I meant Abi, and my mother thought I meant Fred—it was neither.

I listened to the Minister, and was all eerily familiar. It was like the conversations that we had on payday lending, when everyone mentioned the then Office of Fair Trading. I appreciate that that conversation was not with the Minister, but the outcome for our constituents will be the same. It is Christmas; does he think that Klarna, Clearpay and Laybuy will not be heavily pressing their product on our constituents?

We could vote to send a message that change will come in the next couple of months. We could sound the alarm that we did not sound on payday lending until millions of people were in debt. The Minister knows that the FCA has been, and will continue to be, timid about using capping, because it is looking for political leadership to say that capping is the right to do.

I am happy to withdraw new clause 16, but I will press new clause 17 to a vote because I think we should send a message that we are listening to the consumers who are already in debt with those buy-now-pay-later companies. It is an incredibly reasonable clause that says that we will regulate and not leave people hanging. The Minister has not given any succour to that idea. He has talked about a review and the possibility of some consideration later, but that is just too late. Too many people are already in debt with those companies. I hope, if the Minister will not listen to me, that he will at least listen to Martin Lewis and Alice Tapper, who have been trying to help people in financial difficulty because they cannot go to the ombudsman. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 17

Regulation of buy-now-pay-later firms

“The Treasury must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non interest-bearing elements

to be regulated by the FCA.”—(Stella Creasy.)

This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

Brought up, and read the First time.

Question proposed, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Stella Creasy]

I beg to move, That the clause be read a Second time.

I do not intend to speak to this new clause for very long because my case has already been made. This is a simple clause about the powers of the FCA to do investigations and about who has the power to require it to do them—currently, that is the Treasury. The new clause suggests that a Select Committee should be able to do that. It would most likely be the Treasury Committee, but the clause says “a relevant Select Committee”, because the issues may concern the Business, Energy and Industrial Strategy Committee.

The Minister will understand my disappointment and frustration that he has not offered any opportunity to look at whether amendments or investigations are needed. Change is likely to come to our credit industry in the time that this Bill is before Parliament. If the Treasury will not act, it falls to all of us in Parliament to ask where else we can scrutinise how our constituents are being lent to and whether they are being ripped off.

--- Later in debate ---

[John Glen]

The change proposed under this new clause to allow Select Committees to require the FCA to launch investigations in situations where there is suspected regulatory failure would mirror powers that are already available to the Treasury. As I set out earlier, section 77 of the Financial Services Act 2012 enables the Treasury to require the regulators to conduct investigations in cases of suspected regulatory failure in circumstances where it does not appear to the Treasury that the regulators are already doing so under, for example, the regulators’ power in section 73 of that Act.

The Treasury has used those powers to require the PRA and FCA to launch investigations where it considers that appropriate. As Members are aware, the Treasury Committee had the opportunity to scrutinise the investigation that was carried out into the Co-operative Bank in 2018, and it made a number of recommendations that were accepted by the PRA.

I am therefore confident that investigations under existing section 77 powers are useful in holding regulators to account, ensuring proper scrutiny of them and conducting investigators in the public interest. In determining whether an investigation is in the public interest, the Treasury will also consider the views of the relevant Select Committee in reaching its decision.

The Government agree that Parliament should play an important strategic role in interrogating, debating and testing the overall direction of policy for financial services. The Treasury is confident that proper mechanisms exist to allow the Treasury Committee to scrutinise and comment on investigations, as is right and proper. Ultimately, there is nothing to stop a relevant Select Committee launching its own investigation into an issue, calling witnesses, gathering evidence and making recommendations. That is a decision for the Committee.

[Stella Creasy]

Earlier today, we talked about the fact that the Treasury instructed the FCA to get involved in the debate around payday lending. Indeed, it went into companies such as Wonga and QuickQuid and set out redress schemes. We know that they were ineffective because it ended up with the ombudsman getting involved, and it was only then that those companies went into administration because it was revealed how much they owed to our constituents. In circumstances such as that, where no doubt there would be difficult conversations about what role the Treasury and the FCA played in the process, who watches the watchmen? Who would instruct that inquiry? At the moment, that inquiry has not happened, so we do not know why that redress scheme did not work. There is no sign that the FCA wants that. Is the Minister saying that he would instruct that so that we can get to the bottom of why the redress scheme did not work? If it did not, it seems rather apposite to have an independent third party that could look at issues such as that on behalf of consumers.

[John Glen]

I am very happy to look at that particular case. The point I am making is that there is a mechanism to compel the FCA to investigate, and the Treasury does not do that in isolation from the its wider accountability to Parliament, individual Members of Parliament and the Treasury Committee. I am very happy to examine the point that the hon. Lady has made and I will look at it carefully, but that provision exists. Frankly, I cannot and would never expect to act in isolation and without accountability to Parliament. Given the powers available to the Treasury, which can be used in that context, and the opportunity for scrutiny by Select Committees, I ask that this new clause be withdrawn.

[Stella Creasy]

If the Minister is saying that he is going to instruct a redress investigation, I will happily withdraw the new clause. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 21

Assessment of risks of consumer detriment

“(1) Schedule 6 of the Financial Services and Markets Act (2000) is amended as follows.

(2) After paragraph 2D(2)(c) insert—

‘(d) the risks of consumer detriment associated with the firm’s business model and the likelihood for compensation claims from consumers.’

(3) After paragraph 2D(3), insert—

‘(3ZA) When assessing whether the firm has appropriate financial resources to meet the risks of consumer detriment and the likelihood of compensation claims from consumers, the Financial Conduct Authority must ensure that, at all times, firms hold sufficient financial resources to meet any likely compensation claims from customers in full.’”—(Stella Creasy.)

This new clause would ensure that the FCA considers the likelihood of consumer detriment arising from the firm’s business model prior to, and following, authorisation, and that firm’s hold sufficient financial resources to meet potential compensation claims from customers in full.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Stella Creasy]

I beg to move, That the clause be read a Second time.

This is the final new clause for the final bit of the Bill, so I am hoping that this time round, given the season, the Minister will withdraw his Scrooge-like refusal to amend the Bill, not least because I genuinely think that on this new clause and this area of policy he probably agrees and recognises that there has been an oversight in its consideration. I also hope that Government Members will support the new clause, because it is surely what they came into office to do—to remove the red tape and bureaucracy that holds back enterprising, entrepreneurial people in our local communities.

I speak as a proud Co-op as well as Labour MP, and this new clause is about co-operative banking—perhaps not what people might first think of when they talk about co-operative banking, but it is about how mutual banks are set up. Local mission-led mutual banks are common in other parts of the world, but not so much here in the UK. They are, however, something that people are increasingly looking at and trying to support, particularly around Greater Manchester and elsewhere, and local leaders in Liverpool and Preston have plans to establish such institutions as well.

As people would understand, is quite difficult to start a bank: there are often requirements, even for a standard for-profit shareholder-controlled model. Much of the difficulty boils down to the challenges involved in raising the amount of equity capital that regulators require for institutions before they will issue an operating licence. That is what we are talking about today. Frankly, someone would need to raise millions in equity to get a banking licence.

The problem for mutual banks is that many investors struggle to understand what a mutual is. Ultimately, the mutual might offer good long-term returns, but there are no opportunities for those bumper dividends or speculative gains that people might traditionally associate with banking. That is part of a model that invests in communities, supports people and has people as part of the process. People think about credit unions; this is about what the 21st century co-operative banking models might be.

One of the challenges holding back the co-op movement is an antiquated piece of legislation. Let me be clear: the passage of the Co-operative and Community Benefit Societies Act 2014 was very welcome and helped to level the playing field. The capital requirements regulations are a hangover from Disraeli’s time. Those provisions can be traced back to the Industrial and Provident Societies Act 1876. I am talking about simply removing them from the legislation, because the requirements that they make are already covered for co-operative banks by other forms of prudential regulation in the Bill. Their existence creates an artificial level of complexity for the setting up of co-operative banks.

I do not want to go into too much detail, but the law currently prevents co-operative societies from being banks if they have what is called withdrawable share capital. That restriction was imposed in 1876; things have moved on. First, we now separate and have strong regulation of banks’ capital adequacies, as we discussed earlier in the Bill process. Furthermore, we have clear and specific regulation setting out how co-operative withdrawable share capital can safely be used to help to capitalise banks. It is firmly established today that societies retain the absolute right to suspend share withdrawals, giving their capital the essential features of equity under international and UK accounting standards.

If mutual banks were able to add withdrawable share capital to their mix, that would help to enable them to diversify their offer to investors and therefore broaden the range of investors to whom they could be marketed. It would open up significant opportunities for co-operative banks to get off the ground, because they would have the ability to raise the equity that they need to get a banking licence. Surely, Members from all parties can agree, in good Christmas cheer, that such competition in our banking sector would be a good thing, so it would also be a good thing to remove this archaic piece of legislation on capital equity from the legislation book.

The Bill is about financial services, and the co-operatives throughout the country want to offer financial services. The Minister may still be drawing on pot 3, on the Ghosts of Christmas past and present, but on the Ghost of Christmas future, in the Lords or on Report, might he give us a glimmer of hope, Tiny Tim-style, that he will listen to the co-operative banking sector? They have written to him in support of this amendment and I know he has met representatives from the sector to look at what more he can do to support them. I hope he will remove these pieces of red tape and take back control of the mutual sector this Christmas.

[John Glen]

I am grateful for the enticement to be generous, but I was quite generous on new clause 8. I gave some positive indications about the intentions of the Government, and I look carefully at everything that is said by Members from across the Committee. I am very engaged with the mutual banks and with the co-operative sector generally, which I will say more about in a moment.

This amendment aims to remove the restriction which prevents co-operative societies holding withdrawable share capital from carrying out the business of banking. I share the interest of the hon. Member for Walthamstow in how the mutual model of financial services can add much-needed diversity and competition to the sector. Treasury officials and I have had constructive conversations with individuals seeking to set up regional mutual banks, and I look forward to continuing those. I will not mention their names, because they are going through different regulatory processes, and I am told that that is sensitive and so I should not do so. I try to help them.

Ensuring that banks hold the appropriate capital is critical to a stable and functioning financial system. It is therefore important that we consider any legislative changes in this area. I have thought about the amendment, and there are several immediate concerns about the potential risks to financial stability and consumer protection, which the Government have a duty to consider.

I will set out our most pressing concerns. As the global financial crisis highlighted, sufficient regulatory capital is needed by financial institutions as a source of resilience and to ensure losses can be effectively absorbed. To ensure capital fulfils this function, capital held by banks must always be readily available to absorb losses, which cannot be the case where investors can withdraw capital. Enabling co-operative banks to hold withdrawable share capital, as this amendment intends, could place consumer deposits at risk, create an inconsistent regulatory regime between co-operative and non-co-operative banks, and cause risks to the stability of the financial system, if it led to banks being inadequately or inappropriately capitalised.

I have had representations from the prospective regional mutual banks sector that they would seek to use this amendment to issue additional tier 1 capital instruments, or contingent convertible bonds. These are complex instruments that would need further thought to ensure they fulfilled their purpose within the legislative framework for co-operatives. It is also unlikely that the ability to raise additional tier 1 capital would be very beneficial to regional mutual banks currently, given they are at the early stages of their development where raising core equity capital is the priority.

I also note that the activity of deposit taking, in the form of withdrawable share capital that co-operatives and community benefit societies carry out under the present legislation, is subject to certain exemptions from regulatory requirements, which are applicable to other institutions carrying out business activities. These may no longer be appropriate if they were generally allowed to carry out the business of banking.

In conclusion, the Government believe that the fundamental issue is that it is not appropriate for deposit takers to rely on withdrawable share capital. In any case, certainly a measure like this would need further consideration of the legislative and regulatory implications rather than being introduced by way of amendment. I will continue to look carefully at these matters with the sector, but in the context of what I have said I ask the hon. Member for Walthamstow to withdraw her amendment.

[Stella Creasy]

I am so sorry to hear that the Minister is still listening to Marley rather than Bob Cratchit about the true spirit of Christmas. This is legislation from the 1800s. It is about £400 worth of share capital. It is outdated and needs a little more Christmas cheer. The Minister said that he would commit to working with the sector to get this amendment right, and if amended this Bill could be great. I think I will push the new clause to a vote—if nothing else, to put on the record that there are those of us who understand that co-ops want to move into the 21st century—and wish everyone a merry Christmas at the same time.

Question put, That the clause be read a Second time.

Financial Services Bill (Eleventh sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 11th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

I stress that that is very different from a consumer going to their credit card provider and asking for an increase in their credit limit; of course, that should be available to consumers. We are not being prescriptive on personal freedom, but we are saying that this could go some way to redressing the imbalance of power and information between financial service providers and their consumers. That is why we have tabled the new clause.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Davies, as ever, for the last time on this Bill. Let us make it a good one. I will try to keep it lively and maybe capture the attention of everybody on the Committee about the things we can do.

The new clauses provide the moment to finally talk about the big beast in this Bill: the Financial Conduct Authority. I say “big beast”, because, as someone who has tracked not only high-cost credit, but credit companies—as I know the Minister has for many years—I sometimes feel like Bob Peck in “Jurassic Park”, who played the warden, Robert Muldoon, who tried to warn people about the velociraptors, but was also supremely impressed by the way in which they evolved to be able to kill. In this case it is about evolving to be able to exploit.

It matters that we take a careful look at what the FCA is doing, because the FCA is our constituents’ best defence against the velociraptors of the credit industries in this country. I use “credit industries” widely, because for me this is not just about the high-cost credit industry. However, in supporting the new clauses, I want to share with the Committee the experiences around the high-cost credit industry and, in particular, the pay-day loan sector, because I think they speak to the challenges with the Financial Conduct Authority and why we need to amend the Bill, to ensure that as we give the FCA more powers, it truly has our constituents’ interests at the forefront of its mind.

I do not doubt the impact that the FCA has had. I want to put that on record, because the Minister and I have talked for a long time about my concerns about the FCA. I acknowledge that it has made progress. My point is about the pace at which it has made progress, about cutting through the stand-off that we sometimes see, whereby people recognise that this is a problematic type of credit or, as my right hon. Friend the shadow Minister has talked about, where issues arise for our constituents—the people who come into our constituency offices and tell us about their ongoing battles—and about ensuring that we do not just give them protection, which means avenues for redress, but actually prevent those problems. I believe that the FCA was set up to prevent problems, but if we look at its track record in some of those problem areas, we see where delays in dealing with them has led to our constituents paying the price.

Bear with me, Committee; I think it is worth sharing that example, because it explains why these amendments make sense. Indeed, I believe the Minister agrees with me on this. A bit like earlier, with the lead generators, I am sure he already has a folder full of examples of where the FCA has done brilliant work in tackling consumer detriment. In fact, I can see all the paper—goodness me, all the trees that have gone into that! However, I know that he wants the FCA to be more agile and does not want to have people like me continually coming to him and him knowing that there is a problem, but seeing this trade-off, as this aspect is overthought almost, with too much emphasis on the unintended consequences of acting and no emphasis on the unintended consequences of not acting on some of these issues. In order to cut through that, these amendments would give a clear direction to the FCA about what consumer detriment is, why and how it needs to act, and the particular issue it needs to take into account when it comes to debt.

On Tuesday, we talked a lot in this Committee about the debts already in our communities and the debts to come, which is why this is an urgent issue that cannot really be dealt with in another review or consultation, which will go on for 18 months, because by then, in every one of our constituencies, too many people will have lost their jobs and possibly their homes, and will be in what we are calling problem debt for decades to come. Indeed, I believe this Committee is already having a positive impact on that conversation, because on Tuesday we talked about the importance of making problem debt as much of an issue for the sidebar of shame in the Daily Mail as Kim Kardashian’s derrière, and last night I saw that the Daily Mail had started talking about the horror of middle-class people having to go to food banks.

Clearly we are starting that conversation in our country, but we need to do much more. Why do we need to do much more? Because it took too long to deal with the payday lending industry. In 2010, when I was first elected, I already knew many colleagues in this place were seeing these companies on their high streets and the problems with the eye-watering interest rates, where people thought they had missed where the decimal point was. Yet nothing was done for years, and those companies exploded, not just in our high streets but online, and our constituents got into huge amounts of debt. I know that the Minister agrees with me that it took too long. I know, too, that the Minister is not his predecessor, who, when I first went to see him about payday lending, literally patted me on the back, congratulated me on finding an issue that I could issue a press release to my local community about and sent me on my way. I know he is not like that; he recognises when there is a problem. However, if he looks at the regulatory history of the FSA on this issue, he will also see that there was a problem.

Let me set that out with companies that people will have heard of. They will have heard of Wonga, QuickQuid and BrightHouse, all of which operate in constituencies across the country. All these companies have collapsed or are in financial difficulty because of the debts they owe to their customers, our constituents, because of the way in which they lent them money on credit. They have not collapsed as a result of the work of the FCA, but because of the work of the ombudsman. In 2014, when Wonga was clearly a problem for so many of our constituents, the FCA agreed a redress scheme for 375 customers and announced that it had appointed a skilled person to monitor the new lending decisions that Wonga was going to make, to ensure that the issue was sorted. In November 2015, the FCA agreed a redress scheme for 4,000 QuickQuid customers worth £1.7 million, and in October 2017 it agreed a £14.8 million redress scheme for 250,000 BrightHouse customers in respect of 384 agreements for lending that may not have been affordable.

That is the critical issue here. At every point, the FCA has acted to look at the affordability of the loans. However—given it is that time of year—it does not take a rocket scientist to work out that if we ask turkeys to decide what is on the menu for Christmas, they will often say that a nut roast is better, and that is what happens when we ask these companies whether a loan is affordable. They would tell their clients that they could afford these loans, because the way they made their money was to re-lend. It was not for someone to borrow from them and pay it all back—it was for that person to borrow from them and get into a cycle of continually borrowing from them, because they would make a lot more money. Once a person was hooked, they would borrow and borrow. That was the decision about affordability.

At various points the FCA has been brought into these companies to determine whether they were making good affordability decisions—whether, in layman’s terms, they were ripping off our constituents. At every point, that affordability decision did not meet the needs of those customers. How do we know that? Because the ombudsman then had to interfere to help people who were in debt. The result was the same: the lenders all fell into administration, not because of the action of the FCA but because the ombudsman was making them repay our constituents, who had been ripped off by them.

--- Later in debate ---

[John Glen]

I thank the hon. Ladies and the right hon. Gentleman for their speeches, to which I have listened carefully. I will try to address fully the 10 new clauses that have been tabled. In essence, they relate to the effectiveness of the FCA’s oversight; that is the substantive point behind them.

The lead new clause is new clause 6, which has two functions. Subsection (2) requires the FCA to have explicit regard for vulnerable consumers when discharging its consumer protection objective, and subsection (3) introduces a statutory requirement for the FCA to make rules requiring authorised persons to adhere to a duty of care when providing a product or service.

UK financial services firms’ treatment of their customers is governed by the FCA in its principles of business, as well as specific requirements in its handbook. The FCA’s principles for businesses require firms to conduct their business with due skill, care and diligence, and to pay due regard to the interests of their customers and treat them fairly. The FCA already has recourse to disciplinary action against firms that breach the principles.

The FCA has already announced that it will undertake work to address potential deficiencies in consumer protection, in particular by reference to its principles for businesses. Although the coronavirus pandemic has caused the FCA to reprioritise its resources and delay certain pieces of work, including the next formal stage of this work, delaying these initiatives has ensured that firms are able to focus on supporting their customers, including the most vulnerable, during this difficult period.

I draw attention to the second purpose of new clause 6, alongside new clauses 38 and 39, which require the FCA to introduce a duty of care. A number of other amendments here also relate to the duty of care.

The Government believe that, as the FCA is already taking steps to ensure that consumers are treated fairly and financial services firms are obliged to exercise due care and regard when offering products, services and advice, a statutory duty of care requirement is not necessary. I have already set out a number of actions that the FCA is taking to ensure that customers are properly protected.

On new clause 39 in particular, the Government believe that the scope, which applies to all financial services providers, is inappropriately broad. For example, it is unclear whether that would include persons exempt under the exemptions order, which includes entities ranging from central banks to any employer offering a cycle-to-work scheme. Furthermore, there is no indication of the territorial scope of the financial services provider. Assuming that the duty of care would apply only to actions being done within the UK, the vagueness is still likely to lead to enforcement difficulties if a provider is based outside the UK.

Finally, it is inappropriate to apply the provisions to all financial services providers as no assessment has been made, in relation to unauthorised firms, of the extent to which the existing common law and other consumer protection legislation is or is not sufficient to achieve the right level of consumer protection. For example, where providers are subject to supervision or oversight by other professional bodies, as is the case with professional firms, it is unclear how this proposal would interact with the remit of those bodies who may be better placed to assess matters relevant to duties of care.

New clause 40 would require the Treasury to review at least once a year the case for instructing the FCA to introduce a duty of care for all financial services providers. The Treasury will of course keep this question under consideration. However, it is disproportionate to set this requirement in statute. I have already set out the actions that the FCA is taking to ensure that customers are properly protected.

I want to pause here and note that I have enormous respect for the perspectives of the hon. Member for Walthamstow on this issue. I do not have her encyclopaedic knowledge of dinosaur names, but I do respect her engagement on the issue. I have engaged very closely with the FCA. I recognise that she is still dissatisfied with where things have got to and she makes some reasonable points, on which I am happy to continue the dialogue, but there have been significant changes in recent months with respect to the work that is going on—that is live at present. I suspect she will not be satisfied, but let me carry on and then we can see where we get to at the end of this.

On new clause 41, the Government believe that the FCA, as the independent conduct regulator for the financial services industry, is best placed to judge the merits of a duty of care for the financial services industry. It would therefore be inappropriate for the Treasury to instruct it to impose a duty of care on authorised firms, although that dialogue is ongoing.

On new clause 42, the FCA has already published a feedback statement following its discussion paper on duty of care last year. The FCA will also publicise the findings of its upcoming work on how to address potential deficiencies in consumer protection. Therefore, the Government view is that it would be unnecessary at this point for the Treasury to report on the FCA’s position on the need for a duty of care.

The Government believe that there are sufficient protections in place without expanding the FCA’s statutory consumer protection objective or introducing a statutory duty of care, but I reassure members of the Committee that we will continue to work closely with the FCA to keep this issue under review—I am not saying “No, never.”

New clause 15 would require the FCA to have explicit regard to the prevention of consumer detriment, including the promotion of unaffordable debt, when discharging its consumer protection objective. The Government believe that the FCA, as the UK’s independent conduct regulator, is best placed to judge how to protect financial services consumers from detriment, including that which arises from the promotion of unaffordable debt. The existing legislation accounts for the prevention of consumer detriment as a result of section 1C(2)(e), which outlines

“the general principle that those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate having regard to the degree of risk involved…and the capabilities of the consumers in question”.

[Stella Creasy]

I am conscious of time, but approximately 1 million households that could ill afford it have lost out on about £1 billion of compensation from Wonga and QuickQuid. Does the Minister really believe that under the existing regime that he is defending, there has been sufficient recognition of what it means to consumers when it goes wrong, and that there is no need for change?