Financial Guidance and Claims Bill [HL]

Viscount Brookeborough Excerpts

3rd reading (Minutes of Proceedings): House of Lords
Tuesday 21st November 2017 Lords Chamber

[Baroness Kramer]

My Lords, my noble friend Lord Sharkey is unable to be with us at the moment because he is at the Economic Affairs Committee. I suspect that, by the time that committee finishes and he can come down and join us, we will have moved to the conclusion of Third Reading, so I am privileged to speak on his behalf, as it were.

I will talk for a moment about the debt respite scheme and then just say a few words about Amendment 33, which stands in my noble friend’s name and now has the added support of the noble Baroness, Lady Buscombe. The debt respite scheme is absolutely crucial and I congratulate all parties, including the Opposition Front Bench and the Government Front Bench, and the Bill team for working through all of this. This is my opportunity to say that the Bill team has been very open to discussion.

Like others, I recognise that this Bill is very different from the fairly narrow, technical Bill that was originally conceived. This House took on board the argument that many of the issues raised, particularly those around financial inclusion, cold calling and debt respite, were not party-political controversies. All signed up to those issues, and the only question was whether there would be other vehicles in the very near future to carry through those policies. We can all see that the works are getting more and more gummed up on a daily basis, and I suspect there is real relief on all sides now that important issues such as cold calling, debt respite and financial inclusion have found their way into this Bill so that action can be taken despite whatever may be happening at a national level on the broader policies, particularly with Brexit. That is a real win for everybody in the House, including the Government and also the Minister, who has turned a technical Bill into an opportunity to make a real impact on people’s lives.

On Amendment 33, which amends the Long Title, I will pick up the point that the Minister made when she introduced Amendment 1 and talked about the importance of clarity and transparency. To the general public, this Bill will not be noted because it brought together three very important bodies into a single body, although all of that matters and will itself breed quite a significant number of good outcomes; it will be remembered most because it gave the Government the power to deal with cold calling and the abuse from which much of the population suffer on a daily basis. As many noble Lords, including colleagues on the Cross Benches and the noble Viscount, Lord Trenchard, have said, the most vulnerable have been impacted most by cold-calling abuse.

The Bill will also be remembered because of the debt respite clauses. To have a Bill in which neither of those two issues appears anywhere in the Long Title would seem most peculiar to anybody trying to find the appropriate legislation tackling these issues. You would have to guess that they might be in a Bill with the more limited Title. The words “and for connected purposes” might mean a great deal to people in this House, but do not mean a great deal to people elsewhere. Making sure that the Long Title fully reflects the strengths of the Bill and that those strengths can be easily recognised is a real improvement. It will rebound very much to the Government’s advantage.

Most of our exchanges have been extremely gracious, so I hope that the Minister will feel able to overcome her irritation around this one last clause. We have worked well together as a House, which has been crucially important. As I say, our thanks go very much to the Bill team, which has been a crucial part of this. I pay particular tribute to my noble friend Lord Sharkey since he is not here and able to speak for himself. He, among a number of others in the House, has contributed to a very worthwhile piece of legislation.

[Viscount Brookeborough (CB)]

My Lords, I add my praise to the two Front Benches. I should not think they could sustain much more joint praise, but on this occasion they have moved mountains in the length of time that this has taken. I emphasise how important the respite is from the point of view that every single case is a personal case of one family. It is not a matter of statistics, of speaking only of “30% of the families”; every single case that is allowed to go through this debt is a tragedy.

I say on behalf of Northern Ireland, if not the devolved parts of the UK, that it is good to see that it may be extended there, especially, from my point of view, to Northern Ireland. There are many individuals who, although they may not be listening to this, will unknowingly benefit from this to a tremendous extent. I thank all parties involved.

[The Earl of Listowel (CB)]

My Lords, I add my thanks to the Minister for her hard work and ingenuity in securing this amendment today. It has certainly moved a long way since our first discussion in Committee. She may remember that at the time I raised the issue of a particular care leaver who had a very stressful experience over two years because of the difficulties that we are addressing now. I am really grateful to her, particularly for care leavers who, after all, begin with a difficult start in their families, often have to experience independence very early in life and too often find themselves in financial difficulties. This will be particularly helpful for them. I appreciate the clarity that the Minister gave on the urgency with which the Government are moving forward on this, which was reassuring.

There is one point on which I would like clarification, and the Minister may care to write to me on this. Many care leavers are in difficulty around council tax. Some enlightened local authorities are now deciding not to charge care leavers but many still do so. When care leavers are pursued by their local authority for council tax, they can get into the position of the corporate parent aggressively pursuing their corporate child through the courts. I hope the dispensation will address that particular point.

One further point that the Minister may care to cover in correspondence: I believe that in Scotland the experience has been that six weeks may not be enough of a respite period to build a robust plan to go forward. I hope she might look at what is going on in Scotland and that we may build on that learning, perhaps looking at increasing the length of the respite period in light of the experience there.

I thank the Minister and all those noble Lords, particularly the noble Lord, Lord Stevenson of Balmacara, who took this forward, as well as the charity StepChange, which has been so helpful in all these matters.

Financial Guidance and Claims Bill [HL]

Viscount Brookeborough Excerpts

Report: 2nd sitting (Hansard): House of Lords
Tuesday 31st October 2017 Lords Chamber

[Baroness Coussins (CB)]

My Lords, I very much welcome the proposal at the heart of the amendment, and indeed the very similar idea of the breathing space on which the Treasury announced its consultation last week. At this stage I have just one question on which I seek clarification from both the noble Lord, Lord Stevenson, and the Minister. I remind the House of my interest as president of the Money Advice Trust. In my view, it is essential that any breathing space scheme covers public sector creditors as well as lenders in the private sector. The noble Lord, Lord Sharkey, touched on this point.

Debts to public bodies are an increasing feature of the UK’s personal debt landscape. The Money Advice Trust, for example, reports that 25% of callers to its national debtline service had council tax arrears last year, up from just 14% a decade ago. Calls about benefit overpayments and other public sector debts have also increased, and so too has scrutiny of the debt collection practices of these public sector organisations. So for any new debt respite or breathing space scheme to be truly effective, it must provide breathing space from all creditors, including local councils, the DWP and HMRC in particular, so as to give people the time they need to seek advice and tackle their debt problems. I would be most grateful if the noble Lord, Lord Stevenson, confirmed that the intention behind his amendment is to include public sector creditors, and if the Minister said whether she expects public sector creditors to be included in the Treasury plans.

[Viscount Brookeborough (CB)]

My Lords, a lot of the time when we talk about debt, it would appear that we are talking about people who may be in debt for a particular item or for a short period of time. These are people who are right down there and close to being in debt, and may be able to manage their finances by only a few pounds every week or month. So this is not just a debt problem overall; it is debt for very vulnerable people. If we do not help them and give them a bridging mechanism, we are creating a big social problem—a problem regarding their characters, the way they live, their friends and how they are seen. It is about much more than just how we keep the debt down and how, one day, they get out of it; it is about their social identity. Many of them have not been in debt before, and consider going into debt at all a crime and a slur on their character. When we have the chance, we must create the means to help protect as many of them as possible. Wherever we have a breathing space or gap whereby we can legislate to avoid them going permanently into debt—such as, dare I say it, in universal credit—we must try to do so. I therefore support the amendment.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I shall make just two quick points in support of the speeches that have already been made. I am very much in favour of the amendment but the timing is really important. I say that because universal credit, as we all know, has some introductory rollout problems, such as establishing debts in a way that can sometimes overwhelm new applicants, given the 42-day waiting period. If some magic process could put in a breathing space immediately, that would give succour, support and some respite to families who will almost certainly now face arrears, particularly rent arrears. Therefore, time is of the essence and I hope that the Government will bear that in mind.

I also agree with the point that has just been made about public sector bodies. The Government should perhaps be able to do that anyway by getting people within the public service to be more reasonable about the way they prosecute the recovery of debt.

My second point, which is really important to me, is that the presence of this opportunity in Scotland completely changes the atmosphere in which negotiations can take place. People start acting a lot more rationally and are not driven by fear into doing things and making undertakings which, in their innermost hearts, they know they cannot fulfil. The circumstances are thereby compounded, which makes everybody’s position worse. In Scotland, the ability to just stop the clock, step back and think rationally about the solutions over a longer timeframe transforms the circumstances of families in distress. It is very important that we get this done quickly and take advantage of the experience north of the border, where such an approach has been demonstrated to be worth while and to work.

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[Viscount Brookeborough]

My Lords, I support the amendment and I thank the noble Lord, Lord Deben, for saying half of what I was going to say.

However, I should like to add one other point. Yes, this is about protection of the consumer and, secondly, advice. However, there is another word for advice: education. This is not simply about advice for people who go to the right places—very often they do not know where to go unless the advice is put in front of them—but about educating people. In our report on financial exclusion and in the FCA report, it is absolutely clear that there has to be continued learning and education throughout people’s lives. They are at school and then go to their first job and may not be able to save much money. Then they think of settling down, then they want a mortgage, then they want a car and so on—and then they want a pension.

We must look at the fact that a vast proportion of post-graduates—I do not have the figure in front of me now but we have all heard it recently—say that the most important omission from their education is financial education. It is therefore not a wonder that we have to do this. Taking the amendment in isolation, I can see why the Government may not want to accept it, because it is another addition to the legislation. However, it would not be so important if the Government accepted that education in schools should be not only controlled but monitored to ensure that it takes place. However, other things have been allowed to lapse. There are not the checks and the compulsory education, which should start at school and then continue. If there were, people would automatically want to be more educated in financial affairs as they go through life because they would know of their importance at an early stage. This is why this kind of amendment must be brought in at this stage to educate people and keep them in line for the future part of their lives.

[The Viscount Thurso (LD)]

My Lords, I have followed the passage of this Bill with great interest but I have not felt the need to intervene. However, today I support my noble friend in this amendment based on two experiences.

The first is as a trustee of the Parliamentary Contributory Pension Fund, which, as I am sure many Members know, is a well-run fund and gives a great deal of excellent advice. However, it is always surprising to discover how many well-educated, highly numerate and literate people fail to grasp much of what there is to do with pensions. If those of us who regard ourselves as reasonably well educated, quite numerate and quite literate are having difficulty with pensions, it stands to reason that many people who have not had those advantages will have even greater problems. To my mind, therefore, the need for advice is a case that is clearly made.

The second experience arises from my time on the banking commission of the Treasury Select Committee in another place. We worked extremely hard to ensure that the Financial Conduct Authority had a proper consumer remit. I am delighted that the Government accepted what we had to say because the FCA has proved to have undertaken the remit well and with a degree of teeth. If we want to ensure that a regulation works, we must make sure that the person promulgating it has teeth. It is absolutely right that the FCA should be the body to make the regulations and to follow up on them.

In summary, it would not surprise me if there is considerable resistance from the Treasury, but that is simply a manifestation of its well-known terminal “not invented here” syndrome. Experience shows that where the Treasury is obliged to take on regulation, it comes round to accepting its wisdom in due course. The test of this amendment, therefore, is not “Why should we?” but “Why shouldn’t we”.

Financial Guidance and Claims Bill [HL]

Viscount Brookeborough Excerpts

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, my name was added to the three amendments. I declare my interests as set out in the register of the House, particularly in respect of the non-life insurance industry. I pay tribute to the noble Lord, Lord Sharkey, for his drafting skills—I shall make one or two points in a moment about the drafting, which I think is particularly elegant.

The dataset of 9 million telephone calls to UK cities to which the noble Lord, Lord Sharkey, referred had one other gem within it: 42% of those 9 million calls were nuisance calls. That dataset was gathered over three years, so it is fairly robust and it gives the House yet another sense of how inherent this problem is in our society. We stand here today with the opportunity to do something about that.

Keith Brown MSP, the relevant Minister at Holyrood, said when the report originally came out—it is a very good quote—that:

“These calls are a serious problem that can cause both emotional and financial harm, particularly to some of our most vulnerable citizens”.


Indeed, as the noble Lord, Lord Sharkey, pointed out, Citizens Advice Scotland, in data mining the same 9 million calls, said that four in 10 Scots had felt intimidated. That is a form of mental harm. In our society, if I do or threaten to do physical harm to people, we have protected our citizens under Section 47 of the Offences Against the Person Act 1861—he says, looking at a noble and learned Lord—but we have been less good at protecting them from mental harm. This is one of the ways in which we can begin to redress that balance.

These are subtle amendments because they seek to empower Ministers to go along that path by way of a double trigger. The first trigger is for the SFGB to state that there is a problem worth addressing and to make a report. The second trigger is that the Secretary of State concerned can then decide, yes or no, whether to make an order. The double trigger is particularly subtle because it means the problem will be considered in a complete way. Given that, ultimately, the order will have to come here, we can be assured that there will be plenty of debate.

This mechanism, which will enable the apparatus of government to protect people, will strengthen the legislation. I can see no down side but a strong upside, given that Citizens Advice Scotland particularly noted that these nuisance calls weigh on the most vulnerable in our society.

[Viscount Brookeborough (CB)]

I was on the Financial Exclusion Committee. When we talk about targeting the vulnerable, it is not a matter of someone taking all the numbers or addresses out of a book; it is done scientifically. These people look at the vulnerable and consider when they will be vulnerable and how they will get at them.

The amendment includes digital. We were given evidence that single, older and vulnerable people were especially targeted digitally in the middle of the night. So if they are not sleeping well and switch on their computer, what comes up? We should not think that this is just blanket coverage and some of these people picked it up. The high numbers we have been given are targeted numbers and therefore the response rate, sadly, is very high. These are the people we are trying to protect.

We would like to reduce the number of cold calls that people receive purely by chance and do not listen to, but far too high a proportion of these cold calls are listened to because they are targeted on vulnerable individuals in our society.

[Lord Faulks (Con)]

My Lords, I join this debate relatively late and I hope the House will forgive my intervention. I speak from the position of having been a Minister in the Ministry of Justice. One of my tasks was to try to do something about cold calling and the frustrations and distress it can cause. The noble Lord, Lord Sharkey, was right to identify whiplash injuries and, more recently, the problem with holiday sickness. It is a scandal and one is acutely conscious that the vulnerable should be protected from this offensive practice.

My question to the Minister about the amendment is this: is this really the right body for this particular function? I note that the drafting by the noble Lord, Lord Sharkey, the skill of which I admire, tacitly acknowledges this by giving the body a consumer protection function which seems, on the face of it, rather beyond its original remit; albeit it includes a consumer protection function, I accept. Then there are the various stages which are included in Amendment 2 and the riders in Amendment 7. This is quite a cumbersome method of achieving what I think all the House will agree is a satisfactory aim, which is to prevent cold calling.

I understand that the Government are committed to doing something about cold calling. Various attempts have been made before and I acknowledge that they have not been as successful as they should have been, but this does not seem to be the obvious fit for such an initiative. Can the Minister satisfy me and the House that the Government intend to bring forward appropriate legislation if they believe, as I suspect they may, that this is not the right vehicle for that process?

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[Lord Kirkwood of Kirkhope]

My Lords, following that speech from the noble Baroness, Lady Altmann, I support these amendments. I want to reinforce something that my noble friend Lady Kramer said earlier. Language is very important in this context and the amendment addresses that perfectly. We have to be careful how we use language in terms of social security and social protection, above and beyond some of the specialisms familiar to some of the noble Lords who made powerful speeches on this amendment.

I want to add something to the definition of people in vulnerable circumstances. A couple of weeks ago, I was interested to read some remarks from Mr Frank Field, who as noble Lords will know is the chair of the departmental Select Committee covering the DWP. He said something that I recognised, which is new to me and him, about what we as a country are facing immediately and over the next two or three years, with the conjunction of interest rates, a freeze in benefits and other things, together with the administration of the ultimate safety net that now resides in some but not all local authorities after the abolition some years back of the Social Fund and community care grants. Frank Field characterised that as families falling out of stable situations into destitution, particularly in relation to three very normal things. Their electricity is being cut off; they are being evicted, because their rent is not being kept up, and there is the dimension of universal credit implementation in relation to that in the short term; and there is food poverty. In these three circumstances we are seeing for the first time in this country, certainly in my experience, these things coming together and ordinary families suddenly finding themselves falling out of financial security and stability.

We have nothing. The previous set of social security provisions always had a residual safety net. I am concerned now that that is absent, particularly in certain local authority areas. I hope that we can find some way to capture this, if not by this amendment then with something that captures the sense behind it. There is a timing issue here. Over the next two or three years, we need the Bill to pick up people who have faced the conjunction of circumstances that Frank Field described and embrace them. If it is not done by this amendment, it should be done by something else.

[Viscount Brookeborough]

My Lords, could I just look at one other aspect of vulnerability? It is looked on as being a disability of some kind, but vulnerability is also down to isolation, where one might live and being on the periphery. Look at banking in particular—the most basic place that somebody goes or would like to go for financial advice or help at first if they live out in the country. Look at the number of banks that are closing branches left, right and centre. Of course it is business, but we have to realise what is really going on there. They say that they have consulted and we had various banks, without naming them, which came in front of our committee and said, “We consulted before we closed”. But we did not find one instance where a bank had changed its mind because it had consulted. It is as simple as that. We have to look at it on those terms.

Actually, we had Nationwide. I must forgive it for a minute, because I rather liked it. Nationwide said, “We are opening some branches”—and it is being novel about it. It could be opening a branch with one man, who will sit in what could be an office or a caravan. He could be visiting a village or whatever. When the customer says to somebody he probably knows, “Bill, listen. What can you do? I need a loan or a mortgage”, he says, “Hold on”, and presses a button. Up comes Peter from the loans office who says, “Just sit down and we’ll have a chat about this”. He says, “Would you like some coffee?” and the guy says, “Yes please”—because he likes getting anything free that he can. He presses a button and the coffee arrives from next door. The whole thing is very homely. He says, “When I have this loan, what about a mortgage?”. He says, “I’ll bring in Charles on that and the three of us can talk about how it will work”.

Ultimately that is no different from what always used to happen—you went into your bank to the man you knew and he then took you into an office to see somebody else—but this is novel thinking. Banks will always worry about their business, but they should not necessarily be closing branches and we have to encourage them to be novel. The internet is there and the banks must watch out. I heard a comment the other day or saw it in the Financial Times. It was something about banks becoming vulnerable, because people might not keep their money there. The sooner the banks catch on to what is going on and come up with novel ideas, the sooner the vulnerable will not be as vulnerable as they appear at the moment.

I live on the border with the Republic, and we will talk about Brexit another time. The banks have literally all come back from the border. Societies in those villages are increasingly vulnerable. They are beginning to be scared. They have to drive 20 miles, so they had better have something good to talk to the bank about. They had better know exactly what they are doing before they go. A lot of them may be older people without the internet. Something like the Nationwide’s idea is the way we should be going. We must treat vulnerability not only as those who may be medically vulnerable but as vulnerable members of our society.

[Baroness Drake]

I will carry on the spirit of the contribution of the noble Lord, Lord Kirkwood. In Committee, several Peers ran several amendments trying to capture this issue of vulnerability—whether it was vulnerability because of a health shock or because of some standing reason. As the noble Baroness, Lady Finlay, explained in moving her amendment, the attraction of Amendment 11 is that it does not seek to list or define. It just tries to capture the principle that there is a category of people who become or who are vulnerable for a series of reasons, and they need to be addressed.

The purpose of the single financial guidance body is to achieve a series of improved public and individual outcomes by improving a person’s financial capability, but a person’s capability cannot be improved—it just cannot happen—if they are excluded from the market for financial services or denied the access or the means to make good decisions. As my noble friend Lord McKenzie and I frequently say, the fundamental, immutable requirement of financial capability is that you are included and have access. You cannot begin to become capable without it. One feels the sense around the Chamber, which I hope the Minister is able to find a way of recognising, of a wide concern and a very constructive amendment. It is not overprescriptive but allows the financial guidance body to recognise that it needs to address this problem.

Financial Guidance and Claims Bill [HL]

Viscount Brookeborough Excerpts

Committee: 1st sitting (Hansard): House of Lords
Wednesday 19th July 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, this amendment goes to the heart of the consumer experience of what we are trying to do in the Bill. The single financial guidance body aims to provide holistic help, guidance, information and education to the public on their financial issues. The public are understandably often confused about what constitutes help, guidance, information and education versus what is called “advice” in a regulated sense. There is confusion at the regulatory level about the word “advice”, which itself has fed through into the wording of the Bill.

I respectfully request that my noble friend the Minister carefully considers the perspective of the person coming to this single financial guidance body and expecting to receive a holistic service that will cover their financial circumstances, in particular the circumstances of somebody who has significant debts and is looking for assistance in managing those debts in the best way for them. In the past, without auto-enrolment, the issue would have much easier, which may be why we are in this position, because there would have been no expectation that somebody in significant debt could also be contributing to a pension scheme, and increasingly, that is likely to be the case. The Bill is very clear that when it comes to pensions, money and other finances, this body will only give guidance, but when it comes to debt the word used is advice, because that is the word that has been used always in the past.

I have been trying to understand the customer experience of someone who will be coming to this body. I am informed that if that person has large debts, and goes for what is called in this Bill “debt advice”, the adviser will not be able to advise them on whether or not they should opt out of their auto-enrolment workplace pension scheme. Naturally, they would want to know that, but they cannot have a recommendation from this service, even though it is called an advice service. The only advice they can get is restricted and narrowly focused on what to do about the debt. We immediately have a potential confusion set up for the customer. We have an opportunity in the Bill to start to remedy this, but so far we have not.

There are two important points. First, advisers at the Citizens Advice money advice service have told me that the words “debt advice” are often off-putting for those who are in debt. They do not like terms such as “advice” or “financial advice” for some reason. Furthermore, the regulated activity is actually called “counselling”, and the definition that the regulator uses for “debt counselling” says that it involves the several elements, including advice given,

“to a borrower about the liquidation of a debt due under a credit agreement”.

It is clearly narrowly focused on that. The regulatory instructions in the manual about debt counselling spend quite some time trying to unpick what would constitute advice and what would not, but in each case what would constitute advice is not what one would consider to be independent financial advice on someone’s whole financial circumstances. We are supposed to be setting up a holistic guidance body. I am entirely supportive of the aims of the Bill and am not trying in any way to undermine them—they are right. What I am asking noble Lords to consider is whether we can take this opportunity to change the wording in the Bill which says “debt advice” and to use “debt counselling” instead. From what I am told by the advisers, that would be better received by those who need help. It would also be less misleading to those who might think that somebody can help them with the pension decision when this is not the case. I beg to move.

[Viscount Brookeborough (CB)]

My Lords, I support this amendment. I was on the ad hoc Select Committee on Financial Exclusion, which produced the report Tackling Financial Exclusion: A Country that Works for Everyone. We spent a whole Session on it and we covered all these points. I suggest that those who have not looked at the report should do so, not only because I was on the committee but because it is quite concise. We went to places like Toynbee Hall and we saw people who were affected.

If I ask you for your advice, you can just tell me to do this and that, which is the point the noble Baroness is making. Advice may not be helpful, whereas counselling is a two-way thing. To invite people to counselling is not to invite them to take your advice—it is to invite them to discuss what they are willing to find out, and to give them options. It is not speaking to them, it is discussing and talking things through with them.

The word “debt”, which has been mentioned, is not always helpful. Debt is almost considered a crime, but it is not. In fact, very often government institutions and regulations cause people to go into debt—so in many cases the debt is not even their own fault. We must remember that the Bill is about people, the way they think and are approached, and we want to encourage them to take this counselling. We do not want to ask them why they are here and then say, “Here is my advice”. It should be about invitation and discussion. This is a very simple amendment and I support the change of words.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Viscount, Lord Brookeborough. I too served on the ad hoc committee and I was going to make exactly the same point. I was very struck by the visits the committee made to front-line staff; they are always impressive in terms of their commitment. They give of their time, mostly as volunteers, in various organisations and circumstances. There are always difficulties to contend with in terms of managing and assisting households to stick together—it is as serious as that. I support this amendment in the name of the noble Baroness, Lady Altmann. I trust her judgment; she has a lot of experience from a consumer point of view that this Committee would be ill advised not to consider seriously.

What is not to like about counselling? I do not see what the cost is. If there is a government communications programme to underline that, and the organisation is told that the tone and tactics it uses should be in that direction—if that is made crystal clear—it will be a serious service to assist the delivery of this important public function. Contrarywise, as the noble Baroness has said, if we do not take this opportunity, there is no way of rowing back. Should this Bill go on to the statute book with this inherent confusion, the damage will be done. This point is clear and has been well explained by the noble Baroness. It would not be safe for the Committee to pass by this amendment without careful consideration. I support it.

Financial Guidance and Claims Bill [HL]

Viscount Brookeborough Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 19th July 2017 Lords Chamber

[The Earl of Listowel]

My Lords, this group of amendments begins our discussion on the very important matter of financial education. Clause 2(7) reads:

“The strategic function is to support and co-ordinate the development of a national strategy to improve … the provision of financial education to children and young people”.


My amendment would add “care leavers” to that group.

I apologise to the Minister, to officials and to noble Lords for having tabled this amendment late. Sometimes I take a little too much on, and I apologise in particular to the officials. I appreciate that the Minister’s reply may have to be short and, if she wishes to write to me, I shall quite understand.

The main gist of my concern is to ensure that young people in care get the financial education they need. The Minister has just highlighted how important it is to get in early before the troubles arise, and I shall expand on that briefly.

I welcome the Children and Social Work Act, which was brought forward in the previous Session and clarified the duties of local authorities to both young people in care and care leavers. Peripheral to that, there is an ongoing review of personal advisers, looking at how well advised care leavers are on matters such as housing, employment, education and training. This is an opportunity to get reassurance that thinking about financial education will be fully integrated in that ongoing process.

Learning to manage finances is often a part of normal growing up. However, research by the Children’s Society in 2016 found that almost half of local authorities do not provide financial education for children leaving their care. It is well documented that care leavers are particularly at risk of falling into financial difficulty and in the absence of a strong support network, the move to independence and the associated shocks and stresses can mean that the risk of debt can be very high. On average, children leave home at the age of 24 in this country, so care leavers have both the disadvantage of early trauma and are leaving and becoming independent much earlier than most of our children.

I urge the Minister to ensure that guidance to support the development of local authorities and others regarding care leavers in their area should include the commitment to provide high-quality financial education prior to young people leaving care.

Will the Minister join with me in welcoming the encouraging news that almost 30 local authorities—I believe it is 27—across England have taken the decision to exempt care leavers from council tax? That can be a particularly large bill and difficult debt for these young people up until the age of 25. Many local authorities which have a duty to care for these young people when they find themselves in difficult situations, are vigorously pursuing them to pay their council tax debt. That cannot be right and it is good that so many local authorities recognise it and I hope that many more will, too. I hope the Minister will encourage them in their efforts tonight.

I look forward to the Minister’s reply. I beg to move.

[Viscount Brookeborough (CB)]

My Lords, I welcome these amendments because they attract attention to the subject of education, which, in our report on financial exclusion, was a major part. The top of Clause 2(7) states:

“The strategic function is to support and co-ordinate the development”.


It does not appear to have a lot of force behind it. Anything that we can do for care leavers, or anyone else, is most welcome, but one has to go back a stage and ask about the perfectly normal schooling that goes on: is the education actually occurring and, no matter what we write here, will it happen?

We wrote in our report:

“When considering provision in English secondary schools it is also important to note that the national curriculum”—


to which financial education was added in 2014—

“applies only to maintained schools (those run by local authorities) and not to academies, free schools and the independent sector”.

That has resulted in there being still no requirement for English primary schools to include financial education as part of their teaching. In addition, as only 35% of state-funded secondary schools are now maintained schools, the obligation to teach financial education does not apply at all to nearly two-thirds of all secondary schools. Therefore, there was a big hole in this from the start. No matter what we say in these clauses to attract attention to all parts of schooling, the basic financial education is not taking place, as the noble Earl said.

From the point of view of our report, the one thing I could never understand is that we are talking about financial education throughout people’s lives, and the only time we have the total population—in this case of England—within our control and have their attention is at school. If we do not have compulsory financial education of some kind in school, when things go wrong later we do not know where we are trying to pick them up from.

When we raised this subject, the question of teacher time arose. We also heard the comment that teachers were not qualified to teach financial education. However, at the moment we have no financial education and anybody must be qualified to teach children—we all had money boxes—to save a bit, to add it up, to save it for the weekend, even if it is done with sweets or whatever. They complicate this by saying, “How can teachers be capable of teaching children about pensions and so on?”. We are not getting to the point of teaching them about things like that in the first place, and surely there must be a simple level playing field by the time everybody leaves school, or they are permitted to leave at the earliest age of 15. By that time all young people should have been given a very basic financial education: how to save money, where to put it, what a bank is for and so on. I do not believe that not being able to teach them about investing in the stock market or pensions is the crucial point.

As I understand it, a comment made in the Youth Parliament, made up of young people who have left school and are ready to go to university, showed that one of their highest priorities was that they had not been given any financial education. These are life skills. All education, whether it is in physics, chemistry or geography, is part of a young person’s education and is for a job, but financial education is a basic skill and the lack of it is the cause of so many social problems in our country. Why can we not ensure a level of financial skill when young people leave school so that anybody picking them up later on knows that they have only to go back so far? Instead, we have some young people with a little knowledge and many with none. So I totally support these amendments for drawing attention to the issue, but I am afraid that we have to go back one stage further. We have to do something about this because once young people have left school, we no longer have the audience and we wait for them to appear in debt, homeless and everything else. For those reasons, I certainly support the amendment.