Not-for-profit Advice Sector

Debate between Andrew Percy and Yvonne Fovargue

Tuesday 6th March 2012 Westminster Hall

[Yvonne Fovargue]

I agree. The effect on people using the services, who are disproportionately on a low income, will be devastating. Individuals will not appeal, which will end up costing the state more—hon. Members should remember that they have been unlawfully denied benefit—or may take the case themselves and be unable to present the evidence effectively or provide the right sort of evidence, or will end up at their Member of Parliament’s surgeries. I think all hon. Members will admit that we are not legal experts. However, there will be nowhere else for us to refer such people. I recommend to the Minister a report produced by the Young Legal Aid Lawyers, which demonstrates how much MPs rely on their local advice centres.

[Andrew Percy (Brigg and Goole) (Con)]

Will the hon. Lady give way?

[Yvonne Fovargue]

I need to make a tiny bit of progress, but I will later.

So far we have talked only about welfare benefits. Debt clients will lose access to early advice, giving the perverse result that they may be sent away and told, “If you get into more debt and are at risk of losing your home, we might be able to see you.” Clients who are unlawfully dismissed from employment will have nowhere to go and will end up claiming benefits.

This loss of specialist provision has great implications for the future. The experience of specialists will be lost, not just for this generation, but to future generations, because they are training other advisers—often volunteers—but will be unable to pass on their experience because they will not be there within the agency.

I remind the Minister of the cost of cases. A case such as Sharon’s, which has benefited her, cost £148. That is how much a welfare benefits case costs. A debt case costs £180 and a housing case costs £160. What are the knock-on costs to the other agencies of removing this small amount of funding?

The Minister has said many times that he disagrees with the King’s College and CAB figures on the savings made to the state by keeping such matters in scope. What is his estimate? Has any estimate been made by the Government of the knock-on costs of removing specialist work from legal aid?

The real tragedy, as my hon. Friend the Member for Clwyd South (Susan Elan Jones) mentioned, could be the loss of whole agencies. Often, large agencies have done the right thing and diversified their funding and contracted with the Legal Services Commission. The services provided by the Manchester community legal advice service were jointly commissioned by the local authority and the LSC in October 2010. A three-year contract was awarded until October 2013, with the possibility of two more years if the targets were hit—and they have been. Some £1.2 million of legal aid funding will be directly lost by that service and that is likely to have knock-on costs of another £800,000 leading to more than £2 million being lost from that service. In addition, 34 specialist advisers will be lost and 97% of the specialist services throughout Manchester will go. Contracts have been signed for premises and other essentials, predicated on the three-year contract that was given to the service. Cuts pose a risk to the continuation of the whole CAB and community legal advice service in the city of Manchester.

In effect, Manchester could become a desert in terms of face-to-face advice. Who in the city will be affected by that? The majority of the clients, as my hon. Friend the Member for Clwyd South said, are on low incomes, or have a disability, or are black and minority ethnic. They experience higher than average rates of unemployment, debt and homelessness. These are the people that the cuts will affect—not fat cat lawyers. Will the Minister please comment on the future of the community legal advice services, whose staff signed contracts in good faith and now find that those contracts are being reneged on? That is just one example.

When this matter is spoken about in the main Chamber there are many fine words from all parties, but as a feisty volunteer said to the mayor when he spoke about the CAB in respect of a funding cut, “Fine words butter no parsnips. Let’s see the colour of your money.” That is what we need.

We may talk about the transition fund—£20 million given for advice agencies—but transition, to me, means moving on. I cannot see where advice agencies are going to move to, to get specialist funding. I feel that a lot of them will be transitioning into oblivion.

Welfare Reform Bill

Debate between Andrew Percy and Yvonne Fovargue

Wednesday 1st February 2012 Commons Chamber

[Andrew Percy]

I am quite relieved that the Minister did not give us an estimate of the costs, because most Government estimates of costs tend not to be correct anyway. The hon. Gentleman has made his point, however, and it has also been made by Members on this side of the House. I welcome what the Minister has said about the £20 charge; it proves that he has listened.

[Yvonne Fovargue]

I accept the hon. Gentleman’s welcome of the reduction in the charge, but does he agree that the proposed collection charges do not seem logical? It is difficult to see the logic in making a family in need of child maintenance pay the cost incurred by the non-resident parent’s resistance to paying that maintenance.

[Andrew Percy]

That is exactly where I am coming from on this issue; I agree with the hon. Lady.

In closing my comments on this amendment, I will quote Lord Mackay, who said in the other place:

“The motivation of the Government for these charges is said to be trying to bring people to voluntary arrangement. I am entirely in favour of that.”

I would be, too. He continued:

“But if that proves impossible, when the woman is at the stage of having nothing more that she can do, she has to pay. What does that do? If anything, it might make her not go to the Child Support Agency”.—[Official Report, House of Lords, 25 January 2012; Vol. 734, c. 1092.]

Finance (No. 3) Bill

Debate between Andrew Percy and Yvonne Fovargue

Monday 4th July 2011 Commons Chamber

[Andrew Percy]

Of course that is what we all want to see, but we await the response of the Minister. At one point, some Opposition Members seemed to be saying that the Government were going to announce something at the Liberal Democrat conference, suggesting that it would no doubt be a well attended—I will not be going —and joyous occasion. Indeed, the hon. Member for Walthamstow seemed to suggest that the Government already had a solution that they were about to announce in October, so we all look forward to hearing what they have to say.

To end where I began, this is a hugely important issue for a lot of my constituents, as it is for constituents up and down the country, and it is time that we did something about it. It is appalling that people end up on a conveyor belt and seem unable to get off it. I therefore look forward to the Minister’s response, and I genuinely hope that we have some action soon, in the interests of all our constituents.

[Yvonne Fovargue]

At any one time there are 5 million to 7 million people in this country who are unbanked or who do not have a credit history. In the main, they are the people who turn to high-cost lenders, because they do not have a credit history and they have nowhere else to go. Personal debt is rising, with 46% struggling until pay day, up 8% this year. Again, they are the people turning to the payday lenders.

I take issue with the claim that the rate has grown in the last decade. When I started in the advice field 20 years ago, there was one high-cost lender, Provident, which targeted a specific market. Provident went round the estates, using neighbours and talking to people. The company would go in—here I also take issue with the claim that people use the money on luxuries—and find people who needed to replace their broken cooker. The neighbour would come in, look at the cooker and say, “Oh yes, I can lend you that money.” When the loan was nearly repaid, Provident would come back and say, “Tell you what, your sofa’s looking a bit shabby. It won’t cost you much more to get a sofa,” and people would get trapped in a cycle of debt. However, in one respect, Provident was reasonably easy to deal with, because there was one company with a specific target group. It was possible to go round and talk to individuals, target schools and visit the residents groups that the people concerned attended. It is much more difficult now. The explosion of advertising and the normalisation of the process have made it so much more difficult to control the market and tell people what the dangers are.

I had a constituent come to me in February, as soon as he realised my interest in the subject. He could not quite manage to the end of the month—I think his car tax was due—and he had taken out a payday loan. The company immediately took the payment and the interest out of his bank account the next month. He realised that he could not get to the end of that month either, so he took out another payday loan. That carried on and in the end he had 10 payday loans and all his salary was being taken from his bank account. That was a man who was working. Such companies are supposed to check that people can afford to pay the money back and that they do not have other credit, but that did not happen in this case. For such companies, self-regulation absolutely is not working. That company was not an illegal loan shark: it was a legal company and it did not threaten to break the man’s legs, but it left him in a cycle of stress and depression that he found very hard to get out of.

I am also concerned about the double whammy that these companies are operating, as many of the companies that put people into debt are opening debt-management arms to get people out of debt as well. When the financial inclusion fund was finishing last year, those companies were circling like sharks. I cannot tell hon. Members how many companies contacted me basically gloating and saying, “There will be no, or very limited, free debt advice, so people will have to turn to us and you will have to deal with us now.”

I welcome the Money Advice Service because any advice on budgeting is welcome, but that service does not replace face-to-face debt advice. There is a need for that kind of service to be available—and more freely available than it is now. People have what I call behind-the-clock syndrome. They get into debt and cannot face opening the letter about their debt so they put it behind the clock. When they get the next letter, that also goes behind the clock. I cannot tell hon. Members the number of people who used to come into the bureau with a carrier bag whom I would look at and think, “They are in debt”. They would have a carrier bag full of letters that they could not face opening. People are not going to deal with a telephone or online service if they cannot even open a letter. There is a need for free, impartial, face-to-face debt advice and for regulation of debt management companies. Self-regulation is not working. It did not work in America, and when America regulated, those companies started coming over here because they like what they see.