Oral Answers to Questions

Ann McKechin Excerpts

Thursday 20th December 2012 Commons Chamber

The Secretary of State was asked—

[Ann McKechin (Glasgow North) (Lab)]

1. What assessment he has made of the effect of payday lenders in areas of social deprivation.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The Government are not aware of any robust research that quantifies the effect of payday loans on areas of social deprivation, but I expect that there are links. We are very concerned about the findings of the interim report from the Office of Fair Trading’s payday compliance review and strongly support any enforcement action that the OFT takes. Payday lending can work for some people in some circumstances, but it is not a solution to long-term financial difficulty.

[Ann McKechin]

Scotcash, which represents many vulnerable families in Glasgow, has brought to my attention a payday loan agreement in which the APR is a staggering 7,200,000%. Given that Which? has indicated that more than 48% of those who take out payday loans believe that they will not be able to repay them, is it not now time for the Minister to commit to firm statutory regulation in 2013 rather than relying on wishy-washy voluntary codes?

[Jo Swinson]

The hon. Lady raises two specific issues in her question. Although there is concern about high interest rates, just as when someone hires a car for three days they do not look at the annual cost of doing so, with short-term credit the APR is not necessarily the most relevant statistic. The hon. Lady’s second point was on affordability assessments and the detrimental effect of people being lent money they should not be lent when debt advice would be much more appropriate. That is a significant concern. The Government are considering the OFT’s review and the OFT is already taking action—it has opened formal investigations into several payday lenders. We expect the final report early in the new year and the Government are committed to ensuring that we take action on this issue.

--- Later in debate ---

[Mr Willetts]

We got an excellent outcome from the European Space Agency ministerial last month. Britain is now the leader of the ARTES 2 programme for the development of the next generation telecommunications platform. It is great to see British businesses taking a lead here, and this will increase broadband speeds and reduce costs for UK users in rural and remote areas, making satellite broadband even more accessible.

[Ann McKechin (Glasgow North) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

My Department plays a key role in supporting the rebalancing of the economy through business, to deliver growth while increasing skills and learning.

[Ann McKechin]

Given the acknowledged need to get finance quickly to the SME sector, does the Secretary of State share my concern that the British business bank will not be fully operational until the autumn of 2014? Given that private sector models such as Aldermore have been up and running to a much quicker timescale, can he give an assurance that he will try to speed the process along at his end?

[Vince Cable]

The business bank has already been established, and it will be up and running next year. Of course, the full clearance of European state aid, which is a necessary formality for certain kinds of lending, will take longer. I acknowledge the role of Aldermore and other banks, such as Metro and Handelsbanken, which is very important. This bank will complement and support them.