Consumer Rights Bill

Anne Main Excerpts

Tuesday 13th May 2014 Commons Chamber

[Damian Hinds]

Clearly, I was not saying that. I was asking the hon. Lady whether she wanted to comment on the growth of home credit and rent to own. We have had many opportunities in this House to discuss a cap on the cost of credit, and she and I—and she and many other Members—have had an opportunity to discuss some of the practical aspects. There will now be a cap on the total cost of credit, but that is not to say that the definition of that is without difficulties. It remains a tricky thing to do. All of us, including her, who take a close interest in these issues know that there is no single silver bullet solution that solves any of these market problems. We need regulation, empowerment for consumers, financial education and sensible alternatives. This House is at its best when we are discussing what those practical approaches might be, and I welcome the new clauses, which allow us to talk about those very things. I have an awful lot of sympathy for the sentiment behind new clause 11, which was put forward by the hon. Member for Makerfield, and for what is behind new clauses 7 and 9, but we must be wary about seemingly straightforward legislative solutions that may not deliver all they purport to.

We always talk in the plural when we refer to rent-to-own companies, but in reality there is one really big company. There is a problem with the pricing and marketing of these companies. I have recently been added to the BrightHouse e-mail marketing list. I do not know what I have done to deserve that honour—I am not sure whether I should take it as a compliment—but I am now bombarded with messages saying how easy it is to pay weekly, and it is those messages that go to the heart of the problem. To be fair, the slightly misleading approach that we are talking about does not necessarily apply just to rent-to-own companies. We could say that it applies to every pay-monthly mobile phone contract, through which we not only pay for our calls but finance the phone, but it is never advertised how much is for the phone and how much for the calls. We always see it as one all-together monthly amount.

[Mrs Anne Main (St Albans) (Con)]

My hon. Friend is making very measured comments. It is true that no one party has a handle on debt in this debate. Many of us are concerned about the matter. Does he agree that companies such as Emmaus in my constituency have helped to ensure that people do not have to take on ridiculous payback terms, by enabling them to access good refurbished second-hand goods free of charge if their circumstances allow? I pay tribute to companies such as Emmaus that have helped many people in difficulty who need goods.

[Damian Hinds]

I am not familiar with Emmaus, but I am sure that it is an admirable organisation. I can mention Furniture Helpline in my constituency, and there are many others throughout the country.

[Damian Hinds]

The hon. Gentleman is absolutely right. [Interruption.] My hon. Friend the Member for St Albans (Mrs Main), who is sitting next to me, mentions catalogues: catalogue credit has worked on that basis for a long time, stressing the weekly repayment amount. There is also an ability to shift the amount that is apparently the cost of the product and how much is paid for the financing—in the case of catalogues, that is often zero, but the base price is inflated to allow for that.

My worry about the approach in the new clause tabled by the hon. Member for Makerfield is that I do not know how we would make the price comparator work. She made an important point about product numbers. As electronic comparison capability increases, it will be important to be able to make a direct like-for-like comparison, and adding an extra letter to a product number to make such comparison impossible should certainly be cracked down on.

[Mrs Main]

My hon. Friend is absolutely right. Many of the goods that are advertised are often own-label brands, and that makes it very hard for consumers to make a direct like-for-like comparison with another branded good.

[Damian Hinds]

It is difficult, but if we are talking about a big plasma TV or a washing machine, equivalent products and other brands are also available. The basic problem, however, is not that the information is not available, because the idea that people do not have the ability to make such comparisons becomes less and less true every month, with smartphones and so on. The difficulty relates to money advice, and encouraging and prompting people to make the comparison. We do not solve that problem by adding small-print text about the total cost, the annual percentage rate, the total cost of credit, the reminder that “your house may be at risk”, blah, blah, blah. All those things do not solve the problem of how we encourage people to make that comparison and do the analysis to ensure that they are not worse off than they need to be.

That leads me on to new clause 6 and the so-called

“annual report on the level at which a levy on lenders in the high cost consumer credit market should be set”.

There is a levy that applies to lenders, so I assume that the requirement for a report is a device to call for something that might be in place anyway. Debt advice is also provided. We could argue that, at the high-cost end of sub-prime, such lenders should make a greater contribution, because of the detriment associated with them, but that does not require primary legislation.

The new clause would also have the Government make provision for affordable credit to be available through credit unions. I would argue strongly that the Government have brought and are bringing forward measures to ensure that affordable credit is available to vulnerable customers through credit unions. Through the credit union expansion project, tens of millions of pounds are being made available to modernise and upgrade the sector. Through regulatory reform—the passing, finally, of the legislative reform order—the increase in the monthly interest rate cap from 2% to 3% makes competition with high-cost, short-term lenders a little more possible. Also, as we were discussing, the cap on the interest charged in the commercial sector will at least help to slow the apparently inexorable rise of that sector. There are also things that the social lending sector must do. It has to step up to the plate on its marketing, branding and consistency of product offer. There will have to be consolidation in the sector to provide the services that people want.

I do not know whether the idea behind new clause 6 in the mind of the hon. Member for Walthamstow came from the recent IPPR report, on which she commented, which suggested that a one-off levy on high-cost lenders would facilitate a great expansion in the social lending sector.

[Mrs Main]

Will my hon. Friend speak a little more slowly? The hon. Member for Walthamstow (Stella Creasy), on the Opposition Front Bench, is having trouble tweeting. She is trying to provide a running commentary on his speech and perhaps if he went a little more slowly she would catch up.

[Damian Hinds]

I will always follow the hon. Member for Walthamstow, so I shall pay great attention to what she has tweeted after the debate.

I have a lot of sympathy with any measures proposed to help support the growth of the credit union sector. A lot of things in the IPPR report are welcome and positive, such as the idea of having credit unions in post offices, Church of England facilities and so on, but with respect to all concerned I would say that those are hardly first-time-out occurrences of the proposals. A back-stop reclaim facility, through the benefit system, could also have some benefits.

However, the idea—this is the main point—that some huge one-off capitalisation of credit unions would help to facilitate their growth, is not right. Under the previous Government, we had the growth fund, and I am not here to diss that. It was a well-intentioned initiative and will have done a lot of good. Such things are also eroded over time, however, and by definition if one has a big one-off capitalisation one ends up having to address a slightly more costly part of the market, which contributes to that erosion. What we need to do to help support and facilitate the growth of credit unions is what this Government are doing. We are trying to get them on to a sustainable footing with modernised systems, working collaboratively together to get the marketing and branding right so that the sector does not need a subsidy for ever but reaches a scale at which it can address more and more consumers, meaning that fewer and fewer consumers need or want to access the types of lenders we have been discussing today.

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On new clause 11, let me be clear that the Government completely share Members’ concern about the risk of consumer detriment in the consumer credit market. There is clear evidence that there may be problems. The rules that were put in place by the FCA from 1 April this year were made with the stated aims of ensuring that firms lend only to borrowers who can afford it, and increasing borrowers’ awareness of the costs and risks of borrowing unaffordably and of ways to get help if they have financial difficulties.

[Mrs Main]

Does the Minister think there is any merit in making people aware, potentially at school age, of exactly what they can afford and how they can manage their personal finances? People often get themselves into a mess before they approach some of these loan sharks and high-interest places. It might be good if we started this off at an earlier age.

[Jenny Willott]

The hon. Lady makes an extremely important point. There are some really good schemes in schools across the country, but provision can be a bit patchy. I have worked in schools in my constituency that are doing exactly that. Such matters can be extremely complex for people to understand, and learning about them as part of the school curriculum before they get into debt can be extremely helpful.

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[Stella Creasy]

We have had an interesting debate. I acknowledge that there is interest in this issue, as well as experience and expertise, on both sides of the House, which has been reflected in most of the speeches. I pay particular tribute to my hon. Friend the Member for Makerfield (Yvonne Fovargue) who, for all of us, is a touchstone on issues involving the consumer credit market.

I put on the record my support for the work of the hon. Member for East Hampshire (Damian Hinds) on the credit union movement. However, I must say that I brook no argument from him when Government Members have had three chances—not one, not two, but three chances, or an almost biblical opportunity—to deal with payday lending and the cost of credit, but voted against it.

In 140 characters, the hon. Member for St Albans (Mrs Main), like Shelley’s grandmother, shed much heat but not a lot of light on what Government Members will do about the issues that are to come. Our new clauses are about the new forms of legal loan sharking and the new nightmares experienced by many of our constituents. The hon. Lady is making a tapping noise. Is that her calculating the amount of money people have to pay out to the debt management and logbook loan companies?

[Mrs Main]

The hon. Lady is doing herself a disservice. We are not point scoring. Many Government Members have concerns about debt. The tapping noise I was making refers to the fact that she seems unable to listen to comments from Government Members, and just tweets her own self-promotion endlessly.

[Stella Creasy]

The hon. Lady may be horrified about letting the public know what she and Government Members have been saying, but we are not. Government Members may be confident in their commitment to the idea that they are somehow tackling the cost of living, but when it comes to opportunities to make progress on such things as logbook loans or debt management fees, they have nothing to say and they should rightly be held to account not just in the House, but online. She would do well to reflect on such matters.

I want to move on to what hon. Members have mentioned in the debate, but may I tell my hon. Friend the Member for East Lothian (Fiona O’Donnell) that I consider us to be master and apprentice in our dress today? She pointed out that the Government seem to have a problem with the doors when it comes to voting the right way on consumer credit matters.

Let me pay tribute to the Minister and the members of the Sharkstoppers campaign. To hear a Minister in this Government talking about the action that they will take on payday lending is a tribute to the work of all those campaigners across the country. I want to give her the benefit of the doubt when she says that this Government want to make payday lenders pay their fair share. She was extremely honest about the fact that she has no idea how much money payday lenders will contribute to the cost of providing debt advice. We want to return to the issue in the Lords once we get that information, but we are happy to wait for the Minister to come back with the sums, to show that payday lenders are paying their fair share. We are pleased that the Financial Conduct Authority is looking at the outrageous practice of charging people in debt with debt management fees, and we will wait to see what the Government bring forward, and consider these issues again in the Lords in terms of whether fees should be abolished outright.

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[Stella Creasy]

The new clauses and amendments are designed to make progress on issues of precisely that kind. One of the problems of ticket touting is trying to identify who is responsible for the crime that is taking place. Making the seller of the ticket give the details of that ticket will enable us to identify its provenance and who is selling it. We shall then be able to crack down on the people involved, whether it involves the rugby world cup or another event, so that organisations will not have their tickets sold on when they do not wish that to happen. It will give that kind of flexibility, and it reflects the all-party group work done on some of these issues. I hope there will be support from across the House.

[Mrs Main]

rose—

[Stella Creasy]

If the hon. Lady wants to suggest some tweets, I will happily take them, but I am sure everyone will appreciate it if we can move on to the question of letting fees.

[Mrs Main]

I am sorry that the hon. Lady is being so waspish; I am just seeking a bit of clarification. She mentioned the crime of ticket touting. Is she proposing to make it a crime, or does she believe it is a crime?

[Stella Creasy]

There are already criminal elements to what we are talking about. What we are talking about in this legislation is the information provided to a consumer—this is, after all, a consumer rights Bill—that could help address the problems caused by ticket touting, and it reflects the work being done by the all-party group. [Interruption.] Well, this is a separate issue about what we can do for consumers, and with that in mind I want to move on to new clause 22 because, as I have said, there is a lucky dip element to the amendments before us and it is about letting fees.

I pay tribute to the work done in this area by my colleague my hon. Friend the Member for Wolverhampton North East. I see first hand in my constituency the problems caused by increasingly difficult access to housing and affordable housing, particularly within the private rented sector. We know that 9 million people in England are living in rented homes and they are paying on average over £1,000 more a year in rent than they did in 2010. That is why we have to reform the private rented sector. The costs that people are facing are unsustainable. I have families in my constituency spending between 60% and 70% of their monthly income on rent alone. They cannot make ends meet.

There is a wider debate to be had about the length of tenancies and the levels of rent, but this amendment, like the previous amendments I was speaking to, relates to consumer legislation, and in particular the specific issue of fees and whether they should be charged.

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[Mark Durkan]

The other point the Government make is that this will be the subject of a European directive in a couple of years’ time. I would only make the point that we should not have to wait for a European directive, and that it would be better if a meaningful European directive were transposed through existing legislation. New clause 15 would provide exactly those powers and that legislation.

[Mrs Main]

I would like to speak to new clauses 13 and 22, and make a small reference to new clauses 18 to 21.

New clause 13 was explained so eloquently by my hon. Friend the Member for Shipley (Philip Davies) as being a matter of consumer choice. I have a huge degree of sympathy with that, but I will explain why I cannot support him today. We should all know exactly what we are eating. We should have a good deal of information about how animals have lived and died. I have major concerns that Europe does not have the same high standards of animal welfare that we have in this country, yet we import meat from those animals that have been raised with living standards we do not find acceptable and have outlawed, such as farrowing pens for pigs.

Briefing from the Eurogroup for Animals, published in 2011, gives some interesting information about European standards of animal husbandry and, indeed, animal slaughter—much of the meat involved enters our own food chain—and makes it clear that many of us should be very concerned about those issues. That organisation opposes the slaughter of all animals without their being stunned beforehand. The briefing states:

“In 2010, the European Commission requested from Member States official data regarding numbers of animals ritually slaughtered within their territory.”

Unfortunately, there was a real lack of data. According to the briefing,

“most of the countries do not have reliable figures available as no traceability exists to differentiate between animals”

when it comes to how they have been slaughtered. Of course, I am concerned about how they have lived as well. There is also a significant over-slaughtering of animals for halal and kosher meat within the food chain to allow for the amount of demand that might arise in countries that import such meat, which means that there is no way of showing what happens to animals that have been killed in that way and where they end up in the food chain.

This is indeed a labelling issue, but I must say to my hon. Friend the Member for Shipley that, according to some of the information that has been gleaned through the examination of people who do not wish animals to be killed without being stunned, it is almost impossible to trace the meat involved, and that without Europe-wide traceability, his proposal will be totally unenforceable. I appreciate that many consumers would like to know how the animals were treated, where and in what conditions they were raised, the extent of the confinement in which they were placed, and how they were slaughtered. While I agree with my hon. Friend’s sentiments—I, too, believe that consumers should know exactly what they are purchasing—I therefore cannot support his new clause.

Let me now say something about the tenancy issues that have been raised. I quote my hon. Friend the Member for Shipley a great deal, because he talks a lot of good sense, and his heart is often in the right place. However, I believe that if we put all the onus on landlords when it comes to any fees associated with the checking of tenants—they often have to be checked now because of the rules on residency, which govern whether they have the right to rent in this country—those fees will go into the chain, and other ways will be found to put up rents. I cannot believe that the Labour party wants that to happen.

A small letting agency in St Albans, which contacted me about the Labour party’s proposal, is deeply unhappy about it. Given that the agency provides a service enabling people to go into its office, choose from the properties that are advertised, be shown round and so on, why should a fee not be incurred for the benefit that the potential tenant enjoys? The landlord may enjoy a different benefit in the form of the checking of the tenants; the benefits are not always exactly the same.

I suggest that the Government should be extremely cautious before accepting any blandishments from the Labour party, which constantly tries to impose all the cost on businesses. We, as consumers, also want a degree of protection.

[Emma Reynolds (Wolverhampton North East) (Lab)]

rose—

[Mrs Main]

I am afraid that this is a very short debate.

Part of those fees go towards ensuring that there is a market for people who want a good choice of tenanted properties that they can go and look at.

Let me now add my few words to the extensive debate about tickets. The hon. Member for Washington and Sunderland West (Mrs Hodgson) made a very good point about touts who would potentially sell tickets back. That is a flaw, but I have a huge amount of sympathy with those who have bought a ticket that cannot be used for some reason. I do not see how it can be wrong to sell that ticket on, as I might sell on anything else that I might have purchased. My hon. Friend the Member for Shipley made the valid point that if a major company selling tickets en bloc wants to try to stop the practice, it should be working with the Government for that purpose.

I do not wish us to outlaw the selling on of tickets that people may have purchased quite rightfully and of which they then wish to dispose. I feel that that would creep into other areas and start applying to people who buy the latest thing from Kate Moss At Topshop, the latest pair of trainers or the latest toy, and then choose to sell it on. I think that that is a slippery slope, and I do not wish to go down it.

[Several hon. Members]

rose—