High Cost Credit Bill
Debate between Baroness Keeley and Jacob Rees-Mogg
Jacob Rees-Mogg (North East Somerset) (Con)
I begin by referring hon. Members to my declaration in the Register of Members’ Financial Interests—not, I am glad to say, because I am a payday lender, but because I am regulated by the Financial Conduct Authority and am therefore involved in something that is relevant in the broadest sense.
It is always a great pleasure to follow the hon. Member for North Durham (Mr Jones), who is one of the most gripping speakers in this House. I am glad that he always speaks at sufficient length that his thoughts can be developed, which is invariably helpful to the deliberation on Bills. I was glad, too, that we agreed on the one point about Parliament regulating things rather than handing them out to random bodies. There is, however, one thing on which we disagree—his conclusion. I am going to say quite straightforwardly that I oppose this Bill. I congratulate the hon. Member for Sheffield Central (Paul Blomfield) on introducing it, but I do not think it is the right answer to the problem. There are different answers to it, some of which I shall try to cover.
Let me start, however, by placing the problem in its historical context. The issue of usury, as the hon. Member for Foyle (Mark Durkan) rightly called it, is one that goes back to the most ancient times. The Hittites, the Egyptians and the Phoenicians were all lending each other food, substances, bits and pieces and getting them back. It is always a pleasure to mention the Phoenicians because it is believed that Joseph of Arimathea brought Jesus himself to Somerset on a Phoenician trading vessel. It was quite near Bristol, so we never know whether our lord might have gone there, too. This is the ancient history of usury: it is almost as old a profession as the oldest profession; it is part of human nature to lend things and have them returned at interest.
Usury is an issue that has troubled theologians over the years. The Old Testament includes particularly strong statements against it. I shall quote only one, the first one from Exodus 22:25:
“If thou lend money to any of My people, even to the poor with thee, thou shalt not be to him as a creditor; neither shall ye lay upon him interest.”
Even in the Book of Exodus, limits are being set on the amount that may be charged on the repayment that is to come.
Barbara Keeley
Is the hon. Gentleman going to move on to the example of Jesus throwing the moneylenders out of the temple of Jerusalem?
Jacob Rees-Mogg
Perhaps the hon. Lady refers to:
“You have made my Father’s house a den of thieves”.
I was not going to quote that because I thought it was so well known that it would be unnecessary to trouble the House with it. Interestingly, however, the money changers in the temple were changing ordinary Roman coinage into the special coinage used in the temple for buying sacrifices and so forth, and making a very healthy return on that. I am not quite sure that it is the same as usury, which is another reason why I was not going to mention that precise example. However, it is interesting that these issues have come up over the years.
The councils of the Church have considered the matter. At the council of Nicaea, the Church council that set out the Creed also decided that the clergy may not lend money at interest, and that interest may not be charged above a rate of 1% a month. The same issues were being discussed then—the rate of interest being charged and who may be involved in the process. The rather splendid Pope Sixtus V—I rather like somebody called Sixtus V; there seems to be some incongruity in it—said that charging interest was
“detestable to God and man, damned by the sacred canons and contrary to Christian charity.”
We see that these issues have been problematic for not just hundreds but thousands of years. They have been debated by theologians and looked at by economists.
The fundamental point is that there are people who have money to lend and people who want to borrow, and bringing the two together, when done in a suitable way, is beneficial to both sides. It makes it possible for people to spread payments, make investments and order their lives in a way that is convenient to them, and at the same time it makes a profit for the person on the other side of the transaction, who has excess capital to lend out. However, with that come difficulties and problems that Governments have sought to solve over generations.
At this point, I think it is relevant to quote the introduction to Henry VIII’s Act against usury, which shows the context of the problem. It states:
“Where before this Time divers and sundry Acts, Statutes and Laws have been ordained, had and made within this Realm, for the avoiding and Punishment of Usury, being a Thing unlawful, and of other corrupt Bargains Shifts and Chevisances, which Acts Statutes and Laws been so obscure and dark in Sentences, Words and Terms, and upon the same so many Doubts Ambiguities and Questions have risen and grown, and the same Acts Statutes and Laws been of so little Force or Effect, that by reason thereof little or no Punishment hath ensued to the Offenders of the same, but rather hath encouraged them to use the same.”
That, I fear, is why, in the end, I am not going to support the Bill. What happens is that Parliament legislates to rectify a problem but finds that what it legislates does not actually do that. Henry VIII’s Act was repealed within six years. It was against usury and also set a maximum rate on mortgages of 10% per annum. However, it did not work, because there are always people needing to borrow money and people willing to lend it to them. The question is how that is done, at what stage in the process and who is involved.
Having a source of borrowing within a regulated business system is preferable to loan sharks, who have been mentioned. We hear about “legal loan sharks”, and they may become illegal in some of their practices, but as far as I am aware Wonga, however bad a company it is, does not send people round with baseball bats. There seems to be a fundamental problem in legislating in a way that will push people in difficulties in that direction.