Independent Debt Advice

Baroness Burt of Solihull Excerpts

Tuesday 8th February 2011 Westminster Hall

[Lorely Burt (Solihull) (LD)]

I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing this very important debate. To some extent, it follows on from the Opposition-day debate that we had in the main Chamber last week.

Obviously, everyone in this room wants to see the same thing. We want to see a fair and open system of financial support for people who get themselves into financial difficulty. I know personally that the National Association of Citizens Advice Bureaux is a wonderful organisation. It took on the role of providing specialist debt management advice and it has done a really good job, so I share the hon. Lady’s concern regarding the financial inclusion fund.

Local authority cuts will mean that the citizens advice bureaux will not have as much support as they have had. That is having a drastic effect in my own region, the west midlands, where all five bureaux are destined to be closed. I hope very much that the Minister will be able to intervene in some way to ensure that that vital service for the Birmingham area is maintained. In Solihull, we have faced cuts to our citizens advice bureaux before and we have managed to survive them.

[Ian Austin (Dudley North) (Lab)]

I am grateful to the hon. Lady for giving way, but I must say that it is not good enough for Liberal Democrat MPs to come along to these debates and complain about what this Government are doing while they are supporting them. What has she said to Ministers? Has she threatened not to support the Government’s proposals? Has she told them that if these cuts go ahead she will not vote for something else that they are proposing? What have she and her colleagues done to try to prevent these cuts from happening?

[Lorely Burt]

I am glad that the hon. Gentleman made that intervention, because his Government caused cuts to be made to citizens advice bureaux. It is how the Government manage that is important. He asks what I have done and I will tell him. I have worked quite considerably on the issue of debt. In fact, I advise the Government and I am putting in my help and advice, as much as I can, to Government. That is what Governments do and that is what responsible coalition Governments do. We can make our points independently as Liberal Democrats, but we support what the Government are doing because of the financial situation that the hon. Gentleman’s Government left us in and everyone has to bear a share of the pain.

[Several hon. Members]

rose—

[Lorely Burt]

I would rather move on than talk about things other than the subject that we are here to discuss today, which is citizens advice bureaux and debt management.

[Chris Ruane]

Deeds, not words.

[Lorely Burt]

Despite the heckling from a sedentary position, I will continue.

In 2009-10, citizens advice bureaux experienced a 23% rise in demand for their services. Of the queries that they dealt with, 150,000 were about quite complex debt problems, as outlined by the hon. Member for Makerfield. It is estimated that the loss of the financial inclusion fund reduces the debt advice capacity of citizens advice bureaux by 40% to 50%. So I am looking forward to hearing from the Minister today about what steps are being taken, particularly in relation to the national money advice service and how that service will help people and make up the shortfall.

[Kate Green]

Will the hon. Lady give way on that point?

[Lorely Burt]

If the hon. Lady will forgive me, I will not give way.

So how will the citizens advice bureaux replace that loss of support, because as I said we have faced such losses before? In relation to Birmingham, I am hopeful that the Minister will have some good news.

I also wanted to pick up on what the hon. Member for Makerfield said about debt management companies. I am absolutely delighted—as I am sure she is—that the licences of a number of debt management companies were withdrawn by the OFT. I think that 42 companies in all had their licences withdrawn. Those companies can lead to a spiral of debt. Some debt management companies operate free of charge to the recipient. They do that because they are able to be paid by the creditors. It is much better if those who stand to gain pay, rather than those who stand to lose.

The spiral of debt that comes with companies that charge up front is clear. Two months’ repayments are made up front, the company promises to get creditors off people’s backs, but often that does not happen and six months later the company says, “We’re very sorry, but we can’t do anything for you now. We think you should file for bankruptcy.” They then charge for bankruptcy, and the spiral continues.

[Mr Umunna]

In many respects, is not the hon. Lady seeking to face two ways at once? She makes these welcome comments on unscrupulous lenders, but she failed to vote in favour of the motion that was tabled by my hon. Friend the Member for Walthamstow (Stella Creasy) last Thursday. She says that she agrees with my hon. Friend the Member for Makerfield (Yvonne Fovargue), yet she refuses to vote against the measures to abolish the financial inclusion fund. The money will run out in March, so will she vote against the Budget if it does not reinstate the funding?

[Lorely Burt]

I was deeply disappointed by last week’s debate. In her last sentence, the hon. Member for Walthamstow (Stella Creasy) accused the coalition Government of being in the pocket of loan sharks. If any hon. Members imagine that we will vote for being castigated in that way, I am afraid that they have another thing coming. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order.

[Lorely Burt]

I am seeking to be helpful, and am not facing two ways at once.

[Tim Farron]

My hon. Friend is generous to let me butt in. Perhaps I could help Opposition Members. They spent 13 years in power towing the line and voting for things such as cuts in CAB funding—as they did in South Lakeland—and they do not seem to understand that it is entirely possible to be within a Government and at times be a critical friend instead of constantly being told what to think.

[Lorely Burt]

I am extremely grateful to my hon. Friend. [Interruption.]

[Mrs Linda Riordan (in the Chair)]

Order. Can we listen to the hon. Lady and let her speak?

[Lorely Burt]

Thank you, Mrs Riordan, I am grateful.

I am disappointed with Opposition Members. I am sure that there must have been moments, in the 13 years during which they built up the biggest structural deficit in the G8, when it occurred to them that perhaps their Government were not going in exactly the right direction. We are a united coalition Government—[Laughter.] Opposition Members may laugh, but we are seeking to work together to help people in bad financial situations, situations that have been hugely exacerbated by the actions over 13 years of Members who are now in opposition.

In conclusion, I very much welcome the national money advice service. I ask the Minister: how will it help, and how will the Government help CABs to manage the shortfall caused by local authority cuts, and the cut in the financial inclusion fund?