Financial Exclusion

Baroness Tyler of Enfield Excerpts

Wednesday 4th July 2018 Lords Chamber

Asked by

[Baroness Tyler of Enfield]

To ask Her Majesty’s Government what assessment they have made of the impact on financial exclusion of (1) bank branch closures, and (2) moves to restrict the use of cash as a means of payment.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government are committed to financial inclusion. Along with the FCA, we are taking steps to ensure that everyone has access to useful and affordable financial services, including face-to-face banking services and free access to cash. The Government recognise that banking and ways of making payments are changing rapidly, but we do not make assessments of branch closures or payment methods.

[Baroness Tyler of Enfield (LD)]

My Lords, I thank the Minister for his response. I am sure that he is aware that since 2015, some 2,900 bank branches have closed in the UK, and that only last year, the banks removed some 2,000 ATM machines, despite the fact that cash remains a very popular choice for many consumers. Does he agree that the increasing lack of face-to-face banking services, particularly in rural areas, not only threatens the financial exclusion of particularly vulnerable groups—I am thinking in particular of older people and those with limited mobility—but risks disrupting the entire cash economy in local communities, especially shops and small businesses? Given that, what concrete steps do the Government intend to take to ensure that physical banking facilities and cash payments remain available to all who want and need them?

[Lord Bates]

Perhaps I may first pay tribute to the noble Baroness for her work as chair of the ad hoc Financial Exclusion Committee of this House, which provided important recommendations which the Government are steadily working to implement. The issue she raises is an important one. The way we pay for things is changing, as is how we use banks. Cash used to account for 60% of transactions. That has reduced to 40% of transactions and is predicted to go down to 20% by 2026. As I say, the way that banking is carried out is changing. However, we recognise that there is a particular issue for vulnerable people and vulnerable communities. For that reason, in January 2017 we launched the banking framework agreement between the high street banks and post offices. Some 98.7% of people live within three miles of a post office, even those in rural communities. We have introduced the Payment Systems Regulator, which monitors ATM machines to ensure that they are maintained as a source of free access to large parts of the community. We have a great deal to keep under review, but this is an important issue that the noble Baroness and the Government are very aware of.

Creditworthiness Assessment Bill [HL]

Baroness Tyler of Enfield Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Baroness Gardner of Parkes (Con)]

My Lords, I listened very carefully to what my noble friend said in introducing the amendment, but I really think it is a very bad amendment. It throws out the whole value of the Bill completely. It would just reinstate the current position. That is not what we are aiming to do. We are aiming to make this possible for people who really have no knowledge or awareness of finance or how to do things. These people would be the very ones to be overlooked with a “may”, because they do not push themselves forward in the same way, yet they need the information and the help, certainly if they have been good payers of rent. I remember when I was looking to get a mortgage for the first house I ever bought—I did not succeed in getting one at the time. The whole house cost £7,500, which in those days was a lot of money. A dental chair-side assistant was paid two pounds 10 shillings a week; a highly skilled receptionist was paid £7. We are talking about a long time ago. Although those were times when I knew nothing whatever about mortgages, these are times when you need help and you want to have your case considered. The more modest you are or willing to be squashed the more you were squashed. It is not a good amendment and I am sorry to say that I cannot support my noble friend on it. I want to retain the status quo in the original wording of the Bill, which would be very much more helpful to those who need help.

[Baroness Tyler of Enfield (LD)]

My Lords, I also support the Bill in its original unamended form. I will explain briefly why. I apologise that I was unable to be present at Secon I fundamentally believe that there should be parity of treatment between tenants and homeowners d Reading. as others have already said.

I had the privilege of chairing the Lords Select Committee on Financial Exclusion last year, which explored the connection between consumer credit and financial exclusion. We heard that for the many low-income households without financial safeguards, credit, including high-cost, short-term loans, was the only way of keeping on top of family finances for regular or emergency expenditure. As we all know, this phenomenon is particularly prevalent owing to increasingly precarious work and the casualised forms of employment around, meaning that both income and expenditure needs for individuals and families can easily spike without warning.

It was clear to us—the committee heard this very strongly indeed from the evidence—that consumer credit is increasingly the de facto safety net for many people on low incomes to meet essential needs. But we also heard that many credit agencies do not take rent into account. Most social and private renters therefore often have thin credit histories and do not have access to the lower-cost mainstream lending options. What we heard most of all—this is why I feel so strongly on the issue—is that those people are too often forced to turn to high-cost and predatory sources of credit, such as payday lenders or rent-to-own companies.

Frankly, I was shocked when I heard some of the eye-wateringly high forms of interest on credit and how much it can cost for someone who goes to somewhere such as BrightHouse to buy white goods or something like them. They are paying so much over the odds. This directly contributes to the poverty premium, established to be at around £1,000 per year per person, which is paid by poorer people for products and services because of a lack of consumer credit or creditworthiness. As my noble friend Lady Grender said, this particularly affects young people. On Tuesday this week we heard excellent work from the Intergenerational Commission of the Resolution Foundation that showed that one-third of millennials can now expect to be renting for their entire lives. We have to make sure that policy is in line with the reality of how people live their lives.

The chief executive of BrightHouse gave evidence to our committee in 2016 and made the point that its customers had very few options. It is time to give those people some other options and to bring them back into the mainstream. This Bill does that. It can help redress some of the damage of exclusion and insecurity that plagues those struggling to make ends meet and prevent an already disadvantaged Generation Rent falling into further cycles of debt and despair. It really is time that we make rent count and it is long overdue that we do.

Tackling Financial Exclusion (Financial Exclusion Report)

Baroness Tyler of Enfield Excerpts

Monday 18th December 2017 Lords Chamber

[Baroness Tyler of Enfield]

My Lords, I am very grateful to the Minister for his response and I will briefly pick up a couple of points. First, I thank everyone who has spoken in this excellent debate—both those who served on the committee and those who did not. As befits the subject matter, the debate has been wide ranging and extremely well informed. I am very grateful to those who raised issues that we did not address in the report. I was going to summarise a few of the issues raised but the noble Lord, Lord Bates, did it so well that I do not need to do so.

I feel somewhat more reassured by the Minister’s response than I was by the formal written response. Perhaps it is a matter of tone, but the Minister managed, as ever, to convey an appropriate sense of urgency and seriousness regarding the report—something that, frankly, seemed lacking in the written response. He said one thing that I shall hang on to. I think I am right that he said that the Government are taking the report seriously and that it will be an important part of their thinking in preparing their own strategy. I am pleased about that. I very much look forward to seeing the strategy when it is published, as I hope it will be. I hope that it will give the Government another opportunity to go around the block and to look again at the 14 other recommendations that they have not been able to accept so far. I hope that there will be an annual report to Parliament after the strategy is published and that that will give us in this Chamber another opportunity to look at this very important issue.

I intend to follow up assiduously in this area. Meeting Ministers, whether in this Chamber or in the other place, will always be very welcome. I look forward to further debates on this vital issue, which, as the right reverend Prelate the Bishop of Birmingham said, is inextricably linked with the poverty and breath-taking inequalities that currently blight the lives of many of our fellow citizens.

Motion agreed.