Breathing Space Scheme Debate

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Department: HM Treasury

Breathing Space Scheme

Caroline Spelman Excerpts
Wednesday 19th June 2019

(4 years, 9 months ago)

Commons Chamber
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John Glen Portrait John Glen
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I thank the hon. Gentleman for his typically positive and constructive remarks, and I will try to address the five key points he raises.

First, the 60-day time period is longer than our manifesto commitment of six weeks and is the product of listening to the consultation responses and to the experience of the mechanism in Scotland. Overall, it is seen as the right solution.

Secondly, the hon. Gentleman asked which debts are included. I tried to set out in my statement that the scheme is extremely broad, covering public sector debts and arrears. He asked about bailiffs and their role. Of course, the Ministry of Justice completed a consultation exercise in February and will respond in due course. There is also Cabinet Office guidance on the fairness of debt collection. He makes a reasonable point.

Thirdly, the hon. Gentleman asked about guarantor loans, which are an emerging new category of high-cost credit. Such matters are regulated by the Financial Conduct Authority, and I had a conversation just this morning with its chairman. I spoke to Andrew Bailey, its chief executive, earlier this week on the need to be vigilant across all emerging forms of high-cost credit, which is under ongoing review.

Fourthly, the hon. Gentleman asked about capacity and capability in the area of debt advice. I envisage that the creation of the Money and Pensions Service as a new single entity will bring much better co-ordination of the available advice. As I mentioned, the Government spent £56 million last year, and 85,000 more people were seen than in the previous year. We are looking at how that advice can become consistently of a higher standard.

Finally, the hon. Gentleman asked about the long-term causes and the regulation and marketing of high-cost credit products. Following the recent issues at London Capital & Finance, I directed the FCA to examine what happened, and I have asked my officials in the Treasury to conduct a separate review of how regulation works. We have to continue being vigilant on this evolving space, and the increased digitalisation of the availability of high-cost credit means that the regulation and oversight needs to keep pace.

I hope that answers the hon. Gentleman’s questions.

Caroline Spelman Portrait Dame Caroline Spelman (Meriden) (Con)
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I welcome this statement and the Government going beyond their original manifesto commitment. It gives me a chance to thank my citizens advice bureau, which has done fantastic work on debt rescheduling during my 22 years as an MP.

Does the Minister welcome the Church of England’s initiative to teach financial literacy in its primary schools, and would he encourage rolling out such an approach to prevention more widely?

John Glen Portrait John Glen
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I welcome my right hon. Friend’s observations on the Church of England’s interventions on financial literacy. The ongoing challenge is to develop national consistency in the delivery of financial education and advice. A number of initiatives are under way, one of which is trying to get financial services providers, particularly the banks, to work in a more co-ordinated way. I am happy to endorse the work of the Church of England, which has been a significant partner in improving financial literacy across the country.