Oral Answers to Questions
Cathy Jamieson Excerpts(12 years, 11 months ago)
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Miss Smith
I certainly do welcome that, and it is important to combine that with taking women out of income tax, as I have already mentioned.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
May I genuinely welcome the hon. Lady to her new post? I have no doubt that we will have many exchanges across the Chamber, and I hope we will focus on policy.
Back in May, the Minister claimed that the Government’s approach to the economy was working because there were 14 fewer unemployed claimants in her constituency. What is she saying now that women’s unemployment in the UK has risen to its highest rate since 1988, and, more importantly, what is she going to do about it?
Scotland Bill
Cathy Jamieson Excerpts(13 years, 3 months ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Perhaps the reason the Scottish Government have not yet been able to produce the figures is that some of the international studies are not to their liking because they show that lower rates of corporation tax do not necessarily lead to higher growth rates.
Fuel Prices and the Cost of Living
Cathy Jamieson Excerpts(13 years, 6 months ago)
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Stephen Williams
My hon. Friend makes a powerful point about the price of heating oil, which many households in rural communities have no choice but to use.
The first challenge is how to respond to the pressures on household budgets that I was describing. The coalition Government have said that their priority is to ensure that as we make difficult decisions, the poorest and most vulnerable households are protected. We have already made progress on reducing income tax for the lowest-paid, and I look forward to further progress being made in the Budget. We have a triple lock in place for pensioner households and we are going to introduce work incentives in order to tackle worklessness, which is the major cause of poverty in our country.
However, we also have to tackle the deficit. We have been waiting 10 months for a specific proposal from the Labour Opposition on tax, and this motion is the first detailed one that we have received. The critique that we have heard repeatedly from them is that they want fewer cuts in public expenditure and more emphasis on raising tax, yet their first detailed proposal is for a reduction in tax. In effect, this is another uncosted spending pledge. The hon. Member for Wallasey (Ms Eagle), who led for the Opposition, rightly said that the increase in VAT represents about 3p on the pump price that we all have to pay. We know that each penny of that pump price raises about £500 million for the Exchequer, so the motion is proposing a £1.5 billion spending pledge. However, the Opposition cannot tell us, other than in an allusion in the motion to the banking levy, how on earth they are going to find that £1.5 billion. As has been said, they are in effect proposing a new VAT rate of 17.5%, but they know that under international law, they cannot do that.
This duty as a whole raises about £30 billion as a contribution to reducing the deficit, and it makes up about 62% of the pump price. That is a considerably lower proportion than a decade ago, when the share of the pump price represented by taxes was in excess of 80%. I well remember, when I was on the Opposition Benches and the Labour party was in government, that the person who is now leading the Labour party had much promise when he became Energy Secretary. He certainly talked a good talk in that post, although he was perhaps making up for the rather “brown” years of the Labour Government. Now that he is in opposition, we find that his words were hollow and he has moved on to opportunist ground.
We need to move to a transport system that is more sustainable, with more efficient engines, a different mix of fuels, and electric cars, as proposed in the coalition agreement. As our dependency on hydrocarbons declines, we also need to move to a completely new fiscal model for taxing the use of road space, because road fuel duty and vehicle excise duty are a blunt fiscal instrument.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I have listened carefully to what the hon. Gentleman has been saying, and I was very interested in some of his points. What would he say to the family in the rural part of my constituency who live a mile and a half up a farm track, who have no access to public transport and who cannot wait for the kind of interventions that he is talking about to come along somewhere down the line? Does he support the Government reconsidering in the Budget the fuel duty rise that is due?
Stephen Williams
I do not know whether the hon. Lady was listening at the time, but I acknowledged right at the start of my speech that the pressures in rural constituencies are much harder than those in my urban constituency; I have been made fully aware of that by my colleagues. I do not know the details about her constituency, but I certainly empathise with the situation and I am sure that the Government will respond to what she says.
As I was saying, I wish to see a move towards a more sustainable model for taxing motoring and haulage in our country—road pricing, which would make us better able to respond to changed circumstances. But that is the future, and what we have to do now is respond to the genuine concerns of our constituents and motorists up and down the country. It is only a week before the Budget, and although the Chancellor is not in his place I am sure that he is carefully listening to and being informed by his colleagues about what is being said in this debate. I am sure that when he does respond to those pressures and demands from around the country, he will do so in a way that is not fiscally reckless, is environmentally sustainable, and certainly does not follow the opportunistic advice in the motion.
Mr MacNeil
I have every sympathy for the people of West Dunbartonshire—those are high prices—but with our prices of £1.48 and £1.50 a litre, I wish that we could enjoy prices such as £1.36 a litre. If I went back to the Outer Hebrides tomorrow and announced a price of £1.36, I would be regarded as some sort of hero, but unfortunately I cannot do that. I have sympathy with the hon. Lady but I am afraid that she must reciprocate and understand the problems that come when fuel poverty is higher, the cost of living is higher and wages are lower. The pilot project in the Outer Hebrides and other islands in Scotland is the right way to go. If it is a success, I hope we can extend it. I find the lack of sympathy from Labour Members about the problems in the Outer Hebrides somewhat distressing.
Cathy Jamieson
Having visited the hon. Gentleman’s constituency in the past, I understand some of the difficulties his constituents face, but does he agree that although we are talking about derogations, stabilisers and all sorts of things people want action now and that there is an opportunity for the Government to act next week? Will he support the Labour motion today to ensure that the maximum pressure is piled on the Government?
Mr MacNeil
I probably will support the Labour amendment, but at my own risk. I am grateful for the hon. Lady’s words. She is very welcome back in Na h-Eileanan an Iar at any time of her choosing. I would be more than pleased to show her around the islands or to entertain her in Stornoway—at my expense.
I must wind up, because I have to speak at a meeting at 3 o’clock about coastguards, which are a very important issue in my constituency. The last time I spoke about this issue I said that the rural fuel derogation was not like Christmas because Christmas had been and gone. It seems to me that it will not be like Easter either, because it looks like Easter will also come and go while we are still waiting.
Crown Currency Exchange
Cathy Jamieson Excerpts(13 years, 9 months ago)
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Tessa Munt
One might just need to get rid of “registered”, because it seems to have absolutely no meaning and to afford no protection—nothing.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I, too, congratulate the hon. Lady on securing the debate. The presence of so many Members shows the scale of the problem. My constituents believed that “registered” actually meant something in law. Does she agree that that has to be addressed urgently to ensure that no one else loses out?
Tessa Munt
I could not agree more. One problem I have discovered is that, although in the registration process the FSA takes receipt of £500, it is an overseer and not in any way, shape or form a regulator. The directors and responsible officers of a company have to declare under registration unspent criminal convictions for financial crimes, terrorist funding, money laundering and fraud, but there are two difficulties with that. First, the punishment for not doing so appears to be no more than three months in jail, and, if one is rocking along with £100 million, that is probably worth it. The other thing is that it appears that the FSA has absolutely no means of checking the information because it has no access to the Criminal Records Bureau. Registration is clearly not effective; we need to look at regulation for all these companies.
Savings Accounts and Health in Pregnancy Grant Bill
Cathy Jamieson Excerpts(13 years, 10 months ago)
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John Hemming
That might be slightly out of order, but I should probably answer the question. There has been a debate about the £6 billion of cuts in this financial year. At about 4% of the overall deficit, £6 billion is not a large sum, but given what happened with the initial sovereign debt crises during the general election—things that we have to be aware of, such as what was going on in Greece—we need to give the message that we are serious about dealing with the deficit. That is a socially progressive policy.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Does the hon. Gentleman accept that the state has a special responsibility for children in care, irrespective of how they end up in care? Even in times of financial difficulty, any responsible parent would look first to the most vulnerable children, and that is what the state should do.
John Hemming
I agree entirely, but it is also the state’s responsibility to make sure that we do not spend £7 million to give people £2 million. Putting aside whether child trust funds bring a return over time, it is absolutely absurd to propose, as the Opposition do, spending £7 million to give children in care £2 million. There has to be a better way of doing things. Also, those children would not get the money until they were 18.
John Hemming
The Opposition’s proposal to maintain the child trust fund and give £2 million to children would cost £7 million, so they would waste £5 million on the process. In the sphere of the massive deficit, £5 million might not seem like much, but it is the responsibility of Government to be effective and efficient in their use of public funds.
Cathy Jamieson
Will the hon. Gentleman confirm that £5 million will still be used for children in care under the Government’s proposals? Will he also tell us how it will be used?
Cathy Jamieson
Does my right hon. Friend agree that that would also give young people themselves the opportunity to understand the value of saving and perhaps make some contributions themselves, which hitherto they may have been unable to do?
Paul Goggins
My hon. Friend makes an important point. If a looked-after child aged 16 or 17, perhaps studying and working part time, was in a position to make a modest contribution to their own fund, that would be a good thing. Looked-after children have to be more resilient than any other people in our society, so it would be good for them to learn about the importance of managing money and planning ahead through the medium of that child ISA or a savings account to which they and others may contribute. That could make them even more resilient, and looking back to the time when I worked with such young people, the opportunity to sit down with them and work out their money management would have been a great way to do it. I think that that suggestion has great merit, and if the young person could also contribute, that would be a very good thing too.
My proposal would require the Government to open accounts for about 20,000 looked-after children each year. With additional top-ups of £100 for those who remain in care for a year or more, as I have described, we are talking about a total annual sum of some £6.6 million. We can argue about whether child trust funds are a sensible way to spend half a billion pounds, and the Government have taken a view that is different from that taken by my right hon. Friend the Member for Delyn and those of us on the Labour Benches, but I put it to the House that a scheme that would deliver a savings account for every looked-after child in the UK who had been in care for more than three months, at a cost of less than £7 million, would be a good way to spend public money. The young person would get the money when they were 18. It could be an important part of care planning, as I said in response to my hon. Friend the Member for Kilmarnock and Loudoun, and would promote resilience. It would send a clear and strong message to the young people concerned that we owe them an obligation and are prepared to support them in a practical way.
I hope that the Minister will provide a positive response not only to the precise content of my amendments, but to the proposal in general and the need to do something, either here or in another place, that will put in the Bill something tangible for looked-after children. What I propose is modest, but it could make a real difference. If the Minister is prepared to act and make that clear, that would be good news for looked-after children. It would demonstrate that, whatever differences there are in this place over the Bill, when it comes to looked-after children we are prepared to sink those differences and do something together.
Paul Maynard
I thank the right hon. Gentleman for that effort to bring clarity. None the less, I regret the use of the word “trivialise”, if only because I have spoken to many families in my constituency with disabled children. When speaking just a fortnight ago to one family who had benefited from the family fund and had their first holiday in five years, the mother broke down in tears.
I raise the matter not to have a go at the shadow Minister, but to highlight one of the wider issues that was illuminated in Committee: the difference between the accessibility of an asset that is locked away until the young person is aged 18, and the changing needs of families with disabled children—and of looked-after children, for that matter. If we are seeking to target the child trust fund at those in the community who are the most vulnerable, who have the most chaotic lives, who are subject to the most pressures, to whom unexpected things occur, is it truly sensible to tie them into something that can be delivered only when the individual reaches the age of 18?
Cathy Jamieson
Does the hon. Gentleman agree that the situation should not be an either/or? We should be able to give day-to-day help and support to the most vulnerable, at the same time as allowing people—for example, looked-after children and people who have disabled children—to build a capital asset that will be available to them when they enter adulthood.
Paul Maynard
I agree entirely, and I wish that during the evidence taking in Committee and in the debate, we had had an either/or discussion, rather than an “and, and, and, and yet another idea” discussion. We had far too many shopping lists and not enough recognition that hard choices had to be made. It is important to recognise, as Marc Bush from Scope did when he gave evidence to us, that delivering an asset at age 18 is not the solution to the problems faced by families engaging in the transition of their child from childhood to adulthood, when faced with a complex disability. That starts at age 14 and can continue to age 30. The hon. Member for Stretford and Urmston (Kate Green) recognised that when I intervened on her, and that was a useful move forward.
When we are discussing the future of child ISAs, I hope it is taken into account that families who are particularly vulnerable may need access before the age of 18. Locking the ISA away until age 18 is not always the best solution.
Savings Accounts and Health in Pregnancy Grant Bill
Cathy Jamieson Excerpts(13 years, 11 months ago)
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Paul Maynard
Thank you for that advice, Mr Deputy Speaker.
There are other ways in which we can and do help looked-after children. In particular, for example, there is a high correlation between looked-after children and poverty. That stands to reason, particularly in terms of their geographical location, but the pupil premium, which we announced recently, will go a long way to helping those children who are in education to make it as far as university in the first place. Finally, on the child trust fund, I welcome the notion of a children’s ISA. I hope that I hear about it in a future announcement or Budget.
I should now like to apply my two tests to the health in pregnancy grant. It is what it says it is: it is about health in pregnancy. The former Prime Minister, when Chancellor, introduced the policy, saying that the Government had received “powerful representations” regarding the importance of good nutrition during the final stages of pregnancy. The grant was clearly designed to promote health in pregnancy, but, when the measure was going through its Delegated Legislation Committee, the then Health Minister, the right hon. Member for Exeter (Mr Bradshaw), accepted that the bulk of health improvements occur when changes in behaviour occur earlier in pregnancy. Waiting until the seventh month is rather like shutting the stable door after the horse has bolted; it certainly does not encourage a behavioural change.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
By that very logic, would it not therefore make sense for the hon. Gentleman’s party to propose an earlier payment of the grant?
Paul Maynard
I could well ask why you did not think of that when you introduced the scheme in the first place. It is a bit late now—
Kate Green
I very much welcome the growth in the UK economy in the third quarter of this year, but, with respect, it is early days for Government Members to take all the credit for that. I suspect that it was the fiscal stimulus put into the economy by the previous Chancellor of the Exchequer that underpinned the ability of businesses to continue to hire and of people to stay in work. All Labour Members genuinely hope that that long tail effect will continue, but we feel that it is at risk.
On the savings aspects of the Bill, I cannot understand the Government’s logic, given their stated ambitions to reduce inequality and to encourage a savings habit and, in the case of the Secretary of State for Work and Pensions, the strong focus on helping people to reduce and stay out of debt. The child trust fund and saving gateway have helped low-income savers to acquire a savings habit and have assisted their money management. As child poverty has fallen since 2005, the child poverty impact of the measures is beside the point, because they have not diverted money from successful strategies to tackle child poverty, but are in addition to those strategies. They were intended to take on board the evidence of the protective effect of having an asset, which is especially important in social mobility.
Cathy Jamieson
Does my hon. Friend agree it is vital that looked-after children have that asset built? Given that their parents are not in a position to do that, we have a responsibility, as corporate parents, to find another way, if the Government will not reinstate child trust funds.
Kate Green
I hope that Conservative Members and the Minister will hear that contribution in the spirit in which we all feel it. This country has a poor record on outcomes for looked-after children, who enter adult life singularly poorly provided for financially. The child trust fund was a small step towards beginning to rectify that. As my hon. Friend says—and I hope the Government heed this—if the child trust fund is no longer to be the mechanism through which looked-after children are given some sort of nest egg with which to embark on adult life, I hope that Ministers will look for another way to secure the financial futures of such children. It is not sufficient to say that we will improve education, health and Sure Start support, important though those are. Plenty of evidence shows the importance for young people, especially those from disadvantaged backgrounds—and looked-after young people most of all—of having a financial asset behind them.
The hon. Member for Gloucester (Richard Graham), who I am sorry is no longer in the Chamber, cited the briefing that some Members had received from the Save Child Savings alliance. I was struck by the numbers he shared with us: 4.5 million child trust fund accounts are open; £2 billion is under management; and £22 million a month is saved in those funds. That is a lot of money being saved and set aside for our children’s futures. I strongly urge the Government to take note of that success. The vast majority of families saving are on modest, medium or lower incomes, certainly of less than £50,000, and many of them on much less. The hon. Gentleman mentioned that, I think, 24% of families were not saving at all. He is right to draw attention to the position of those families, but I question what they will save with instead, if we remove the child trust fund. If the Government do not save on behalf of the poorest children, I very much doubt that a tax break, for families who probably do not pay tax anyway, will suddenly magic up savings for the poorest children. I ask the Government to address that point.
The child trust fund is well targeted for its purpose, which is to deliver an asset to young people as they start out on adult life. Better-off families can afford to support their children with university fees, renting their first flat, buying their first car, perhaps starting a business, having a gap year—all markers of social stability, and therefore at the heart of what the Government rightly want young people from low-income backgrounds to be able to participate in. I am genuinely at a loss to understand why a Government who repeatedly, and unjustly, lambast Labour’s record in relation to social mobility and inequality, should totally dismantle a savings vehicle that has the potential to reduce inequalities, and instead propose a savings vehicle that will widen those inequalities by benefiting only those who are better off.
I am just as puzzled by the Government’s attitude to the saving gateway. Pilots in different parts of the country have shown that, coupled with outreach and money advice, it helped to support a savings habit, provided low-income families with a cushion enabling them to cope with crises, allowed them to build up modest assets over time, and made possible additional savings that would not have been possible otherwise.
I am surprised—more than surprised; indeed, I am shocked—that a Government who are happy to extend tax breaks to savers and to maintain them on ISA savings, pension contributions and inheritance tax will not provide support to boost the savings of the poorest. I ask Ministers how that can possibly be fair.
Child Trust Fund (Looked-after Children)
Cathy Jamieson Excerpts(13 years, 11 months ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I refer hon. Members to the Register of Members’ Financial Interests, which notes that I donate 50% of my Scottish Parliament salary to the charity, Who Cares? Scotland, to which I shall refer.
The abolition of child trust funds was announced earlier this year and will have far-reaching effects. We are all aware that they were set up in 2002 by the Labour Government, and that additional payments for looked-after children were introduced in 2008. That was welcomed at the time by a significant number of children’s groups as a positive step in what had hitherto been a fairly neglected area of social policy.
Like others, I have concerns about the wider proposal to end child trust funds, but I want to focus today on its impact on looked-after children. The matter seems to have stayed below the radar because, sadly, the needs of young people in care are often not high on the political agenda, despite the best efforts of organisations such as the Who Cares Trust and Who Cares? Scotland, which represent the views and needs of young people who are looked after and accommodated.
Under the scheme, the UK Government provide £100 a year to put into a child trust fund for every child who is looked after away from home, including those who are in foster care, residential care and kinship care. Some of those young people have spent all or the majority of their life in care, and the money is paid when they have spent part of a year in the care system. The amount of money is not a lot per child, but it helps young people to build up a personal fund that will become available when they move on from care to post-school education or employment training. Its purpose is to help young people move on to independent living. It also offers useful educational opportunities for learning how to manage money, and the discipline of developing a saving habit. That is important.
Research on young people in the care system shows that access even to a modest level of savings at the age of 18 makes a real difference to the decisions that young people can make about their future, as well as encouraging investment. Many of the things that we take for granted and that have been put in place for us and that we put in place for our children are simply not there for young people who are brought up in the care system. We must also remember that young people in care often move on to an independent lifestyle much earlier than other young people. They are often expected to take on the tenancy of their own home, and to manage a household budget when they are entering further or higher education, or the world of work. That is a time when, as those of us who are parents or have had teenagers know, young people are vulnerable. Young people in the care system are expected to make adult decisions and to move quickly into the adult world.
As corporate parents, the Government at any level have responsibility for children in care. The purpose of the child trust fund scheme, especially for looked-after children, was to help to improve outcomes for those children, and we should find a way of continuing it. Sadly, it is being abandoned just as we have begun to unearth more efficient ways of operating it.
The concept of asset building for young people in the care system is not well developed. Having access to individual asset accounts can make an important contribution to the well-being of children in care by providing a sense of security and encouraging planning for the future. It can help the local authorities that are looking after children to work with them to strengthen their saving habit, and to ensure that they have something for their future needs. It would also send positive messages to parents of looked-after children about the need to become involved in the process of saving for their children’s future, and encourage them, when possible, to take on some responsibility for supporting their children.
I realise that the Minister is not responsible for the actions of the Scottish Government, but I want to place on record my belief that the Scottish Government and Scottish local authorities should also give more consideration to future financial planning for looked-after children. That would be entirely consistent with the recommendations of the 2009 national residential child care review for developing corporate parent responsibilities. Again, those recommendations attracted widespread support.
The Minister should take an interest in the funding that was provided to the Scottish Government specifically to benefit looked-after children but did not go to those children. Back in July, in response to a series of questions in the Scottish Parliament, it was revealed that the Scottish Government had no idea whether looked-after children had received the payments. That was incredibly disappointing and worrying. Under pressure following those revelations, most Scottish local authorities have now ensured that the payments have been made, but it was worrying that the Scottish Government had not been monitoring the payments, so not only did they not know what was happening to the money but they were unlikely to be able to assess any outcomes of what that money had gone towards. Will the Minister tell us what evidence the Treasury has of the outcomes of that initiative throughout the UK, and how it was taken into account before the decision to scrap child trust fund payments?
The Conservatives’ commitment before the election was to end Government payments to child trust funds, except for children in the poorest third of families and children with disabilities. Many young people who are looked after and accommodated will fall into those categories because of the difficulties in their background. When the Bill that introduced child trust funds was going through Parliament, the right hon. Member for Tatton (Mr Osborne), who is now Chancellor of the Exchequer, said that
“we greatly support the principle that the Bill is designed to promote…We think that having savings…gives people a stake in society, gives them independence, encourages self-reliance and bolsters the freedom of the individual against the overbearing state.”—[Official Report, 15 December 2003; Vol. 415, c. 1345.]
Apart from the remark about the overbearing state, that was one of the few occasions on which I agreed with the now Chancellor.
As recently as September, Phillip Blond—the same Phillip Blond who has emerged as one of the Prime Minister’s policy gurus—in his role as director of ResPublica launched a report entitled “Asset Building for Children—Creating a new civic savings platform for young people”. It called on the Government to tackle social mobility by adopting a savings policy that builds assets for all children’s futures. The key recommendations included a new type of asset building for children—an ABC account—based on retaining the infrastructure of the child trust fund that the new Government scrapped; a reward scheme to encourage saving with money off, for example, leisure facilities; new private sector incentives offered by banks and savings providers; and a financial capability programme with the voluntary sector to improve financial literacy. All those suggestions would benefit young people who are looked after and accommodated.
The Save Child Savings Alliance—that is a bit of a mouthful—consists of academics, charities, think-tanks and members of the financial industry. It welcomed the report, and the recommendation
“to maintain, extend and improve the infrastructure of the Child Trust Fund”
as part of any asset-building agenda to boost savings. It argued that the child trust fund was one of the most successful saving schemes ever, and that the framework could be retained for a small administrative cost. The alliance acknowledged that even if the Government were unable to make contributions to the scheme in the current economic climate, keeping the structure in place would at least ensure that all newborn children have a chance of having a savings account opened for them at birth that would improve the life chances of future generations.
Julian Le Grand, founder member of the Save Child Savings Alliance and professor of social policy at the London School of Economics said:
“When it comes to social mobility, a lump sum asset is a lot more powerful than income in unlocking opportunities for youngsters as they enter adulthood. This is particularly vital for less well-off families to help give their children the best start to their adult lives. We must not allow what has been a successful start in fostering a savings culture for all to fall away from the most vulnerable in society.”
Those comments were echoed by Dr Katherine Rake, the chief executive of the Family and Parenting Institute, who said:
“The last two years of economic strife have reminded British society of the importance of personal savings. It’s imperative that we help ordinary families put money away for a child’s future. The Child Trust Fund offers a proven structure for this.”
Of course, many looked-after children do not have that family support.
David White, chief executive of the Children’s Mutual, said:
“The Child Trust Fund ensured that every single newborn child in the UK had a savings account opened for them which they, and only they, could access at the age of 18. With ever increasing day-to-day demands on family savings and reports that university students face debts of £25,000 on graduation, it is critical that we explore ways to protect savings for our children. Whatever their background, the next generation should not be forced to start adulthood saddled with debt or as a dependent drain on their parents.”
Again, many looked-after children do not have that parental background to provide support. The arguments are particularly valid and resonant for those in local authority care.
According to figures from HM Treasury, on 5 April 2009, the total number of children in local authority care for whom a child trust fund had been opened was 33,158. Figures from the Department for Education reveal that the cost of the £100 top-up for looked-after children paid to local authorities in England and in the devolved Assemblies was £1,039,833 in 2008-09, and £1,502,786 in 2009-10. That is a relatively small amount of money per young person, but it has the potential to make a big difference. If asset building and financial education for the next generation are to be tackled, in light of current personal debt levels, I believe that that would be money well spent.
I appreciate that policy decisions can often have unintended consequences, and it is the mark of a compassionate and caring Government that they can admit when things are wrong and take steps to correct errors. My preference would be for the Government to revisit the whole policy on child trust funds and keep the scheme intact. I realise, however, that that plea may fall on stony ground.
For a relatively small amount of Government investment, the child trust fund system could be maintained for our most vulnerable children, who are surely those who are looked after and accommodated. Young people in care often feel isolated with little control over their lives. They feel that few people speak out on their behalf and that no one listens to them. I am speaking out on their behalf today, and I hope that the Government will not only listen, but act to ensure that the term “looked after” actually means something for those young people.
The Economic Secretary to the Treasury (Justine Greening)
It is a pleasure to serve under your chairmanship for the first time, Mr Hollobone, and it is nice to see you in your place today. I start by congratulating the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) on securing this debate. As she points out, it is an important topic. She is right to say that perhaps more than many other communities in our country, looked-after children need people who will stand up and speak on their behalf about some of the challenges that they and their families face.
The context for today’s debate is unfortunate—it is the day before tomorrow’s spending review. I suppose that that is either good or bad, depending on how one looks at it. I will respond to the hon. Lady in detail, and I will also try to address the important questions that she has raised. In the time available, I will set out the overall context of the changes and explain why they are taking place. I will go on to talk in more detail about the specific issues that she raised regarding looked-after children. The devolved Assemblies are an added aspect. As the hon. Lady said, responsibility for the delivery of services and support for looked-after children lies with the Scottish Government.
I agree that looked-after children face greater challenges than other children, and that they need and deserve greater support. In England, we are looking at ways to improve that support, alongside other measures taken in the spending review. I understand the hon. Lady’s disappointment at the changes that we have to make to the child trust fund. Unfortunately, those changes are necessary. This week in particular, with the spending review happening tomorrow, hon. Members will be aware of the unprecedented budget deficit that the Government inherited. That is not a position that we wanted to be in, but it is a grave situation.
At the moment, we currently borrow £1 of every £4 that we spend. The hon. Lady mentioned financial literacy, and that is a broader issue that we as the UK Government are trying to tackle for our country as a whole. Because of the problems that we face with the deficit, our level of debt and the interest that we have to pay, the amount left for public service support is being squeezed. It is simply not affordable to spend over £0.5 billion a year on the child trust fund. The children concerned cannot use that money for 18 years, and we cannot afford to spend it when we have limited resources that are under pressure to provide support and services for people now, including looked-after children. As I said, I will come on to the more specific issues, but it is important to drill down into the wider context for those who may read the debate later.
As the hon. Lady knows, we have already reduced Government payments into child trust funds, and we have introduced a Bill to end eligibility to child trust funds for children born from next January onwards. In other words, most women who were pregnant when we made our initial announcement will have access to the child trust fund; the Bill will affect children born from next January onwards.
I confirm that the top-up payments to the child trust funds of looked-after children will stop. Those changes will save £320 million this year, and over £500 million a year in the future. That is £0.5 billion that we do not have to find through spending cuts—perhaps in important areas such as education or children’s social services—increasing taxes further, or borrowing, which would mean that our deficit was higher and that even more taxpayers’ money was going to fund debt interest instead of public services.
We are talking about a legacy. The hon. Lady rightly made the point about looking ahead, but we are concerned about the legacy that all children will inherit if we do not tackle the debt that we face now and the deficit; the country’s level of debt would be eye watering, even compared with today. During this Parliament, spending on our debt interest could rise from £43 billion—a huge figure compared with what we spend on transport, prisons or justice, for example—to £60 billion. That is a rise of £17 billion over the next few years and shows what a challenge we face. We must try to work together to balance our priorities. If we do not address the debt, it will only increase further and put even more pressure on the vital public services that we want to support.
Cathy Jamieson
I appreciate that the Minister is trying to be helpful and I look forward to what she has to say, particularly on support for looked-after children, but could she answer the question that I raised? What assessment was made of the effectiveness of the outcomes of the child trust fund for looked-after children before it was decided to scrap this particular scheme?
Justine Greening
The hon. Lady will be aware that a key aspect of the emergency Budget was to examine the distributional analysis of how people would be affected, but also to consider key issues in relation to children, such as child poverty. We were very careful to consider those issues. Indeed, given the problem that we were having to start to solve, the fact that we were able to introduce an emergency Budget that still managed to see child poverty not rising is a measure not only, we hope, of its effectiveness, but of our desire as a Government to see that whole issue as important. We are trying to balance protecting things today with, as the hon. Lady points out, the need to look more long term.
I can reassure the hon. Lady that my hon. Friend the Financial Secretary to the Treasury is examining ways in which we can encourage saving and children’s saving. We recognise that that is an issue and my hon. Friend is considering it. He is very interested on a personal level, and has been for many years, in how we can improve financial literacy—the other key issue that the hon. Lady raised—and ensure that people take good decisions.
The hon. Lady said that the Scottish Government had not always ensured that money got to where it was meant to go. She is right to raise that as a concern. In England and in Scotland, local authorities have a statutory obligation to report to Her Majesty’s Revenue and Customs all children who come into their care who are of child trust fund age, precisely so that HMRC can ensure that all children who were due to get a child trust fund got an account and received the payments to which they were entitled at birth and at age seven. In fact, they are meant to report monthly to HMRC so that that can be followed up. There are very clear guidelines from the Department for Education requiring local authorities to make those payments, so the hon. Lady is right to raise her concerns in relation to the Scottish Government. I shall take this opportunity to say to her what she has probably already said to the Scottish Government. As a devolved Administration, they, too, can take decisions about whether they want to see this area as a priority for children in Scotland and for looked-after children—the group about which the hon. Lady is particularly concerned.
The hon. Lady talked about keeping the top-ups for looked-after children in place, despite the difficult decisions that we are having to take about child trust funds. We examined some of the challenges in relation to doing that. We recognise that looked-after children need to have additional support, and certainly in England we will be looking at how we can ensure that that happens. Ultimately, however, we just did not believe that continuing to pay the £100 top-ups to looked-after children would be the most effective way of providing that support, given the broader pressures that we faced in relation to public services and ensuring that we tackled the deficit. That is why we took the difficult decision that the top-ups would be stopped in due course.
One issue that we examined was that when local authorities make those £100 payments, it costs them £122. Part of the challenge that we face now is that that extra £22 spent on administration would be much better put into front-line services. When we considered that, it just did not make sense to continue those £100 payments, especially given the impact that that would have had on the broader budget and the fact that the £100 payments would be locked away until the children reached 18. They were not going to get the benefit from them for many years, and our concern was that we want them to reach that age in a country that is not paying hand over fist for debt interest and that does have money to pump into public services in a sustainable way. That was not the situation that we found ourselves in when we came into office.
Cathy Jamieson
I absolutely understand the issue about value for money and ensuring efficiency. It certainly does not seem to make sense that it costs £122 to make a payment of £100. However, does the Minister agree that looked-after children do not have a parent putting money aside for the future or putting money literally in trust for the future, as we would all do for our kids, so that when they get to the age of 18, they have some money, however small the amount, and that someone has to take responsibility for that? In those circumstances, is there anything that she can say today about ensuring that young people, when they leave care at the age of 18 to go into further or higher education or into the world of work, will have some money behind them to allow them to move on into adult life?
Justine Greening
I talked briefly about the fact that we recognise that financial literacy and encouraging saving for children are important. She knows that we have a broader problem with saving in Britain. The savings ratio had really fallen. It was not just the Government who had unsustainable finances; many households did as well. As I said, we are considering how we can nevertheless encourage saving and encourage children to save. Obviously, we have to work within the constraints of the public finances, but that work will explore the idea of allowing parents potentially to open a tax-free account for children born after child trust fund eligibility ends. I am sure that, as part of that, we would look at the group of looked-after children, in the same way that they were part of the child trust fund scheme. For most children in Britain, the account was triggered and opened by the parents, but for looked-after children, it was the local authority that took that approach.
Any such account would not have Government contributions going into it, but potentially could have some of the other features of child trust funds. Clearly, however, if we go down that road, we need to consider the design of any account carefully. It is clear that it would not be exactly the same as the child trust fund. However, I can reassure the hon. Lady that we are trying to find our way through the problems that we face today, which are grave and must be tackled, while at the same time ensuring that on these important issues, for the longer term, we still do what we can to support these children and address the issues.
Time is moving on. I shall try to ensure that I have covered the other issues that the hon. Lady raised. She talks about social mobility and she is absolutely right. I passionately believe in social mobility. She is right to talk about ensuring that we support looked-after children and that particularly when they leave care and face all the challenges that she referred to, they get support. Certainly in England, we are very keen to consider the overall package of support for these children, and I know that my colleagues in the Department for Education are doing that.
I am certain, given the hon. Lady’s clear interest in the issue, that she will follow it up in the Scottish Parliament. Indeed, she has a long track record not just of expressing an interest, but of being involved in direct policy making in this area. It is great that that experience has been brought into the UK Parliament.
I can see time ticking on. To conclude, I again congratulate the hon. Lady on securing the debate and on her eloquent and passionate description of the needs of looked-after children. As I have explained, I agree that these children, alongside other disadvantaged children, need more support than many children. Only last week, the Deputy Prime Minister was talking about the fairness premium to ensure that we can target and help those children growing up who perhaps need the most support to make sure that they can get the opportunities that many children in this country have, but too many do not.
We are passionate about tackling disadvantage, including for looked-after children, and we want to provide that support, but as a Government—a coalition Government—we just do not think that the child trust fund is the best way to do that. Those children, including looked-after children, need support now, rather than having it locked away until they are 18. It would not have been the best use of our limited money, either for looked-after children or for others—
Banking in Scotland
Cathy Jamieson Excerpts(13 years, 11 months ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I should perhaps start by assuring hon. Members that, unlike some of my hon. Friends, I have never been led astray by bad boys. Indeed, I have made a career of challenging bad boys’ behaviour and threatening that all sorts of awful things would happen to them if they continued to misbehave. With those opening remarks, I should perhaps move quickly on to the start of my brief comments.
I begin with the place that to me is perhaps the centre of the universe—Auchinleck, in my constituency. A few weeks ago, during an unexpected lull in the excitement of the football match at Beechwood Park, which for the uninitiated is the home of Auchinleck Talbot football club, I felt a tap on my shoulder and a constituent asked whether he could have a quiet word with me. I am not unused to that sort of thing happening. Usually it is about a particular problem, and I am usually able to tell the constituent that he can call me at the office, or we have a chat about it. However, in that instance, the constituent prefaced his remarks by saying, “Before you say anything else, I have to tell you that I am a banker.” He went on to make the serious point that often he cannot now tell people what his employment is. He is not one of the high fliers, one of the big bonus earners. He is simply someone in the middle management sections, or rather he was before he was let go—I think that those are the words used these days. He finds the situation very difficult because he personally has faced some of the opprobrium that has been heaped on the banking community as a result of what happened with the banks.
I place on the record my thanks to the previous members of the Scottish Affairs Committee for this thorough report. I will refer to some of its conclusions and recommendations. It was a thorough piece of work, and timely. We can think back to just how awful things were when some of the major banks in Scotland and, indeed, elsewhere were on the brink of extinction. I hope that no matter what side of the House hon. Members sit on, they will understand that Government intervention was necessary at that stage and had to take the form that it took in order to ensure that those banks survived.
I shall focus on a couple of the recommendations in the report. My hon. Friend the Member for Glasgow South West (Mr Davidson) has already talked about bankers’ bonuses. It is clear when we talk to ordinary people on the doorstep that that issue is now in the public psyche. I am referring to the fact that many people in the banking system were simply paid far too much, very unfairly, and people did not see what those bankers had done to justify those very large amounts of money, when many of them were struggling to get by, whether on the minimum wage or on very low incomes, and were taking what they felt was the brunt of the crisis. We still have some way to go to convince people that that whole area has been evened out and that we have moved towards a fairer system.
My hon. Friend also referred to another point in the report—recommendation 5 in relation to viewing repossession as the last resort, saying that the banks and building societies should perhaps view matters differently. It took legislation, particularly in the Scottish Parliament, to ensure that that happened, because there were fears that, despite all the exhortations, the banks were still not looking at repossession as the last resort. Many people, particularly sole traders in small or medium-sized businesses, had been required to put their homes up as security in order for the businesses to continue and they found themselves in danger not only of losing their business for lack of finance, but of losing the roof over their head.
Some of the most awful experiences that I have had as an elected politician have involved seeing business men whom I knew to be pillars of my local community and who had contributed a huge amount in the local area suddenly finding themselves in very difficult times, coming to my surgery and breaking down in tears in my office because they felt that they had literally no one else to turn to. I hope that we shall not see any more of those situations and that people will be more sympathetic. In my role in the Scottish Parliament, I was one of the people who pushed for the relevant legislation.
I want to focus on the issue of fair treatment of customers, which has been mentioned and was the subject of recommendation 7. I think that my hon. Friend the Member for Glasgow South West has already referred to the wording:
“We conclude that banks continue to use aggressive tactics towards customers who have fallen into debt.”
Citizens Advice has given us an update on what that means for real people living in our communities. It states that, in 2009-10, 135,032 new debt issues were brought to Scotland’s advice bureaux, which helped people to deal with those issues. It states that more than 4,200 problems with bank accounts were brought to its bureaux in 2009-10 and that a number of those issues were connected with the interest and charges associated with the account, while a high number were connected with the difficulties of opening accounts. There are still situations in which that occurs, despite all that has happened.
We may talk about high finance and the economic impact of what is happening with the banks on a global scale, but many people living in our communities still cannot get a bank account that they can afford to operate, and of course they rely on that to be able to manage their business. Basic bank accounts are very important, but we should not underestimate the difficulty that people encounter if they do not have a credit history, if they have not been in employment or if they are a young person leaving the care system. In those circumstances, trying to open a bank account is extremely difficult, and there is much more to be done in that respect.
The report mentioned overdraft charges and, again, Citizens Advice Scotland has given us an update on some of the problems that people face. It says that clients report incurring overdraft charges due to mistakes often made by others, including the banks themselves, benefit agencies and companies failing to cancel direct debits.
People will be aware of the case that was taken up by the Office of Fair Trading and pursued very ably by Mike Dailly, the principal solicitor at Govan law centre, in the constituency of my hon. Friend the Member for Glasgow South West. He will know it very well. People still face real difficulties as a result of what are seen by the banks’ customers as unfair charges.
Let me give a couple of illustrations, because it is worth having on the record what Citizens Advice tells us. It says that one client
“accumulated over £1,000 in bank charges over a three month period while his bank refused his application for an approved overdraft limit.”
The client was overdrawn by £270 and simply wanted an overdraft facility so that he could make arrangements to pay off the money that he owed without facing multiple charges. A single mother was being charged £5 by her bank for every day that she was overdrawn and £25 for every transaction that she made during that period. That woman was living on income support with a five-year-old daughter. Incurring bank charge after bank charge after bank charge, with no assistance to get out of those problems, is no way forward for people in those circumstances.
Again, my hon. Friend was right to highlight the problems in relation to set-off. If anyone has ever lived in a situation in which every penny is a prisoner, and they have to budget and know exactly where their money is coming from and where it is going week to week, they will know that they can manage in many instances because they have a degree of certainty. What is impossible for people on very low incomes to cope with is the unexpected. For some people, the right of set-off means that earnings that were paid into the bank were taken without their knowledge and without any discussion with them beforehand and were used to pay their debts. I am not suggesting for a moment that people should not pay their debts or should not be helped to budget where that is appropriate, but many people on low incomes are very good at budgeting.
What is happening is simply not acceptable. Citizens Advice gives the example of a lone parent’s bank taking £400 from her account to repay debts without her permission. After her wages had been paid in, that money was taken out and she had literally no money at all to live on. In another case, a client’s bank used the right of set-off to put the client’s wages towards arrears on a loan. That individual was working only 10 hours a week and receiving £11 a week in benefits. When they were paid, the bank took the full amount towards the arrears, leaving the individual with no funds whatever. There is more to look at on that.
The banks are saying in their responses that it is now easier for businesses to borrow, but I think that there are still difficulties. I regularly hear from start-up businesses that they have to use personal loans or continue to use their homes or other security. They are not able to access funding that would help to match the start-up funding that may be available for the business, so there is a disjoint in those contexts. There are still difficulties for businesses suffering temporary cash-flow problems. A reputable business in my area with lots of orders coming through contacted me recently. Simply due to delays in receiving payment owed for contracts, they are in a difficult cash-flow situation and looking to their bank to give flexibility, but they are not getting it.
In conclusion, I want to return to where I started in Auchinleck, which is not a bad place to return to, and talk about financial education. The hon. Member for Milton Keynes South (Iain Stewart) mentioned the days when there was a bank book and one could pay in money; in my school days it was into the Trustee Savings bank, and in my constituency it is the Cumnock and Doon Valley credit union, which goes into schools and has a junior credit union in Auchinleck primary school. Ironically, in the same week that some bailed-out banks sent letters advising me that I could go along and hear what they were doing about financial education in schools, I paid a visit to the young people who run the junior savers scheme in Auchinleck primary school. They seem to have got the message pretty clearly. They were involved in taking the money, keeping the accounts and looking at what they were responsible for, which was highlighted when the photographer who came to look at what we were doing asked whether he could have a pound coin out of the cashbox to illustrate what was happening. The young people said no, because he was not a member of the credit union, and it was not his money or their money to give away. I will finish on that very salient point. Others should perhaps take note.
The Financial Secretary to the Treasury (Mr Mark Hoban)
First, let me congratulate both the Chair of the Select Committee on opening this debate, and you, Mr Rosindell, on chairing your first Westminster Hall sitting. You need no lessons from the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) on controlling bad boys.
This is a helpful report. Every hon. Member at the start of their speech has positioned themselves in relation to it. It was my predecessor, Lord Myners, who gave oral evidence to the Committee, but it is this Government who responded to the report. I want to take the opportunity to talk through our response and the progress that we have made since July and to address some of the issues that hon. Members have raised. It is worth bearing in mind some of the remarks that have been made about the Scottish financial services sector. Although the problems at RBS and Lloyds TSB and the failure of the Dunfermline building society cast a long shadow, they are only part of the Scottish financial service sector—a point made to me when I visited fund managers and insurers in Edinburgh earlier this year.
It was more than 300 years ago that William Paterson founded both the Bank of Scotland and the Bank of England. Today, that heritage of innovation, education, and expertise is still very much alive, and reaches across a whole range of financial services, beyond the roots of banking in Scotland in the 17th century. General insurance, life and pensions, asset management and related services all have a place in Scotland’s financial hubs of Glasgow and Edinburgh, and also in people’s high streets. We think of financial services as being related to the City, Canary Wharf or the big centres in Glasgow, Edinburgh and Aberdeen, but of course they are part of our high streets too. We cannot forget that.
Some of the reasons why we see a vibrant financial services sector in Scotland are the highly talented and educated work force, the strong infrastructure and the first-class support businesses such as law and accountancy, which all provide a firm foundation for the Scottish financial services sector. I believe that the sector will play a role in our recovery and future prosperity, not only in Scotland but in the United Kingdom as a whole. However, that will happen only if it reconnects with businesses and families.
The financial services sector in Scotland has been through difficult times. Extraordinary action has been taken to restore stability to the financial services sector, as the hon. Member for Nottingham East (Chris Leslie) said in his remarks. Since March, when the Committee’s report was published, I think that the situation in Scotland and throughout the UK has improved considerably. Actions taken by financial authorities, along with improving global conditions, have enabled banks and building societies to stabilise, begin restructuring and slowly start to restore consumers’ trust.
However, we must continue to be vigilant. We cannot take the strength of Scotland’s financial sector for granted and I welcome the Committee’s contribution to the discussion about how improvements can be made. The opportunity exists now to deliver real and lasting reform of the financial sector, to ensure that it is stronger, safer and more resilient. The Government are determined to deliver that reform.
In the future, we must examine the structure of banking, including the links between size, risk and competition. To that end, we have tasked the Independent Commission on Banking, under the chairmanship of Sir John Vickers, to consider structural and non-structural reforms to the UK banking sector, in order to promote stability and competition.
My hon. Friend the Member for Argyll and Bute (Mr Reid) talked about competition in the banking sector. Clearly, we need to think about issues such as the transparency of the financial information available to customers, so that they know how much their bank account is costing them. During an intervention, my hon. Friend the Member for Skipton and Ripon (Julian Smith) talked about improving data on interest rates and the Government have made steps, following a super-complaint on individual savings accounts, to ensure that there is much more transparency and that people can move their accounts from one provider to another more quickly.
Cathy Jamieson
As a follow-up to that point, I wonder whether the Minister can ensure that the mutual sector is not unfairly disadvantaged, given that it largely avoided the problems that we have seen with some of the other banks. Will he ensure that any changes in legislation support the continuation of the mutual sector?
Mr Hoban
Indeed. I am very grateful to the hon. Lady for mentioning that point, because one of the commitments in the coalition agreement is, of course, to foster diversity and ownership in the financial services sector, including strengthening the mutual sector. The hon. Lady’s intervention also reminds me that she raised issues about set-off. I know that set-off is very important to many consumers and she will be pleased to know that the Financial Services Authority is reviewing it at the moment.
I was talking about reducing risk and the role of the Independent Commission on Banking. The debate about how we reduce risk is not just a UK debate. We have been at the forefront of developing common international standards of regulation—for example, in Basel and through the capital requirements directive negotiations in the EU. In addition, we have led the way in developing approaches to minimise the risk of failure and to ensure that, when failures do occur, the call on the taxpayer is minimised. Of course, it was the previous Government who introduced the special resolution regime, which we supported, and “living wills”—the recovery and resolution plans that were in the Financial Services Act 2010. We also supported that measure.
We will continue to work with international colleagues to ensure that the implementation and sequencing of regulatory changes are taken forward in a way that balances the need to act now on the lessons of the crisis with the need to maintain the competitiveness of the industry.
A number of hon. Members talked about the regulatory framework. Clearly, the reputation and long-term success of Scotland’s banks also depend on trust. Customers need to know that they will be treated fairly and appropriately by all financial institutions. The robust regulatory framework that we are creating will help to cement the attractiveness of Scotland’s financial sector, by providing certainty for banks and confidence for consumers without stifling innovation and growth.
We have learned the lessons from the financial crisis and set out a radical reform to the architecture of financial regulation that we inherited. Earlier this year, the Chancellor announced that the Government will legislate to create a new prudential regulation authority as a subsidiary of the Bank of England. The PRA will be responsible for prudential regulation of all deposit-taking institutions, insurers and investment banks. It will cover all issues affecting the safety and soundness of individual firms, including remuneration. It will have the focus, expertise and mandate to ensure effective prudential supervision and regulation of individual firms, thereby strengthening the UK’s financial system and its resilience to future crises.
We will ensure that financial regulation delivers financial services and markets that are secure and within which private individuals, small businesses and multinational firms have all the information available to them to make the right choices, as well as the right level of protection if things should go wrong. That is crucial.
Consequently, alongside the PRA we will establish a consumer protection and markets agency, which will be a new and integrated conduct regulator. The CPMA will take a tougher, more proactive and more focused approach to regulating conduct in financial services and markets. That will ensure that the behaviour of firms—whether they are based in the high street or trade in high finance—is placed at the heart of the regulatory system, giving consumers greater clarity. The CPMA’s primary objective will be to ensure confidence in financial services and markets, with a particular focus on protecting consumers and ensuring market integrity.
Appropriate regulation is vital to instilling confidence in financial services, protecting customers’ interests and ensuring clean and efficient markets, where both retail and wholesale customers can engage confidently and with the degree of protection appropriate to their needs.
Regulators are continuing to monitor firms for poor practice and they will develop new initiatives to ensure that consumers are treated fairly. A specific focus will be given to cases of unarranged overdraft charges. Working alongside the industry, the Office of Fair Trading has developed commitments on unarranged overdraft charges. They include an agreement that consumers should be able to opt out of unarranged overdraft facilities and minimum standards for how that process of opting-out should work.
Furthermore, earlier this week we laid the regulations to turn on the new section 404 powers—a provision in the Financial Services Act 2010, which was passed just before the election—that will enable the FSA to require firms to establish consumer redress schemes. We believe that it is right to turn that provision on.
However, we also need to ensure that consumers have advice at their fingertips. We have already announced the introduction of an annual financial health check. That check will help families and individuals to get into the habit of taking a thorough look at their finances. It will show them where they are most at risk and how they can regain control of their finances and plan for the future. It will give people a “prescription” that will offer clear advice on what they can do to improve their financial situation now and for the years ahead.
My hon. Friend the Member for Milton Keynes South (Iain Stewart) and the hon. Member for Kilmarnock and Loudoun talked about the importance of inculcating the habit of saving among children early on in their lives—indeed, the hon. Member for Nottingham East also highlighted that issue. It is absolutely vital. Of course, it is a responsibility that we all share and it is an idea that is supported by a number of financial services bodies.
The hon. Member for Kilmarnock and Loudoun mentioned the Cumnock and Doon Valley credit union. Across the UK, credit unions play an important role in this area of education. I have been to see a project that HSBC sponsors in primary schools; I saw it in the Wallisdean infant school in my own constituency. It was quite interesting to talk to children between five and seven about the importance of saving and spending. Clearly, even at that early age they have thought about this issue very carefully.
The new consumer financial education body will roll out the national financial advice service, which will be free and impartial. Of course, that service will be funded by the industry through a social responsibility levy. The cost of the service will not be picked up by the taxpayer; the service will be industry-funded, as part of the industry’s contribution to tackling some of these issues. I think that the service will help consumers throughout the UK to get the best from their financial providers and to give them the information that they need to manage their finances responsibly. The service will be further complemented by the simple products initiative that we announced in July.
The hon. Member for Glasgow South West raised the issue of repossessions. I say to him that in 2009 47,700 homes were repossessed, compared with an estimate that 75,000 would be repossessed. In the first quarter of this year, 9,800 homes were repossessed and in the second quarter 9,400 homes were. In part, that is due to the forbearance of lenders, but clearly the low interest rate environment has made it possible for more people to stay in their own homes. That is to be welcomed. [Interruption.]
Equitable Life (Payments) Bill
Cathy Jamieson Excerpts(14 years ago)
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Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I add my congratulations to the hon. Member for Congleton (Fiona Bruce) on her maiden speech. I know that she has Scottish roots and she is already proving to be an assiduous member of the Scottish Affairs Committee.
Before being elected to this House in May I met Equitable Life policyholders from my constituency. I am indebted to Richard Cox, the local EMAG regional co-ordinator, for bringing me up to speed on the issue and the background to the Bill. I did not immediately sign the pledge to support EMAG, because I wanted to ensure that if I signed I would be able to carry through my commitment. Having met those affected and read the numerous reports on the issue, I judged that there is an indisputable moral obligation to compensate the Equitable Life policyholders, so I signed the pledge in the knowledge that I would be judged later by my actions and follow-through.
In today’s debate Members on both sides of the House have said that there are areas on which we can agree and build consensus. We all seem to agree that a compensation scheme is important and must happen. The differences between us appear to be the vehicle for compensation, the amount, the timetable for delivery and the payments. As I listened to the debate, I could not help wondering whether some of the exchanges would be seen as not especially helpful by those who want us to unite and find a way forward to helping those who have been affected by this issue. Some of the to-ing and fro-ing across the Chamber may make for a bit of sport and entertainment, but it does not move the debate on. I hope that we will be able to make progress in further contributions.
I do not have any difficulty with the principle of the Bill in that it will enable a payment scheme to be put in place for policyholders, but I do have reservations about the nature of the Bill, as I always do with Bills that do not contain much detail. It is all very well to lay down the general direction, but the Bill fails to answer several key questions to which those affected have long sought answers. For example, the Bill does not set out who will be entitled to what under the compensation payments scheme, but that is the essence of the issue. Despite all the numerous reports, inquiries and legal actions, the Bill empowers the Treasury to make payments, but gives no details. I regret that that is a pattern in the Bills introduced by this Government. The lack of detail also puts some of us in a difficult position. We want the compensation scheme to be put in place as quickly as possible, but we are reluctant to support a Bill that does not actually outline the detail of that scheme.
It is worth quoting the coalition agreement on this issue:
“We will implement the Parliamentary and Health Ombudsman’s recommendation to make fair and transparent payments to Equitable Life policy holders, through an independent payment scheme, for their relative loss as a consequence of regulatory failure.”
There were no ifs and buts in that statement, but we now seem to hear some maybes about what might happen in the future. I urge the Minister to ensure that not only the design of the scheme but its operation is independent of Government, and that is why I welcome the amendment we propose to table.
In the end, not this House but those who voted for the coalition partners will judge whether they have met their promises. Some of those who have brought their concerns to me would not naturally support my politics, but it has become increasingly apparent that while they may not have agreed with the previous Government’s position, they at least knew what it was. Their problem now is that they feel let down, because they were given a clear commitment and now the Government are rolling back on that.
Chris Skidmore (Kingswood) (Con)
Will the hon. Lady explain the previous Government’s position and whether she agreed with it? As far as I am concerned, the House will vote tonight for compensation for the victims of a scandal—the people who waited 10 years under her Government and never got a penny.
Cathy Jamieson
I would point out gently to the hon. Gentleman that that is exactly the kind of intervention that people in my constituency do not find helpful. What they do find helpful is that we now have a Bill—albeit with some flaws—and I hope that the hon. Gentleman will support our amendments to it. It is important that we take this issue forward and resolve the matter speedily—
Cathy Jamieson
It is no use the hon. Gentleman making interventions from a sedentary position when I am genuinely trying to point out areas where we can build consensus.
I hope that the Economic Secretary will address a couple of points. First, do the Government believe that it is their moral duty to compensate policyholders by choosing the issue of relative loss over absolute loss? Secondly, I hope that she will give consideration to the points made today about some compensation payments being made early. I heard what the Financial Secretary said about the need to put a scheme in place swiftly, but that is unlikely to produce any results until next year. Many of my constituents are anxious for some interim payment to be made by the end of this year and I hope that the Government will give some thought to that.
As other hon. Members have said, the Bill raises broader issues. It is clear that hard-working, decent and honest people who tried to do the right thing and provide for their families and their retirements have lost out. I hope that we will keep that in mind as we move forward with this Bill and in the debates to come.