Tax Credits

Debate between Damian Hinds and Chuka Umunna

Tuesday 20th October 2015 Commons Chamber

[Damian Hinds]

It does answer the question. The hon. Gentleman was suggesting that this proportion would not benefit from a national living wage, which is incorrect. A lot of people who are not on today’s minimum wage will also benefit to a sum of about—[Interruption.] I am asked how many—the estimate is that about 6 million people will benefit directly or indirectly.

[Mr Chuka Umunna (Streatham) (Lab)]

Let me ask the Minister about the subsidy point. We can all agree on the context that we need to reconfigure our labour market. Almost 6 million people are not earning a wage that they can live on. Ultimately, yes, a subsidy going to employers is not desirable, but surely the issue here is the order in which we transform our economy. The fact is that through a properly prosecuted industrial strategy—something that we have obviously not seen in our steel industry—it is possible to reconfigure the labour market. That should come first—before taking away the tax credits and support from people who are not earning enough. Ultimately, that is the difference between the two sides.

[Damian Hinds]

The harsh reality that we face is that we have a budget deficit equivalent to £3,300 for every household in the country. We need to take firm action on that now. It is right, as I said earlier, that the burden is spread right throughout society, but it is also right to shift the burden towards the upper end, which is what has happened with the tax burden.

Consumer Credit and Debt Management

Debate between Damian Hinds and Chuka Umunna

Thursday 3rd February 2011 Commons Chamber

[Mr Umunna]

Does the hon. Gentleman accept that the fact that a definition of the cap is not given would allow the regulator some form of flexibility in the event that it is required to take action?

[Damian Hinds]

I am grateful to the hon. Gentleman for that intervention and for being my minute man. That does create extra flexibility but we do need to know what we are talking about. A number of hon. Members have drawn a distinction between an interest rate cap and a cap that includes interest and other charges—that is what the annual percentage rate is; APR includes some other charges. It does not include behavioural charges, default charges and so on, and I do not understand mathematically—I am happy to take an intervention on this for a second minute—how they could be factored into a general cap that would apply to credit products extended to everybody, given that, by definition, behavioural and default charges are incurred only by some customers.

Another problem with the motion is its emphasis on a lack of competitiveness, because that is not the problem in this area. I do not wish to be too pernickety, but I do not think that “many” lenders can be in a “near monopoly” position, as the motion suggests. In many ways, stimulating competitiveness further might end up being counter-productive, but in the three minutes available there is no chance of our discussing that aspect.

This country is both blessed and cursed with a very diverse and dynamic consumer credit market. We are blessed because of the variety, where there is a product to suit just about every need in the market. Even payday lending can be very rational; it could be very rational for someone trying to avoid current account bounce charges to take out a payday loan instead. Very few people are excluded from the legal and, therefore, regulatable market altogether.

We are cursed by this market because of the ubiquity of the messages about credit that people are bombarded with; the emphasis on what people want to borrow, rather than what they need or can afford to pay back; and the complexity involved. Even very highly educated people find it difficult to understand every product and every aspect of every product. I am sure that some Members of this House struggle, as I do, with understanding some aspects of some of these products.

That complexity highlights one of the great difficulties with introducing new regulation, because companies make money in this market in lots of different ways. Rent-to-own companies, such as BrightHouse, which has been mentioned more than once in this debate, would almost certainly not be curtailed by any restriction on the cost of credit, because so much of the money they make is on the sticker price, relative to Argos or Currys, rather than on the charge for credit.

I am running out of time already, so I had better hurry up. The experience in America suggests that where there is effective regulation of cash lending, other sectors such as rent-to-own or good old-fashioned catalogues are stimulated, and if there is a clamp down on interest rate charges, that will stimulate growth in behavioural charges and so on. Everybody in this House probably agrees that a blunt, general, across-the-board APR cap is not a good idea, so the challenge is whether we can come up with a regime that curbs the worst excesses of the market without putting entire segments and entire product categories out of the market, and that protects the most vulnerable. We need a regime that does not push them into the arms of illegal loan sharks—the sort of people for whom the idea of a late payment penalty is a cigarette burn to the forearm.

Building Schools for the Future

Debate between Damian Hinds and Chuka Umunna

Wednesday 21st July 2010 Westminster Hall

[Mr Chuka Umunna (Streatham) (Lab)]

Thank you, Mr. Gray; you did okay.

I start by declaring an interest: two projects in my constituency have been scrapped and one hangs in the balance. The two that have been scrapped are the La Retraite and Bishop Thomas Grant secondary schools projects, and the one in the balance is for Dunraven school.

I have lived in my constituency all my life. I love my area and think that our young people are fantastic—they have drive and talent and want to succeed. I do not buy into the view that is often promulgated in the media that our young people are a problem. To answer the point made by the hon. Member for Banbury (Tony Baldry) about so-called synthetic anger, that is where my anger comes from: there is nothing synthetic about it. I want to provide young people in my constituency with a platform from which to succeed. That is why I feel emotional about the topic, and if the hon. Gentleman does not get that, I am not sure he will get anything.

[Damian Hinds (East Hampshire) (Con)]

Will the hon. Gentleman give way?

[Mr Umunna]

I will make some progress, if the hon. Gentleman will allow me, and perhaps take interventions a bit later.

Having declared my interest, I want to discuss the manner in which the BSF cuts were announced. I welcome the Secretary of State’s apology, but that does not excuse the shabby, dysfunctional way in which he made the announcement on 5 July. One of the problems was that he came to the Chamber almost as if he were attending an Oxford Union debating society-type event. He made the announcement in a way that seemed to show no recognition or appreciation of the gravity of what he was saying, or its effect on communities such as mine. As for the content, it included massively sweeping statements about the BSF project, some of which we have heard again this afternoon. We were told, at column 49 of Hansard, that it was “dysfunctional” and “did not guarantee quality”. It was portrayed as a wasteful programme, delivering second-rate buildings and facilities or, as I think the Secretary of State put it at column 48 on the same occasion, “botched construction projects”. I do not think that any Labour Members would say that the BSF programme was perfect, or that every aspect of it operated perfectly, or that it was 100% efficient; however, big and sweeping statements have been made, and I want to know—I will be grateful if the Minister elaborates—where the overall evidence is to support those statements.

A National Audit Office report on the BSF programme was produced last year. Although it noted that initial timings and budgets were too optimistic, it found that BSF was delivering school buildings more cheaply than academies and other school building programmes, and it was making it easier for local authorities to use their capital funding strategically. The hon. Member for Banbury put a premium on what school principals say about the project, and I would not disagree with taking note of what school heads and principals say about it. PricewaterhouseCoopers published an evaluation of BSF in February in which more than four fifths of head teachers agreed that the programme would contribute to educational transformation in their schools; three quarters agreed that it had more potential to deliver educational transformation than previous capital investment programmes; and all the head teachers surveyed agreed that it delivered a more stimulating environment and tackled fundamental design issues in schools. That is the overall evidence.

There are examples in my constituency of the BSF programme being very effective and highly successful. They undermine and contradict the overall view put forward by the Government and the Secretary of State. One example is Elm Court school, a special school in the Brixton area. An old Victorian building was transformed into a modern learning space, with fantastic new facilities including a theatre, a drama space and multi-use games and sports areas. The young people love it. Again, I ask for the evidence for what the Government say.

The lack of evidence calls into question the coalition’s motives for the announcement that they have made. They have said that the money being taken from the programme is not being diverted into free schools, but do they not accept that it adds insult to injury when the parents and teachers in my constituency, whose schools are affected by the cuts, see all that money being ploughed into the Secretary of State’s pet project, the free school model? The hon. Member for Erewash (Jessica Lee) mentioned the structural deficit, which tends to come up every time we talk about anything relating to resource. [Hon. Members: “ Of course it does.”] Okay, I accept that, but one of the ways of dealing with the deficit is to bring about growth. That is ultimately the best way to eradicate the deficit, in many respects. Why take investment away from the people to whom we are looking for the growth of the economy in the future? It does not make sense to me.

Above all, although I accept that BSF may not operate perfectly—the hon. Member for Erewash outlined the process—why not review and reform the process? Why sweep away an entire programme? I do not know whether there are any Liberal Democrat Members in the Chamber, but I cannot believe that they are going along with what is happening.