Financial Guidance and Claims Bill [Lords]

Darren Jones Excerpts

2nd reading: House of Commons
Monday 22nd January 2018 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

I rise to speak specifically in favour of the amendments tabled in the other place in respect of the debt respite, or breathing space, scheme for those struggling with personal debt.

However, before I do, I wonder whether, in summing up, the Minister can clarify the to and fro we have had on whether consumer debt is increasing in this country. When I say “clarify”, I do not mean giving us a statistic that supports the Government’s answer, as against the statistic given by Opposition Members; I mean giving us a simple answer on whether consumer debt is higher or lower. My understanding from Bank of England and Office for Budget Responsibility data is that consumer credit—unsecured loans—is up by 19% since 2010. Car financing—a huge new area of secured personal debt—has added £30 billion in the same timeframe. Student debt under this Government has doubled to nearly £100 billion. In real terms, there has been a 7% increase since 2010 in consumer personal debt—the second highest figure in the G8 economies after that in Canada. Some clarification on that point would be welcome.

It is estimated that over 8 million adults in the UK struggle with problem personal debt—the issue we are debating today—resulting in bankruptcy or individual voluntary arrangements. Many people are in that situation because of unexpected life events, be that a job loss, an illness or a breakdown in relationships. The debt charity StepChange, which has been mentioned on multiple occasions in the debate, estimates that 60% of its clients were able to stabilise their financial position after a voluntary freezing of interest charges and enforcement action by their creditors, so it is clear that a breathing space scheme can make a real difference to the lives of people struggling with problem personal debt.

We must be honest: we have a problem with personal debt in this country. Although I welcome the Bill and the technical measures to try to solve some of the symptoms of personal debt, I want to take this opportunity to speak about some of its causes. We must remember why we are in this situation in the first place. Quite frankly, it is because we have seen the lowest level of wage payments as a percentage of GDP for decades. The flatlining of wages for many years—and, according to the Office for Budget Responsibility, potentially for the next 17 years—when compared with the increasing cost of living, pushes many hard-working people into the red.

That is not new in Britain, but it does show the difference that Government policy can make. I remember all too well when, in the 1980s, as a child growing up in Lawrence Weston—in what is now my constituency—I had to hide behind the curtains with my mum when the debt collector came to the door because we could not afford to repay the then high cost of personal debts provided by Provident, the Wonga of its day. That was a regular occurrence in my childhood. My parents were both in work. They were hard-working, law-abiding citizens who just wanted to do the best for our family. However, in the days before the introduction of the national minimum wage, the only source of support for a working-class family earning a mere couple of pounds per hour and with no one to call upon for financial help in times of trouble could be high-interest loan providers.

I remember asking myself then—as, sadly, I do now—why my mum and dad went to work every day, but did not have enough money to feed themselves as well as me. Why could we not afford my school uniform, or the school trip on which my friends were going? Most important, I remember seeing and feeling the stress that poverty induces. When there is a bailiff at the door, and red-ink printed letters in the letter box bearing more and more charges leading to spiralling debt repayments, it causes a type of anxiety and stress that I find hard to describe in words alone. As we discuss the Bill, let us not forget the additional harm caused to the British people when we do not solve the issue of personal debt in the first place, but merely provide technical measures to deal with the outcomes.

I am reminded of why I am so deeply committed and thankful to the Labour Government. They introduced the national minimum wage and invested in public services, and we should be proud of the number of children lifted out of poverty, including me. That has meant that I can stand here today to try to improve the lives of my constituents. It saddens me greatly, however, that—although I benefited from the policies of a Labour Government, which made such a difference to my family and to my prospects in life—we are here once again talking about the same issues. The sad truth is that, after a new lost generation of misguided austerity, we are now going backwards. On the day that Oxfam has revealed that 42 people have the same wealth as the 3.7 billion poorest in the world, we must take this opportunity to pause and ask why that is, and why we let it happen.

I am a centre-ground politician. I do not want to smash capitalism, but I do wish to fix it. If we are to do that, however, we must remember that it is for us—elected representatives of the British people in this democratic Parliament—to set the rules of the game. It is no excuse to talk of globalisation, multinational companies, tax jurisdictions outside the United Kingdom, and the accumulation of wealth in assets while wages become lower and lower. It is no excuse to stand here and say that those problems are too hard for us to fix as a nation—to say, “I would rather we were a member of the European Union, trying to fix them as part of a bloc of countries.”

I should like to see much more radical reform of the economy, but this is a good first step, and I welcome the Government’s commitment to it. In a digital world, the Provident man is no longer on the doorstep writing down in his grey book how much people have borrowed, how much they have paid back, and, when he comes back next week, how much they need to repay. An app on the phone can deliver the funds to someone’s bank account within hours. Access to such services and support is very important.

I thank the Economic Secretary for his detailed response to my letter about this issue. Like other Members who have spoken, I hope he now understands—notwithstanding clause 8(2), which says that the Secretary of State may merely consider whether a breathing space is necessary—that it is indeed necessary, and that the Government should work speedily to introduce it. In response to my letter, the Government made it clear that they were willing to listen to stakeholders in designing the “breathing space” scheme, and I welcome that. I hope that they will include all personal debts, not just some. I hope that they will take account of what has been said by Members such as my hon. Friend the Member for Makerfield (Yvonne Fovargue), who, on this issue, is a learned Member, and who suggested a minimum period of six months rather than six weeks.

I took issue with something that was said earlier by the Secretary of State, who is no longer in the Chamber. In her opening speech, she said that people needed access to mentoring, support and education about budgeting. I agree with that, but let me make this point: to suggest that people who find themselves in very stressful, and sometimes devastating, situations of personal debt because of their ineptitude is both patronising and offensive. [Hon. Members: “She did not say that.”] She did indeed.

I am reminded of an occasion when, during my election campaign, I visited a food bank in my constituency. I asked some people why they had ended up there. One of my constituents said that she had broken up with her partner and found herself in financial difficulties, and that that had driven her to come to the food bank. I will not name names, but she then told me that a Conservative Member of Parliament who had been in my constituency in the run-up to the election had written in an article for ConservativeHome that food bank users needed financial budget management skills. She broke down in tears as she told me that story, in front of her neighbours and her children in the food bank where she had wished never to find herself, because she had been told that she was there because of her lack of intelligence or ability.

The Secretary of State said that it was a core principle of this Conservative Government that the Bill empowered individuals by giving them the information that they needed. Let me make it clear that it is a core principle of the Labour party—and it will continue to be a core principle when we are in government—to empower individuals by paying them a decent wage for a decent day’s work, so that they can live as they wish to live.

I commend the Government on this technical Bill, which provides some good solutions to some of the problems that we face. I look forward to seeing the regulations that will bring a breathing space scheme into law as soon as possible. However, let us not forget what causes people to find themselves in this situation. Let us try to create an economy that works not just for the few, but for the many. Let us remind people like my constituents who become stuck, often through no fault of their own, that they are not alone, and that there are people in this place who are fighting for them and their future.