Unemployment

Debate between Gordon Banks and Alex Cunningham

Wednesday 14th December 2011 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

The dire news presented by the latest unemployment figures should cause members of the Government to hang their heads in shame, but there are not many present to do that today. The Government have promised much, but instead of delivering on their promises, they have proceeded to devastate the lives of ordinary hard-working people—people such as nurses, engineers, chemical process workers, local authority employees, shop assistants and even members of our armed forces, some of whom return from action on behalf of our country to learn that their jobs are either gone or under threat.

We were promised a private sector jobs revolution, but, as the Prime Minister had to admit today when challenged by my right hon. Friend the Leader of the Opposition, he has failed to deliver on that promise. His failure is proving expensive, not just for the millions who are unemployed, but for our country. Instead of investing billions in infrastructure, house building, new hospitals and other job creation schemes, the Tory Government are throwing that money away on escalating unemployment benefit bills which, sadly, are likely to increase even more in the future.

[Gordon Banks]

Is not one of the problems the fact that the Government seem to view the public and private sectors as two separate entities, although one cannot survive while the other is being cut to death?

[Alex Cunningham]

I agree. My hon. Friend provided an illustration of that earlier when he mentioned the job losses that have been announced in a company in his constituency. For some time the Tories said that we did not have a plan for jobs. They may have systematically dismantled our investment programmes for job creation, but it is not too late for them to adopt our five-point plan for jobs and growth.

Like others who have spoken, I shall concentrate on the subject of young people. The acceleration in the number of young unemployed people will help this Tory-led Government to go down in history as the Government who could not care less about our country’s most important asset.

Debt Advice and Debt Management

Debate between Gordon Banks and Alex Cunningham

Thursday 1st December 2011 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

I beg to move,

That this House has considered the matter of debt advice and debt management services.

It is a special privilege for me to open this debate this afternoon—a debate called for by Members from across the House. Although we may have many differences, when it comes to debt advice and debt management services, we share a real concern for ordinary people, including some of the most vulnerable in our society who, often through no fault of their own, find themselves in crisis. Many see that crisis deepen because they do not know where to turn when they fall victim to unscrupulous practices that I am sure we would all unite in condemning.

I am extremely grateful to my hon. Friend the Member for North East Derbyshire (Natascha Engel), Chair of the Backbench Business Committee and to the Committee members for providing us with the time to discuss the issues on the Floor of the House today.

The Select Committee on Business, Innovation and Skills is currently undertaking an inquiry into this very matter, so I believe this debate will add value to the work being done, particularly regarding the scandalous actions of a large number of debt management companies.

Debt seems to have permeated every part of our society in the 21st century. Households are in debt; students are in debt; the Government are in debt; even premiership football clubs are in debt. Debt seems simply like a fact of life for many. Something tells me, however, that neither the Chancellor of the Exchequer nor Malcolm Glazer are subject to aggressive cold calling, excessive fees and misleading advertising by debt management companies from which many of the most vulnerable people in debt suffer. A report commissioned by the Consumer Credit Counselling Service found that 6.2 million people are financially vulnerable—in other words, they have no money left in the bank at the end of the month—and many more are on the brink. More startling is the fact that younger Britons are getting into more debt earlier in life. More than a million households in the 18 to 39 age group are already struggling to cope, with a further 893,000 at risk.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Is my hon. Friend as concerned as I am about the cuts to the Money Advice Service just now and how detrimental they will be to the money advice that can be given to young people?

[Alex Cunningham]

I certainly am, and I am going to deal with the issue later. I understand that a considerable number of this body’s staff are to be cut, which is bound to have a tremendous knock-on effect for services across the piece, not just those for young people.

Insolvency is also on the increase. Earlier this year, it emerged that 135,000 people were declared insolvent in England and Wales in the previous 12 months—the highest figure since 1960.

It should also be emphasised that it is the legacy of debt that is the real concern. There was a huge rise in consumer debt from the 1980s until 2007, and although consumer spending has reduced in the last few years, the debt remains, accumulating vast amounts of interest as time goes by. Contrary to what some may think, such debt is not predominantly due to reckless overspending. According to figures from the University of Nottingham, 50% of debt problems can be attributed simply to changes in individual circumstances, particularly unemployment or a drop in wages—something that is not too uncommon in the present grim economic climate.

I know that it would be easy to start outlining why even more people will need help in the coming years as a result of the Government’s policies, but I believe that the purpose of the debate is to concentrate on how we can best help the victims. If we are to help people, we need to retain and enhance the right services and ensure that there is appropriate regulation. Tackling debt head-on can have far-reaching benefits. One pound spent on debt advice saves £2.98 in future spending. A report from the Centre for Social Justice, published in October and entitled “Completing the revolution: Transforming mental health and tackling poverty”, estimated that debt advice could save about £30 million for the national health service, £50 million in legal costs and £220 million in productivity gains, as well as providing other benefits such as debt repayments to creditors.

I am proud of the good work that the Labour Government did in helping those in debt. Since 2005 the financial inclusion fund has done tremendous work, focusing on the most vulnerable members of society and providing free advice for anyone who needs it. I was relieved when, despite the current Government’s initial decision not to maintain the fund, it was announced in February this year that £27 million would be made available so that free face-to-face debt advice could continue to be funded during the coming year. Now I am concerned about future provision, and especially about the possibility that local government—which is also under a considerable financial constraint—will be required to do more in this regard and Government cash will dry up.

The Money Advice Service, set up by the Government to co-ordinate debt advice, is evidently a new body still trying to find its feet, but we desperately need a clarification of its role. For example, if it aims to co-ordinate debt advice, does that include fee-charging services? I hope that the Minister will publish the whole business plan for the service, particularly as I understand that—as was suggested earlier by my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks)—staff numbers are to be cut dramatically.

We must also maintain the excellent practice that exists in our constituencies. In my own constituency the Cabin, part of the Stockton district advice and information service, provides targeted advice for young people. It depends on grants to survive, and I was pleased to learn that the lottery was helping to fund it, but that type of funding is extremely limited, and it will run out.

One young person who was dealt with by the Cabin had approached a fee-charging money management company. According to its assessment, he would be able to pay £100 per month, of which £29.50 was a monthly administration fee. He tried his best to keep up the monthly payments, but knew that he could not really afford them in the first place. He visited the Cabin, which arranged a debt relief order for him, basing his monthly contribution on his current circumstances. He was then able to put his life back on track.

The Cabin’s manager, Janine Browne, is worried about young people finding their way to the very kind of organisation that we want them to avoid. She told me:

“We find the majority of debt collection agencies are very aggressive and if young people cannot access appropriate advice and support they will try other avenues which may not be effective or necessarily appropriate to their circumstances. Without support they bow to pressure.”

What is happening with debt management companies? In 2010-11, the Citizens Advice service in England and Wales dealt with 3,155 complaints about debt management services, 5% more than in the previous year. The key complaints were about poor advice, poor service, excessive charging, cold calling, and up-front fees for services that did not materialise. Most debt firms that have been audited have also failed to comply with guidance from the Office of Fair Trading in several respects, the main problem being misleading advertising that represents their services as being free when they are not. Through up-front fees, the companies take their clients’ cash for themselves first and their creditors second, leaving people disheartened by the lack of progress in dealing with their debts. What can we do?

I have a number of questions for the Minister. Free debt advice is currently widely available and easily accessed. How will he protect and promote those services? The current system of self-regulation is failing. How will he enhance it? Will he ban cold-calling canvassing for new business and the upfront fees? Will he introduce tougher licensing and a requirement for firms to make clear their fees on any advertising and on initially meeting clients?

[Gordon Banks]

My hon. Friend is giving the Minister a Christmas list—and the Minister will recall that this time last year we were addressing the Postal Services Bill, which caused much amusement. Does my hon. Friend agree that the Minister should pay particular attention to the powers of the Office of Fair Trading? Where it has evidence of wrongdoing, it must be able to act quickly to suspend the licences of companies, rather than cases being dragged out for up to four years in the courts before the OFT can finally take action.

[Alex Cunningham]

My hon. Friend steals my final point. He will find out in a few moments that I entirely agree with what he says. What I do know, however, is that some Christmas list requests will not be fulfilled this year because of the levels of debt people are facing.

What work does the Minister have planned with search engines such as Google on finding ways to help people in need find the free services that are available to them, rather than the unscrupulous merchants? Will he provide the OFT with the power to investigate ruthless companies and shut them down early, rather than that sometimes taking more than two years, during which time the companies still operate, make a profit and charge vulnerable customers? I look forward to the Minister telling us what is to be done.