Oral Answers to Questions

John Glen Excerpts

Tuesday 16th January 2018 Commons Chamber

[Kate Green (Stretford and Urmston) (Lab)]

6. What recent assessment his Department has made of trends in the level of household debt since 2010.

[The Economic Secretary to the Treasury (John Glen)]

The household debt-to-income ratio has fallen from 152% at the start of 2010 to 138% in the third quarter of 2017. It has remained significantly below its pre-crisis peak of 160% in the first quarter of 2008. I also note today’s report from the Institute for Fiscal Studies on the same subject.

[Kate Green]

I, too, have read the IFS report, which points out that debt is a real problem for a significant minority of low-income householders who are struggling to pay the bills and make debt repayments. Does the Minister accept that imposing a freeze on benefits when inflation is standing at 3% will make things even tougher for those families?

[John Glen]

The report also points out that the percentage of households with financial liabilities in the four lowest wealth quintiles fell between June 2010 and June 2014. The Government are fully committed to helping the poorest households, and just last year the Money Advice Service spent £49 million on giving 440,000 free-to-client sessions to assist those in difficulty.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

The UK has the second highest level of household debt in the G8. On our high streets, loan sharks are masquerading as household goods stores. Does the Minister agree that we have a rather unhealthy addiction to consumer debt in this country?

[John Glen]

My right hon. Friend makes a sensible point. The Government have empowered the independent Financial Policy Committee to advise them on these matters, and to keep a close watch on the level of debt.

[Toby Perkins (Chesterfield) (Lab)]

20. One trend that alarms me is the false advertising of consumer credit rates. Despite having a perfect credit rating, according to Experian, I was told that M&S Bank would not give me the advertised rate that was supposedly being offered to 51% of its customers. What is the Minister doing to ensure that the Financial Conduct Authority is robust in ensuring that advertised rates are made available to the majority of consumers?

[John Glen]

I am familiar with the hon. Gentleman’s situation and his correspondence with the Financial Conduct Authority. I believe that he has met FCA representatives. The FCA has strong powers to ban products. It has unlimited fines at its disposal and it can order repayments. As the hon. Gentleman knows, 51% of applicants for loans will receive the advertised rate, and those are the terms that the FCA works to.

[Sir Desmond Swayne (New Forest West) (Con)]

When will incentives to save exceed those to borrow?

[John Glen]

Obviously I do not have a crystal ball, and as the economy grows, different patterns of behaviour will ensue. It is not for the Government to tell people what to do; we are trying to secure a growing economy in which people have the choice.

[Kirsty Blackman (Aberdeen North) (SNP)]

Personal debt is the biggest worry for many people I meet. The figures released by the Institute for Fiscal Studies today show that a third of those on the lowest incomes are in net debt. This debt is persistent; it is a spiral that people get stuck in for years. What are the UK Government doing to improve the financial position of households with the lowest incomes?

[John Glen]

We recognise that on occasions people find themselves in challenging debt situations. That is why we committed in our manifesto to a six-week breathing space, and we will bring that legislation forward in due course in the Financial Guidance and Claims Bill.

[Kirsty Blackman]

Over a third of people aged under 45 live in households with financial wealth of less than zero. For too many people there is not enough money at the end of each month or each week. From next year individuals earning less than £26,000 in England will pay more income tax than they would if they lived in Scotland; how can the Minister justify that?

[John Glen]

The Government recognise the challenges facing those on lower salaries, which is why we have increased the tax-free allowance, have had the eighth successive fuel duty freeze, and have increased the national living wage above the inflation rate.

[Robert Courts (Witney) (Con)]

Will the Minister confirm that the lowest paid have had a real-terms pay increase of 7% since 2015, showing that this Government’s policies are targeted to help the lowest paid?

[John Glen]

My hon. Friend is right. The Government do not take anything for granted and will look very closely at what is happening with the poorest in our society.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Does the Minister acknowledge that the reasons why a quarter of people on low incomes are currently experiencing significant problems with arrears or debt repayment include, first, his Government not taking on board Labour’s programme to rein in credit card debt and, secondly, the fact that their changes to the tax threshold have been outweighed for the poorest people by alterations to social security?

[John Glen]

The hon. Lady needs to acknowledge the transformation that the national living wage has brought to so many people and this Government’s willingness to increase it above inflation. It is also worth noting that interest payments as a proportion of income are currently at the lowest on record.

[Chris Davies (Brecon and Radnorshire) (Con)]

7. What assessment he has made of the contribution of the UK internal market to the Scottish and Welsh economies.

--- Later in debate ---

[Stephen Kinnock (Aberavon) (Lab)]

14. What assessment his Department has made of the effect of the UK leaving the European economic area on the economy and the service industry.

[The Economic Secretary to the Treasury (John Glen)]

The Government have undertaken a significant amount of work to assess the economic impacts of leaving the EU, and that is part of our continuing programme of rigorous and extensive analytical work on a range of scenarios. The Government are committed to keeping Parliament informed, provided that doing so would not risk damaging our negotiating position.

[Stephen Kinnock]

The Chancellor has said that he wants a jobs-first Brexit. Given that 80% of the British economy is in the services sector, and given that the EEA-based model of Brexit is the only one that gives maximum access for our services industries, does the Minister agree that an EEA-based Brexit is the only viable option for our country?

[John Glen]

What we can agree is that the Government are united in working to secure the best and most ambitious Brexit deal. That will mean a bespoke deal that will not damage the long-term interests of the economy.

[Nicky Morgan (Loughborough) (Con)]

First, I welcome the Minister to his place in the Treasury. I am sure he will do an excellent job.

Is it not impossible to assess the impact of leaving, whether we are talking about the European economic area or the European Union, without knowing where we are headed? It is time for the Government to be clear about the end state of negotiations on financial services. I would like to see them publishing a position paper on financial services, particularly one informed by the meeting between the Prime Minister and the Chancellor last week.

[John Glen]

I am extremely grateful to my right hon. Friend, the Chair of the Select Committee, for that. I am aware of her previous exchanges with the Chancellor, who has undertaken to look at this issue. I will be working with him and we will respond in due course.

[Alison McGovern (Wirral South) (Lab)]

Academic assessments by the Treasury are crucial, but my constituents are reeling from hundreds of job losses at Vauxhall. Last night’s comments by the chief executive officer of Airbus that whatever Brexit we have will be net negative means we are talking again about hundreds of my constituents’ jobs on the line. I plead with the Minister to take this seriously, keep us in the single market and customs union, and keep my constituents in their jobs.

[John Glen]

I assure the hon. Lady that I take this very seriously, and the Government’s intention certainly is to negotiate a deep and special partnership on economic and security matters. There is room for positivity; if we look at what GSK, Google and Apple have said, we see that that attitude of positivity and optimism as we look forward is necessary.

[Andrea Jenkyns (Morley and Outwood) (Con)]

Does my hon. Friend agree that since deciding to leave the EU this Government have overseen record jobs, with quarter 4 figures for 2017 showing improved productivity? Does he agree that Britain’s best years lie ahead?

[John Glen]

The negotiations that this country faces are complex, but I will take an optimistic approach to all the discussions that I undertake at the Treasury and elsewhere going forward.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T1. If he will make a statement on his departmental responsibilities.