Football Clubs (Insolvency)

Justin Tomlinson Excerpts

Tuesday 18th March 2014 Westminster Hall

[Justin Tomlinson (North Swindon) (Con)]

I apologise for arriving late, but I had to serve on a Delegated Legislation Committee. It is a great pleasure to support both this debate and the private Member’s Bill of my hon. Friend the Member for Folkestone and Hythe (Damian Collins).

I am an unabashedly huge football fan, and I have two brief points that are slightly too long for an intervention. My first point is on the Insolvency Act 1986. I represent North Swindon, and we have Swindon Town football club, which has entered administration twice and avoided it on many other occasions. We have had a number of owners, some good and some less good. The hon. Member for Coventry South (Mr Cunningham) mentioned St John Ambulance, and his point applies to Swindon, too. We had a number of good local businesses—genuine suppliers—that were left high and dry each time the club’s ownership changed. Various wealthy people managed to get away completely unscathed while those who were working hard to support our vital community football club were left with their fingers burned, which made it a lot harder for the town to continue trusting the new owners.

My second point is on transparency. We have heard about the situations in Portsmouth and Coventry, and the same applies to many football clubs across the country. As supporters, we simply do not know who is responsible for the football club and who is ultimately making the decision to spend more money than the club can viably sustain. I have previously called for every football club to have an elected fans representative on the board. Ultimately, we need business people who are good enough to raise sufficient money, but stupid enough to go and waste it chasing domestic success when running the club, and an elected fans representative would at least always ensure transparency.

My hon. Friend the Member for Portsmouth North (Penny Mordaunt) described people trying to work out who the administrator was, but the fans representative would provide a link inside the football club. The football clubs would benefit, because at the end of the day, we long-suffering supporters are the customers. We buy the season tickets, the replica shirts, the Christmas presents, the programmes and the pies at half time. Having that rep on the board would offer a link to those customers. The rep could suggest where things are going right and where there are further opportunities to grow, as well as perhaps being the front that liaises with the local community, building trust in and support for the club.

[Jim Shannon (Strangford) (DUP)]

I also apologise for not arriving on time for the debate. I was also on a Delegated Legislation Committee and I took a little bit of time to get down here. I am pleased to have the chance to support this debate. I support Leicester City, and have done since I was a wee boy. We are looking forward to going back to the premier league, but we have had difficulties in the past. The loyalty of supporters and their contribution to their club, whether socially, physically, monetarily or in time—they might attend all the matches—are important. I totally support the hon. Gentleman’s point that the clubs should have within their administration some method whereby supporters clubs, or individuals on behalf of supporters clubs, can have an input into what happens.

[Justin Tomlinson]

I thank the hon. Gentleman for his comments, which I agree with. I see that representative being elected through the supporters trust network. We have had a number of Supporters Direct events in Parliament, and we have all seen at first hand the fantastic work that it does.

[Damian Collins]

My hon. Friend raised an interesting idea. Does he agree that there is a necessity for the public declaration of the ownership to be clear? That was not clear with Leeds United and when the chief executive gave evidence to the Select Committee, he said that he did not know who owned the club. That kind of situation cannot be allowed to continue.

[Justin Tomlinson]

That is the absolute minimum we need. Supporters and suppliers should have a right to know who the custodian of their community football club is. The fans representative could then give a day-to-day commentary where appropriate and link the supporters and the club. That would be a win-win, particularly for the Football League, in ensuring that fans are engaged with the football club. The hon. Gentleman is absolutely right that we need that public declaration.

[Mr Marcus Jones (Nuneaton) (Con)]

Does my hon. Friend agree that there should be more transparency within the Football League? I and many of my constituents support Coventry City, and the Football League has been completely not transparent in allowing the club’s owners to move it to Northampton, without any proper plan to get it back where it belongs in Coventry.

[Justin Tomlinson]

I know that my hon. Friend has worked tirelessly to support the long-suffering fans of Coventry City. Long gone are the days of the 1987 FA cup final, when Coventry had a 3-2 win over Tottenham. Watching that on the television is one of my earlier memories. My brother went to Coventry university, and it was the only time he was interested in football. He was pleased by the result on the day.

We keep coming back to the point on transparency. My hon. Friend the Member for Portsmouth North made the point that there would be alternatives if a supermarket was closing, but that people generally have only one community club to support. Yes, there will be good times and there will be bad times—in Swindon’s case, there have been a few more bad times than good times of late, but that adds to the excitement—but it should always be about transparency for the fans and for suppliers, who work hard to do their bit to support their community clubs and often give generous deals. We cannot simply abandon them and create this unique rule that protects wealthy people within football. I say that as a huge football fan myself. We have to do right by the community, the fans and the suppliers.

[Mr Jim Cunningham]

I thank the hon. Gentleman for giving way. I agree with the hon. Member for Nuneaton (Mr Jones): whoever owns the club, they have been playing ducks and drakes with the fans in Coventry. The fans are vitally important, but they are playing a guessing game on whether they will go back to the stadium or whether there will be a new stadium and, if so, where it will be located. It is 20 questions all the time, and that is how contemptuous they are of the people and fans of Coventry, quite frankly.

[Justin Tomlinson]

I agree wholeheartedly with that. What frustrates me, whether it is the Premier League or the Football League, is that it is in their interest that football clubs remain viable and continue to grow. It is a brand, and by and large it does work. The frustration was highlighted in the example given by my hon. Friend the Member for Portsmouth North. She said that at the eleventh hour—a huge amount of work had been done, the community had raised money and different people had pledged money—the goalposts seemed to be moved.

The Football League and the Premier League should have all the information registered and available, so that those seeking to step in to rescue, protect and save those valuable community assets are armed with the information that they need. In some cases, football clubs will disappear because it is just not meant to be, and some clubs will do better than they should, but that is just the nature of competitive sport. Where a set of owners have been reckless and the community wants to step up, whether that is through a new business owner or a community, fan-owned club, they should be able to have that information. The Football League and the Premier League should have it at their fingertips.

[Damian Collins]

My hon. Friend makes an important point. It is why it is important to have a proper fit and proper person test, administered by the Football Association, that can be done quickly. It can assess whether a new bid is worth pursuing or worth looking at, saying, “Is it from a fit and proper organisation or is it spurious?” If it is spurious, it should be set aside. It should not be down to the administrator to get the most money regardless of where it is coming from.

[Justin Tomlinson]

I agree with my hon. Friend. A whole review of the fit and proper test is needed, because my understanding is that while one of the tests is that a person must have a certain amount of money deposited in a bank account, they do not necessarily have to put that money into the club. I have seen that with Swindon Town. Wealthy people take over a club and have the potential to cover its liabilities, which would cover the suppliers, but that money is not necessarily used.

[Mr Jim Cunningham]

The hon. Gentleman is making a very important point. If we go back 15 to 20 years—I cannot remember the exact date—an individual wanted to buy Manchester United. Everyone was led to believe that he was going to buy the club, but at the end of the day he could not put the deal together. He totally misled people for some months.

[Justin Tomlinson]

I believe the individual ended up at Carlisle, and the club had a chequered time under his stewardship. Time and again, we are seeing people coming in for various different reasons without the interests of those football clubs at heart. I understand the world of business, but these clubs are valuable community assets. The Government need to apply pressure to the Football League and the Premier League, because it is in their interest to get their houses in order.

[Jim Shannon]

The hon. Gentleman is being gracious and kind in giving way again. We are referring to the English Football League. Will there be an opportunity for the Minister to look at what is happening in Scotland and the other leagues? I think of Rangers FC, which is an institution. I have supported the team since I was a young boy. The club has dipped in and out of administration and still has difficulties in the board room. The club is important: at its past three matches, 115,000 fans have come to support it. Does the hon. Gentleman feel that we have to look beyond the English league to the leagues in Scotland, Northern Ireland and Wales?

[Justin Tomlinson]

I absolutely agree. The issue affects football clubs across the country. In Scotland, there is the worrying experience with Hearts. As with Portsmouth, people are trying to do deals, but even the club cannot identify the owner.

[Damian Collins]

I just make the helpful point that many aspects of football are devolved. I originally wanted the debate to encompass Scotland, too, but I was advised that it could not.

[Justin Tomlinson]

I thank my hon. Friend for that.

In conclusion, there are huge amounts of good will towards sport and football, whether that comes from supporters or suppliers. We need to do whatever we can to ensure that they are equipped with knowledge, so that things can be remedied as quickly and swiftly as possible when they go wrong. That is absolutely vital for our local communities.

[Mr Gary Streeter (in the Chair)]

An injury-time strike by Marcus Jones.

Holiday Pricing

Justin Tomlinson Excerpts

Monday 24th February 2014 Westminster Hall

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. As an MP who represents a constituency that relies on the tourism industry, I presume you will find this an interesting and topical debate. I pay tribute to my hon. Friend the Member for Birmingham, Yardley (John Hemming) for securing this debate, which has managed to attract more than 200,000 signatures on petitions. I posted about this on Facebook and had 47 separate comments and suggestions from residents, with more than 3,000 views in just 72 hours. A lot of important things that we do in Parliament do not attract quite as much interest. That shows the strength of feeling in parents throughout the country on a real, live issue.

In my mind, this matter is split into three sections. First, it is about the holiday industry, which is why the Minister was selected to respond to the debate. Some have expressed concern about such a significant increase in costs. My hon. Friend the Member for Birmingham, Yardley gave good examples of people going on holidays during school holidays and during term time. However, some parents said that they felt that was a bit of a red herring: it probably reflects supply and demand, because if a firm cannot sell the more expensive holidays, it would be forced to drop those prices. For example, Center Parcs relies on something like a 97% occupancy rate to be a viable business. Prices will reflect—

[Mr Tobias Ellwood (Bournemouth East) (Con)]

As a representative for Bournemouth East, my default position is to support the tourism industry. Like many colleagues, I have received letters on this subject from people who are concerned about the price of holidays. Does my hon. Friend agree with the point made by my hon. Friend for Birmingham, Yardley about co-ordination across the country? Is it really necessary for Dorset to have the same holiday timings as Yorkshire or Kent? Could we not stagger these a little bit, so that supply and demand is spread over a longer period?

[Justin Tomlinson]

Like Bournemouth, which is a fantastic place to go on holiday, my hon. Friend’s intervention was fantastic. I am coming to that point in a bit. I have had many enjoyable holidays in Bournemouth.

[Toby Perkins (Chesterfield) (Lab)]

I am grateful to the hon. Member for North Swindon (Justin Tomlinson) for giving way and to the hon. Member for Bournemouth East (Mr Ellwood) for his comment. We support greater flexibility for different authorities, but can we ensure that Derbyshire gets the warmest months?

[Justin Tomlinson]

Derbyshire is also a fantastic place to go on holiday. Let us champion every constituency. I think that we are on safe ground, with cross-party support, when championing the UK tourism industry.

We need to be 100% sure that there are not some unscrupulous operators, but predominantly we need to focus on the two other areas of discretion and flexibility. On discretion, there is already confusion among a lot of parents. A lot of parents have contacted me to say, “We have triggered fines. We feel that our decision to take our children out of school was justified, but the school came back and said, ‘Under the new rules, there is absolutely no discretion; you will be fined’.” As a Government representative, I have almost felt obliged to apologise on behalf of the Government.

At one school that has made the new rules clear, the chair of governors said, “No. Actually, there is discretion. We, through the pastoral team, will look at those parents whose children have excellent attendance records and are achieving well in school and we will look at why they might be taken out of school, for a funeral, say, compared to a holiday without educational benefits, and it would be weighed up.” Clearly, there is confusion and that needs to be resolved.

There is the assumption that there is pressure from Ofsted because it looks at attendance records when rating a school. If a school decides to say that, because of cost and work pressures, it will allow a good level of discretion, its attendance records do not look good. That also needs to be considered, because that would be a disincentive for a school to apply common-sense discretion.

I think that all hon. Members would agree that, perhaps, discretion should apply where children are doing well and where parents work during school holidays. My hon. Friend the Member for Portsmouth North (Penny Mordaunt), who is a champion for the armed forces, highlights one career, but I am sure that there many others, in all our constituencies, where parents can take their children on holiday only during school time. We have all noticed the cost of peak holidays.

There are some challenges. I have been contacted by teachers who say that they do not like being in the firing line and having discretion, because if they feel that the child should not be given time off they are the ones who are blamed. Sometimes there are reasons why that should not be so. I have also been told that, in the past, when there was discretion about 10 days or 10 sessions, some parents felt that it was an automatic right to have that every year, even if the child was struggling. There was never a case of a parent saying, “You’re absolutely right. I’ll now withdraw that request.” It would create heated discussion. If we are to consider discretions, clear guidelines, which were suggested earlier, are an absolute must.

We must also consider teachers, because although discretion can help pupils and parents, the teachers would not have discretion to take time off during terms. That is not necessarily a complete, one-size-fits-all solution.

I am a big fan of flexibility in this regard. One big suggestion is flexible term times. About a year ago I was contacted by a resident, Nicki Mitchell, on this issue. I suggested flexible term times and was asked, “What happens if you have a child in a primary school and another at a secondary school, and they have different term times? That will make it even harder.” A number of residents have contacted me and said that such flexibility exists in Europe and that it is done by county or region. We might decide that the south-east goes a couple of weeks earlier and the south-west goes a couple of weeks later. However, in Europe it is done in rotation, so it is not always the south-west or south-east first. Not only would that help parents and children, but it would probably help the tourism industry, because almost regardless of what it charges it can fill up at peak time, but the rest of year it faces a real challenge. Spreading that across the year would be helpful.

If we cannot manage flexible term times, another suggestion is extending the school year by two weeks and allowing everybody automatically two weeks’ worth of discretion throughout the year. That would probably be incredibly unpopular with teachers, who would then face an extra two weeks, but I thought that I would mention it.

[Lorely Burt (Solihull) (LD)]

I am following closely what the hon. Gentleman is saying. Once a child has been away on holiday for two weeks, would there not be a lot of catching up to do when they came back? Children would be trying to catch up at different times.

[Justin Tomlinson]

That applies to general discretion. There is a plus and a negative with any suggestion, which is why my personal choice would be rotational, flexible term times, because that would help children, parents and teachers, and the tourism industry. To me that is a win-win, across the board. Long gone are the days when we all needed to be available for harvest time.

It is a pleasure to participate in this debate, which has caught the public’s imagination. It is a serious issue. I do not think that we will necessarily get all the solutions today. I think that the key to this—my hon. Friend the Member for Birmingham, Yardley mentioned it—is that the Education Committee should now pick up the baton after this debate, taking on board the speeches and comments that we have made, and we will happily forward all suggestions and comments from constituents who have contacted us. This can be looked at. The Government could, by looking at this proactively, innovatively and constructively, make a real difference to people’s lives.

[Several hon. Members]

rose—

--- Later in debate ---

[Jenny Willott]

The staggering of school holiday periods may well lengthen the period of peak demand and help to lower prices. I completely understand the suggestion that the Government should arrange for holiday periods to be spread, but currently local authorities, not the Government, set the term and holiday dates for community and voluntary-controlled schools. Academies, free schools and voluntary-aided schools—including some church schools—set their own dates. The Deregulation Bill, which is currently before the House, will extend the power to set term dates to all schools by 2015. The Government believe that term dates should be dealt with locally, through negotiation and co-operation across an area, to take into account the educational needs of students and the practicalities of varying the school year. I cannot remember which hon. Member raised the fact that someone with a child in a primary school and a child in a secondary school wants their holiday dates to line up.

[Justin Tomlinson]

I raised that point. I accept that schools can lead locally, but the reason why the system works so successfully in Germany is because the dates are set by regions, which ensures that children in primary school are not off at a different time from those in a nearby secondary school. Although I accept that the decision should be made locally, I think that the Government might guide regions to pick the dates.

[Jenny Willott]

It is clear that such a decision will have to be made across a local authority area, or more broadly. When the Deregulation Bill becomes law, we will look at how that can be done most effectively, and with the minimum disruption, to help schools and families.

Debt Advice (FCA Levy)

Justin Tomlinson Excerpts

Tuesday 21st January 2014 Westminster Hall

[Justin Tomlinson (North Swindon) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, because you are a true champion of Back-Bench business. The debate is a good example of how Back-Bench business can have an influence in a crucial and important area. We have heard several thoughtful and constructive speeches, and I am impressed by the degree of cross-party consensus in this important area. I pay particular tribute to my hon. Friends the Members for Worcester (Mr Walker) and for East Hampshire (Damian Hinds) for securing the debate, with the work and support of other Members.

I will not take up my full eight minutes as I simply want to concentrate on two small areas. I am the chair of the all-party group on financial education for young people, and I am delighted that the Government have supported our calls to include financial education in the national curriculum. That drove my support for the idea that we are debating. Underlining all our work, research by the Nationwide building society shows that 91% of people who get into financial difficulty say, “If only I had known better.” Hindsight is a wonderful thing, but we live in an increasingly complex financial world, partly because we are bombarded by marketing and partly because nowadays direct debits, standing orders, roll-overs and all sorts of other things encourage us to get into debt. If something happens—a bereavement, the loss of a job or a family breakdown, for example—people who have traditionally been good at managing their money quickly become overwhelmed. Because they understand that there is a problem, they might think “I will not go out at the weekend. I will not spend any money.” When they look at their bank account on Monday, however, they find that all the direct debits and standing orders have gone out and they quickly become overwhelmed.

My hon. Friend the Member for Gosport (Caroline Dinenage) will shortly tell us that such problems affect not only young consumers but existing ones. Although it is brilliant that the Government are supporting financial education, it will take generations for the benefits to filter through and to ensure that consumers are equipped with the skills to make informed decisions. That will not end the problem, but it will certainly help to tackle it. We must also tackle the situation faced by people today. The YouGov survey that the hon. Member for Makerfield (Yvonne Fovargue) cited showed that those who get face-to-face debt advice are twice as likely as those who do not to get their debts into a manageable situation in 12 months.

I praise the hon. Lady’s comment about putting envelopes behind the clock, because it sums up the situation very well. People come to our surgeries with a carrier bag full of unopened envelopes, having passed the point when they should really have tackled the situation to reach a position at which they are completely overwhelmed. We do our level best to help them, and we have organised training with our local citizens advice bureau so that my staff know the best way to deal with such issues as swiftly as possible. The reality, however, is that it is costly for organisations such as StepChange or Citizens Advice to sit down with people, unravel the complex mess in which they have found themselves and start to broker deals that will allow them to get back on the right path.

I absolutely support the need for face-to-face debt advice. If money from the levy is to go to the Money Advice Service, which commissions services from several different organisations, it should be ring-fenced for face-to-face debt advice. People should not simply be pointed to a website, because that approach has not worked. That might help consumers who already kind of know what they are doing to go that bit further, but people in real distress can be helped only by face-to-face debt advice. I also support calls for the funding to be additional so that it provides for additional face-to-face advice, rather than the new money simply offsetting the current levies that the banks pay. Although payday lending makes a big contribution to the increasing complexity of our world, other factors are also involved, so we need to increase funding rather than simply offsetting it.

We need to ensure that debt advice is clearly signposted, because consumers often do not realise that they can get help. When an individual takes out a loan, there should be a clear sign—a bit like the health warnings on tobacco products—giving them a telephone number to call or a website to visit. Even if people are not yet in a mess, they can simply ask whether the product is the most suitable one for them and whether there are other alternatives.

I think that we have made good progress. The Government have noticed that things need to be done and given the FCA greater powers, and the FCA has been proactive in meeting those of us who have campaigned on the matter. We must recognise that the market is ever changing, and I encourage the Government and the FCA to listen to what we are saying and to continue to work with us in our determination to protect and empower vulnerable consumers.

--- Later in debate ---

[Sajid Javid]

I listened carefully to what the hon. Lady said, and others have also made that point. When I visited MAS’s office in London last week, I looked much more closely at how it provides money advice. The hon. Lady is right to say that it relies considerably on a website, but it is more than just a website—there are individuals involved. I listened to a lengthy recorded call that was an example of how people who wanted money advice before entering into a financial transaction could be guided through the process. I saw for myself how that was adding value. Although that was obviously a phone call and not face-to-face advice, it was more than just web advice. The hon. Lady highlights the importance of MAS continuing to consider how it can continue to improve its service and ensure that it is providing appropriate advice.

[Justin Tomlinson]

There are a couple of problems. The MAS website is a poor man’s version of Money Saving Expert and it spends a fortune on self-promotion and advertising for its inferior product. The reality is that the financial world is changing, with direct debits and standing orders, and there has never been a greater need for face-to-face help for those who have become overwhelmed by difficulty.

[Sajid Javid]

I agree with my hon. Friend about face-to-face advice, including debt advice. All the debt advice that MAS provides through its partners is face-to-face debt advice. More than 158,000 face-to-face sessions took place in the last financial year, whereas 150,000 had been planned for, which shows that face-to-face debt advice is crucial. I agree with many comments made by colleagues, including the hon. Member for Makerfield (Yvonne Fovargue), about the importance of face-to-face advice.

Payday Loan Companies

Justin Tomlinson Excerpts

Monday 20th January 2014 Commons Chamber

[Justin Tomlinson (North Swindon) (Con)]

I pay tribute to those Members who have already spoken for what has been a balanced and well-informed debate so far. I also pay tribute to the hon. Member for Sheffield Central (Paul Blomfield), who has been leading a cross-party push to influence and shape policy in this extremely important area. I have been proud to work with and support him. I am delighted that my borough council has achieved cross-party support, so we are leading nationally and locally, and with cross-party support—perhaps it is the future.

I have talked about this subject on a number of occasions, particularly the need to empower consumers to make informed and savvy decisions. I recently read an interesting report on consumer markets by my hon. Friend the Member for South Thanet (Laura Sandys). It states:

“Good markets put consumers in the driving seat to make, shape or break products. Bad markets disguise, mislead or control consumer choice”.

How true that is of this market. It is absolutely key, because there is a fundamental information asymmetry in the payday lending market, and that is at the root of why it does not work in the consumer’s interest. The market distorts decision making so that, rather than making an informed decision based on price, the consumer is led into favouring other factors above all others in making their decision—a point that has been made by a few Members today.

The Office of Fair Trading investigated 50 payday lenders, and 60% of the consumers who responded emphasised speed and quick access. For the industry itself, the FCA produced an informative and useful video and talked with some of the consumers. They said that traditional mainstream banking was often too formal. There was a perception that they would have to turn up in a suit and justify their demands, wishes and financial actions.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the hon. Gentleman accept that many who have tried with the normal banks, regardless of whether they were wearing a suit, were turned away or found it very difficult, and that is why they have ended up with payday loan companies?

[Justin Tomlinson]

I thank the hon. Gentleman for that intervention. I will be moving on to the failings of mainstream banking shortly.

It is also a recognition of how consumer habits have changed. With 24/7 internet shopping becoming increasingly popular, if consumers see something online at 3 o’clock in the morning and want to purchase it, they would like to be able to access the funding right away. Society is geared up for consumers wanting something, and wanting it right away. That market adapted to consumer demand and stepped in where the mainstream banks were not looking. Clearly, value for money for the consumer is not paramount, and that needs to be addressed.

I welcome the positive steps that the Government have started to take, working with the FCA. I will comment briefly on the various things that I would like to see. The first one, and it is often the simplest, but the one on which I am not sure we are there yet, is that the total cost of a loan should always be displayed in cash terms. I suspect that not even Treasury Ministers can calculate an APR rate, which involves a hugely complex formula. Therefore, a customer should be able to say, “I want to borrow £100, and it will cost me £20.” Even those without a particularly good grasp of mathematics would then be able to make a reasonably informed decision on whether that represents good value for money.

To encourage competition, we need a standardised unit for comparison. In the energy market and in mobile phone contracts there are standard units, so consumers can visit price comparison websites to find the best product. That is very difficult with payday loan companies.

[Caroline Dinenage]

My hon. Friend is making an excellent speech. I know that he has worked hard to bring financial education into the school curriculum. Does he agree that to be able to fathom even the cost of these loans in numerical terms people need a certain level of literacy, so we really need to tackle the poor levels of adult numeracy and literacy, which are a big barrier in this case?

[Justin Tomlinson]

I thank my hon. Friend for that contribution. If she can just be patient, I will be heaping huge amounts of praise on her shortly.

The second thing I would like to see is real-time credit checking. The industry wants that because, despite a lot of the rumours, it relies on people being able to pay back the money they have borrowed. It would help to avoid somebody going into one shop and 15 minutes later going into another one. The credit checking agencies follow the traditional monthly banking system, so in theory somebody can wreak damage on themselves in the course of a month before the banks catch up. The industry says that it wants real-time credit checking; the credit agencies say they would like to offer it but that it is very complicated. One of the smaller operators, Call Credit, has got 10 operators signed up, but it will not be 100% participation. The Government will therefore have to empower the FCA to demand this. We are getting close to it, and it exists in some forms in America. It will make a huge difference because it will protect people from taking out multi-loans and allow the FCA to enforce affordability checks so that lenders who are lending to people who cannot afford it can be dealt with.

I would like to go one step further in ensuring that people can rebuild their credit rating. When someone has been turned down for a loan by one of the mainstream banks, the payday lending industry is often the only one that is prepared to take the risk with them. If they pay back the loan properly and on time, they should then have their credit rating repaired, allowing them to re-enter mainstream traditional lending.

There is a perception that the products, prices and requirements placed on people pushed them away from mainstream banking into a more modern, innovative industry that was responding to the situation. Mainstream banking has to take a long look at itself to see how it can adapt to a changing world. I fully support the fantastic work that my hon. Friend the Member for East Hampshire (Damian Hinds) has done on credit unions as an alternative for people. It might not be the total solution but it is certainly a very important part of the process.

On debt advice, which will be debated tomorrow in Westminster Hall, I fully support the levy, and I think the industry does as well. The Nationwide building society carried out a survey showing that 91% of people who get into financial difficulty say, “If only I had known better.” We see this in our casework. People who have got into difficulty come to see us with their carrier bags of unopened envelopes, and they need face-to-face, patient help. At the point where they go to get one of these loans, it would be helpful to have well-advertised information about how they can access free, independent debt advice, with a freephone telephone number.

Under the licence to operate, it costs lenders about £2,000 to get set up. A particularly bad, unscrupulous lender can wreak all sorts of damage before the FCA, or formerly the OFT, will have had time to do something about them. Unfortunately, some of these operators on the very fringes of the market will take advantage of the potential two-year window to do whatever they want before being taken down, and will then spend more money to get themselves back up the Google search engine listings.

The FCA needs to be extremely proactive in terms of mystery shoppers. Often the consumers who get themselves into the most difficulty are vulnerable people who are least equipped to raise it with us so that we can chase things up. This particularly applies to doorstep lending, as I have said in previous debates. With that lending model, the lender befriends someone, gains their trust, goes into their house every month, and could encourage them to borrow more. They might say over a cup of tea, “Have you sorted out your Christmas presents? If not, don’t worry, because we could provide the money for that, and why don’t you get your carpet sorted out if you’ve got your family coming round—that’s only another £3 a week.” We need to have mystery shoppers to check that the operators are sticking to the rules.

I championed the desire to get financial education on to the statute book, and I am delighted that the Government are implementing that in 2014. As my hon. Friend the Member for East Hampshire said, things will now change. This is about equipping the next generation of consumers with the skills to be able to make informed decisions—not moralising on those decisions but enabling them to make the mathematical calculations.

[Andrew Percy (Brigg and Goole) (Con)]

My hon. Friend is absolutely right to mention financial education. It is good that we have got that on to the curriculum, and it was a good campaign, but we also need to make sure that it is covered in teacher training. I used to be a teacher, and I would be the last person to give advice on financial literacy, as people will know from my previous speeches. We have to make sure that teachers are trained properly in how to deliver this.

[Justin Tomlinson]

My hon. Friend is absolutely spot on. From his experience as, I am sure, a wonderful teacher, additional training would make a real difference. It is important that the Government tie that in with the national curriculum to be introduced in September.

My hon. Friend the Member for Gosport (Caroline Dinenage) was also spot on about adult literacy. We cannot just wait for future generations to filter through; people are making bad decisions now because they simply do not have the capabilities to do anything else.

As a country, we need to encourage a savings culture. I sometimes worry that we all—we are all as bad as each other—want everything tomorrow, but it is sometimes not such a bad thing to wait.

The cost of credit is being looked at, and we are absolutely right to consider the total cost. We should look not just at the crude APR measurement, but at the fees, the cost of roll-overs and things such as bank overdrafts. Some of the charges I have seen equate to about 80,000% APR. The hon. Member for Makerfield (Yvonne Fovargue) made some good points about fees and roll-overs, and we should continue to push on those matters.

Finally, we just have to recognise the need to be flexible. The industry will continue to change: when we started to look at limiting roll-overs of loans, it began to extend loans. The market will keep changing, so we have to be quick on our feet.

National Minimum Wage

Justin Tomlinson Excerpts

Wednesday 15th January 2014 Commons Chamber

[Mr Newmark]

I thank my hon. Friend for that intervention. I will go into that matter in a little more detail in a minute.

The Government are taking strong action to deal with the last Labour Government’s failure to have a robust system of enforcement for the national minimum wage. I welcome this week’s announcement that tougher financial penalties will be brought in to crack down on those who do not play by the rules.

[Justin Tomlinson (North Swindon) (Con)]

I support everything that my hon. Friend has said. When I was an employer, I always recognised that I would get what I paid for. When a business is successful, that success should be shared with its employees. I welcome the fact that the Government are increasing the fines and are naming and shaming businesses, but I want to see the naming and shaming of the decision makers who disgracefully choose to exploit their staff.

[Mr Newmark]

My hon. Friend is right that there should be more publicity about those who abuse the system. Naming and shaming is a good idea.

To put some numbers on what has been said about penalties, in 2012-13 HMRC identified 736 employers who had failed to pay the national minimum wage, which led to the recovery of £3.9 million in unpaid wages for more than 26,000 workers. This week’s announcement will see the penalty for rogue employers raised to up to £20,000. The Government are taking punitive, robust action.

We should not forget that the last Labour Government left us with the biggest recession in recent history. This Government are helping some of the lowest-paid people in our society by raising the tax threshold and taking more than 2.7 million people out of tax altogether.

Spending Review

Justin Tomlinson Excerpts

Wednesday 26th June 2013 Commons Chamber

[Mr Osborne]

We are maintaining capital investment at £50 billion.

[Justin Tomlinson (North Swindon) (Con)]

The decision to introduce a fairer national education funding formula is vital for my local schools. How much did Labour’s formula short-change schools in Swindon?

[Mr Osborne]

The people of Swindon were short-changed in many ways by the Labour Government. Under the excellent leadership provided by my hon. Friend and his colleague, our hon. Friend the Member for South Swindon (Mr Buckland), not only is Swindon’s voice heard in Parliament, but the changes this Government are making will help families in Swindon, including those with children at school.

Finance (No. 2) Bill

Justin Tomlinson Excerpts

Monday 15th April 2013 Commons Chamber

[Mr Gauke]

I shall certainly take that intervention as lobbying in support of the proposal. The hon. Gentleman is right to highlight our super-connected cities policy, which is further modernising our economy and further benefiting a number of cities. I appreciate the case he makes for Swansea, and I am sure that it will be properly considered.

[Justin Tomlinson (North Swindon) (Con)]

The tax breaks for the video games industry are a fantastic opportunity to create swathes of new jobs, but it is essential that the Minister continues to apply pressure to address the shortage of computer programming graduates or we shall miss out on a fantastic announcement.

[Mr Gauke]

I am grateful to my hon. Friend for putting that point on the record. He will be aware of the efforts made by the Government to strengthen our capacity in that respect, and I am sure his remarks will be noted carefully by my ministerial colleagues in the Department for Business, Innovation and Skills.

I turn to tax avoidance and evasion. Although we believe in a competitive tax landscape, we are not by any means a soft touch on tax. As a Government, we have made very clear our expectations of businesses. We expect businesses to pay tax in accordance with the law, but we also want to ensure that aggressive, artificial tax avoidance is dealt with, which brings me to the second key theme of the Bill.

The vast majority of individuals and businesses pay their fair share of tax, but the Bill takes determined action against those who choose not to do so, by introducing a further package of measures to tackle tax avoidance.

--- Later in debate ---

[Mr Gauke]

I am grateful to my hon. Friend for making that helpful point.

Turning to the wider issue of fairness, in addition to the steps that we have taken on avoidance and evasion, the Bill builds on previous coalition policy by ensuring that individuals and businesses will make a fair contribution, while the Government continue to support those on the lowest incomes. We continue to reward work and help hard-working families with the cost of living, and the Bill therefore increases the income tax personal allowance to £9,440 from this month. That represents the biggest ever cash increase, and the Chancellor has announced that the threshold will rise again, to £10,000, from next year.

[Justin Tomlinson]

This announcement is extremely welcome, but most people simply do not know how much the changes will help them. Does the Minister agree that any changes, good or bad, should be displayed on payslips, in the same spirit that changes in council tax or business rates are displayed in the annual bill?

[Mr Gauke]

My hon. Friend makes an interesting point. He will be aware of the steps that the Government have taken to introduce personal tax statements that will make the tax system much more transparent. It will be clearer to people how much tax they are paying, and how that money is being spent. We believe that those are helpful steps, and those tax statements can demonstrate the way in which we have made great progress in increasing the personal allowance.

Budget Resolutions and Economic Situation

Justin Tomlinson Excerpts

Thursday 21st March 2013 Commons Chamber

[Justin Tomlinson (North Swindon) (Con)]

Given the time constraints, this will, obviously, be a bit of a whistle-stop tour. However, I will set out some of my Budget highlights and, with each one, something on my wish list to try to be constructive for the Government. First, I very much welcome the £10,000 personal allowance. As we know, that is a tax cut for 24 million people and 2.7 million people will be completely taken out of paying income tax. This is genuinely a reward for people doing the right thing.

Some excellent work by the TaxPayers Alliance has highlighted a chronic lack of understanding of the impact of changes to taxation in people’s own payslips. In this week’s The Spectator, I set out a request that when changes to pay-as-you-earn made by any future Government, of any colour, kick in, they should be explained on the employee’s payslip. In that way, we can get greater engagement. I know through my work on the all-party group on financial education for young people that because we now have so many direct debits and standing orders, people are disfranchised from their own bank accounts. Therefore, setting out the information I suggest will help.

I welcome the various measures to support business, such as the 20p rate of corporation tax and the £2,000 employment allowance. It will make a huge difference in the south-west, as 85,000 employers will gain and 40,000 will be taken out of paying national insurance altogether. Some 1.25 million private sector jobs have been created and a quarter of a million new businesses have started since we came to power. My constituency has seen the fastest increase in the number of start-up businesses in the south-west. It is also crucial that we continue to support businesses looking to export to emerging economies such as Brazil, India and China, so that we are not so exposed to the turbulence in the European Union.

I also want more to be done to help promote young entrepreneurs. We all support that principle, but young people face a challenge, as I find when I talk to business students. I was the only one of the 350 who studied business on my university course who ended up running their own business and employing people. When I ask business students whether they would like to run a business, all the hands go up and they are extremely enthusiastic; they have been enthused by “The Apprentice” and “Dragons’ Den”. When I then ask how many will do it, all the hands go back down, because they simply do not know how. When people choose to go to university or take on an apprenticeship—the number of which has increased massively—a clear, defined career path is laid out for them. If they tick the box, get the grades and pass the application process, that is what they will do. We need to do a lot more in that regard.

A couple of weeks ago, I set up a scheme with Swindon college to support a local charity, the Prospect hospice. Those who took part were each given £10 to raise money by trading in the Blunsdon market, a tough trading environment, and between them they raised more than £711. One team was so successful that the market has asked them to come back in the summer holidays to give it a go. Our town centre is looking to use the high street money provided through the Mary Portas scheme to set up pop-up shops, and has also made an offer to that team of very successful girls. Those who are interested might like to hear that they ran a 1950s tea shop-style café, dressed in 1950s clothes and played 1950s music; they understood customer service. My request is that we do more to set out clear career paths in business.

I welcome the good news on fuel duty. People have mentioned the 13p price difference—it is 59p if we use gallons, and sounds even more impressive. Whenever I use cutting-edge social media such as Facebook to conduct a “Fantasy Chancellor” poll and ask about the one thing people would do, fuel duty is always the most popular issue. I ask for no return to the 12 hikes in 13 years we saw under the previous Government. They regarded motorists as an easy hit, but the cost has a tangible effect on people.

The excellent news on beer duty is a credit to my hon. Friends the Members for Burton (Andrew Griffiths), for Nuneaton (Mr Jones) and for Leeds North West (Greg Mulholland). I am a proud member of the save the pub group and the all-party group on beer. I had a text from the wonderful Arkell’s brewery in my constituency, which very much welcomed the move. It is important to the sector.

[Andrew Griffiths]

I thank my hon. Friend for his sterling support for the campaign to scrap the beer duty escalator. Earlier, he mentioned the work of the TaxPayers Alliance. Will he join me in congratulating the TPA on its “Mash Beer Tax” campaign, and The Sun newspaper on its fabulous campaign to scrap the beer duty escalator?

[Justin Tomlinson]

Absolutely. I also commend the constructive and proactive way they lobbied politicians on both sides of the House, so that they realised what a benefit such a move would be to the local economy, as well as for those who enjoy the odd pint in their local pub. It is cause for rejoicing.

I have two further requests. A considerable number of pubs are starting to provide food as a mainstream part of their offer. More needs to be done to encourage hospitality and catering students to consider becoming landlords, as a lot of breweries are struggling to find younger landlords. Secondly, I urge the Minister to consider the excellent work of my hon. Friend the Member for Burton and to commission him to look more widely than the beer duty: to consider why we are losing pubs and what more we can do in that regard, just as we commissioned Mary Portas to carry out the high street review.

[Guto Bebb]

Is my hon. Friend aware that the increase in the personal allowance can be crucial for businesses such as public houses, which are often run by a husband and wife working in partnership? Our changes mean that such partnerships can make a profit of £20,000 without paying a penny in tax.

[Justin Tomlinson]

Absolutely. The industry can react quickly and provide flexible employment opportunities, and it is a major contributor to local economies across the country.

The Help to Buy scheme will provide £3.5 billion to help those wanting to get on to or move up the property ladder. I know that more details need to be considered, but we should think not only of the people who will benefit directly but of the huge numbers of people in the house building industry. Over the past 20 years, Swindon has been pretty much the fastest growing town, and a huge number of local residents are connected to that industry. They will welcome any measure to help restore confidence in the housing market.

We come up with these fantastic schemes, and I was challenged on local radio last night about whether this scheme would catch on. As entertaining as we all think we are, our wonderful debates in the Chamber often pass the public by. As the scheme comes into force in 2014, it would be nice to promote it in the annual council tax bill. The councils have already paid for the postage, so let us put a little information flyer in with the bill so that people can see what opportunities there are and whether they apply to them.

Finally, I want to talk about business rates, on which I would have liked a little more to have been done. Our high streets are struggling and business rates are becoming a bigger burden, with landlords lowering rents and so on. I was fortunate enough to become a member of the Public Accounts Committee, but one of my biggest disappointments is that that happened 24 hours after Starbucks and Amazon had their hearing. Amazon kindly came to meet me yesterday and it is fair to say that we rowed. Its actions over tax and transferring money to Luxembourg are disgraceful. The company is not operating on an even playing field. We have to investigate some form of internet consumer tax for such organisations, but with every single penny ring-fenced to subsidise the business rates of the traditional high street. If the high street struggles any more, Amazon will also struggle because the high street is the shop window. I have spoken to a number of independent retailers who provide the customer service—and consumers then simply pick up the phone and order from Amazon. Let us create a fair playing field for all retailers.

The Economy

Justin Tomlinson Excerpts

Tuesday 11th December 2012 Commons Chamber

[Justin Tomlinson (North Swindon) (Con)]

I congratulate the hon. Member for Croydon North (Steve Reed) on a powerful maiden speech—I cast my mind back to the nerves I felt during my first speech—which he delivered in an exceptionally articulate way. It is clear that his local government experience—championing the future of public service, along with understanding and delivering much needed improvements—will be a great asset to this House. I also congratulate the hon. Member for Rotherham (Sarah Champion), whose exceptional experience in children’s services will be a vital asset to us all in Parliament.

Let me turn to a few key messages in the autumn Budget that I picked up on, having spoken to a number of my constituents. On fuel duty, I pay tribute to my hon. Friend the Member for Harlow (Robert Halfon), who has championed the campaign with huge support across the country and among MPs. It was absolutely essential that we froze fuel duty, because it is the most tangible tax there is. We all pay all sorts of taxes, and although people will have a rough idea how much council tax, income tax or national insurance they pay—they will not know exactly—everybody knows exactly what it costs to fill up the car. That impacts on consumer confidence, which is something we desperately need to protect in this country, so this move by the Government was welcome.

I also welcome the further move on the income tax threshold. It is a principle of ours to ensure that work pays, and what better way to incentivise people than to leave more money in their pockets? By the end of the Parliament, those on the minimum wage will be paying half what they were paying in income tax when we came to power. That stands in stark contrast to the 3.9 million workless households we saw under the former Government. Some 24.4 million people will benefit from the changes we have made to the income tax threshold by an average of £247 per person, but I would like to see a further change. Whenever any changes are made to pay-as-you-earn—whether by this Government or future Governments —they should be shown on employees’ payslips. We get excited in these debates about such changes, but more often than not they fly past the public. If we are going to get the public to take ownership of the tax system, those changes should be displayed clearly. I welcome the move to introduce an annual tax statement. I was one of the 10 MPs who supported the private Member’s Bill on that subject. Any notification of changes to PAYE on people’s payslips would make a big difference.

I am also delighted to see further measures to support business. Before I became an MP, I was a small business owner in Swindon. We now have 4.2 million self-employed people in this country, which is a record number. That shows that we are truly open for business. The cut in corporation tax takes it down to the lowest rate in the G7, and the extension of the small business rate will make a huge difference to small traders. I would also urge the Government to continue to look at the principle of the rates system, because to a certain extent the golden goose has been killed. High street businesses in particular are facing further threats from internet companies, which benefit from not having high street rate bills to pay. That is something that we must take into account.

The £250,000 annual investment allowance will also make a huge difference. I know that my hon. Friend the Member for Dudley South (Chris Kelly) has championed that cause for a long time. The need for this measure reflects the fact that businesses are nervous. For the first time in history, businesses are holding more money in their current accounts than they are borrowing. That is partly because of the perception that they will be unable to borrow money, and they want to stay in control. I hope that the increase in the annual investment allowance will open up the coffers, and that the effects of that will filter through to the election.

[Mr John Redwood (Wokingham) (Con)]

Given the warm welcome in the House, particularly on this side, for all tax freezes and reductions, will my hon. Friend urge those on our Front Bench to do more of that, so that we can get the economy growing more quickly?

[Justin Tomlinson]

I thank my right hon. Friend for that important suggestion, which I endorse. We would all welcome such measures being taken whenever possible, given the financial constraints that we inherited.

I also welcome the extra investment in UK Trade & Investment in relation to exports. The Office for Budget Responsibility has recognised the challenges involved in exporting to the eurozone. Honda, the biggest employer in my constituency, has faced challenges in exporting cars to a declining market, although the UK market has experienced an 8.6% increase. We have seen our exports to emerging markets double, however, and the investment through UKTI will make a big difference. I have attended lots of events with the Government and with banks to encourage businesses to consider exporting to those markets, and that extra help to remove barriers will make a big difference.

I want to make a plea for a greater push promoting young entrepreneurs. The Government have launched the £2,500 start-up loans. I have been working with Young Enterprise, Virgin Media Pioneers and the National Association of College and University Entrepreneurs. Even the Scouts have a young entrepreneur’s badge now, and my wife and I had a very enjoyable evening helping to judge that. They even offered us free cake and cups of tea to try to influence our decision. I was the only one of the 350 students studying business at my university who went on to run their own business. I believe that that university education taught any entrepreneurial flair and risk-taking out of us. We need to encourage more young people who have boundless energy and enthusiasm, and enough cheek to question the accepted ways, to find new niche markets.

I have been working with New college and Swindon college in my constituency to try to set up further opportunities for young people. This will involve not only the traditional young enterprise scheme set up in the main foyer in which the students sell to their friends but the opportunity to set up a pitch in the local market. They will have a wooden table and do three days’ trading. If they are not set up by 9 o’clock in the morning, they will lose that day’s trading. Those who are successful will then be offered cheaper pitches in the summer holidays, after they have finished college, and we hope that they will be the next generation of entrepreneurs. Many famous business people, including Lord Sugar, Richard Branson and the founders of Marks & Spencer and the Superdry clothing brand, started on a market stall. If we can get those young people to take that risk, we can create the next wave of jobs, and I encourage the Government to do what they can on that front.

On the banks, we all welcome the fact that we still have record low interest rates. That is due in no small part to the fact that the tough decisions we have taken have protected our triple A credit rating. That has made a huge difference to businesses that are borrowing money and to mortgage holders. However, we still need to do more to encourage access to finance from banks. Whenever I talk to banks, they tell me that they have money and that it is available to borrow. Whenever I talk to businesses, they say that there is no such money. There is clearly a perception problem.

The Government should help to provide information on the funding that is available, whether from the Government, from the banks that say they have money or from the national loans guarantee scheme. I am told time and again that everything possible is being done to communicate such information but that it is difficult to get hold of the businesses that need it. That is not the case, however, because once a year the Government send out a business rates mailer to every business. It might simply say that they do not have to pay anything because the small business rate relief has been extended, but the Government still have to write to them to tell them that. My suggestion is that we should include something in that mailer—we have already paid the postage, so the taxpayer will be no worse off—outlining what funding is available through the banks and through the Government, what opportunities there are to employ and offer opportunities for apprentices and about the business mentor scheme. Some 40,000 business mentors are there to help and I have seen them make a big difference when I met Mentorsme, an organisation that has helped a number of businesses in my constituency. Let us use the business rate mailer to spread the opportunities that are available. Those measures will make a big difference to us all.

[Several hon. Members]

rose—

Financial Services Bill

Justin Tomlinson Excerpts

Monday 10th December 2012 Commons Chamber

[Stella Creasy]

I shall speak to amendments 78, 137 and 148, which deal with the role of the Office of Fair Trading. Before I do, I want to place on record my gratitude to Members in the other place who, along with the hon. Member for Chatham and Aylesford (Tracey Crouch) have been so supportive of the sharkstoppers campaign. I mention Lord Mitchell, Lord Kennedy, the Right Reverend Welby—I think that is the appropriate term; apologies if it is not—Baroness Howe and Baroness Grey-Thompson. They have all been fantastic in championing a measure that I know has widespread support across the country.

I also put on record my gratitude to many organisations that have been helping make the case for action on high-cost credit, whether it be R3, the insolvency practitioners, the co-operative movement and co-operative party, Unite, Community and the thousands of concerned citizens who been involved in part of the campaign. I thank the hon. Member for Chatham and Aylesford for her kind words and for using the term “tirelessly” rather than “tiresome”, which is how some people might have interpreted the doggedness with which we have persisted in campaigning on this issue. In that sense, this amendment and the damascene conversion of the Government to the need to act on the cost of credit is very welcome. Throughout this campaign, we have all said that when the Government accepted that we were right all along, we would be grateful and would take it within the spirit of cross-party agreement that something needs to be done about these companies and about the impact of debt on our constituents.

With that in mind and in genuine appreciation of the fact that this moment has happened, I now want to press the Minister, as have many others, about the nature of the amendment and what will happen in the next year. Many of us are concerned that there is still a window of opportunity driven both by the delay in the implementation of these powers for the Financial Conduct Authority until April 2014 and by the continuing pressures that many in our constituencies will face, which might mean a bonzer Christmas for many of the legal loan sharks.

We started to campaign on this issue because we could see that toxic mix in Britain of a crisis in the cost of living, of families struggling, having lost jobs or facing wage freezes in Britain and, indeed, of the lax regulation in the UK of the cost of credit. We know that those pressures have got worse, not better, for British families over the last couple of years, so we know that one in three of those families in Britain have suffered a pay freeze over the last 12 months at the same time as they have seen the cost of basics rise and continue to rise. We know that many consumers have borrowed about £2,000 on top of their secured debts—their mortgages—to try to make ends meet in the last year, but only a quarter of them have managed to pay that money back.

The concern I bring to the House tonight is that when we look ahead to 2013, many of those pressures will not just increase, but explode over the course of the next year. The consequences for many, particularly those in the poorest communities, will be severe. We know that the pressures on the cost of living are not evenly distributed in British society. We know that the poorest 10% spend up to a quarter of their incomes on basics such as housing, fuel and energy, and we know that the prices of those commodities will become higher, not lower, in the coming year. Today we heard from E.ON—the last of the big six companies to announce it—about the increase in the cost of energy that consumers will face in the new year. The companies’ average increase of between 6% and 11% means that the average annual household energy bill will reach an all-time high of £1,300 next year.

I started to campaign on this issue because I could see the impact of debt on my community in Walthamstow, in north-east London. It gives me no pleasure to say that over the past 18 months many Members on both sides of the House, representing a range of communities, have approached me to discuss cost-of living issues, but I also know that London is a harbinger of the pressures that are to come. I know, because I have seen research-based predictions that London rents will increase by 26% over the next five years, that unless we do something about the cost of credit—unless we do something to help those who are struggling with the everyday cost of living—we shall face a society in which debt is just a way of life, with all the consequences that that will have for people.

However, this is not just about the cost of housing or, indeed, the cost of energy. It is also about the everyday cost of getting to work, which is having a great impact in my local community. I have talked to people in Walthamstow who have managed to secure apprenticeships but are forced to travel around London because there are so few apprenticeships in my area. A travelcard covering zones 1 to 3 costs £35 a week. Only people who are able to live at home can afford to take the opportunity to become an apprentice earning £100 a week, and we now learn that rail fares are to rise next year.

Those are pressures on the working poor in our community, but so are changes in the benefits system. Given that there is no spare supply of housing, it does not take a genius to recognise that the 1,000 families in my community who have been told that their housing benefit will be capped in April will have to borrow to make ends meet and keep a roof over their heads. The pressures that the legal loan sharks have decided to increase are the pressures that the amendment seeks to address.

It is clear that these companies are stubbornly resisting what are now widespread concerns about them and the profits they are making. Last year the industry was worth £1.7 billion in the UK; it is predicted that next year one company alone, Wonga, will be worth £1 billion, and it is just one of more than 200 companies that are now operating here. Moreover, the companies are clearly targeting young people, including students, and they have begun to change the terms of their loans. We became aware this week that Wonga is now offering what are supposed to be short-term loans on a 60-day basis. As the Office of Fair Trading has pointed out, the companies are abusing even the most basic consumer protections in the industry. That is why we need the amendment as a starting point, but it is also why we need to look at what else the OFT can do in the year ahead.

If we allow the pressures on consumers and their cost of living to continue and do nothing to curb the legal loan sharks now, we shall see another year in which millions of people are pushed into debt by them. We already know that a third of payday loan users take out loans that they know they cannot repay, and that 50% of people who have taken out loans have missed a payment. Given the additional pressure that those people will face next year, it will be a disaster for Britain if we do not act, and that means that we should think about what the OFT itself can do. I hope that the Minister will tell us tonight whether he will support measures enabling action to be taken now.

We know that the OFT will present new proposals in the new year, and that will present an opportunity for change that could set the tone for the new Financial Conduct Authority. I agree with my hon. Friend the Member for Nottingham East (Chris Leslie) and my hon. Friend the Member for Harrow West (Mr Thomas)—who is not in the Chamber now—that there should be regular meetings with the FCA to consider the industry now, but let us use the OFT to put down those markers.

First, as was pointed out by the hon. Member for Chatham and Aylesford (Tracey Crouch), we must pin down the question of irresponsibility in lending. What is an irresponsible rate at which to lend to people? The irresponsible lending guidance should be redrafted to make clear precisely what the cap should be and precisely what constitutes consumer detriment, in terms of both duration and the amount lent and including the total cost of a loan. Secondly, it should be made clear that it is irresponsible for lenders not to use a real-time credit register and ensure that every loan is recorded.

[Justin Tomlinson (North Swindon) (Con)]

The hon. Lady is delivering a categorical and passionate speech about a very important subject, and she has just made one of the most important points that can be made about that subject. Does she agree that the sharing of credit information in the UK car industry has, to an extent, transformed what was a very murky market, and that lessons can be learned from that?

[Stella Creasy]

I pay tribute to the work that the hon. Gentleman has done in raising issues about debt and credit, and about the way in which companies such as this operate. We know that many of them use a get-out clause, arguing that they could not possibly have known that someone had eight or nine loans at the same time. That is partly because there is no register specifying rates of interest and the number of loans that people are taking out. The OFT should make it clear that that constitutes irresponsible lending, and that loans should be made on a real-time basis. It is no good for supposedly short-term credit to be provided on a monthly basis. I also agree with all those who have expressed concern about continuous payment authorities. I hope that, in the new year, the OFT will make it clear that we must end both the fraud and the debt that they cause.

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

It is an honour to follow the hon. Member for Walthamstow (Stella Creasy), and to speak in favour of the spirit of Lords amendment 78.

The problems of high-cost sub-prime debt are widely acknowledged. Although they have come much more to the fore through opinion-formers of late because of payday lenders, they are not, of course, new, and by extension—this is somewhat at variance with what the hon. Lady said—it is not new that Government are not capping the cost of problem credit. It worries me slightly that we use the term “payday” as a catch-all shorthand for all these problems, and I hope that the Minister will reassure us that we are not just talking about payday lenders.

Dealing with problems of this kind requires an integrated approach involving financial capability and the provision of alternatives for people who need access to credit, but it also requires regulation. Disclosure is not enough in this market, especially as it often involves very vulnerable consumers and the ready, easy availability of credit. It could be said that supply sometimes creates its own demand. Some people tend to opt not for the solution that best suits their needs, but for the most recent that they have seen. In seeking to address these costs, however, we need to look at costs in the broadest sense. This is not just about interest rate charges.

[Justin Tomlinson]

On the question of percentage charges, if we displayed everything in cash terms it would be far easier for even the most vulnerable consumer to make an informed decision.

[Damian Hinds]

Yes, total cost of credit information is a good way forward—although, ironically, that would please a lot of payday lenders because, relatively speaking, they would not look quite so bad.

This is not only about interest rates; it is also about ensuring that credit is eventually paid down, and about behavioural charges, which can be difficult to pin down under the annual percentage rate as they apply to some consumers, but not others. An APR cap on its own might seem like a panacea, but, as Members on both sides of the House realise, it is not. Unfortunately, there are ways around caps. The experience of some states in the United States where there has been a 30% cap on payday loans is that the rent-to-own sector gets a great boost, because money can be made in another way: by whacking up the base price of the goods.

If there is to be a cap—and I think there can be a place for a cap—we must talk about what sort of cap it will be. I have always argued that a blunt general cap is a bad idea, because it can only be set either so high as to make no difference or so low as to put some parts of the market out of existence entirely and thereby run the risk of driving more people into the unlicensed part of the market, where someone’s idea of a late payment penalty is a cigarette burn to the forearm.