Financial Exclusion (Liaison Committee Report)

Lord Balfe Excerpts

Wednesday 25th May 2022 Grand Committee

[Lord Balfe (Con)]

My Lords, I note that the noble Lord, Lord Davies, is not able to be with us, so the Committee get me. I thank the noble Baroness, Lady Tyler, for introducing the debate. I hope that I will not upset too many people by the time I finish speaking, but the most obvious point of the lot seems to me to be that one way of tackling financial exclusion is to give people more money. We can try all the sticking plasters in the world, but the fact is that a lot of people in society are struggling to get by, and their number seems to be going up. Their financial problems will not go away because the FCA passes a regulation. Having said that, there are, of course, many very useful things in here.

I gave up money when Covid arrived and our local shop put up a notice saying, “We no longer accept cash”. I said to the very nice Turkish gentleman who runs it, “Why is that?”. He said, “Because the coins could give me Covid”. I said, “I don’t think they could, but I am quite happy to use my debit card in here.” I then thought about it and decided that I do not need money. I can honestly say that I have not carried any money for well over two years—so I am useless to tramps, for instance.

When we look at access to cash, let us realise that the world is changing. I am old enough to remember the Daily Express launching the “Save our Sixpence” campaign. It did not get very far, and most people today do not know what a sixpence is. Time moves on, and we are using less and less cash. When I go into my local stores today, very few people appear to be paying with money—and I am talking about the local Co-op, not expensive stores in expensive locations. We have to realise that we are heading towards if not a cashless society then one where cash is less of a factor. I do not think that we should resist this. It is rather like cheques. I got my cheque book out the other day to write a cheque—incidentally to a Member of this House for one of the APPGs—and it was the first time I had used it for a year, and that was because the APPG did not know how to accept electronic payments. You can see that there is still some education needed, even in this House. The world is changing; that is the point I am making.

Part of digital inclusion has to be to put some effort into getting people, particularly of my generation, behind the computer. It is, of course, gradually catching on, and most of my friends transfer money electronically. It is also an education and class issue. We need more digital inclusion. I notice that all the schemes which were running around the time of the Labour Government —which my wife made quite a bit of money out of, incidentally—to teach the silver generation how to use a computer seem to have disappeared. They did some good—not a lot, but a certain amount. Their weakness was that, when the Government sent money to Cambridge City Council—a very good Labour Council, let me say—it looked very carefully and decided to put its money into local libraries in the poorest areas of Cambridge. This was 20 years ago, when I was much less competent with technology, so I thought I would slip down there; it was a bit much, but I went down to see. I drove down there and, lo and behold, the car park was full of Chelsea tractors, Mercedes-Benz and BMWs, as the middle class of Cambridge had pounced on the idea that there were free lessons to be got from the council in a very poor area. The one thing I did not notice was any people who looked particularly poor. When we are looking at digital inclusion programmes, we need to target them.

Similarly, I just say a word on basic bank accounts. They are an extremely good idea but one of the groups with the greatest difficulty with bank accounts that I have come across is people newly arrived in Britain. I do not just mean refugees on the shores of Dover, but also students. EU nationals used to have tremendous difficulties in opening bank accounts because they could not provide most of the documents; they did not have a council tax bill, utility bill or whatever. In a university town such as Cambridge, it was a major problem faced by many overseas people—and indeed still faced by many.

I have another one or two small points. I welcome the resolution to better regulate buy now, pay later. It is an anomaly. It has crept through, because it is a new idea that managed to get round all the regulation. Clearly, it is another form of credit and it should be subject to some rules, so I certainly welcome that. I hope that the Minister can tell us what the phrase in the government response means when, in answer to our point that

“This legislation should be brought forward without delay”,


it states:

“The Government will publicly consult on policy proposals, and will then bring forward secondary legislation … as soon as parliamentary time allows.”


Does the Minister have any estimate that he can give us? I notice that we have a little time spare in the Lords. We managed to get the Second Reading of a Bill through in about an hour and a half yesterday and I do not think that this one would take much longer.

I turn to my next point. I am interested to read about the no-interest loan pilot. I counsel the Government to be very careful. A no-interest loan is still a loan and will still go into that order of priorities, and the one who chases the softest gets the least. More years ago than I remember, I was involved in advising the system in Bangladesh, of all places, on setting up loans for the village co-operatives. The one abiding lesson that I came away with was that you needed to have community contribution and coherence. If you just gave a loan to an individual person, they tended to disappear or put it right down the scale; if you gave it to a community group—an identifiable source—you would find that the community would exert some moral pressure on it getting paid back.

I have one other point. Financial learning begins at home, of course. We all know that the first seven years of a child’s life is when most of it is shaped, and that includes their attitude to money and to parents and many other psychological things. I was brought up by a grandmother born in Victorian England. She had a very strict attitude to credit—she did admit that mortgages could exist but she did not go much further than that. She used to say, “If you can’t afford it, boy, save up for it. Don’t you borrow—all the banks will get your money.” I think she saw banks roughly as most people see terrorists; she was not very fond of banks. It is important that, through schooling and through parental education, we help to educate children about money. What they learn in those first 10 years they will probably carry through the rest of their lives.