Financial Services (Banking Reform) Bill

Lord Bishop of Birmingham Excerpts

Monday 9th December 2013 Lords Chamber

[Baroness Cohen of Pimlico (Lab)]

My Lords, I rise to support Amendment 21 and will speak to Amendment 20. I am sure that we are all very grateful to my noble friend Lord Mitchell for his tireless efforts in bringing the payday lenders under regulation. I am sure that that is the best result for everybody. I also support his remarks about how we actually need payday lenders. They fill a gap that no one else fills. If you have no food in the house or your car needs repairing in order for you to get to work, and if your family and friends cannot help, there is nobody but the payday lenders. They are colossally efficient—as my noble friend Lord Mitchell found out when he bravely took out a payday loan. They will get you the money very quickly.

That is a function that, in my youth, was fulfilled by employers by way of something called the “sub”. At one point, I was the industrial relations man, temporarily, on the Western Avenue extension. About a third of that whole site received subs on their pay. The rules stopped you receiving a sub for more than three days ahead of time and of course it was not paid interest. I do not think that happens any more and the payday lenders have come into that gap.

What have not come into that gap and are not yet organised to fill it are the credit unions. I very much welcome the most reverend Primate the Archbishop of Canterbury’s view that the credit unions can fill this gap, but they cannot do so at the moment. They are just not fast or efficient enough. I would very much like to encourage, in all work on credit unions that the most reverend Primate is undertaking—and which I shall be pleased to join in on—that they be a bit more like the dreaded payday lenders in their speed, efficiency and ability to respond to need.

[The Lord Bishop of Birmingham]

My Lords, I take a moment to thank the noble Lord, Lord Lawson, for his kind remarks about my friend the most reverend Primate’s speech last Thursday. I shall pass that on to him. He regrets that he is not in his place today. He is presiding over a whole number of bishops—it amounts to about the number of noble Lords in your Lordships’ House tonight—up in York.

I support these amendments, particularly Amendment 22 on the timetable. I am grateful for the Government’s approach and seriousness towards this payday lending crisis. The examples we have heard from noble Lords about the experience of poverty are gruesome. I should like to introduce a new element of competition to the response time for this particular bit of industry in terms of its timetable, because the risk, referred to by the noble Lord, Lord Newby, to the industry itself in not getting it right is paralleled by the risk just mentioned by the noble Lord, Lord Mitchell, of people having yet another Christmas borrowing at too great a cost and risk to their own future and that of their family. The Minister is trying to set a final deadline of January but I ask that he really encourage the industry to bring this forward to 1 October.

We have heard about the industry’s complexities and the credit unions that are needed. We have also heard of the encouragement this would give to those who are working very hard to provide effective money advice to those who are managing unmanageable debt and to help those young people who have been mentioned start handling their money properly. Local charities, churches and the faith groups are responding to the Government’s approach to tackling this global financial crisis. However, the slow timetable—several years before all this is implemented—is a completely different timetable from that of someone who has no resources, who has no back-up and who is looking for food tomorrow. I encourage people to support this amendment.

[Lord Eatwell]

My Lords, my noble friend Lord Mitchell in speaking to his amendment on the proposed date referred to 90 days. One might ask how 90 days can make a difference. Surely when the Government need something to be done they can get it done. The idea that somehow the whole process is so darn elaborate that they cannot do it in a period of time which saves 90 days on their side is, in the true meaning of the word, incredible. On the other hand, for the borrower 90 days includes Christmas Day 2014. That is a big issue, because this is the period when short-term borrowing is at its peak. That is why it is incumbent on this Government to take swift action. They have been dragging their feet on this issue for four years. It is incumbent on them to take swift action and that is why Amendment 22 is so important.

The noble Lord, Lord Sharkey, has raised a crucial and frightening point—that payday lenders within the European Economic Area could lend within the UK. I hope the Minister will be able to tell us that we are not wasting our time completely this evening—because that is what that would mean we would be doing—and that the noble Lord’s fears are unfounded.

Swift action is so important that when this amendment is called I intend to test the opinion of the House.