Armed Forces (Service Complaints and Financial Assistance) Bill [HL]

Lord Bishop of Oxford Excerpts

Tuesday 29th July 2014 Lords Chamber

[Lord Kennedy of Southwark (Lab)]

My Lords, first, I declare an interest as a director of London Mutual Credit Union. This amendment would put in the Bill a specific indication that the establishment of a credit union for the Armed Forces will come under the scope of the Bill when it becomes an Act of Parliament, and that the establishment of such a credit union would be for the benefit of the Armed Forces community.

A lot has been said in this Chamber about credit unions and I have been a supporter of them my whole adult life. Last year, I was delighted that we were able to establish a credit union for the whole of Parliament. Anyone working in Parliament can now join it. Credit unions provide fair and affordable lending to people—often the same people who are excluded from access to other forms of lending by banks and building societies. They are also able to help people start to save, as learning to save and to manage your budget are of almost equal importance. Specific products such as jam-jar accounts have been developed to help people meet their bills and avoid getting into debt or further debt.

The bigger credit unions will be able to offer ISAs and mortgages at competitive rates. The interest rate cap for credit unions has just been raised and stands at a maximum of 42.6% per annum on the money it lends out. We in this House and elsewhere all hold our Armed Forces and the forces community in high regard. They put themselves in extraordinary danger in order to keep us safe at home, and we all owe them a great debt. However, like any other group of people they can experience pressures and problems. The problem of debt and the misery that it brings is also experienced in military community families, and that is why I tabled the amendment. We owe a special duty to people in the military family.

We have all been rightly disgusted by the activities of companies such as Wonga and the outrageous rates of interest that they charge. There are other companies which target the military community, such as Forces Loans, which offer loans to military families at rates of 3,351%—or QuickQuid, which states on its special military site, “You provide security protection for your country—shouldn’t you arm yourself against financial problems, including access to military loans? We will charge you an interest rate of 1,734%”.

Over the last couple of years, I spent time with the RAF as part of our Armed Forces Parliamentary Scheme. Whenever I arrived at an RAF station, the welfare officer or the chaplain would tell us of the problems that service men and women and their families had. Often they were about debt and the lack of money. I recall an RAF chaplain telling me that on Sunday he would conduct his service, and for the rest of the week he would spend his whole time helping families of all faiths, or no faith, across the base to deal with their financial and other problems.

When I saw the Armed Forces (Service Complaints and Financial Assistance) Bill, I thought that this was a Bill that was saying enough is enough. We owe a duty to our service men and women and their families. That duty extends to their financial well-being, and establishing a military credit union will go a long way towards helping that community. A community bank will understand them and their needs. This will not take a lot of money; it just needs support and commitment from the MoD to make it happen and to encourage its development.

Will the noble Baroness, Lady Jolly, who is responding, agree to arrange a meeting with Anna Soubry, the Minister responsible, before we come back from the Recess? Will she also allow me to bring the issue back at Third Reading so that I can report back on what has happened between now and then? There is not much division on this issue in the House but we need to make it happen, and this is the Bill to do it. I beg to move.

[The Lord Bishop of Sheffield]

My Lords, from these Benches I welcome the amendment in the name of the noble Lord, Lord Kennedy, and give it our full support. The amendment gives strong support to the setting up of a credit union for the Armed Forces and their families in a similar way in which the church is setting up its own credit union—the Churches’ Mutual Credit Union. The Armed Forces, like the clergy and other groups, need a source of affordable credit for short and long-term needs. As a society we have a duty of support and care to our Armed Forces. Recent research in a number of strands shows clearly that the ability to obtain credit at reasonable rates of interest is a vital element in building resilience to poverty and debt across our whole society. The inability to obtain such credit in times of need raises the possibility of falling further into debt, of food and fuel poverty and of a downward spiral.

An occupationally based credit union is not only a safety net but something that will further encourage service personnel, as we have heard, to plan financially for current situations and future needs. Other professional bodies and occupations, such as the police and trade unions, already offer a credit union to their members. In the USA, the navy has long had a credit union. Founded in1933, the Navy Federal Credit Union is the world’s largest credit union with more than $60 billion in assets, more than 5 million members, 247 branches and more than 11,000 employees worldwide.

A credit union for the Armed Forces has the potential to make a significant difference in the long term. If I understand the proposal of the noble Lord, Lord Kennedy, correctly, the Navy Federal Credit Union does for US service personnel exactly what the proposals in the amendment would offer Her Majesty’s Armed Forces. The Navy Federal Credit Union could provide an interesting model by which to shape our own service personnel credit union. On 8 April in another place, the Under-Secretary of State for Defence, Philip Dunne, made positive comments and commitments to the notion of a service personnel credit union. Will the Minister in his closing remarks comment on the progress of discussions with the credit union trade body and the service charities referred to on that date by the Under-Secretary of State?

[Lord Deben (Con)]

My Lords, the Minister will have been under the usual pressure to say that this provision is probably not suitable for this Bill and that there are all kinds of reasons why it will not quite work. Perhaps his officials will have used the words that I well remember as a Minister: “Better not”.

I suggest to my noble friend that this is the kind of opportunity that rarely comes when a Member has raised an issue for which there is no convenient box in other Bills. I must say that the whole House owes a great deal to the noble Lord opposite for having found this moment for the amendment. I therefore very much hope that my noble friend will be sensitive to this issue. It is in line with much of what we are trying to do elsewhere and is the best way to counter the sharks. Actually, legislation does not help much with sharks because they always find a way around it, but if one can provide an alternative to the sharks, one is more likely to win the battle.

It is notable that throughout our society the encouragement of the credit union movement by all sorts of organisations—I have recently come across several examples—is something that can do only good because it uses three simple concepts. First, people need to borrow money from time to time. Even the best-organised families find that to be necessary so there ought to be a way in which they can do it. Secondly, there is no doubt that within the Armed Forces there are many for whom pay and conditions are not absolutely perfect and where there are stretching moments—perhaps more so than in other jobs. Thirdly, as the noble Lord opposite said, we owe our Armed Forces a particular debt and, because of the things we ask them to do and the places we ask them to go to, it is often more difficult for them to access the sort of short-term help that many people receive from family and friends. That just happens to be part of the conditions of being in the Armed Forces.

I very much hope that my noble friend, who has shown himself to be particularly sensitive on many issues, will be able on this occasion to give us some hope that he can persuade others to accept that this is a sensible place to put the amendment and to give some degree of creativity to a Bill which, although important, is not the most exciting to have come before this House. I have sat through most of our proceedings and I have to say that this nugget, if my noble friend is able to give it his blessing, might well be the thing that people remember the Bill for.