Creditworthiness Assessment Bill [HL]

Lord Davies of Oldham Excerpts

2nd reading (Hansard): House of Lords
Friday 24th November 2017 Lords Chamber

[Lord Davies of Oldham (Lab)]

My Lords, I too congratulate the noble Lord, Lord Bird, on his Bill and on his speech introducing it. Of course he has great experience of people who have difficulty coping with debt. We all know that an unacceptably large percentage of our population are daily facing challenges which can often be quite extreme. I suppose that the Government and the Prime Minister would say that they fall into the category a little below those who are referred to as “just about managing”. The worry is how large those two groups are. My belief is that they will come to haunt the Government as they seek to cope with the declining economy.

The problem has been identified clearly by the noble Lord, Lord Bird, and other speakers in the debate, who have reflected a strong consensus in favour of the Bill: society stacks the cards against poor people. An anxiety that we have expressed for many years now and which still leads to terrible deficiencies in our society is the absence of any real financial understanding of how household budgets should be handled. I know that attempts have been made in recent years to increase the provision of financial education, and under considerable pressure some progress has been made, but it is still easy to meet people who have no concept at all of some of the most basic aspects of household finance. That is why this problem is so acute. More than 1 million of our people do not have a bank account, which is indicative of the limitations they face.

Of course, as has been described on both sides of the House, the more limited your financial health, the more costly it becomes to tide over in difficult circumstances when debts are incurred. Credit companies inevitably favour safe investments and discount heavily against those with limited assets. We recognise this because it is an aspect of the market, and indeed we may hear a little more about the operation of the market before the debate concludes. However, there are very good reasons why those with limited resources should be anxious about market forces because they can be cruelly affected by how they work.

We know about those forces in relation to housing costs, and we know also that one of the fundamental problems in our society at present is the generational difference between those who were able to purchase their homes at prices within their means, given that their mortgages took up only a limited amount of their wages, and the situation today. Now, the decline in the economy and the extraordinary increase in house prices—attached to the wage freezes and impoverishment of our people—means that, for the generation coming on stream now, the issue has become a crisis.

The Government may be making some moves. In the Budget, we had indications that at least the housing crisis will be addressed, but we all know that the Budget projections on how the housing need will be met mean that it will be a decade or so before we start to see any real substantial matching of supply to demand. Housing costs, which after all relate to the question of having a roof over one’s head, will continue to burden so much of our population.

Last evening, when I was thinking about the Bill and about indicating my complete support for it, as well as that of my party both here and in the other place—my party has expressed strong commendation of the Bill—I thought I would be addressing a House with a substantial consensus of opinion. However, Governments are always good at busting consensus if it does not meet their particular rubric. As a result of communications received by the noble Lord, Lord Bird, only a day or so ago, I know that the Minister must indicate today that the Government do not think that the Bill is the appropriate solution to the problem. For the Government to change the terms of the debate 48 hours or so before we are due to debate the Bill is pretty poor conduct on their part. I excuse both noble Lords opposite—they have both been in the Commons and therefore seen, from time to time, exercises of which no one could approve. I have no doubt that neither of them was involved in this exercise, but I ask the Minister to pay due regard to what we on this side of the House regard as a somewhat unfair operation on a Private Member’s Bill at such a late stage.

I have no doubt that the Minister will say that is because the Government have a better idea and that the better idea is market orientated. Of course, in certain philosophies, of which the Conservative Party is the clearest exponent, just to use the word “market” means commendation immediately. I am not sure that the Government are bent upon improving the Bill, but they are bent upon trying to take credit for the enormously successful campaign of the noble Lord, Lord Bird, which, through the Big Issue and his experience he has operated over a considerable period of time. I think the Government are seeking to snatch a modicum of credit for the fact that they are responding to this development of public pressure. I have no doubt that they will get away with it; after all, they have a majority in the House of Commons, I am told, although it seems to have a certain process of erosion attached to it. Today, on the basis of a very limited mandate, the Government are setting out to indicate that they intend to stop this Bill in its tracks, because although the Minister will persist with his usual commitment and present the opportunity for future arguments, I have no doubt that the Government will be working toward their own agenda, which does not include the passage of this Bill.

I am sorry to have brought a slightly discordant note to proceedings, but it is on the basis of what I think is one of the latest incursions upon a Private Member’s Bill. Remember that we as parliamentarians value Private Members’ time and the ability to get Bills through. They should not be wrecked by the Government unless there is a very good cause. The cause in this case seems not to be an improved position over the Bill but the Government seeking to take credit when in fact credit is due to the noble Lord, Lord Bird, and all those people who have supported him throughout the whole of this campaign.

Creditworthiness Assessment Bill [HL]

Lord Davies of Oldham Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 11th May 2018 Lords Chamber

[Lord Best (CB)]

My Lords, from the Cross Benches, I support the noble Lord, Lord Bird, and oppose the amendment. I know that the motivations of the noble Lord concern mostly poorer people who need credit to buy white goods and the rest—we have known for many years that the slogan, “The poor pay more”, has been more than true—but I want to refer to those members of Generation Rent who have a chance, albeit a sometimes slim one, of being homeowners and need every help in getting their creditworthiness to the highest-possible status to move from being a tenant to a homeowner, and who are held back by the way in which credit agencies operate. It may be said that the people in Generation Rent do not wish to be homeowners —that they live an “Uber lifestyle” in which you do not own a car; you call Uber. That can apply to many aspects of life. However, surveys continue to show that people wish to be homeowners and for very good reason: home ownership brings with it security, which you do not get in the private rented sector. Even if your tenancy is for a full year, a lot of people find that it is hardly enough to enable you to settle down and, certainly, to bring up a family—we are now seeing ever more families in the rented market.

Home ownership remains an aspiration. Although you might be paying more for a mortgage on day one—if the mortgage company can provide a loan for you—rents will rise roughly at the level of earnings, which is RPI or CPI plus 1% or so, year after year and, in 25 or 30 years, those rents will be enormous. When you come to retire as a tenant, a lifetime of tenancy means having to move home on retirement because your income will drop but your rent will keep rising. Home ownership gives you not just the security of tenure but the financial security of knowing that, although it may take 25 or 35 years, eventually you will be free of debt. Anything that inhibits people from breaking into home ownership, which is what people aspire to, is extremely important.

People say, “Nowadays in London and the south-east, what is the point of talking about home ownership? Prices are so far beyond the reach of those on ordinary incomes this will never happen”. We now have planning consents across London for an enormous number of new apartment blocks. We are seeing come out of the ground 520 apartment blocks of more than 20 storeys for residential use. A massive housebuilding programme is coming down the line. Those who have built those apartment blocks, some of them overseas investors, believe that the starting price will be about £500,000 for the majority of the flats. Someone who is on £50,000 a year—there are not that many people on such a salary—will be able to get a mortgage of £250,000 and not £500,000. The trouble is that we are running out of Russians; we are running out of overseas buyers who are prepared to pay £500,000. I predict that home ownership, which has been in sharp decline, will come back into fashion. The opportunities will recur; prices will have to come down to meet the incomes of those who aspire to own. We should ensure that the credit lines for them are as clear as possible, which is what the noble Lord, Lord Bird, would do.

[Lord Davies of Oldham (Lab)]

My Lords, I indicated at Second Reading that Her Majesty’s Opposition were very much in favour of this Bill. In a debate in Westminster Hall, the shadow Finance Minister made it clear that he too was in favour of it.

I appreciated the way in which the noble Lord, Lord Blencathra, introduced the amendments—it was more probing than assertive. He will have recognised that representatives of almost every part of the Chamber have been against the amendments and said that the Bill should stay as it is in this crucial provision. The noble Lord, Lord Bird, is more qualified than me to respond to all these points and I shall therefore defer to him, but he must have been encouraged by the enormous support across the Chamber for his Bill as it stands.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I strongly support the Bill in its unamended form and do not support the amendments proposed by the noble Lord, Lord Blencathra. When the noble Lord responds to the debate, can he tell the Committee a little bit more about who the members of the Consumer Credit Association are? I do not know whether BrightHouse is a member of the CCA, but if he could tell us it would be helpful.

I grew up on a council estate in the 1960s and 1970s. Both my parents worked and made sure that they paid their rent—it was the first thing they ever did. My dad had two jobs to ensure that our rent and rates were paid. It is important that people who meet their financial obligations week in, week out have that taken into account when they seek credit. As the noble Lord, Lord Best, said, it is always the poor who pay more, and that is totally unfair—of course, that goes for many things in life. When I go into my local newsagent, I see people queueing up with their little fobs to get their electricity; they pay more. And there are other things—it is just unfair. What the Bill does, on which I congratulate the noble Lord, Lord Bird, is begin to make sure that, if you have a good credit record, that is taken into account properly, so that when you seek credit you can get a fair price and will not always have to pay the most.