Tackling Financial Exclusion (Financial Exclusion Report)

Lord Kirkwood of Kirkhope Excerpts

Monday 18th December 2017 Lords Chamber

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Altmann. She is an expert on pensions and she is right to draw attention to its important role in dealing with financial exclusion. Her speeches always repay careful rereading.

I declare an interest in that I am a continuing member of the Financial Inclusion Commission, which has been in operation for the past few years in this important area of social policy. I too acknowledge the skill and wisdom of my noble friend Lady Tyler and the way in which she steered the committee’s work. It was an excellent experience; it was the highlight of my week while it lasted, and I felt quite bereft once it had stopped. Whatever committee she chairs next, I shall certainly be applying to join.

The committee raised the profile of the issue that we are debating. There have been some expressions of disappointment at the Government’s response and, if I am honest, I shared that feeling when I read it, although it was quite long. However, I was not surprised because this is quite difficult territory.

We have to look to the future about how we are going to take the issue forward. I am going to spend a few minutes on the mechanics of what we are facing. It is true that the Government can say they have not been doing nothing and there has been some progress. I was encouraged when we had the election; reading between the lines of the Conservative manifesto, I believe if the Prime Minister had been left to her own devices we might have had more social justice. It is no accident that “A Country that Works for Everyone?” is the subtitle of our report; we were trying to work with the grain of government policy. The Prime Minister might have had more opportunity with a new incoming ministerial team. I think everyone understands that a lot of this business is eclipsed by our withdrawing from Europe but we must not ignore the domestic agenda, and in particular it would be a mistake to ignore this part of that agenda. I would argue that, as someone may have said earlier, a lot of the discontent that drives the emotional Brexit response is rooted in some of the problems that this report addresses.

I think that it was the noble Lord, Lord Patten, who said that we were getting high marks for not spending money. I would have liked to spend quite a bit of money, but we were very constrained. We were making reasonable suggestions that did not incur huge bills and were rooted in the evidence that we heard—the evidence is very powerful. I concur with colleagues on the committee who said that we were very well served by the staff and our advisers, but the stars for me were those who gave us and sent us evidence. The body of evidence left is, sadly, a year out of date now—as colleagues know, the dogs bark and the caravans move on rather quickly—but is more up to date than a lot of the assured ONS official statistics and is a goldmine for researchers, policymakers and, indeed, legislators who want to take the question forward.

I do not know whether the Minister has time to do this, but I would like to understand what the mechanics of some of these new elements will signify and how they work together. We have a new ministerial team, but there is a contradiction in attention. Guy Opperman is an excellent Member of Parliament for Hexham. He does very good work and is familiar with this territory, but he is looking after pensions as well which, as the noble Baroness, Lady Altmann, just explained, is a full-time job in its own right. How does he relate to Stephen Barclay? I do not know him nearly as well; he is Economic Secretary, but has about 17 responsibilities, most of them related to Brexit.

How do those of us on the committee who want to take a continuing interest in the subject focus our representations to ensure that we are on the right side of that dual responsibility offered to those two politicians? How does the policy forum fit into that? If it is merely a six-monthly meeting of stakeholders around a big oak table where they say what they think is wrong with the world, go home and come back in six months’ time, how useful will that be? If it is not that, what is the policy forum to be?

I think it was the noble Viscount, Lord Brookeborough, who mentioned what was done by the Financial Inclusion Task Force in 2005. It had a very small Treasury-based unit with three members of staff. Sir Brian Pomeroy was an experienced hand and a wise man. It made a real impact for next to nothing—this was not public expenditure resourcing that you would notice; it was a sensible amount of money. It made a big impact in increasing the number of basic bank accounts issued.

I am trying to work out how this new arrangement with a split responsibility at its ministerial head will work. There is the policy forum, the single financial guidance body, which is welcome, as are breathing spaces for debt, and the Financial Conduct Authority, which I think is beginning to play a responsible role and getting a much better feel for the issue. The noble Viscount, Lord Brookeborough, also mentioned the financial life survey by the FCA, Understanding the Financial Lives of UK Adults. It is an excellent survey and a valuable document, and it will, to its credit, make the data widely available. The survey is not about people who are just about managing, it is about people who are finding it just about impossible to stay financially afloat at every stage in life. So the FCA’s work will contribute, but there are gaps.

I point to two random examples that have come in front of me in the past few weeks. The Post Office current account has no online payment capability. That is a mandated feature of ordinary basic bank accounts, but it is not included in Post Office accounts. I am disappointed that we are not making more of the Post Office. It could be carrying a lot of the weight—the noble Lord, Lord Patten, made this important point—but it is not being given the chance to do that, or it is shying away from the responsibility. Either way, this is exactly the kind of gap that could be identified and dealt with if this new machinery were put in place and acting effectively.

Finally, the Financial Inclusion Commission produced a publication looking at improving access to household insurance, which stated that nearly 16 million adults who have some need for contents insurance have no insurance protection against fire, flood or burglary. Of that 16 million, 10.5 million are renters and two-thirds of those renters are potentially vulnerable. So there is another gap. I am getting a long look from the noble Baroness, Lady Goldie, who is the Whip, so I will stop now.

At the beginning of today’s sitting, the noble Lord, Lord McFall, the Senior Deputy Speaker, said that he was interested in taking committee reports forward. I hope that we can keep the community of interest that our colleagues on this ad hoc committee established during our sittings, maintain a constructive interest and monitor the future work done in government on this important public sector policy.