Welfare Reform and Work Bill
Debate between Mark Durkan and Damian Hinds(9 years ago)
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Damian Hinds
If the hon. Gentleman will forgive me, I will not give way.
That is why the Government have proposed changes to child tax credit and to the child element of universal credit, as set out in clauses 11 and 12 respectively. The Government will look at the important issues around exemptions through secondary legislation, which is a better way of dealing with these matters. Indeed, we discussed when that could be done in Committee with proper reflection and working together with stakeholders and experts.
I also wish to make it clear that the changes will not affect families already receiving the child and family elements before 6 April 2017 and who remain on benefit after that date, including such families who subsequently leave universal credit for a period of less than six months, and families who make a new claim to universal credit and who have been in receipt of tax credits for more than two children or qualifying young persons in the past six months. In addition, the Government will continue to support larger families through child benefit, which is paid for all qualifying children in a household, and paid at a higher rate for the first child.
In conclusion, the amendments oppose our clear mandate to find £12 billion of welfare savings and to restore fairness to the system by ensuring that work always pays. In making these changes, we have balanced the vital task of bringing spending under control while ensuring that the support is there for those who need it most. I therefore urge hon. Members to withdraw their new clause.
Question put, That the clause be read a Second time.
Finance Bill
Debate between Mark Durkan and Damian Hinds(9 years, 4 months ago)
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Damian Hinds
The hon. Lady will know that we still intend to bring forward the cap. It has had to be delayed, but we intend to do it during this Parliament. The Budget delivers for all the people of this country, including those who work hard, save hard and want to be able to pass on an asset to their children. In the Bill, we introduce a new £175,000 per person transferable allowance when a person’s home is passed on at death to their children or grandchildren. With the allowance, married couples and civil partners can now pass on an estate worth up to £1 million before having to pay any inheritance tax.
Damian Hinds
I will not give way, if the hon. Gentleman will forgive me.
Productive businesses are the fundamental drivers of national growth. Back in 2010, our corporation tax rate was 28%. Over the course of the last Parliament, we reduced it to its current level of 20%, the joint lowest in the G20. We are reaping the rewards of that, with the UK growing faster than any other G7 economy in 2014. Now we will go further. Clause 7 cuts the rate to 19% in 2017 and to 18% in 2020. The cuts will save businesses a further £6.6 billion by 2021. In addition, clause 8 sets a new permanent level for the annual investment allowance. At £200,000, it is the highest ever permanent level.
We need to invest more in our roads, because their quality has fallen behind as a result of decades of under-investment. That is why we have the reform of vehicle excise duty, which supports the creation of a new roads fund and puts vehicle excise duty revenues on a long-term, sustainable footing.
To respond to the hon. Member for Brighton, Pavilion, the incentives will still be there to purchase lower-carbon vehicles in the first year rates. We know from research that people focus on the first year rate in particular when buying a car. We will do that while dealing with the unfairness that my hon. Friend the Member for Lewes rightly identified, whereby people driving a second-hand car can pay a lot more than those who can afford to buy a new model every couple of years.
It is right that banks make a fair contribution to the public finances that reflects the risk that they pose to the UK economy. That is why we introduced the bank levy in the last Parliament. The additional contribution needs to be balanced with consideration for the UK’s global competitiveness. Therefore, we are legislating for a package of measures that includes making sure that banks cannot profit from the fines they incur and the supplementary rate of tax. I reassure hon. Members about the impact on smaller challenger banks, which we greatly support. The way in which the charge is structured will ensure that they are not adversely or unduly affected.
This is an ambitious Finance Bill for an ambitious nation. It rewards work and investment, provides certainty and security for families and businesses, delivers significant tax reform, helps our economy to be even more competitive internationally, and ensures that the burden of fiscal consolidation is distributed fairly. The Finance Bill marks the next step forward in our long-term economic plan and I commend it to the House.
Question put, That the amendment be made.
High Cost Credit Bill
Debate between Mark Durkan and Damian Hinds
Damian Hinds
And there are multiple other reasons why people take out credit products, many of which are just as rational. I shall come on to some of them later in my remarks, but there is ample evidence to show that many people taking out loans—and the same applies when they access a debt management plan—choose something that is inappropriate. Even where comparative, side-by-side, costings are available—to those of us who studied economics and believe in consumer sovereignty and rationality, this is difficult stuff to get our heads round—consumers often take the more expensive option.
Mark Durkan
Is the hon. Gentleman’s answer to the point from his hon. Friend the Member for Shipley (Philip Davies) that the very fact that these products are advertised in a mainstream way as being so convenient is one of the things that gives them the air of reputability, which encourages people to opt for them as a standard and acceptable form of borrowing?
Damian Hinds
I am grateful to the hon. Gentleman. That may well be part of it. There is a range of operators in this market, stretching from the big and well known with very large ad spends—we can call them “reputable brands” if we like—through to quite iffy-looking companies at the other end of the scale. As in most markets, there is a range.
All these points—I am grateful to hon. Members of all parties for making them—bring me to the third point on which I think we should all be able to agree. Wherever people are on the political scale—whether they are a Milton Friedmanite free market economist or a socialist—they should agree that people should not have to go to excessive lengths to know that they are not being ripped off. There is, of course, a reasonable amount of due diligence that has to be applied when people make a purchase, take a loan or whatever, but they should not have to run around the block seven times to know that what they are taking out is reasonable value.
Those are the three things on which I hope we can broadly agree, and the debate largely revolves around how we achieve them. It is not always quite as straightforward as it appears. On occasion in this House and elsewhere, relatively simple solutions have been proposed that purport to deal with complex market issues in one big initiative. I suggest that that is rarely an adequate answer, as it is rather more complicated.
There are a number of rules of the road in the credit markets, and they have come into sharper focus for me as I have looked into this subject over the last few years. The first is that there are always unintended consequences—except when there are no consequences at all—of what regulatory authorities try to do. The second is that markets cannot be beaten unless something better is provided. The third is that where demand creates its own supply, supply creates its own demand. Let me explain in a little more detail what I mean in each of those cases.
On the unintended consequences, it is a beguiling and attractive prospect to say, “Let us just cap the amount of interest that lenders can charge on their loan products so that people will pay less and household budgets and benefits will go further.” The problem with a blunt and general APR cap is that companies find new products that slip outside the definition being regulated and new ways of making money that do not count as part of APR. To the extent that this cap, or something like it, is effective, its major impact is market exclusion, which inevitably means the most vulnerable and the poorest customers are those most likely to fall into the hands of illegal loan sharks and the sorts of people whose idea of a late payment penalty is a cigarette burn to the forearm.
When I say that there are sometimes no consequences at all, it can again be beguiling to think that we have done something clever, come up with an initiative, empowered consumers and so forth, but it turns out that no impact whatever was made. It is very easy for disclosures, warnings, signposting and so on to just become part of the wallpaper of life—like the bit at the bottom of the billboard chart that says, “Your home may be at risk if you do not keep up your payments on a mortgage or other loan secured on it.” In the case of this market, hon. Members may recall from the previous Competition Commission inquiry that there was, for example, a lenders-compared website, which was meant to help consumers who might be home credit borrowers to compare the price of home credit providers against credit unions and so forth. The problem, of course, is that nobody uses it. The regulatory authorities feel happy because they have provided something, but what they have provided actually does no good at all.
Consumer Credit and Debt Management
Debate between Mark Durkan and Damian Hinds(13 years, 9 months ago)
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Mark Durkan (Foyle) (SDLP)
I join others in commending the hon. Members for Walthamstow (Stella Creasy) and for North Swindon (Justin Tomlinson) for securing this debate, even though they differ on the amendment.
Many hon. Members have described the problems in their constituencies. The problem is that firms in the credit market are able to exact credit terms that are lucrative for them but punitive for their customers. When we hear of some of the eye-watering interest rates that end up being charged, it is natural to think that there should be a law against it, and people look to this House to provide some sort of bulwark against open-sky exploitation. The motion asks the House to give the Government a mandate—although it is not a prescriptive mandate—to put regulatory powers in place that would provide caps that would be sensitive to the circumstances and needs of those who are in dire straits and otherwise financially excluded. Those caps would also be sensitive to the dynamics of different parts of the markets and sub-markets—
Mark Durkan
Well, I am addressing the wording. Many people are misrepresenting the motion and the amendment.
The motion would not put prescriptive caps in place or require the Government to do so immediately. The hon. Member for Solihull (Lorely Burt), who supports the amendment, said that a Government consultation is under way. But that consultation is not just asking the regulators what they think: it is rightly asking all of us what needs to happen to provide properly regulated financial services and proper protection to customers, both business and personal. Instead, the amendment says that we do not even want the Government to consider the question of regulatory powers that would protect those customers—we should ask the regulators to consider that question instead. Who are the regulators? The very consultation that the hon. Lady was talking about is about who the regulators will be in the future and what powers they will have. So the amendment is an evasion and dereliction of parliamentary responsibility, because it would simply ask the regulators to think about the issue—when we are still thinking about who the regulators should be and what powers they should have. It is a case of “There’s a hole in my bucket, dear Liza.” If people want an answer to this problem, they should not back the amendment.
Mark Durkan
No, because I want to give other hon. Members a chance to speak. The hon. Gentleman is supporting the amendment and he ended up pleading with the Minister to consider what he called “twin caps”. I do not know why he did that when he is backing an amendment that says that the Minister should not consider anything to do with caps. So the hon. Gentleman does not want the Minister to have anything to do with this and instead it should be unspecified and unknown regulators.
There is even more uncertainty about who the regulators in Northern Ireland would be. If I, as a Member representing Northern Ireland, were to support the amendment, I would be asked by my constituents, “Well, who are the regulators in our country?” It is unclear who the regulators would be in Northern Ireland. That is why I cannot join others in sidestepping the main point of the motion by backing the amendment.
I would like to join my Celtic colleague, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), in making a point about debt management and debt management plans. There are not only loan sharks out there, but debt sharks, who pose as debt dolphins coming up to help people who are deep in dire debt. We need clearer regulation. We know that an Office of Fair Trading report found that more than 129 companies were engaged in various questionable practices; and we know that there are models for statutory schemes, not just in other jurisdictions such as the south of Ireland and elsewhere across Europe, but even in Scotland, where there is a debt arrangement scheme that provides a good model for protecting consumers in dire need of credit but being exploited in the name of debt management plans.
The term “flipping” was used during the parliamentary expenses scandal to describe MPs changing houses. In the debt management plan arena, of course, we have flipping as well, with companies sucking customers in with unsustainable terms then flipping them on to more exorbitant terms in the future.