Nigel Evans
Main Page: Nigel Evans (Conservative - Ribble Valley)(13 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Deputy Speaker (Mr Nigel Evans)
Mr Speaker has selected the amendment in the name of Robin Walker and several other hon. Members.
Stella Creasy
It is a pity that the hon. Lady was not here at the start of the debate when I set out clearly that the proposal is not for an interest rate cap, but for a cap on the total cost of credit. As I said, that is a difference that makes all the difference to the efficacy of the proposals. That is why many groups that share the concerns in the research that the hon. Lady has set out, are not concerned about these proposals. I urge her to look closely at that distinction. I will press on now because many hon. Members wish to speak and I know that the Minister will have a substantial amount to say.
Another point that has been raised is that new provisions in the Consumer Credit Act 2006, which came into force recently, may well change the market. Although those provisions are welcome, the protection that they offer presumes that choice is open to consumers and that if they are simply equipped with clearer pricing and the chance to rethink loans, that will resolve the problems that we have discussed. Customers with no alternative, struggling to make ends meet, cannot exercise choice or avoid borrowing. If someone is tied to the train tracks, knowing when the train is coming makes only a limited difference to their chances of survival. Until we give consumers a level playing field by producing powers to cap costs, we will not change the dynamic of the relationship.
Others have argued that the powers needed already exist, and that the Competition Commission could investigate and act. Indeed, the Office of Fair Trading referred the home credit market to the commission in 2004, as the hon. Member for Solihull (Lorely Burt) pointed out, and came up with various remedies. Here I turn to the views of Citizens Advice, which argues that the problems are getting worse, not better. That shows that those powers have not worked, so it is time to strengthen the intervention that we make in the market.
Mr Deputy Speaker (Mr Nigel Evans)
Order. The hon. Lady has already indicated that a lot of Back Benchers wish to get in. It was recommended that her speech should last 15 minutes, and she is way over that. Could she please bring her remarks to a close?
Stella Creasy
I will, Mr Deputy Speaker.
Finally, people have suggested that we need to introduce more competition by encouraging affordable lending, and I agree, but I do not see that there is a choice to be made between capping the costs of credit and supporting credit unions. Furthermore, it will take a long time for credit unions to become a serious, affordable alternative. In contrast, cutting rates would have an impact on people’s debts now.
I know that some people are concerned about the concept of regulation, but in the motion I simply urge the Government to close the loophole that they have created by saying that they will commit to regulation on the costs of store cards and credit cards but leave this vulnerable market untouched.
The weight of evidence means that I will hold firm in not accepting the amendment, as much as I welcome the strong cross-party support for the proposals. We all know that that support exists, and in these days of new politics I want to celebrate it, but I fear that the warm embrace of consideration could turn into the slow of death of progress without firm direction from the House. The longer we delay affirmative action, the longer our constituents will pay high rates.
Make no mistake, the problem will get worse, not better. As Uriah King of the American Center for Responsible Lending points out,
“payday lenders are aggressively seeking new markets because they are being curtailed here in the US”.
We can all see the consequences in our communities. One example of this is the uncle who came to me last year because his 16-year-old nephew had been given a £300 loan by a home credit agency. His family will struggle to repay that debt. He is angry, you bet, but he knows that it is all legal. What chance for the next generation if we do not act now? Mr Crook will be licking his lips at their predicament.
Let us not delay. There is evidence to support my proposals, and there is political will in the House for this to happen. Let us consider the motion a belated submission to the credit review, giving the Government a clear and urgent message that the time for capping costs has come. Voting for the amendment would dilute that message. The clock is ticking. Research by R3 shows that 44% of people in this country now struggle to make ends meet until pay day, and the problem will only get worse. Those people are our constituents, and they are our responsibility. I ask Members to please give them more than consideration—please give them action. Support the motion and protect the poorest consumers above the needs of loan sharks.
Several hon. Members
Mr Deputy Speaker (Mr Nigel Evans)
Order. As hon. Members can see, this is a popular debate and a five-minute limit has been introduced, with the usual injury time for the first two interventions. Members do not have to take the full five minutes—if they do not it will mean that more people can get in—and they do not have to take interventions.
Susan Elan Jones (Clwyd South) (Lab)
I pay tribute to my hon. Friend the Member for Walthamstow (Stella Creasy) for her sterling and tireless work. I also pay tribute to the cross-party support for her motion and the widespread support from groups that I do not believe have ever spoken to each other before, which shows the strength of feeling.
I am speaking today because of a constituent on income support who went to BrightHouse and was told it was fine for them to buy any item, however expensive it was and whatever the rates they would have to pay back. I am here for the couple with children who lost their house through redundancy. As well as very large mortgage-related debts, they must pay 10 other debts, including five from credit cards, all of which are spiralling out of control, to a total of £37,000. That is the tip of the iceberg in just one constituency. Citizens Advice informs me that in my constituency—just one constituency in one part of the country—it is dealing with work relating to debts in excess of £2 million. That cannot be right, which is why I believe we have such a consensus.
Just before Christmas, I received a nice, handwritten card in the flat that I rent in Vauxhall. The nice person who signed it told me that I could get £300 immediately. The only problem was that the annual percentage rate was 272%, which would mean that I would have to repay £546. Six companies control 90% of that market in the UK. That is scandalous. New Members received £4,000 loans for office items. What would they think about paying back £7,280? Perhaps I should not have said that quite so loudly—people writing about this debate might think that it is an excellent idea. Seriously, however, that is the problem facing the poorest communities in our country today.
The hon. Member for Thurrock (Jackie Doyle-Price) compared prices between an electronics supplier and BrightHouse. In Argos it is possible to buy a 60 cm double oven for just under £280, but the total after interest for the same item in BrightHouse is almost £590. That is nonsense—it is immoral and it must be stopped.
I should like to deal briefly with credit rates, which hon. Members have mentioned. Some say that if we act, there is a possibility that people might go elsewhere to access credit. I understand that, but I cannot see too many of my constituents in north Wales heading to Manchester airport to take the next flight to New York on the off chance that they can get cheaper credit there.
The movement for action is growing globally, including in this country. It is tremendous that we are seeing widespread, cross-party support, and support throughout business and civic society. I commend the motion and hope it wins support. I also hope the Government put behind them whatever qualms they may have had, because this matters in our constituencies, whatever parties we represent, and whatever part of the country we come from. The motion will make a difference to the poorest members of our society. It is right and moral, and we should take action.