Consumer Credit and Debt Management

Sheila Gilmore Excerpts

Thursday 3rd February 2011 Commons Chamber

[Jackie Doyle-Price]

That is why we must avoid being prescriptive about how we tackle the problem. We can make rules, but firms will find ways of getting around them. We could put in place an overarching obligation for the regulator to say, “We will take action when we think something is not fair”, and we will be able to point out that such practice is not fair by any stretch of the imagination. However, we need to set that expectation for the regulator—that it will take action when unfair activities take place.

The hon. Member for Walthamstow mentioned affordable credit. Ultimately, we will not tackle the problems until more affordable credit is available. With that in mind, I should like to ask what more the Government can do to establish and foster the growth of credit unions and to think in a big society way.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the light of the hon. Lady’s support for affordable credit, will she put pressure on the Government to extend the life of the growth fund?

[Jackie Doyle-Price]

I was about to say that I am asking the Government to think in a big society way about what they can do to encourage the growth of credit unions. It would be nice if Opposition Members allowed Government Members to make our case, because we have as much to advance on this subject as they have.

I pay tribute to my local borough council, which has welcomed Essex Savers credit union into its civic offices and other properties that it owns and manages. I encourage the Government to consider what facilities it could offer to credit unions—post offices were mentioned, but we could also use jobcentres. That would give credit unions access to more savings, and they would therefore be able to make more loans. I have now run out of time, but I hope the Minister takes that on board.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to thank my hon. Friend the Member for Walthamstow (Stella Creasy) not only for securing this debate, but for the campaign that she has been waging on this subject since she was elected. Mention has been made of the review of consumer credit, and of the consultation, which closed some time ago. It is important to remember that that review would not even have looked at some of these issues if my hon. Friend had not pushed for them to be examined, so we are here today in part because of her efforts.

It always worries me when people say things like, “We don’t need to regulate yet” or, “We’re all in agreement with this, but—”.

[Lorely Burt]

The Labour Government had 13 years in which to regulate, and they conducted three investigations into this very subject. They did not bite the bullet, however, so the hon. Lady should not be criticising us. We are conducting a consultation nine months into this Government.

[Sheila Gilmore]

The hon. Lady has been told on several occasions by various Members that the proposal in the motion is different from some of the proposals that were not taken up by the previous Government. If I had been in this place then, I would have been pushing my Government to do exactly what the motion proposes. It is not good enough to say, “If your Government did not do this, you should not propose it now.” For how long does she think should we be disbarred from making such proposals? One year, two years, 13 years? On that basis, we might as well not be here at all, but perhaps some Members on the Government Benches would prefer that.

[Craig Whittaker]

I understand the party politics involved, but does the hon. Lady acknowledge that we have already heard a lot of evidence today about how these unscrupulous companies get around the process anyway simply by increasing the base price? We need to take time out to have a look at this in a proper, regulated manner.

[Sheila Gilmore]

I am not convinced that we have heard assertions or evidence that that could happen. If we always decided not to legislate because someone could get around the law, there might be a case for not legislating.

I should declare an interest as a solicitor, and one of the things that drew me to the law as much as to politics was my belief that the law is a valuable tool to help those who are more vulnerable. The law is a lever to create a better balance of power between those who have power and assets and those who do not.

I am not saying that we should regulate on absolutely everything, but regulation is necessary if we are to deal with a problem that has expanded greatly, partly but not entirely because of the recession. The industry is incredibly seductive for people; it offers them attractive places to go and produces attractive adverts that make everything seem very easy. There is widespread agreement on the need to help people and to make changes, provided that that is not done through regulation, but we must will the means, not just the end. It is not enough to have warm words and to keep talking about how important it is to have measures to deal with financial exclusion and vulnerable people. We have to will the means to do that.

There was a recent Westminster Hall debate on basic bank accounts, in the course of which it became clear that, for all the espousal of financial inclusion, there is a growing inability to will the means that are needed. The measure before us is one of them, and there are several more. In my earlier intervention I referred to the growth fund. Every Member wants there to be more sources of affordable credit. We are all great supporters of credit unions—indeed, I am a member of my local credit union—and we want their lending to be expanded.

One practical recent measure that led to that expansion was the growth fund. As a result of it, lending by credit unions and other community-based financial institutions was able to expand greatly. That will end in March this year, however. Some people might say, “Well, that’s the date your Government set for it to end.” I must say yet again, however, that had my party been re-elected last May, I would have been pressing them to extend the growth fund because it has built up many credit unions and other community-based financial institutions to provide an alternative for people. Without that lending capacity however, many such organisations will have to reduce their lending activities substantially; that is what they are telling me. The alternatives that people often say should be in place before we legislate will therefore not be in place if we do not go on expanding through the growth fund.

I was also concerned to hear that the financial inclusion taskforce within the Treasury, which the previous Government set up, is, in effect, being wound up. Several of the people who were working in this field have already been redeployed to other activities.

If we want to put our money where our mouth is, we need to put in the financial resource and the legislation. Even at this stage in the debate, I hope that Members are willing to decide to vote for the motion and not support the amendment, and to put pressure on the Government to continue the work that the previous Government did in a variety of fields. This is part of the big jigsaw puzzle that we have to address when dealing with financial inclusion and the problems some people face. We need all the following measures: we need credit unions, but we need the resource to go with them; and we also need community-based financial institutions and other sorts of credit unions.

There is one further small provision that the Minister might want to consider: reforming and extending community investment tax relief. Many community development financial institutions—community-based lending institutions that lend to individuals and businesses—would like that, and I hope that the Government are prepared to consider this further measure that is part of the wider jigsaw puzzle.

I commend the motion, and I hope the consensus that has been apparent will translate into support for it.