Financial Services and Markets Bill

Stella Creasy Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Richard Fuller]

The hon. Lady tempts me to talk beyond what is really the responsibility of the Government. She is raising questions that are correctly and appropriately for the parliamentary authorities to respond to. On her more general point about whether the system is correct to rely on the regulatory framework that was established in 2000, I think the answer is absolutely yes. As I have just mentioned, it provides the ability for an agile, pro-growth, competitive set of financial services regulations, and I believe that Parliament itself is capable of providing that democratic oversight over the regulators. If she is concerned about that, I encourage her to take it up with the parliamentary authorities in the usual way.

So I welcome the Treasury Sub-Committee. I have said that ultimately it is for Parliament to determine the best structure for the ongoing scrutiny of financial services regulators. The Bill also includes a new power for the Treasury to require the regulators to review their rules when that is in the public interest. Following any such review, the final decision on potential action would be for the regulators to make.

Following the repeal of retained EU law, the Government will have no formal mechanism to bring public policy considerations directly into rule-making. It is right for the democratically elected Government of the day to be able to intervene in a matter of financial services regulation where there are matters of significant public interest. The Government’s intention is therefore to bring forward an intervention power that will enable Her Majesty’s Treasury to direct a regulator to make, amend or revoke rules where there are matters of significant public interest. The Chancellor will take a final decision on the precise mechanics of the power and the Government will table an amendment in Committee.

Let me now turn to the Bill’s second objective: bolstering the competitiveness of UK markets and promoting the effective use of capital. I have already spoken about the improvements to the UK’s regulation of secondary markets in this Bill through reforms to the MIFID framework in the wholesale markets review. These changes will lower costs for firms and align our approach with that of other international financial centres such as the United States. To improve the smooth functioning of markets, we will introduce a senior managers and certification regime for key financial market infrastructure firms. We will expand the resolution regime for central counterparties to align with international standards, and enhance the powers to manage insurers in financial distress.

The next objective of the Bill is to strengthen the UK’s position as an open and global financial hub. Outside the EU, the UK is able to negotiate our own international trade agreements, including mutual recognition agreements—MRAs—in the area of financial services. The Government are currently negotiating an ambitious financial services MRA with Switzerland. Clause 23 enables the introduction of any necessary changes through secondary legislation to give effective to this and to any future financial services MRAs. Schedule 2 contains measures that enable the United Kingdom to recognise overseas jurisdictions that have equivalent regulatory systems for securitisations classed as simple, transparent and standardised, allowing UK investors to diversify their portfolio while maintaining the level of protections they currently enjoy.

The Bill takes the UK further forward as a centre for financial markets technology. Clause 21 and schedule 6 extend existing payments legislation to include payments systems and service providers who use digital settlement assets that include forms of crypto-assets used for payments, such as stablecoin, backed by fiat currency. This brings such payments systems within the regulatory remit of the Bank of England and the payments system regulator, allowing for their supervision in relation to financial stability, promoting competition and encouraging innovation.

To foster innovation, clauses 13 to 17 and schedule 4 enable the delivery of a financial markets infrastructure sandbox by next year, allowing firms to test the use of new and potentially transformative technologies and practices that underpin financial markets, such as distributed ledger technology. In parallel, the Bill promotes the finance sector’s resilience by allowing the financial service regulators to oversee the services that critical third parties provide to the sector.

Let me turn to the Bill’s final objective, which I know will have the commendable focus of colleagues throughout the House: the promotion of financial inclusion and consumer protection. The Government will continue to foster an industry that supports everyone so that individuals do not feel left behind by the rapid advancement in financial technology. There is an extensive programme of ongoing work related to consumer protection, especially in the areas that were legislated for in the Financial Services Act 2021, such as buy now, pay later agreements and the FCA’s rules on the consumer duty.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister is relatively new to his role, but he cannot help but be aware that it is now almost two years since this House recognised the real threat to our constituents’ bank balances posed by buy now, pay later and its lack of regulation. There is agreement throughout the House that these legal loan sharks must be regulated. The Minister may say that this is a complex policy area, but political will and the cost of living crisis demand fast action. Why is the necessary regulation not in the Bill? It could have been the perfect vehicle, ahead of Christmas, when these companies will profit again, to act to protect our constituents.

[Richard Fuller]

The hon. Lady is right to talk about the urgency and complexity of the issue. She understands that it is complex and will invigorate us all to move as quickly as possible. I note that even as recently as 19 August the FCA has followed up with the buy now, pay later companies to remind them of the rules that they have to operate under, and that the Government have committed to bring forward the consultation on the draft legislation before the end of the year. I look forward to discussing matters further with the hon. Lady.

The 2021 Act made legislative changes to support the widespread offering of cashback without a purchase by shops and other businesses. Clause 47 and schedule 8 go further and give the FCA the responsibility to ensure reasonable access to cash across the UK. The FCA will have regard to local access issues and a Government policy statement on access more generally. The Treasury will designate banks, building societies and cash co-ordination arrangements to be subject to FCA oversight on this matter.

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

I welcome this ambitious piece of legislation. It is quite right that for a country and an economy such as ours, in which financial services play such a key role, we should be able to set UK-specific financial services regulation. I very much welcome the reframing of the regulatory objectives around long-term growth and international competitiveness. I want to speak to two specific aspects of the Bill that fall under “other miscellaneous provisions” but are nevertheless incredibly important: credit unions and compensation for the victims of fraud.

I turn first to credit unions, and in particular their role in financial inclusion and providing an alternative to high-cost, sub-prime lenders. Last night, I happened to be flicking through a well-thumbed copy of Hansard and looked at a debate from January 2014—hon. Members will remember it—when we were discussing payday lenders and the problems associated with them. We have come a long way since then. I think it is important sometimes to look back and say, “Where has regulatory change made a big difference?” We have had: the CMA report; the new FCA regime, including on payday affordability checks, roll-overs and restrictions on advertising; the measures on continuous payment authority, which I remember the hon. Member for Walthamstow (Stella Creasy)—no doubt, she would have wanted me to say this—championing so strongly; the cost of credit cap; and, most recently, the new FCA consumer duty.

More broadly, the Government put financial education on the national curriculum and, of course, supported credit unions with a commitment of up to £38 million for their development and further regulatory liberalisation.

[Stella Creasy]

I acknowledge what the right hon. Gentleman is trying to point out. However, does the evidence not show that it was the intervention of the financial ombudsman service that led to the downfall of companies, such as Wonga and Amigo, that were exploiting our constituents, rather than the intervention of the FCA, which oversaw unaffordable lending on its watch? Does that not show us why we need further FCA reform? It is the opposite of the point that he is making.

[Damian Hinds]

The hon. Lady makes an important point. It would be wrong—I am sure she did not mean to say it, even though it is what she just said—to say there was a single cause for those things. In fact, it is about changing the entire framework. In other parts of the market, for example home credit, there is a different set of reasons again why there has been a decline. We know the sub-prime segment shapeshifts the whole time, and we have also seen the recent growth of buy now, pay later. At a time of heightened financial stress, it is inevitable that new risks and new vulnerabilities manifest.

Wise heads always remind us that in seeking to curb the parts of the high-cost lending market that we do not like, there is always a danger that we instead push some part of that customer base into the arms of a high-cost lender whose idea of a late payment penalty is a cigarette burn to the forearm, so we must get the balance right. Regulation has been a success, but ultimately what we need is an alternative, because credit does form a part of people’s lives, and that is where credit unions and others, such as community development financial institutions, come into play.

We have seen development in the sector, but I would like to see a lot more. We have a great example in Northern Ireland—and indeed in the Republic of Ireland—of what a much more developed credit union sector can look like, and I would like to see that in mainland Britain. The proposals in the Bill will continue that development, amending the Credit Unions Act 1979 to allow for conditional sale and hire purchasing agreements to be undertaken by credit unions, along with the marketing of insurance services. I would only encourage the Government to go further, because our credit union sector is still small in Great Britain compared to Northern Ireland and there is much more that can be done. There is also more that can be done on CDFIs, whose growth, frankly, has been disappointing.

I encourage keeping an open mind on the regulatory aspects of the Bill. I do welcome the measures, but while the 3% per month interest cap is very reasonable, in some parts of financial services it is difficult to break even on that cap. Ironically, the demise of the market leader of the home credit business sector makes it more urgent for us to ensure there is very good provision from credit unions and other responsible lenders in its wake.

The other issue I want to comment on briefly is the provisions on authorised push payment scams and mandatory reimbursement. This gives me the opportunity to join others in the nice things they have been saying about my hon. Friend the Member for Salisbury (John Glen), the former Economic Secretary to the Treasury. I had the opportunity to work with him when I was Security Minister and he was bearing down on the awful growth in fraud. We have not just seen that growth in this country. Fraud and economic crime have been growing in countries throughout the world. There is a change in crime, and we need to respond accordingly. I welcome the change in the Bill, because it brings consistency and fairness and will enhance confidence for people using online financial services. One should never take away all responsibility from the consumer, of course, but that is a welcome move.

Very briefly, there are two things I would like the Government to look at, one for the Treasury specifically and one for the wider Government. First, for the Treasury, it is not clear to me why this provision applies just to the faster payment system. It is true that the vast majority of scams happen through faster payments, but they may not in future. It is right that the regulator should have the ability at least to extend that scope.

Secondly, a bigger point—not for my hon. Friend the Economic Secretary, he will be pleased to know, but for others in Government—is that we should extend the principle beyond the banks. It is difficult to get sympathy for banks and bankers, but right now they are bearing the entirety of the burden even though they are just the last link in the chain of the scam. They have responded very well, partly through regulation on such things as strong customer authentication and so on, but also by going further off their own bat. I think that is partly to do with their moral commitment to their customer base, but it is also about the liability they face through the contingent model. One wonders whether, if social media platforms, telecoms companies and others had had those same incentives, we might already have a lower level of fraud than we have today.

Save for those two encouragements to my hon. Friend the Minister for the Government to look at going further, I strongly welcome the Bill and all he is trying to do.

--- Later in debate ---

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I do not want to disappoint my colleagues on the Government Benches, but I think that they know the issue on which I wish to focus in the time that is available to me. Before I start, I want to put on record, as a Co-operative and Labour MP, my support for the comments of my Labour colleagues on the importance of access to credit unions and of access to cash, which reflects the issue that I want to raise, particularly with regard to high-cost credit regulation.

I also wish to put on record some scepticism about the idea that there are wonderful opportunities as a result of Brexit. To my mind, there are simply problems that we will need to address, and I note that the former Minister, the hon. Member for Salisbury (John Glen), talked about the unlikelihood of a derogation from the existing regulations. Some may wonder whether this is the best use of parliamentary time, but I am willing to look at the legislation.

There is a genuine philosophical disagreement here about the concept of consumer protection. It is the lesson of high-cost credit regulation in this country that I do not think this legislation learns and it is our constituents who will pay the price.

Let me start by highlighting the points of agreement. I agree with the right hon. Member for East Hampshire (Damian Hinds) when he talks about this as an industry that is shape shifting—that it evolves to meet the times that it faces. Let me also put on record my appreciation of the work of the former Minister, the hon. Member for Salisbury. He and I have had many discussions about this industry and how best to address the threat that it poses to our constituents. Although we may not have agreed all the time, I have certainly respected the fact that he has been listening and looking at the evidence.

I am here today as a Cassandra, a broken record, to warn again of these industries and the latest antics of the companies, particularly the buy now, pay later lenders. Two years ago, we started to say that those lenders must be regulated, and I would argue that that was probably 18 months too late from recognising the threat that they pose.

The lessons of payday lending, guarantor lending and hire purchase agreements show that we simply cannot wait until the harm is evident among our constituents, especially when the abuse that is coming is self-evident already. Now that we are in a cost of living crisis, such caution is frankly unforgiveable, because it is our constituents who are paying the price. I hope that we can return to this matter in Committee. I am sure that the Minister now dealing with this Bill will recognise that, especially as the £1.8 billion that this country owes in personal debt—a rise of £62 billion—has not come from nowhere. Credit card borrowing in this country has jumped at its fastest rate in the past 17 years as people deal with the cost of living crisis.

When a third of households with children are cutting back on food to be able to pay their bills, it does not take a rocket scientist to work out that too much month at the end of somebody’s money and mouths to feed mean that credit must be found, and our constituents are turning to the high-cost lenders in their droves. I would be surprised if Members do not know what buy now, pay later is, because it is on every single website in this country now as a result of the delay in action. It has massively exploded as a result of the pandemic and now the cost of living crisis. Those companies are offering the opportunity to spread the payments, but they do not do so out of the goodness of their hearts; they do so because consumers spend 30% to 40% more. Add that toxicity to the way in which people are borrowing now to make ends meet: we are seeing buy now, pay later companies offering to put people’s energy bills onto these processes. We are seeing them offering the loans not for fast fashion, which is where people originally thought this kind of regulation was needed, but for basic goods and essentials. Millions of people in this country are now using this form of credit and getting into a hole that they cannot get out of. Those are not my words; it is what the evidence is now showing us. The previous Minister well knows that the evidence of harm is there. Indeed, that is what the FCA told us more than two years ago.

The average buy now, pay later user is paying off £293 of buy now, pay later debt, but that is at current prices. With inflation rocketing in the way that it is, the only ones that will win from that are those that offer the ability to apparently spread the payments, but that simply gets people into further and further debt. Most of these companies will not be clear with their lenders about the consequences. Indeed, many people do not even realise that it is a form of credit; they just think that they are spreading the payments on the websites.

Shoppers were charged £39 million in late repayment fees on buy now, pay later loans last year. I dread to think what the figure is now. There is agreement across this House that we need to regulate these companies, but what there is not is the political will to make sure that it happens before the pressure points come. We have already been through one Christmas where one pound in every four spent was on buy now, pay later. There are millions of people still paying off those debts. On the regulatory timetable that the Government are talking about, we will not see action before some time late next year. Minister, some time late next year is far too late for our constituents.

[John Glen]

I cannot resist. I think there is great consensus in the House on this matter. It is not a question of a lack of political will; I can assure the hon. Lady that it is about the complexity of delivering that legislation. In fact, the intent’s having been stated will have a meaningful effect on market practices and will change, and is changing, behaviours in the marketplace.

[Stella Creasy]

I thank the former Minister for his intervention, but my question is what that means for consumers. The lack of regulation means that my constituents cannot go to the ombudsman to seek redress if they think they have been mis-sold this form of credit. As people are drowning in buy now, pay later lending, they cannot seek assistance except from the companies themselves. We now see mainstream banks moving into buy now, pay later—the very bank that looks at someone’s account to decide how much they can spread payments and how much more they can afford to borrow, because this is a form of borrowing.

The hon. Gentleman may argue that the market is moving, but constituents need help now, because it is now that they are getting into debts that they cannot get out of. The challenge for us all is that the pace of change is horrifically slow, and that is where the damage to our constituents will come. If we all agree that regulation matters, let us get on with it. Furthermore, let us ensure that some of those basic changes, such as the ability for the ombudsman to intervene, happen.

This legislation shows that that matters, because it was the intervention of the ombudsman that made a difference with payday lending. The evidence is clear; the Financial Conduct Authority was overseeing Wonga while it continued to make loans that were unaffordable to its customers. It was only when the ombudsman intervened that Wonga was finally held to account for its behaviour, and as a result it went bust—and Wonga is not a one-off. Our constituents need proper consumer credit protection.

The Minister will know that it is my belief that there should be a proper credit capping process for all forms of credit, so that we do not have to play whack-a-mole. The right hon. Member for East Hampshire reflected that when he talked about shape-shifting: as one of these companies is regulated, another one comes up. In the intervening period, however, it would be perfectly possible to bring in the ombudsman. If we set out a separate regulatory regime for those companies, we are setting a precedent for other forms of credit to come and ask for separate and, frankly, special treatment.

What our constituents need is clarity about who to go to when they get into trouble. We all tell our constituents to go to a debt adviser, but if they have rights, those rights need to be transparent. At the moment, if people are borrowing on buy now, pay later, they have no rights, because it is not regulated. They only have the indulgence of those companies, and asking turkeys to tell us whether Christmas is a good idea rarely ends in a present for anybody.

It is right that we act as quickly as possible. I do not agree with the hon. Member for Salisbury when he says that the political will is there, because frankly this could have been done a while ago. The timetable that the Government have set out, which does not seek any form of actual intervention until some time in late 2023—and even then, it is about consulting on further measures—simply will not wash. Every Member of this House will have constituents coming to them for whom buy now, pay later debt will be part of their debt make-up, who may have put their mortgage on it, because there are companies offering the opportunity of spreading payments. Little wonder, when after all the Government are telling us they are going to spread our energy bills; the Government proposals to date are a form of buy now, pay later.

I wish I was wrong. I wish I had been wrong about payday lending, but we waited too long, and there are still millions of people in this country who are owed money through the compensation scheme from those payday lenders because we waited too long to intervene. We must not make the same mistake again.

I put the Minister on notice, and I ask for support from across the House, because I do not think this is a party political issue; it is about the pace of change. I will be proposing an amendment to this legislation that will give the Government the same time period of 28 days that the buy now, pay laters give our constituents to bring in that secondary legislation and give our constituents the protection of the ombudsman. It is a necessary and vital measure in a cost of living crisis to ensure that when people who cannot choose between eating or heating—because they cannot afford to do either—turn to buy now, pay later, they are not creating further problems for themselves down the road.

I know that hon. Members across the House agree that this kind of lending is a problem, but it is time for clarity, it is time for simplicity and it is time for that legislation. I hope that I will find supporters on the Government Benches, and I know that we will find supporters in the other place. Above all, I know that our constituents deserve better.

Economy Update

Stella Creasy Excerpts

Thursday 26th May 2022 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Chancellor says he cannot solve every problem, but there is one problem he could solve that would not cost him a penny, but would save millions of people billions of pounds. One in 10 households say it is loan repayments that are causing them destitution, with an average monthly repayment to find of around £370. In the cost of living crisis, it is the legal loan sharks and consumer credit companies that have profited from the delay in help that we have seen and the lack of regulation of their charges. This is not just “buy now, pay later”—it is all of them. When will the Chancellor follow the lead of other countries, recognise how our constituents are being ripped off by those companies, and introduce a cap on the costs of all credit?

[Rishi Sunak]

My hon. Friend the Economic Secretary to the Treasury is in regular dialogue with the Financial Conduct Authority to ensure that the industry is properly regulated. Last year, we also introduced the breathing space programme, for which he deserves enormous praise and which we continue to believe will help people. It provides a space where all statutory debt repayments are paused to allow families time to work through them, with the benefits that that brings.

Oral Answers to Questions

Stella Creasy Excerpts

Tuesday 17th May 2022 Commons Chamber

[Rishi Sunak]

Whether it is expansion of the school breakfast club programme, the holiday activities and food programme or healthy start vouchers, this Government are supporting families in meeting the costs of food, particularly at this difficult time. The hon. Gentleman rightly talks about children growing up in poverty. The best way to support those children is to ensure that they do not grow up in a household where no one is working, and I am proud that, thanks to the actions of Conservative Governments, half a million fewer children are now growing up in a workless household.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

One group of companies doing well out of the cost of living crisis is the buy now, pay later lenders, with Klarna now valued higher than Barclays or Lloyds. One in 12 of their customers are using buy now, pay later credit to pay for toiletries and basic food products. Will the Chancellor, who was boasting about our consumer credit profile earlier, name the date when our constituents can finally make good on the promise that was made in this House over 18 months ago to give people protection from these legal loan sharks and access to the Financial Ombudsman Service?

[John Glen]

I cannot give the date, but it will be very soon.

Black Friday: Financial Products

Stella Creasy Excerpts

Tuesday 23rd November 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I beg to move,

That this House has considered promotion and regulation of financial products on Black Friday.

It is a pleasure to serve under your chairmanship today, Mr Robertson. May I associate myself with your comments? I had the honour and pleasure of taking part in debates chaired by Sir David. He was always a fair and very fun Chair to have around; we shall miss him terribly.

I want to be clear from the start that I do not think that anybody in this room is green—green in the sense of being the Grinch. This is not a debate about whether people should be able to spend money, which is a personal decision. As we come up to Christmas, it is important to recognise that for many families this year will be an extra special one, given what we have been through over the past two years. I recognise that it is very easy, when we talk about consumer credit, to sound like the Grinch, as though we are saying it is all so complicated and difficult and that nobody should spend any money. Let me be clear that it is not my intention to come without good Christmas cheer.

Indeed, I note that many retailers are taking advantage to promote the idea that this is the year that one should really indulge and go all out. Tesco tells us, “Don’t stop me now,” when it comes to shopping. Argos tells us, “Baubles to last year,” and Debenham’s says, “Christmas like never before.” Aldi tells us not to be a Scrooge—at least, I think that is what they are telling us with the Christmas carrot. Sports Direct is more direct than ever, telling consumers to “Go all out!”

My point is more simple. We want families to be able to celebrate with their families and not be worried. One thing we know that causes the most worry to families is money. We are a nation that has not done as well in the G7 as some others, but we are second highest among the G7 countries for household debt. That is one competition we do not want to win as a nation—but we do. We have always been more comfortable with borrowing and credit than other nations.

My point in calling the debate on Black Friday and the run-up to Christmas is to recognise that this is a time when for many families getting into debt seems the right thing to do, because it is about being able to treat loved ones. When we have had so little time with our loved ones and been so apart—I hope we can be together this year—being able to do that feels even more important. As a result, the risks that families face are even higher.

I recognise that the Minister cares passionately about the subject and has done a lot of work on it. My call is about how we will help those families have a good Christmas, so that the new year is not a time of further worry and distress caused by debt. The honest truth is that as much as people talk about the pandemic as a time when some families have paid down debt and saved money, since they have not been able to go on expensive foreign holidays, for many others it has been a time of further financial distress. I used the word “further” critically, because we are a nation that has a problem with household debt, and has had that for some time prior to the pandemic.

Prior to the pandemic, Experian found that 40% of people would not be able to pay their mortgage or rent if it increased by £50 or more a month. Just an extra £50 and they were sunk. A total of 10% of this nation was constantly overdrawn, and that figure has remained pretty stable for many years. As many as 2.8 million people have persistent credit card debt, which means that they are paying more in interest fees and charges than in paying off the debt.

For some people in this nation, saving is a habit, while for others it will always be an ambition. Some 34% of adults have never had any savings or have savings of less than £1,000. There were many people in this country who were struggling financially before the pandemic. What the pandemic has done for that group of people—people for whom a foreign holiday was never a possibility —is throw into sharp relief just how difficult their finances were. Many of those are in precarious jobs, such as in retail or hospitality, and they were hit even harder when the pandemic came.

[Catherine West (Hornsey and Wood Green) (Lab)]

I thank my hon. Friend for giving way. I place on record her excellent background in holding to account Wonga and a number of other loan sharks through other Parliaments, as well as work on other topics she is well known for. This issue is particularly important right now, as we come out of coronavirus. Is my hon. Friend aware that Citizens Advice found that 40% of buy now, pay later customers have been unable to pay for essentials such as food, rent or bills? This is a particularly difficult time as people come back into work, with the insecurity of work underlined in many of our workplaces, and bills—particularly fuel bills—going through the roof.

[Stella Creasy]

My hon. Friend is absolutely right. If both Scrooge and the Grinch are misunderstood, I very much believe that buy now, pay later companies could become the true villains of Christmas rather than them —[Interruption.] It might be tenuous, Minister, but it is a link.

I recognise that during the pandemic, debt has become a lot worse for many people; when I say a lot worse, I mean it is less likely that they will ever be able to get out of it. Many people live with debt, and while sometimes it is a debt they can manage, an awful lot of people are drowning, not waving.

Data from StepChange is clear that as a consequence of the coronavirus lockdown period, 2.8 million people have fallen into arrears: most frequently on utilities, as my hon. Friend the Member for Hornsey and Wood Green (Catherine West) said. That is on fuel and water, on keeping the basics of the house going. Some 820,000 people have fallen into arrears on their council tax—a debt to the public sector—and about 500,000 people have fallen into arrears on their rent. We have seen a massive explosion in the number of people who will never own their own homes and will always be in the rental sector, particularly in areas where the cost of living is particularly high. My constituency has the 10th highest level of child poverty in the country, and that is because of the cost of living and the cost of renting in my local community. We know that those people, who have struggled to stay in our area, were particularly hit by the restrictions on their working practices in lockdown and have now found that they simply cannot afford the roof over their heads.

Little wonder that nearly 4 million of us have borrowed to make ends meet during the lockdown period, with 1.7 million often using a credit card, 1.6 million using an overdraft and nearly 1 million using a high-cost credit product. That borrowing is not, perhaps, the stereotype of borrowing in order to buy goods—going back to my original point about people wanting to treat a family member. Instead, people have borrowed during lockdown to keep things going: to keep food on the table; to keep their car working, so that when they can go to work, they can get to work; and, perhaps, to pay for heating, especially in the cold weather.

It is striking that there has been a 267% increase in the number of consumer county court judgments issued. Those numbers were depressed by the covid forbearance measures. I recognise that schemes such as the furlough scheme and the self-employment income support scheme helped to mitigate the impact of that. My point when talking about consumer debt and consumer credit is that we are coming out of a period when many people were vulnerable anyway because of long-standing household debts, and that those debts have been made a lot worse. Add into the mix the fact that we expect those people to spend money and help to get our economy back on track. It does not take a rocket scientist to recognise that at the heart of that mix is something very potent that could lead to real poverty and destitution for many people.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I congratulate my hon. Friend on all the work that she has done on this issue, as mentioned by my hon. Friend the Member for Hornsey and Wood Green (Catherine West). Let me pick up on the point my hon. Friend the Member for Walthamstow (Stella Creasy) is making very powerfully about people who get into debt and feel pressured into buying things for their family and friends, especially because this is the first time for a while that they can celebrate Christmas properly with family. Recent research by Citizens Advice, which I have seen, found that 39% of people who have opted to buy now, pay later online did so without realising that they were signing up to a high-interest loan. That lack of transparency is very concerning to me. Does she agree that with pressure on our constituents to make purchases online before the products are likely to rise in cost before Christmas, the Government should set out what they will do in the coming days and weeks to make sure that people know exactly what they are signing up for when they take out a buy now, pay later product?

[Stella Creasy]

My hon. Friend makes her point incredibly well and she will not be surprised to learn that, yes, I absolutely agree with her. Indeed, it is striking that just before the pandemic hit we had the first year in this country when more purchases were made online than in bricks-and-mortar shops, and of course during the pandemic people’s switch to shopping online has become even starker. The state of our high streets is a debate for another time, but we have all seen that change and I do not think that it will go backwards. People’s comfort with shopping online had already been set in place before the pandemic hit; now, for most people, that is the first place that they look, rather than the last.

In 2020, 9 million people were forced to increase their borrowing to cope with the pandemic. That is a phenomenal statistic. The press and media have been full of people paying down their debts, and the silent minority of people for whom debt has increased have not been heard. Today’s debate is about that group of people, and what support and advice we are giving them, because, as my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) said, being able to treat our family members, especially when we have been through such tough times, becomes even more important for everyone. That means that we must ensure that everybody can access credit in a fair and affordable way.

My argument with the Minister today—he will know it, because we have been having it for many years—is about what more we can do to ensure that there is a fair and level playing field, that consumers are armed with the best information and that companies cannot exploit the situation in which there are so many people in our communities who are drowning in debt and will never get out of it. They will always live with a level of debt that might be exacerbated so that one single thing can tip them over into a financial crisis, as opposed to just a financial meltdown, which is what they might be in right now without realising it. Indeed, many of us may have had the experience of talking to people in our constituencies who say, “Well, I don’t have any debt”, and then we ask them if they have a credit card and they say, “Yes, of course”, as if a credit card is not debt.

My hon. Friends the Members for Hornsey and Wood Green and for Hampstead and Kilburn are right to prefigure the particular type of debt that I am concerned about. The Minister knows that I am concerned about it and I know that he agrees with me that there is a problem with this type of credit, which needs to be regulated. My point today about the buy now, pay later industry is that there are echoes of previous examples in our communities where new, or relatively new, forms of credit that might have seemed niche when they first came to the UK market explode very quickly, become commonplace among millions of people and, without proper regulation or scrutiny, cause many more people to get into debt as a result. We saw that with the payday lending industry, which exploded in the UK in the early 2010s, and the honest truth is that it took politicians from all sides too long to recognise just how much damage could be done by a high-interest loan.

Those in the buy now, pay later industry will say that they are not a payday loan. Indeed, they are not—they are not capped, for a start, which is one of the things that helps to protect people from getting into debt through a payday loan. Buy now, pay later companies will say that they do not charge interest to consumers, so we should not view them in the same way as payday lenders—that this is apples and oranges. But both types of high-cost credit—they are high-cost credit, because they come with late fees if people do not pay them back on time—share a similar marketing tactic, which is about forming a habit. It is about getting people to see them as the main way to make ends meet; the main way for people to deal with having too much month at the end of their money.

Whereas the payday lender said, “We’ll give you a short-term loan and you’ll pay it back very quickly, and you’ll never notice, and it will just tide you over”, the buy now, pay later companies say, “Spread the cost. It will make it much more manageable, and you will be able to get the things that you need at the time that you want to.” Let me be very clear that for some people, there may well be a perfectly reasonable use of buy now, pay later, in the same way that for some people there is a perfectly reasonable use of a payday loan. The problem is that for many people buy now, pay later is a form of credit that they cannot afford, because they cannot afford the goods in the first place.

Experian data shows us that 30% of people using buy now, pay later say they use it for items that they otherwise could not afford, and in an environment where inflation might top 4%, where wages have struggled to keep up and where we have a cost-of-living crisis, that is pouring fuel on to the fire for many people and the debt problems that they face.

For those who may not be familiar with buy now, pay later, it is a simple premise. The payments are spread over a number of weeks or months with these companies, and there are variations of the same model. What does that mean for a consumer in practice? A £100 pair of trainers will, perhaps, suddenly become £25 at the point of sale, because the £75 will be paid off at later points throughout the year to recoup the cost. Crucially, the consumer is not officially paying the fees, because the retailer pays to use the service, although one innovation we have noticed in the market in the last year alone has been the move to be able to allow the company to have a direct relationship with the consumers. What they call a one-time card can be created and purchased from a website without the retailer ever being involved. That in itself is problematic, because it prompts the question of how they are deciding what someone can afford to pay.

Let us stick with the original business model. How these companies make their money is very simple. When a £100 pair of trainers suddenly looks as if it only costs £25, people think, “Well, I might buy the trousers and jacket to go with it, because I thought I was going to spend £100 today, and I’m only spending £25”. On average, consumers spend 20% to 30% more when they can spread the payments. For the retailers, it is worth paying the fees of these companies, because people will spend more and they will get more purchases from them.

Many retailers are very up front about that. It is a massive part of their forthcoming business strategy, particularly in relation to Black Friday and Christmas, to encourage consumers to use buy now, pay later because they will end up spending more than they would have done if they had used another form of credit. I reiterate: for some people, that may be perfectly reasonable. They are spending future money, but they have that future money, so it is an acceptable way to do it. They can splash out this Christmas knowing that pay packets in January, February and March will cover the cost. However, a large group of people is spending money that they simply do not have and getting into debt. As my hon. Friends the Members for Hornsey and Wood Green and for Hampstead and Kilburn have pointed out, because this is a new form of credit, many people do not realise it is a form of credit and what can happen if they do not pay back. The late fees, the credit checking, the credit reference agencies and the debt collection agencies are all part of the mix and experience of using these companies.

In the pandemic, spending on buy now, pay later has gone up 60% to 70%. For some age groups in this country now, buy now, pay later is used more than credit cards. It is a revolution in how we use credit in this country and it has gone relatively unnoticed, except by those who cannot afford to pay and have ended up with a big hole.

[Catherine West]

My hon. Friend is making an excellent argument. Does she agree that the quality of financial education in the UK is not what it should be? The 60% to 70% increase in debt from these sort of products would primarily affect a younger age group to begin with, because of their propensity to use the internet. Does she agree that much more needs to be done on financial education, hopefully led by the Treasury and spread across the appropriate level of education online?

[Stella Creasy]

My hon. Friend makes an important point about financial education. I am pleased to see it is now part of the curriculum. She is also right that a cohort of people who did not have financial education are absolutely at the forefront of using this form of credit. Half of all online shoppers aged 24 to 35 have used buy now, pay later. What is challenging is how often they are using it.

If people think that this is about a one-off purchase of a pair of shoes, a dress for a special occasion, or Christmas presents, looking at the one in 20 consumers who use it more than once a week should make us worry about what it is about their finances that means they need to spread payments because they cannot afford to make a payment in a week. Some 35% of consumers aged 18 to 35 report using buy now, pay later more than once a week.

Buy now, pay later is a game-changer in how debt is being created, generated, and maintained in our economy, but it is going under the radar. Little wonder that two-thirds of merchants are using this form of credit. It is now in over 20,000 major brands in the UK including Marks & Spencer, Pennies, Halfords, Asos, PrettyLittleThing, and I SAW IT FIRST.

Klarna was valued at £46 billion as a business in the last investment round—I believe that is more than several of our public services—and claims to have 13 million customers in the UK. That is across every single one of our constituencies, but disproportionately in the poorer constituencies where people are struggling, and people are being targeted.

Citizens Advice reports that 41% of buy now, pay later users have struggled to make a repayment, one in 10 have been chased by debt collectors, rising to one in eight for young people and 25% have fallen behind on another household bill in order to pay a buy now, pay later bill. It does not take a rocket scientist to work out that if there are debt collection agencies at the door, a person is probably going to pay them before their council tax, but we know the consequences that can have.

Time and time again, studies show that people do not realise what they are signing up for. Forty per cent. say that they used it without realising; 42% did not realise what they were signing up for; 26% regretted it. One in four people regretted using buy now, pay later because of the problems it created. As a consequence, many are generating late repayment fees.

The Financial Conduct Authority agrees. In January, the Woolard review called for the industry to be regulated as a matter of urgency. That regulation is critical. One of the things that most consumers do not realise is that, unlike any other form of credit, including a payday loan, there is no regulation of the buy now, pay later companies. In layman’s terms, if someone gets into difficulty, they can only appeal to the companies themselves to treat them fairly—and good luck with that. They cannot appeal to the Financial Ombudsman Service as can be done with a payday loan or a credit card.

There are many particular problems that need to be sorted out by regulation. First, there is conflict of interest. Many of these companies will tell you that they do credit checks. After all, they say, they do not want to lend to people who cannot afford to repay them. However, their definition of repayment is open to interpretation, just as it is for payday lenders. One of the things that worries me when I talk to the companies, which I have done substantially, is that they will let someone miss a payment, make a payment, and then continue to lend to them. They will let someone express behaviour showing that they have a problem with debt, and then carry on lending to them. As the companies rely on merchant fees, it is not about the consumer for them. It is all about the retailer, all about what they can get out of the retailer, and the retailer wants that 20% to 30% more in interest.

It is also about overspending. As I have said, there is 40% more spending—of course that means that consumers will spend more than they can afford. However, it also means that they can get multiple buy now, pay later loans, just as we saw with payday lenders—people going from company to company. Many people are not just going to Klarna, but also to Laybuy, Clearpay, and the buy now, pay later schemes that retailers have themselves. It is meaningless to suggest that they are doing soft credit checks, because they would not know who else had lent to an individual. They would not know if that person had £500 worth of debt with Klarna as well as £50 debt with Laybuy to inform whether they should be able to take out another £200 of debt with Clearpay.

Crucially, the fact that they are not required to report means that there is no clear assessment for affordability; they decide what a person can pay, rather than applying consistent affordability criteria. That is a particular concern of mine as we have seen this industry evolve so quickly over the past year, and we have seen banks start to offer buy now, pay later. The very people who manage our money are deciding how much of it we can pay out and how much they can then charge fees on. It could be argued that that is like an overdraft, but at least with an overdraft we know that it is one, and consumers can be aware of that. I would wager that people are much more aware of the risks of an overdraft than they are of buy now, pay later.

Little wonder that there was a call earlier this year for urgent regulation. That is why today I am asking the Minister what he is going to do, because we have not yet had that regulation. It is welcome that the consultation on what that regulation should be has been published, but it was only published this month. We have had eight or nine months now of those companies knowing that regulation is coming, but with no clarity as to what that regulation might be, or, crucially, when it might be enacted. Little wonder that many consumer groups are very worried.

A Which? investigation in October found that of 111 major retailers of fashion, baby and child and homewares, 62 offered at least one buy, now lay later scheme, and the majority did not provide any information about late fees. This afternoon I was looking at various websites to see what information these companies provide about the risks of the debt that people could get into—the sort of information that we would expect as standard from regulated companies. Very few provide that information.

We are still seeing the influx of advertising from these companies—we cannot avoid it—pressing and pushing buy now, pay later. Now it is linked to Black Friday, which is a relatively recent concept in the UK, but we are very keen on it and account for 10% of all global Black Friday searches. We are a nation who want to know whether we are going to get a good deal and when it will happen. It is a toxic mix, and one that we must address urgently.

It is right to consult on what the regulations should be, and I hope the Minister will confirm that it is crucial to regulate these companies as we regulate others. First, it is a form of credit, so why should these firms not have the special affordability rules that we ask of other companies? Secondly, if we start picking off various types of credit and offering them different types of regulation, we will quickly undo the regulation that we have and see a race to the bottom, rather than the standards that we all want for our constituents. He must also recognise that the length of time that it has taken to get to regulation has offered these companies an open goal, and it is one that they have taken through the evolution of offering immediate credit cards themselves direct to consumers to make purchases—Amazon may say that it does not accept Klarna, but people can use the Klarna app to buy from Amazon—and in the types of products that can be bought using buy now, pay later. Betting sites now offer buy now, pay later options. Food sites offer buy now, pay later. Zilch can be used to buy a Domino’s pizza.

Think about that for a moment. Spreading the cost of a pizza over months tells us something about the cost of living crisis and how desperate people must be if they have to spread payments for a pizza. This is not about buying fancy tellies any more; we are back in the territory that we got into with payday lending, where people use this form of credit to make ends meet because they have got too much month at the end of their money.

The Minister will say that a consultation is ongoing, but it closes after Christmas, so it is too late for Christmas this year. In this environment, it would be helpful to hear that he recognises the risk of Christmas. We know that one pound in every four spent last Christmas was on buy now, pay later, and it will be a lot more this year, so the risk of people getting into the difficulties that the CAB and Which? outlined so well is even higher. What will he do to warn people that such credit is unregulated, so they do not have the consumer protection that they might expect from other forms of credit? What is he doing to hold to account those retailers telling us to go out, spend money and treat our dearest and loved ones while creating websites on which it is practically impossible not to get into using buy now, pay later as the default option? What is he doing to ensure that advertising is clear about the risks of the debt that people could get into? When people look at the JD Sports site, which has six different options for buy now, pay later, they need to understand that all those options come with a higher risk than other forms of credit because they are not regulated.

The Minister will say that the Government want to make good legislation, and I agree, but he must take responsibility for the length of time it is taking to regulate these companies, because they have evolved and are exploiting people at the same speed at which the payday lending industry moved to exploit people. The problem with leaving these legal loan sharks to prey on our communities is that we will all pay the cost at a later date. We will all pay the cost when Government is slow and FinTech is quick, yet that is the situation that we are in.

Will the Minister join me in calling on responsible retailers to rejig their websites so that buy now, pay later is not the default option but one that comes with a severe financial health warning? Will he join me in asking major transport agencies not to take these companies’ adverts until their costs are clear and they admit that when they say, “No late repayment fees; no charges,” that will not necessarily be true? Will he set out a clear timetable for when he expects that the regulations will come in and these companies will have to abide by common rules on affordability and credit checking and treat our constituents fairly?

I am really worried about this Christmas and how many people will get into debt trying to do the completely understandable thing of not being the Grinch. However, I am even more worried about the message that we are sending. Just as Wonga came along and then came Klarna, so another FinTech will come in the future. Every single time we pause—every single time we as a nation say, “Well, there might be unintended consequences if we don’t act”—we are offering up our indebted constituents as guinea pigs for these industries, and I know that is not what the Minister wants to do. We have to be as quick as them, if not quicker, in recognising the risk and stamping down on it.

I hope the Minister understands where I am coming from and why I believe it is so important that Parliament sends the message that Black Friday should be a time when we are all very aware of our finances as well as the deals that we are offered. We should be warning everybody about buy now, pay later. I hope the Minister will agree that we have to get much quicker at dealing with these risks, for the benefit of all our constituents.

--- Later in debate ---

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I associate myself with the remarks of a number of Members this afternoon concerning the death of Sir David Amess. He was a true blessing to this Parliament and a great character whom we all loved, and he will be sadly missed.

I have listened carefully to the various contributions this afternoon. As ever, this has been a very well-informed debate that I welcome very much. I pay particular tribute, as I have done previously, to the hon. Member for Walthamstow (Stella Creasy) for securing a debate on this important matter. I will be sure to give her some time to have another go at me in the last few minutes of the debate. She set the scene very well, explaining the context that we face in the run-up to Christmas: the inducements to consumption and the apparent savings for consumers; the evolution in new forms of credit; the need for regulation, which I fully accept at the outset; the risks around the use of buy now, pay later becoming habit-forming; the behavioural shifts we are seeing in the market; and the need to really think about the context of borrowers’ behaviour as we bring forward this regulation. As ever, we were treated to some sophisticated analysis of the wider consumer credit challenges, and the issues with making more affordable credit available, from my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard). I will address those points later.

It is important that we start this afternoon by understanding the Government’s position: we recognise that there is a potential risk to consumers from unregulated buy now, pay later products. I listened very carefully to the criticisms of the timeline, and over the next few minutes I will address the challenges we have encountered and present some of the solutions that we think may exist. It is extremely helpful for all parties to be represented in this debate; given the level of engagement from players in the market, there is a clear desire to address this significant area of concern in Parliament. There has been a massive explosion in this area, and it is important that we respond appropriately.

It is important to understand the nature of the risks. We should acknowledge that the use of buy now, pay later is growing rapidly: in fact, the number of transactions from the main providers using buy now, pay later more than tripled in 2020. That said, buy now, pay later is still estimated to have amounted to only 2% to 3% of the consumer credit market last year, and a recent study by the consultancy Bain & Company found that about 5% of online transaction volumes involved the use of buy now, pay later. I am very sensitive to the distribution of that additional use and the people who are increasingly reliant on buy now, pay later—that is something we must take account of—but it makes up a smaller proportion of the market than is sometimes believed. In addition, we have not seen substantial evidence of the risks that some have predicted materialising.

I will set the scene of the current state of regulation, because it certainly does not mean that the Government are turning a blind eye. A degree of regulation already provides protections for users of interest-free buy now, pay later products. The Consumer Protection from Unfair Trading Regulations 2008 make it a criminal offence for traders to give consumers misleading information. Firms are required to provide consumers with the information necessary to make informed decisions and not omit or hide material information that the average consumer needs. The FCA and the Competition and Markets Authority are designated enforcement bodies for these regulations. The Consumer Rights Act 2015 requires that the contract terms of buy now, pay later providers must be transparent and not contain unfair terms. When promoting buy now, pay later products, firms must also comply with the rules set out in the UK advertising codes, and offending firms can be referred to trading standards and Ofcom.

Last year, the Advertising Standards Authority published formal guidance about buy now, pay later, setting out its expectations of both providers and retailers when they offer these services. The ASA also banned harmful buy now, pay later adverts, stating that future advertising must not irresponsibly encourage the use of a product, particularly

“by linking it with lifting or boosting mood”.

That is something that the hon. Member for Walthamstow has highlighted and campaigned on. Some buy now, pay later agreements are also already subject to some aspects of the financial promotions regime. The FCA uses its existing powers to protect buy now, pay later users, for example by scrutinising marketing materials of authorised firms and the way these products are promoted. The FCA has wider consumer protection powers that it can apply to unauthorised firms where it sees poor practice.

Effective Government oversight of financial services is not just about imposing rules; it is also about engaging with industry. In the case of the buy now, pay later sector, that is something we have done extensively—as have Members here today. We have seen that reflected in the actions of the largest firms, with many voluntarily introducing credit-worthiness checks and making information more transparent at checkout. However, I fully concede that that is not universal, and not every firm has moved in the right direction.

Looking ahead, the fact that we have seen some progress does not mean that we are complacent. As Members have noted, the Woolard review into the unsecured credit market, which was published in February this year, identified a number of potential risks. They include how buy now, pay later is promoted to consumers and presented as a payment option. Consumers are sometimes left with an absence of information about the product and the features of the credit agreement, and there are no requirements to undertake affordability and credit-worthiness checks. As has been pointed out, that is particularly important when multiple transactions are taken up with different buy now, pay later providers.

Following the publication of the Woolard review the Government announced, with support from the Opposition —I am grateful for their support—our intention to regulate these products. On 21 October, we published a consultation document that sets out the proposed approach to regulation, and that consultation is open until 6 January. Prior to the publication of the consultation, I had a lot of engagement with my officials. One of them is sitting here today, and I have spoken to a number of them this afternoon and numerous times before that. It is through a desire to get this right that we have taken time over it. There is no desire to go slow. I recognise that there is an urgency to this, and we have to move forward as quickly as we can. During the consultation period, the Government are engaging with representatives from consumer groups and industry—indeed, there is a workshop going on this afternoon—to ensure that the final approach to regulation strikes the right balance on consumer protections. Debates such as this help to inform that approach.

We want to expand the evidence base about the risk to consumers, and Members from across the Chamber have made a lot of points about that this afternoon. As I have said, the Government recognise the potential risks, and that has been supported in recent studies by consumer groups, such as Which?, Citizens Advice and others. However, the Government’s view is that as an interest-free product, buy now, pay later is inherently lower risk than products that charge interest. Used properly, it can be a way for consumers to manage their finances, as my hon. Friend the Member for Blackpool North and Cleveleys mentioned, and to spread the cost of purchases—particularly when managing periods of higher household expenditure, such as Christmas, when Michael Bublé CDs are being purchased in the household of the right hon. Member for Wolverhampton South East (Mr McFadden). We should not forget that interest-free buy now, pay later offers, specifically around Black Friday, can allow consumers to take advantage of offers and discounts that they might not otherwise be able to benefit from.

Looking ahead, and in the context of the ongoing consultation, our overall objective is to ensure that buy now, pay later products can continue to be offered in a way that allows consumers to take advantage of the flexibility of the offer, while ensuring that the potential risks are managed. That means designing regulation that is proportionate to the level of risk and takes into account the way that the products are used.

For example, the Government believe that is it reasonable that buy now, pay later products use a bespoke approach to consumer disclosures, as well as to the form that the credit agreement must take. That is reflected in the proposals in the consultation, which I would characterise as not reluctant, but detailed, reflecting the fact that different issues come up with the evolution in the market and in the provision of different services. We cannot apply a single, one-size-fits-all approach. I see that the hon. Member for Walthamstow is adjusting her face mask, so I think she wants to intervene.

[Stella Creasy]

I thank the Minister for letting me intervene. He will understand that I am a little troubled because when the Woolard review said in February that there was an urgent need for regulation, we all agreed that urgency, as well as regulation, was a critical part of that conversation. Does he accept that in the absence of such regulation, one thing that we now need to tell people —it is on his list—is that they cannot go to the Financial Ombudsman Service if they feel they have been mis-sold a product? At the very least, in the intervening time before any regulation comes forward, the Government have a duty to ask retailers and companies to make that clear to people—a buyer beware warning. Does he at least accept that the Government should be doing that this Christmas?

[John Glen]

I fully accept the point that the hon. Lady makes, in that at the moment, those protections do not exist, and that is why we have to regulate appropriately and proportionately.

I want to say a bit more about what I think we should be doing. It is reasonable that buy now, pay later products use a bespoke approach to consumer disclosures, as well as to the form the credit agreement must take, and that is reflected in the consultation proposals. However, we need to think about the way that these products are used in the context of an online journey, the warnings that are inherently there during that journey and the fact that they are frequently used for much smaller sums than the traditional credit agreements for which these rules were originally developed.

When we think about how this facility is used, part of the challenge is the way additional payment smoothing mechanisms can inadvertently be sucked in. I do not want dental payment plans—essentially, for expenditure that is smoothed over 12 months—to incur an obligation to do some form of affordability check. Such issues make this more complex than it may have at first seemed.

I am determined that we get this right, that we recognise the distinct consumer risks that exist and that we bring forward regulation that deals with them. The Government’s view is that buy now, buy later information should not be long and detailed so that it becomes just another long set of terms and conditions, because frankly there is a significant risk that people would just make a cursory observation of such a list and tick the box. Instead, the information should be presented in a form that allows consumers to engage meaningfully, and I hope the hon. Member for Walthamstow would support that.

The Government also consider in the consultation whether the financial promotions regime, which already applies to a broad range of financial products, should be amended to ensure that all buy now, pay later promotions fall into that regime, further strengthening consumer protection. That would mean that all promotions made by merchants, such as a retailer, would have to be approved by an FCA-authorised firm. It is also important that consumers are lent to affordably. That is why the Government anticipate that the proportionate regulation of buy now, pay later would include the application of the FCA’s current rules on credit worthiness.

The Government recognise that these products are lower risk than other interest-bearing agreements and can help consumers to manage their finances. A study by Bain suggests that in 2020 consumers using buy now, pay later instead of credit cards in the UK saved £103 million in interest. I say that not to commend it over credit cards, but to recognise the segmentation of the credit market and the different behaviours and options that exist out there. That is why we believe it is right that regulation is balanced and proportionate, ensuring that customers are given the appropriate protections, without unduly limiting the availability and cost of useful financial products.

As hon. Members have mentioned, there is already precedent for imposing different regulatory requirements on different credit products, depending on the risk they pose. The Government and the FCA have previously implemented bespoke regulation for higher-risk products, such as the price cap rules for payday lenders and rent to own. Obviously, it would be difficult to apply that symmetrically in this context, but I sincerely welcome the hon. Lady’s comments later. Likewise, a more proportionate approach is right for buy now, pay later products, which we assess to be of a lower risk.

As new products enter the market, it is critical that the Government carefully consider not only how credit products are regulated, but where the boundaries of regulation should be. I note the concern that buy now, pay later may increasingly be used as a more mainstream form of credit, as has been mentioned this afternoon, and that even some banks are beginning to offer it.

Many different types of financial arrangement already make use of the same exemption, as I mentioned earlier, which currently allows interest-free buy now, pay later to operate outside consumer credit regulation—and has done so for decades. That includes arrangements used over many years by UK retailers to support the purchase of higher value items such as home furnishings and white goods, but also those arrangements which allow monthly payments for memberships to sports clubs, dental plans, other associations and certain invoicing arrangements.

In regulating buy now, pay later, we need to think carefully about all the arrangements that these changes could affect and avoid bringing activities into regulation which do not present the same risks to consumers. What is in play here is the cumulative application of the buy now, pay later product to a vulnerable group of consumers, and we need to make sure that that is where we focus the outcome. The Government must also ensure that their approach is future proof and cannot be gamed by firms operating on the margins of regulation. That is why we are engaging with consumer groups in detail to ensure that we get this right and capture the emerging products that are beginning to form.

I will give the hon. Lady several minutes to come back, but I want to mention personal debt more broadly, because it is a critical topic that comes into this discussion. I think everyone here has a desire to tackle problem debt and, as this afternoon has shown, we share an understanding of the complexity of the issue.

We need comprehensive solutions, which is why we are maintaining record levels of funding for free debt advice in England. The Money and Pensions Service this year has a budget of £96.4 million. We have launched the breathing space scheme, which gives a 60-day freedom from fees and payment requests. We are also expanding the availability of affordable credit, providing £96 million of dormant assets funding to Fair4All Finance.

My hon. Friend the Member for Blackpool North and Cleveleys talked about the Australian experience and the opportunity to cut and paste no-interest loan schemes. We have moved ahead with that, and I anticipate that it will move more quickly now. However, I want to be absolutely clear that it works in the UK context and can be scaled up quickly. I would rather it was on solid foundations, but I feel his frustration in my heart too.

I will sum up by reiterating that the Government’s view is that interest-free buy now, pay later has a legitimate role to play in the market, but its rapid growth throws up challenges. I think that consumers recognise that; they find it useful and easy to use. However, we are committed to getting regulation right and protecting consumers. The asymmetry of protections mentioned here needs to be addressed, but we want to do that without limiting the availability and cost of genuinely useful financial products.

We understand that there are concerns, which I have heard this afternoon, about the speed of the regulation. I will do this as quickly as I can, with my officials. We will report back to the House as quickly as possible, but I would welcome colleagues’ continued engagement in the weeks ahead. I recognise the risks that exist in the run-up to Christmas, and I acknowledge the legitimate warnings that the hon. Member for Walthamstow has raised.

[Stella Creasy]

We have had a very important debate today. I pay tribute to my hon. Friends the Members for Hampstead and Kilburn (Tulip Siddiq) and for Hornsey and Wood Green (Catherine West), the hon. Members for Blackpool North and Cleveleys (Paul Maynard) and for Belfast South (Claire Hanna), the SNP spokesperson—the hon. Member for North Ayrshire and Arran (Patricia Gibson)—my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), speaking from my own Front Bench, and the Minister, for their contributions. I also acknowledge the work of my hon. Friend the Member for Makerfield (Yvonne Fovargue), who has been a fantastic champion on debt issues, but sadly could not be with us this afternoon.

I also pay tribute to the work of Alice Tapper from Go Fund Yourself, who has been a fantastic campaigner in raising concerns on this issue, as well as to Damon Gibbons from the Centre for Responsible Credit, Martin Lewis, of course—where would we be without Money Saving Expert?—Citizens Advice, Which?, and Step Change, all of whom have tried to sound the alarm about buy now, pay later, in particular.

Today, I want to give the Minister probably the best Christmas present of all, which is oddly enough not a subscription to Michael Bublé on Spotify, but the opportunity to prove me wrong. I want to be wrong about this industry. I want to see the parallels with the same problems that we had with the payday lending industry and be mistaken about this.

However, my concern is that Government are slow and FinTech is fast. Everything the Minister has said today has raised that concern for me. He recognises, rightly, that we need to regulate this industry, yet our ability to do so is hampered by the “what ifs”, which these companies do not recognise and, indeed, thrive in. They are predatory. They are preying on our constituents and evolving at a rate of knots. I am not surprised that they suddenly say that they are in favour of regulation, in the same way that turkeys would say that Christmas is overrated—if we are looking for our festive analogies.

I urge the Minister not to falter. We must move as quick as we can, if not quicker. I agree very much with the hon. Member for Blackpool North and Cleveleys; the role of Back Benchers is to say “Go faster; do it yesterday”. I also asked the Minister what we would do in the intervening period, because we have predators, such as Klarna, Laybuy or Clearpay in our communities. When Clearpay wrote to me to boast that it had 4,000 customers in my constituency, I felt physically sick, because for how many of those people is this actually a solution, and how many is it drawing into debt?

The Minister says that he recognises that we need to regulate and that the lack of the financial ombudsman is a real challenge for consumers, who genuinely would not know that they are not protected when they use buy now, pay later. The question of affordability is not about the product so much as the person. That is what concerns me when we start talking about different ideas of affordability for different products; it is still the same constituent who will end up in our surgeries, about to lose their home because they cannot pay their rent, not able to feed their kids, worrying about their debts, not able to sleep at night.

Regulation is always complicated, but there is a simple truth at the heart of this: the speed at which this industry will evolve and prey on our constituents is disproportionately linked to the slow pace of change in our financial regulation industry. That was the lesson of Wonga. This Christmas, we must learn the lesson of these companies.

While we wait for that regulation, I again repeat the call to the Minister. Use the Government education channels. Use the publicity channels. Warn people that this is not regulated. At least tell them, “Buyer beware”—that they do not have the same protection that they might with other forms of credit this Christmas—not just to check the details of those Black Friday deals carefully, but to check the kind of credit they are using. It is so easy on websites now to slip into buy now, pay later.

I promise the Minister that, this time next year, if he can prove me wrong, he will have the best Christmas ever, but I fear I may yet again be the Cassandra of the credit industry. That is not a position I want to be in, because all our constituents deserve better: not the Grinch, not the Scrooge, but a 2022 where they can look their family in the eye, knowing how they will pay for the food on their table and the roof above their head. That is what good consumer credit is about.

Motion lapsed (Standing Order No. 10(6)).

Covid-19: Household Debt

Stella Creasy Excerpts

Thursday 8th July 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

It is a pleasure to take part in the debate, and I pay tribute to the work that my hon. Friend the Member for Makerfield (Yvonne Fovargue) has done on these issues for many years.

I agree with every word from the hon. Member for Blackpool North and Cleveleys (Paul Maynard); I fear that consensus will break out in the House on the need to act. Whether we have different ideas on how we should act may be another matter, but I think the concern that debt has been the quiet winner of the covid crisis is widely shared across the House. The two excellent previous speeches reflect that. The talk of people saving more may well be true, but we know that, in our communities, many people are drowning, not waving. Frankly, they were already in deep water before the pandemic hit.

The two previous speakers gave some excellent statistics on the debt in our country. I am mindful that StepChange tells us that more than 19 million adults have experienced a loss of income during the pandemic, while 11 million people have built up £25 billion of arrears and debt—not because they have been sat at home ordering consumer goods to entertain themselves, but to pay for essentials. As we know, those debts are not equally distributed within our communities. In particular, renters, those from minority ethnic communities, and women and mothers, as Women’s Budget Group research shows, have borne the brunt of the debt crisis that is building up in our communities. In April, a quarter of mothers from black and ethnic minority community backgrounds reported that they were struggling to feed their children, and 32% of young women said that they were finding it hard to pay for essentials.

So, the question for us all is, what are people doing to make ends meet? Some 26% of those affected by coronavirus have borrowed money to make ends meet, most commonly through credit cards or an overdraft facility, and a million of those people have used some form of high-cost credit product. Crucially, Citizens Advice research also shows that people from shielded groups are four times as likely as others to be behind on utility bills such as council tax.

Understanding the nature of the credit tsunami that is coming towards us due to the debt that underpins our economy and underpins the response to credit is vital not only for people’s individual lives, but for our public sector. The reality is that research increasingly paints a grim picture for many of our constituents. Some 48% of consumers told the FCA review of high-cost credit that they had to cut back on other spending to make their loan bills, while 37% said they missed payments on their rent or mortgage or on utilities, with council tax the top payment that many are forgoing. Some 16% of customers reported that their most recent borrowing was to repay debt that they had already taken on. People were being drawn into a spiral whereby they were borrowing from Peter to pay Paul, from Paul to pay Sarah, and from Sarah to pay Peter.

The truth is that this is not a new phenomenon in our country. We have always had an economy that was increasingly reliant on consumer debt, and we have always had millions of people for whom that reliance was toxic. As my hon. Friend the Member for Makerfield set out so well, it is very expensive to be poor in this country. Credit cards and high-cost credit, whatever form it takes, are expensive for people on low incomes. Indeed, a sub-prime credit card costs around £200 more a year, and personal loans cost around £500 more a year. The issue is not just about the credit that people can access, but about the way utilities are sold. Being on the best energy pre-payment tariff could still be £131 more expensive than the best online-only tariff.

We must not be complacent—I know the Minister is not—and we must not encourage a consumer spending bubble. I urge the Treasury to change tack and be like the Grinch, but for good cause, owing to the problems in our communities. The debt advice services tell us that they have not yet seen hundreds of thousands of people coming to them, but we know it takes time for people to get to the point when they admit that they need help. The true impact of the pandemic on debt advice is yet to be seen, although we are already seeing some incredibly worrying trends. The Financial Wellness Group tells us that around 24% of the customers it has advised on utility debts each owed about £1,000 in arrears, but that has risen to £2,000 over the last year. We can see that when people seek help, they are already in a position whereby it is much more difficult to help them. In particular, they flag up housing costs.

I recognise the point about incomes made by my hon. Friend the Member for Makerfield, but I represent a community in London—supposedly an affluent area—that has the 10th-highest level of child poverty in the country due to the cost of housing and of keeping a roof over people’s heads. We must focus on the poverty that we see in our communities and on the impact it has on people’s spending. With the eviction ban ending, with no end in sight for high rents and with no action taken on them, it is clear that people will struggle to manage the cost of trying to stay in the community where their children go to school and where they can be as close as possible to whatever work they can get, especially if they have experienced unemployment during the epidemic. Indeed, the Financial Wellness Group tells us that more than one in three customers to whom it has provided free debt advice have had negative disposable incomes—their priority living costs exceed their income. For many of those people, it is about housing costs.

Like others, I welcome the Breathing Space process, but I believe we need to have a much more fundamental rethink of how we help people to manage their finances and how we put consumers front and centre in what is often an unfair fight. I recognise the point made by the hon. Member for Blackpool North and Cleveleys about not taking a whack-a-mole approach, but I hope he will forgive me if I take a bite out of some legal loan sharks that I have been concerned about and spoken about to the Minister for some years now—the “buy now, pay later” industry, which has been one of the overall winners in the pandemic.

Since the pandemic started, there has been a massive increase in people using “buy now, pay later”, because they have been able to do online shopping. It has even been suggested that £1 in every £4 spent last Christmas was “buy now, pay later”. Several years ago, few of us had heard much about that industry. It is now huge.

As my hon. Friend the Member for Makerfield said, the impression being given is that the issue is all about fast fashion and young women buying too many pairs of shoes, but the brutal reality coming from the research is that it is not about that at all. People are using the options provided by websites to make ends meet because there is too much month at the end of their money. In particular, families are suffering and having to use that form of credit. As my hon. Friend said, the Which? research is incredibly compelling. People are using “buy now, pay later” to access credit at a stressful and challenging time in their life—for example, when they face redundancy, or when they might not have been able to access help because they are one of the 3 million excluded in our country, in particular those who have children to keep clothed, fed and warm.

Missing a credit bill or payment can be a major life event. The odds of using “buy now, pay later” go up by about a third when someone is made redundant, has a baby or has to move because they can no longer afford to live in their home. We know that, as a result, those people’s credit records are affected. We know they have been referred to debt collection agencies and that they have experienced mental distress. We know that it does not have to be that way.

I welcome the fact that, over the past year, the debate has changed from the idea that this is somehow just a new wacky way to use the internet to shop more simply to a recognition of the damage and the danger that this form of credit, which is unregulated—and still is unregulated today—represents. The FCA report was clear about that.

We know from Citizens Advice that almost 40% of people who have used “buy now, pay later” did so without realising, as a lot of the retailers push people to use that as the first option on their sites because they are officially paying the fees for it. Almost the same number of people thought it was not proper borrowing and really did not understand what they were signing up for. If we consider the research from the Money and Mental Health Policy Institute, which shows that 3 million people with mental health problems have found it much harder to control their online spending since lockdown, in part because of the design of online retail sites, the need for urgent action grows ever stronger. As I have repeatedly said to the Minister, we have to learn the lesson of the payday lending industry. We did not act quickly enough, so even now we are seeing millions of people who still have problems as a result of borrowing seven or eight years ago through payday lenders.

The public know that we need to act because they do not believe the adverts. They know this is a problem. Indeed, the Hastee Workplace Wellbeing Study showed that 59% of workers had applied for high-cost credit knowing that they would struggle with repayments, but feeling that they had little option. Yet over the past couple of months, rather than the industry recognising its responsibility to its consumers and recognising the support from across the House that the Government would have for regulation, we have seen it simply changing the wording. Such entities no longer call themselves “credit”. They call themselves “a money management tool”. They offer debt advice themselves. It really is turkeys talking to us about how going vegan at Christmas is a good idea. The industry is moving quicker than the Government. That is why I urge the Minister, when he knows he has cross-party support and when he has the evidence, that there should be no further delay in regulating those companies on the issue.

We need to tackle the way in which the companies see affordability. It is clear from the evidence that their definitions of affordability are not ones that we accept in other industries. We need to challenge the product design and how those companies are evolving so quickly to evade what is commonplace evidence about credit regulation—many of the things the Advertising Standards Authority has tried to pick them up on. However, they are moving quicker than Government. We need to make sure that we have a proportionate regulatory process.

One of the things I am extremely concerned about is hearing Ministers suggest that somehow these companies would not have to follow the same rules around credit regulation as other companies, as if they were special and as if they were not as bad as some others. There are two things about that. I hope the Minister will set out for us why he thinks there might be exemptions. What particular elements of our consumer regulation would he not apply to “buy now, pay later” industries? Why does he think that would not create a race to the bottom across the consumer credit industry, as companies variously tried to argue that they were not the bad guys ripping off our constituents? Has he spoken to the Competition and Markets Authority about this? Setting out a situation whereby we allow companies to pick and choose which regulations they abide by is not going to help our constituents.

On that point, I agree with my hon. Friend the Member for Makerfield that we need to review the FCA. The failure to act quickly enough on Wonga, BrightHouse and Amigo Loans is an example of why we need the regulator to be better. Too often, the Financial Ombudsman Service has intervened on behalf of our constituents, rather than the regulator, which has been working with the companies. It is right to review now the FCA and whether it is working effectively, when people are without the compensation they are due from those companies, many of which have gone bust. Some people are not going to get the compensation they are entitled to, but they are also being chased by the creditors of those companies because they owe the companies money. Something is fundamentally wrong in that balance.

Finally, I again agree with the hon. Member for Blackpool North and Cleveleys that we need to ensure that there are good credit options, which is why I urge the Minister to talk to his colleagues—not just in the Treasury, but in local government—about our credit union movement, which is on its knees as a result of the pandemic. As a proud Co-op MP, as well as Labour, I believe that social finance initiatives are critical to helping people out of this crisis. Minister, the people who are drowning, not waving, need us to offer more than a life raft such as Breathing Space. They need us to deal with all these legal loan sharks, which are circling them and pulling them down—once and for all, in truth. The Minister will have my support, and I know the support of Members across the House, if he takes that robust, proactive approach, but right now all we can see is more fins in the waters ahead.

[Mr Peter Bone (in the Chair)]

It might help Members to know that five Back Benchers want to get in before I have to call the Front Benchers at half-past the hour; if people keep their remarks to five minutes or less, we will get everyone in.

Business Rates Reduction Services

Stella Creasy Excerpts

Wednesday 26th May 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Hollobone. It is also a pleasure to follow the hon. Member for Thirsk and Malton (Kevin Hollinrake), who has been a doughty campaigner on this issue, and rightly so. He said that 13 of our colleagues are affected. I suspect there are many more but that they have not felt able to raise the issue.

Let us be honest: we recognise that we may not be the main event this morning in Parliament, but these issues are our bread and butter as MPs. They cut across the political parties because a rip-off is a rip-off. When we see companies preying on and exploiting our constituents, who are trying to do that most basic and important thing of setting up businesses and being successful in our local communities, selling a wide range of goods and services to those communities, it inspires anger in all of us and frustration that we cannot do something more quickly to help. I recognise that we may not be the box office hit this morning that we would want to be, but I agree with the Minister—consensus is breaking out—and I hope that we can make progress today on something with a longer lasting effect, because in some sense this should be a simple open and shut case.

Like the hon. Member for Thirsk and Malton, I was contacted by a local resident absolutely at their wits’ end dealing with RVA as a company. They have a small business with one or two employees—not a large multinational—and are trying their best to understand and navigate the range of regulations and rules that they have to abide by, and to understand what they can do to give their business the best fighting chance. Six years ago, like the hon. Gentleman’s constituent, my constituent was contacted by RVA and offered what appeared to be assistance. There are many different companies that would offer assistance to small businesses that seem, on the face of it, to be helpful. It is not just about small business rate relief; often it can be about recycling or rubbish collection—all sorts of areas where there are different rules for businesses than for individuals. For a small business, particularly a sole trader, having someone help them to get their head around them seems like a blessing. Unfortunately, it was anything but a blessing.

The stories are very similar, which is why some of us have been exasperated by the lack of reaction to the company —it has been going on for many years. My constituent was contacted and told that they could reduce their business rate cost; RVA visited the office and took measurements—allegedly on behalf of the council, as though it was part of a public service—and then billed the company for the savings on small business rate relief. But those savings would have been automatically due to the company anyway. My constituent, not unreasonably, did not know the ins and outs of business rate relief. I am sure that if the Minister gave us all a test on it, I would wager that the hon. Member for Thirsk and Malton would beat me, but even he would not know everything about this scheme. To expect our constituents who are setting up a business to know all that information is simply unreasonable. That is why I completely agree with the hon. Gentleman when he uses the term “carpet-bagging”. There might be some more choice terms, but I am very conscious that they would not be not parliamentary language.

My constituent is now part of a long-running legal battle with that company—I will limit what I say to ensure that there is no issue for them but, like the hon. Gentleman, they have issues with the documents that appear to have been falsified and claims about signatures. RVA claims that my constituent agreed to a seven-year contract, when they only had a five-year lease on the premises. It does not make any logical sense. My constituent has had years of torture, causing real distress, through the court case and the impact on their ability to run their business at all.

When people come to us—I am sure the Members participating virtually have had the same experience—we want to help. I thought, surely, this is almost a police matter if fraud is involved. To find that this company is able to continue to operate to this day, ripping off businesses around the country, is deeply distressing. Like the hon. Gentleman, I have pursued this issue with trading standards in the area where the company operates, but I am told that they cannot act. Many moons ago I scrutinised the Consumer Rights Act 2015, where we talked about providing a reasonable service at a reasonable timescale for a reasonable price. None of that is reasonable. I am at a loss to understand why we cannot have stronger enforcement. We have not seen stronger enforcement, which is why this debate is so important.

I hope the Minister is open. I know that he, like me and the hon. Member for Thirsk and Malton, would be aggrieved at seeing people ripped off. My constituent asks for a simple solution: she says that the small business rate should be automatic. Actually, the Federation of Small Businesses has been talking about licensing those companies, partly because, as I say, I do not think the rip-offs are restricted just to companies talking about business rate relief. Small businesses, especially in the post-covid environment, have really struggled over the past 18 months and are getting back on their feet, and they will desperately want help and advice about how best to navigate the new environment that they are operating in. It is entirely reasonable for the FSB to call for those companies to be licensed. We should be thinking about licensing business service companies so that we can stop what the FSB itself calls cowboy practices.

This is a matter for Government, not least because it is changes in Government policy that these companies are exploiting. When changes in business rates relief happen, these companies make their money; they make their money in a way that undermines the very policy of the Government. Governments of all political persuasions have tried to support small businesses. They are trying to pass on money—they are trying to help small businesses with their costs—yet, because of the practices of these companies, they can inadvertently end up charging them more, because the bill comes for the fact that the relief has changed.

I hope the Minister will listen and be not just sympathetic, but proactive, in calling to account the Insolvency Service, asking for an investigation into RVA, and in helping to shut down this awful company once and for all, as well as in learning the lessons from this situation on how we can best support small businesses when it comes to regulation.

We cannot have a debate in this place without talking about the B word, Brexit, and I always thought the concept of red tape and how much more of it might be coming was ironic. Here is a very clear example of where removing red tape could really help to support our constituents and make sure that people are not being ripped off, if only we have the political will to do so. I genuinely hope that the Minister will listen to this cross-party call for action and respond accordingly.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for having secured this important debate on a matter that is of considerable public interest generally, but also locally in his constituency and to those affected by this company. It is a pleasure to speak in a debate that is not disfigured by party politics; all Members have made very constructive contributions, and I am grateful for them.

I will start by expressing my sadness that, inevitably, proceedings elsewhere in this House at the moment are going to be overshadowed by this very important consideration of business rates. I only hope that the media will find some time to indulge Mr Cummings in his comments in between reporting on this vital topic. In a slightly more serious vein, I apologise that the Government have not been able to supply a Minister with specific responsibility for this area to respond to the debate. As the hon. Member for Glenrothes (Peter Grant) rightly said, its focus is not on business rates—although there has been the occasional attempt to crowbar the rest of the business rates system in—but on the reduction services aspect that my hon. Friend raised. That aspect is a matter of business regulation, and therefore falls to the Department for Business, Energy and Industrial Strategy. He and the hon. Member for Walthamstow (Stella Creasy) have also focused on some individual cases of predatory practice by specific companies, and they will understand that I cannot comment in any detail on specific cases. It would set a very bad precedent for a Financial Secretary to do so, given the connection to the tax system in a different context.

I think Members recognise that, at its core, the system of business rates is a relatively simple and straightforward one. Companies and individuals who occupy non-domestic properties are liable for business rates. The rates bill is the product, in the literal, mathematical sense, of the rateable value of the property and the multiplier for the financial year concerned, offset by any rate reliefs. The rateable value is set by the Valuation Office Agency and, broadly speaking, it is the rental value at a set date —presently 1 April 2015.

In cases where businesses are unsure about the rateable value of properties, there are plenty of helpful resources on the website of the Valuation Office Agency. For example, I can go online and see a detailed valuation of No. 2, Marsham Street, which is the headquarters of the Home Office, and an explanation for how its valuation has been reached. You will be pleased to know, Mr Hollobone, that it has rather a high valuation, as befits its position in central London.

If ratepayers are unhappy with their rateable value, there is an online system known as check, challenge and appeal, which allows them to check the facts and, if necessary, to dispute the valuation that has been reached. This system was introduced to provide ratepayers with a service that is easier to use and understand than its predecessor and that enables quicker resolution of cases. An evaluation of the system last year found that it is working and that ratepayers are getting their cases resolved faster, without the automatic need to make appeals.

Rate reliefs are applied by individual local authorities, but most of these are automatic or require minimal information from the ratepayer. For example, transitional relief, which is used to phase in the effects of revaluations, is entirely automatic. For small business rate relief, rate- payers need only provide a little information about other properties on which they pay business rates, before being able to claim. All rate bills must explain the various reliefs available, and local authorities have many excellent websites that explain how to claim those reliefs.

Much of the £16 billion of relief that the Government have provided to the retail, hospitality and leisure sectors in response to covid-19—this was picked up by the hon. Member for Strangford (Jim Shannon)—has been applied automatically to rates bills. So there are many automatic methods of applying reliefs currently within the system. The relevance of that to the present debate is that there is no reason why a ratepayer should have to use an agent to claim rate relief. If they believe they are eligible for relief, they should instead contact their local authority. Of course, that is not in any sense to criticise people who have been found to be clients or would-be clients of the predatory organisations that have been highlighted by Members in the debate.

Let me pick up on the nature of some of the protections that exist within the system, of which there are several. One is the rules that apply to business-to-business contracts and that arise from the Business Protection from Misleading Marketing Regulations 2008, which prohibit advertising that misleads traders. There is also the Misrepresentation Act 1967, which may also apply to business-to-business contracts, and which says that if someone has entered into a contract following misrepresentation by the other party, they would be entitled to rescind that contract. Additionally, if they have suffered loss, they can claim damages against the other party.

Small businesses can seek help through other channels. If a ratepayer feels that there may have been illegal or fraudulent activity, they can choose to take court action, as I understand a number of businesses have successfully done in at least one of the cases under discussion. Alternatively, my hon. Friend the Member for Thirsk and Malton mentioned the Insolvency Service, which offers some protections, although they appear not to have been availing in this case.

It is worth just picking up the point about consumer protections. At present, the services are provided to the businesses that I have described, and consumer protections do not apply in the case that we have described. I note, and my hon. Friend the Member for Thirsk and Malton has argued, that microbusinesses share many of the characteristics of consumers, and he and other Members have therefore argued that they are worthy of protections in their own right. Members have highlighted the predatory practices of the companies they have discussed, which are, I am afraid, also exercised by a relatively small number of other companies, and cause extreme distress to the people who are affected by them.

It is important to note that, in other markets—for example, financial markets—it has proved possible to differentiate between protections afforded to different kinds of people in the client relationship. Therefore, there is a clear case here for the Department for Business, Energy and Industrial Strategy to revisit this area and to assess what further protections can, in principle, be provided. Let me conclude with a very simple message.

[Stella Creasy]

I hesitate to stop the Minister in full flow, because it is very interesting to hear what he is saying. I just want to come back on a point he made about businesses being entitled to rates relief automatically. Of course, that does require businesses to know about that. I agree with him, and I think we all agree, that differentiating between businesses—often small businesses —and consumers does not make any sense in terms of the expectation of protection, which is the reason why we have consumer regulations.

However, might he be convinced that it would be helpful in these instances for Government to be proactive in telling people that they might be entitled to rates relief? One reason why this company has been able to exploit people is a lack of awareness of the scheme. Although the Minister may feel that it is relatively straightforward, for a new business, the idea that there might be some things that do not have to be paid and others that do adds complexity. Is there a case, perhaps, in the absence of the further consumer protections we are talking about, for requiring local authorities, when they send a bill, to say, “Most small businesses would be entitled to rate relief, and therefore it is worth your time investigating”?

[Jesse Norman]

I thank the hon. Lady for her question. I have already said that all rates bills are required to explain the various reliefs available and that local authorities have, in many cases, excellent websites that explain how to claim the reliefs. Of course, the fact that reliefs in the cases I have described are automatic means that they flow through in and of themselves. That is a very attractive feature, where that can be engineered into the system. Where it cannot, it is for good reasons, and it may not be possible.

I do not think it is right to suggest—I do not think anyone who has participated in this very thoughtful debate would suggest—that there is any easy fix here, but there is a clear case to be addressed. I thank my hon. Friend the Member for Thirsk and Malton for bringing it to our attention and for raising it with the Government. I think the Government—across my colleagues and myself—need to consider what more can be done, both by themselves and in their further discussions with local authorities.

Financial Services Bill

Stella Creasy Excerpts

Monday 26th April 2021 Commons Chamber

On that basis, I am happy not to support the amendment and not to vote with the Government. This is the closest I have been, in six years doing this job, to voting against the Government. Nevertheless, I am reassured by the conversations I have had with the Minister and am willing to work with him to try to make sure that we can find solutions, as rapidly as possible, to solve the plight of many tens of thousands or even hundreds of thousands of people.

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

I associate myself with the powerful speech by my hon. Friend the Member for Feltham and Heston (Seema Malhotra). I understand where the hon. Member for Thirsk and Malton (Kevin Hollinrake) was coming from, but I really believe that we could make some progress on this issue this evening. That would be of great benefit to many people affected by the issue, so I will certainly support the relevant amendments.

We know how important this legislation is. I pay tribute to the Minister, who has been listening to concerns throughout the Bill’s passage. I wish to comment on two particular issues in respect of which I would like him to tell us further information; I hope he might be able to. We know that this legislation matters desperately because between a fifth and a quarter of adults have experienced a reduction in income in the past year. That is mainly because of furloughing but is also true among the self-employed. It is crucial to get financial services right as we come out of the pandemic to help to make sure that people are not stuck in interminable circles of debt.

We knew that one in five people were already struggling to pay for housing, food and energy and were unable to meet their credit commitments. That proportion has now risen to two thirds among people who were already suffering from financial problems before the lockdown. There has never been a more important time to get right how we regulate our financial services. StepChange points out that 26% of those affected by coronavirus have borrowed money to make ends meet, usually using their credit cards or an overdraft facility. At least £3.3 billion of new debt has been taken on since the start of the crisis. The question for us is whether the Bill is going to do enough to make sure that that credit is offered at a fair and affordable price for people.

Given that 6 million Britons have already fallen behind on a household bill, this is a question for the state as well as for our economy. Mothers, lone parents, those from black and ethnic minority backgrounds, the young and the disabled are most at risk of debt. In April, a quarter of all mothers from minority community backgrounds reported that they were struggling to feed their children, and 32% of young women reported finding it hard to pay for essentials. That is not just a financial problem; it is a mental health issue. There is a mental health crisis coming to our country, with one in every 12 people who are over-indebted experiencing mental health problems.

I know that the Minister shares the concerns I am outlining. That is why I have been a terrier when it comes to the “buy now, pay later” industry—because of my concern about the way in which it engages in lending to our communities. The Minister knows the speed at which the industry has grown during the pandemic. The FCA found that 11% of consumers in this country—roughly 5 million people—have used a BNPL product since the start of the covid outbreak, and many of them say that they use “buy now, pay later” credit because they cannot manage their financial distress, which is directly related to the crisis, without it.

BNPL companies have exploded. Within a year, Clearpay now has 1 million customers in the UK, lending to them on average eight times a year. Klarna, perhaps the most well known, reports that its worldwide revenue for 2020 grew by 40%, to $1 billion. The founder of Laybuy expressed concern and surprise that fraud in the UK market was huge in comparison to that in New Zealand and Australia. That just shows the problems of the industry coming and exploding at such a rate in our communities without regulation.

Compare the Market tells us that “buy now, pay later” schemes are being used 35% more than they were in the pandemic, with most customers saying that it is because they cannot afford to make purchases outright. We are a nation with a massive debt bubble underneath our economy and we need to ensure that, when these companies operate, they do not exacerbate it.

I welcome the Woolard review, which was clear that the “buy now, pay later” industry needs to be regulated because people were in financial distress and difficulty because of these products, that the products were not good value for money, and that many of the things their lobbyists had told MPs were simply not true. Indeed, the review also found that consumers may not be applying

“the same level of scrutiny to their decision-making as they would for other credit”

companies,

“including consideration of the potential consequences of failing to repay”,

because they were not getting the right information. The Minister will know—we tried to tell him at the start of the Financial Services Bill—of the case that we needed to take to the Advertising Standards Authority about the way in which Klarna was advertising its products.

Finance (No. 2) Bill

Stella Creasy Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

This week the shops have opened, many of us have finally had a haircut and some have even had their eyebrows done. Vaccines are being given out and unemployment has started to fall, which we all welcome. We know how hard this year has been for our constituents and the challenge of how to help weighs heavily on the minds of many across the House. Some would say that that challenge is just about the impact of the pandemic and that this week shows that it is slowly being addressed—that it has been a horrific year with the loss of loved ones, and the shutdown of businesses made necessary to prevent transmission, but we are making it through. And let’s be honest, some people have done well in the last year. We have seen them: the ones who have been able to spend time with their families and to work from home okay—wi-fi willing. They are the ones the Chancellor is counting on to spend their savings and make his sums work—the people to whom short-term measures to keep pumping up our housing market and spending on DIY will appeal.

Thanks to the Chancellor’s efforts and legislation such as this, everything is neatly in place for a classic short-lived consumer-led boom. Cheap borrowing costs and the stamp duty holiday mean that the residential property market is red hot. Indeed, last November, this country paid back more than it had borrowed on its credit cards for the first time since July 2013. But to say that we are heading out of the woods and just to keep going is to fail to recognise why we are so vulnerable in the first place, why the UK economy collapsed so badly over the last year and why our communities were so at risk of harm from the virus that our death rate has been so high—the underinvestment and austerity that mean that our productivity rate is so sluggish, our poverty rate is rising and our people are not waving but drowning in their debt. We do a disservice to our communities if we underplay these issues or the scale of the task ahead.

We need a Finance Bill made not for the here and now, but for the long term. We cannot go back to normal when normal means 23% of our population living in destitution; when millions of people are sitting on debts and rely on insecure work in industries that will never be the same when furlough ends; when our health inequalities have worsened so dramatically over the last year.

In addressing those underlying problems in our economy, I can welcome much in the Bill. I recognise that it is right to look at corporation tax, given that those with the broadest shoulders should help the most with repairing our fractured economy. We should be tackling the devastating impact on our environment of plastics; with some amendments, the proposals could drive not only a reduction in use, but new industries. We should be trying to tackle tax avoidance, although I always tell Treasury Ministers that it would be simpler to ask my right hon. Friend the Member for Barking (Dame Margaret Hodge) what they should do next.

The truth is that the Bill takes a nut to a sledgehammer. We would do better if we were to start again, rather than continue on with the fantasy that, with a few tweaks here and there, everything can go back to normal—whatever normal is. My worry is that relying on the fantasy the Bill creates will leave millions of families abandoned who may have weathered the shock of the pandemic, but were always going to be sunk by continued austerity. While millions have benefited from working from home and being able to save, millions more are struggling to make ends meet, having lost their job or seen their income fall.

The Institute for Fiscal Studies found that last year the richest fifth of households swelled their bank balances by over £400 a month, while the poorest were about £170 worse off each month. This is not people spending to entertain themselves during lockdown. Citizens Advice shows that roughly 6 million people have fallen behind on at least one household bill during the pandemic. Most people visiting the citizens advice bureau for debt advice are not coming to ask about credit card debts or rent-to-own purchases; instead, they are in debt to the public sector because of tax credit overpayments, benefits overpayments, council tax arrears or utility bill arrears. The Trussell Trust tells us that over half of food bank users struggle to afford food and clothes because they are repaying universal credit debts. Anyone who questions why that extra £20 matters should look at that information and realise that it needs to become permanent.

In total, £10.3 billion of debt and arrears attributable to covid have built up in the UK, most often by those who were already struggling before the pandemic—people such as renters, young people, single parents and low earners; people who, now that evictions have restarted, have few options when it comes to keeping a roof over their head; and many who were excluded from Government help altogether. I see nothing in the Bill to change those facts. Indeed, instead of helping, the Bill is walloping them with a tax rise. It squeezes family finances by freezing the personal allowance, after many families will have struggled to pay their increased council tax bills as well. The Chancellor might think he is being clever by using the least visible taxes to raise funds, but I tell him this: the public will notice. They notice when nurses get a pay cut, when VAT goes up and when they have even less money left at the end of the month with which to pay their bills. They notice just how segregated this country has become, with the haves and the have-nots not just in income terms, but in the divides between town and city, north and south, because of our failure to invest in the people of this country.

“Freeports!” the Government cry in answer. The Bill suggests that this will somehow generate jobs and growth in communities that were struggling long before anyone had heard of covid-19, but no one can explain why, if regulation is bad for business in the Thames Gateway, it is not bad for businesses in my community in Walthamstow. This is not the levelling-up agenda we need. It does not recognise that we stand alone among OECD economies in the extent to which our productivity problems are regional rather than sectoral, or that a super-deduction scheme will do little to invest in the children of Hartlepool, Harwich or Hendon.

We need not just to build back better, but to build back for all. Andy Haldane has highlighted that around 10 million people in this country are on insecure contracts. Our economy was so hard hit by covid because it was over-reliant on services, which made up as much as 80% of our GDP, whereas just 14% was based in construction and just 6% in manufacturing. The Bill shows that the Government still have not learned the lessons about how we are able as a nation to handle future shocks and diversify; to invest alongside business and academia in new technologies; to learn from the vaccine programme and encourage co-operation and innovation alongside the state and not in spite of it; or, in the run-up to COP26, to provide the incentives to renewable energy manufacturing and production that could futureproof our economy for decades to come.

This Government have no answer to our research and development sector, which is crying out for support while they use this Bill to give a tax break that will go to the biggest corporations and venture capitalists. Our charity sector is on its knees, but it gets nothing from this legislation. Charities cannot claim the super deduction tax for their IT equipment, whatever the hon. Member for Hitchin and Harpenden (Bim Afolami) might suggest.

Other nations are investing in their people and infrastructure, yet our Business Secretary has chosen this moment to abandon the industrial strategy enacted just four years ago and replace it with something that is neither industrious nor strategic. Combined with the approach in the Bill, that will simply confirm what a lot of companies and investors have already suspected for some time—that it is unwise to expect any UK Government to stick to a programme of supply-side reform for more than a couple of years. Frankly, the UK has generally got away with muddling through economic crises in the past, but the scale of the challenges that we approach makes that inadequate at this point in time. And we have not even today even really begun to understand how the B-word—Brexit—interacts with these longer-term challenges, hitting as it does our high-productivity export sectors while covid hurt our employment-rich domestic service sector. But truthfully, nothing in the Bill will help those at the mercy of either factor—unless they happen to have shares in Amazon or Google, or possibly the Chancellor’s private phone number.

Austerity has weakened the very foundations of our economy, but it is a political choice that the Chancellor is making in this legislation to use straw dust, not concrete, to try to repair them. Parliamentary time is valuable, and tax and spending is crucial to get right in such a context, so I propose to the House that we reject the Bill today and instead demand better for all our constituents.

LGBT Conversion Therapy

Stella Creasy Excerpts

Monday 8th March 2021 Westminster Hall

[Stella Creasy (Walthamstow) (Lab/Co-op) [V]]

It is easily done, Mr Gray; please do not worry.

I am honoured to be able to take part in this incredibly important and powerful debate, which clearly has cross-party support. I start by paying tribute to the hon. Member for Carshalton and Wallington (Elliot Colburn) for the way he introduced the debate and, in particular, for centring the survivors of conversion therapy in his remarks. It is incredibly important in a debate like this to remember those whose voices may not yet be heard in this place, but for whom we need to speak.

I also pay tribute to the journalist Patrick Strudwick and to Vicky Beeching, who have done amazing work uncovering and talking about their own personal experiences, bringing to the fore an understanding of how toxic this treatment is. To everyone who has spoken so far and given their personal experience: that is what Parliament at its best does.

Like previous speakers, I want to take on some of the arguments about why conversion therapy should be made illegal. There has been a lot of focus on whether it works, as if there are any conditions in which such a therapy would be acceptable if it could be shown to be ethical. Many of the major bodies for psychotherapy in the UK have outlawed the practice and said that there is no semblance of an evidence base behind it. However, I believe that we have to make it illegal, to send the clear message that it is not about whether homosexuality is a pathology, because it is not. It is not about whether being trans is a pathology, because it is not. It is a part of who someone is. We in this place need to send the clear message that we will not see the behaviour in question indulged. We will not see the question as one of medical ethics, but as about a progressive, inclusive society that bans practices that demean, belittle and discriminate against people.

Where young people who are gay, lesbian, transgender or bi grow up in communities where they are not supported, they are eight times more likely to have attempted suicide, six times more likely to report depression and three times more likely to use illegal drugs. There are consequences of living in a society where what I am talking about is even a debate, in many different communities, but we know it is a live debate. Right now there are websites where people can go to book conversion therapy, and it is talked about as a matter of free speech. Let us put the argument to bed today. It is not a matter of free speech to cause someone harm in the way that conversion therapy does.

It is also claimed that the matter is about a conflict with spirituality. There is no conflict with spirituality. I will not give a platform to the organisations that can be found, but I want to give a platform to the House of Rainbow and the Reverend Jide Macaulay, who is a proud member of the local community in Walthamstow and our local faith communities too. He teaches every single day that God loves you, not that God cares about who you love. Those are the organisations that we should be supporting. But we also need to send a clear message that it is not just about the medical side; it is simply about living in a better society. We want to outlaw the practice, to protect people from the harm and damage that it does.

We know that it is possible to do that. Frankly, when countries such as China, Brazil, Argentina, Ecuador, Malta and even Samoa have a ban, we could have one in the UK, and quickly. As the debate shows, there is cross-party consensus for it, so I urge the Minister to use the energy from the debate and the support across civil society for action and not to delay further. Let us make Britain proud to be a world leader, for once, on some of those issues, rather than following the pack. Let us tell everyone in the community that we love them not for who they love but for who they are.

Ministerial and other Maternal Allowances Bill

Stella Creasy Excerpts

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Thursday 11th February 2021 Commons Chamber

[Jackie Doyle-Price]

I shall not detain the Committee unduly, given that I made many of my points on Second Reading. However, I would like to highlight how the hon. Member for Gower (Tonia Antoniazzi) illustrated beautifully how all our maternity rights legislation refers to “women” or “she” and reflects the female sex, which again makes the Bill something of a vagary.

I thank my right hon. Friend the Minister for her references to my amendments and for engaging constructively to try to work through to a solution, notwithstanding the constraints of the legislation with which she is working. My amendments would replace the word “person”, which is causing so much anxiety to women outside this place, with a word that reflects the position in employment law—in this case, “minister”. That would be consistent with the rest of the Bill, because for the Opposition positions the Bill refers to office holders. I am really grateful to my right hon. Friend for seeing whether that might be a solution. It is not ideal—I would much prefer to see “woman” placed in the Bill—but needs must, and we must pass the legislation so that we can send the Attorney General, my right hon. and learned Friend the Member for Fareham (Suella Braverman), Godspeed on her way to enjoy her pregnancy and her childbirth.

I am not minded to press the amendment if it is not a suitable way to deal with this issue. It was tabled in a constructive spirit, to try to take the heat out of something causing distress to women. However, we must ensure that this is not repeated in future legislation regarding maternity rights. If there were an opportunity to vote on replacing the word “person” with “woman”, I would be in full support of it.

[Stella Creasy]

I rise to speak to a number of amendments. Before I do so, I will acknowledge some Members across the House who have done such amazing work in raising issues of equality when it comes to pregnancy and maternity in this place. I believe there is a high degree of cross-party consensus that we need to act.

I also put on the record my support for the many men who have spoken today about the importance of fathers. Let me be clear: there will be no equality for pregnant women and new mums until fathers are able to step up and equally do their bit. It is not a zero-sum game; it is about parents being able to support each other, and the importance to women’s equality of not being left literally holding the baby.

Let me put on the record my thanks for the work of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman); my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), who was a trailblazer in her time and continues to fight for women’s rights; my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper); and, indeed, my hon. Friend the Member for Enfield North (Feryal Clark), who spoke bravely and set out her own fears for what would happen. That is one of the tests we must face in this place.

I take the point that the Paymaster General is making when she says that this is not a perk, but I think it is quite difficult to make that argument when faced with another Member of the House who is in exactly the same position as the Attorney General but will be unable to access the maternity leave that we have all agreed it is important that new mums should be able to access.

I want to put on the record my support for the words of my hon. Friend the Member for Leeds West (Rachel Reeves). If Members have not read her books, trying to correct the record of the absence of our understanding of what women parliamentarians have done, they really should.

I also want to mention the right hon. Member for Basingstoke (Mrs Miller). I said in my earlier contribution that one of the things I thought was missing from the debate was a recognition of the legislation that she has proposed to try to help women facing redundancy in pregnancy, and to make real the promise, which I think we all expect for our constituents, that we will not make someone who is pregnant redundant. As we know, even before the pandemic, 50,000 women a year were facing that situation. I think about the narrow scope of this Bill and contrast it with what her Bill could do for thousands of women in this country. If she is able to bring it forward, she will have my support.

I also want to thank the current Chair of the Women and Equalities Committee, the right hon. Member for Romsey and Southampton North (Caroline Nokes), who is doing an amazing job. She spoke today about the importance of equalities impact assessments. New clause 1 is about exactly why that matters. Obviously, we usually expect those assessments to be done for any form of Government legislation, because we recognise that we cannot be blind to the consequences of legislation for different sections of our society.

We have an Equality Act in this country and we protect certain characteristics for a reason, because we know that not everyone in our society faces a level playing field. Pregnancy is a protected characteristic for just that reason—to enable us to say, “Actually, in our society in 2021, women who are pregnant in our communities face discrimination.” We recognise that if we address the challenges that they face and remove those barriers, we shall all benefit. This legislation seeks to do that, and I recognise that. That is why I will support it, and why I think it is the right thing to do.

However, as the Paymaster General herself said, this legislation does that for a maximum of 115 women. In a society of 70 million people, that cannot be enough. That cannot be the message that we send from Parliament. That is why it is important that we have an equalities impact assessment of this legislation, and that we recognise that it does not take place in a vacuum, but in an unequal society where women who are pregnant face discrimination. We see that in our public life. We have already talked about this place briefly, and I do want to return to that, because I think it is important.

I acknowledge that the Paymaster General has recognised the timetable that I am setting her. I want to put that on the record, because I think that should be part of an equalities impact assessment where I believe the discrimination is against those of us who are pregnant, and there are human rights elements of this. But we cannot be blind, either, to the message that this legislation, in the way it is crafted, will send to our sisters in local government and regional Assemblies, or indeed to our sisters who are employees of this House.

[Jim Shannon]

Will the hon. Lady give way?

[Stella Creasy]

Happily. In fact, if I did not give way to the hon. Gentleman, I would feel that I had missed out.

[Jim Shannon]

I thank the hon. Lady for what she is saying, because I wholeheartedly agree. An example of that is a young girl who works for me. She is my PPS but also a councillor. She was able to get maternity leave because she works for me in this place, but not for her role as a councillor. I want to quote quickly from her. She cried, for she felt pressurised to return to the council after a couple of weeks, not by any person in her group but because she knew that no one else could take over from her, vote for her or speak for her. Today we have an opportunity to get this right for Ministers and for MPs, but I believe we must do the same for the Northern Ireland Assembly, the Scottish Parliament, the Welsh Assembly and every council. This is about equality, and we need that for everyone.

[Stella Creasy]

I always knew that the hon. Gentleman and I would eventually find common cause, even if we have disagreed on other human rights issues. He is right; we have a leadership role to play. Indeed, I would argue that this is leading legislation, because we know that in other Administrations there are not formal maternity provisions. That is why it is so frustrating that we are missing this opportunity to go further and help our colleagues.

[Meg Hillier]

I thank my hon. Friend for giving way and congratulate her on her happy news. I have had the interesting experience of having three children: as a councillor, where I took six months’ leave; as a member of the London Assembly, where I was the first then to take six months’ leave; and as a Minister and a Member of this House, where I took six months’ leave. It can be done, but there is an important element to consider.

Proxy voting, for example, which has an important role to play, can be seen to tether a woman to her job during her six months’ maternity leave and make sure that she has to follow every twist and turn of her job. We need to be careful in this debate that, while, of course, this Bill is a good move and while there are still many other measures that need to be put in place, we reflect and recognise that maternity leave is there for a reason. It is there so that we can bond with and nurture our child and come back to work at the point that we are ready to do so, with our child and our situation in a good place. It is important to make sure that, with some of the mechanisms that could be proposed, we are not unnecessarily tethering a woman to her job.

[Stella Creasy]

I completely agree with my hon. Friend. The challenge that she is speaking to is the same as the one that the hon. Member for Strangford (Jim Shannon) spoke to with regard to his member of staff. The Bill is not just about pay, but actual cover. As I said earlier, it is the commitment that the current Attorney General will not get an immediate phone call saying, “We know you are on leave, but we need you because of X.” Somebody else will be formally overseeing that role.

It is not by accident that when I was pregnant, I thought about what I wanted to do for my community. It was not about money, but about being conscious that if I had been awake for two or three hours at a time, I probably would not be as useful to my constituents as someone who could focus fully on the job. As I discovered with my first child, those pockets of sleep for two-and-a-half to three hours—the point at which I saw coffee as a medicinal substance to keep going—were in the first few weeks and months after childbirth.

It is absolutely right that we work to protect the family life of any woman giving birth, so that she has that time to bond with her child and to properly take time out, but we cannot do that in this job if there is nobody fulfilling the role that we are doing. It is the same for a local councillor and the same in our Assemblies. That is the challenge that we are facing here, and why it is so important that we assess the impact of this legislation.

[Wendy Chamberlain (North East Fife) (LD)]

I am listening intently to the hon. Lady’s speech. She is making some excellent points. Does she agree that today, what she is asking for is even more crucial? Given social media and emails, Members of Parliament are arguably never off.

[Stella Creasy]

I completely agree with the hon. Lady. At this point I pay tribute to the hon. Member for Stroud (Siobhan Baillie), who found herself being abused because she was on maternity leave. She was also abused by members of my own party. I remonstrated with them, pointing out that that was not the progressive approach to take.

My concern about the hon. Member for Stroud, and why the legislation is a missed opportunity, is that she sought to get cover. She was an MP who, like me, tried to get a locum. I had a fantastic locum. In fact, my locum, Kizzy Gardiner, was too good. People in Walthamstow were desperate to keep her, because she was an absolutely fantastic example of why maternity cover matters. Nobody in my constituency batted an eyelid about having someone else not just doing casework, but out there representing our community, working with groups, going into local schools before lockdown happened, and then when the lockdown happened, leading on that role. Watching the hon. Lady being abused and attacked, and watching her also trying to cope with those first few weeks of having a new baby alone, fired my enthusiasm on this. We cannot sit around in this place, watching as other people get those issues right, but failing to take action ourselves.

It is not by accident that the number of times pregnant women end up in this place, or in local government or in the Assemblies, are few and far between. That is one issue that an equalities impact assessment can take a look at. We all talk about wanting to get more diverse people into our politics. Sometimes the barriers to that are blindingly obvious. I know from talking to colleagues in local government just how frustrated they are. I know from talking to colleagues in other devolved Administrations just how frustrated they are.

When we pass legislation in this House, such as this Bill, we cannot be blind to the message that we are sending about how we have determined who is important enough to have that leave. If we think that is not something that should be bestowed as a discretionary pleasure, or as a benefit like a company car, then we also have to recognise the consequences of behaving like that, not just here but in other places as well. If we want to ensure that there is no trade-off between family life and public life for either men or women, we must look at the message we are sending. The honest truth is that this legislation, as it stands, sends a message that a two-tier system is acceptable.

Consider for a moment what would happen were we to look at local government and say, “Well, it’s okay for just cabinet members in local government to have maternity leave”. We would be horrified for young female councillors, or indeed for young men who want to be good fathers and spend time with their children, and want to be supportive partners, yet that is exactly what we are doing here. Frankly, in no other workplace would this be acceptable. If someone came to us in our constituency offices and said, “This is the experience in my workplace”, we would say, “Well, that’s clearly breaching various regulations. We must support you. We must get you trade union representation.” I am very proud of the trade unions, which I know have made representations on this issue already.

--- Later in debate ---

[Patrick Grady]

The hon. Lady knows that she has the support of the Scottish National party for her amendments. Indeed, my hon. Friend the Member for Livingston (Hannah Bardell) wanted to make sure that her support in particular was recorded.

Until the pandemic, the only times that I acted as a proxy were actually for new fathers in our group; we have not had a new mother, at least in the time that I have been here. I have heard the case made on many occasions that the best stride that could be made for gender equality would be equality of parental leave. If that parental leave could be shared between both parents of a child, it would be an incredible way of helping to break through the glass ceiling—if the entitlement was there for everyone. The hon. Lady is absolutely right that this Bill and the clauses that we are debating just now do not make that distinction.

[Stella Creasy]

I completely agree with my colleague from north of the border. People’s ability to take shared parental leave is so important. Again, parental leave is not covered in this Bill, but an equality impact assessment could look at the consequences of failing to include it. That matters because the Bill talks about ensuring the income of a Minister, and, to put it bluntly, the biggest barrier to people taking up parental leave is that it is only open to those who can really afford to do so.

The gender pay gap is at the heart of some of these challenges. That is because for most women and their families, it is actually better for them to take time off with the baby than for their partner to do so. That means that they take the hit on their career and on their incomes, and we do not get the fathers’ involvement in children that we all want to support. Why are we sending the message that we are not even talking about ministerial paternal paid leave and therefore ensuring that fathers can be part of it? The Paymaster General said that it is already covered in existing provisions. That is because it is only two weeks. In the first two weeks post birth, parents are lucky if they see daylight and are able to go outside—or, indeed, to wear clean clothes, if I remember correctly—so having more time with their child is crucial.

I want to look particularly at what this legislation means for Parliament. The Paymaster General has pointed out that she gets this and she understands that we have to go much further, and I believe her. She talked about a timetable. Let me be clear why that timetable matters. I said earlier that I have a direct discrimination case, and I think that an equality impact assessment could look at this issue. She will have seen that the Independent Parliamentary Standards Authority has come out today and said, “Yes, we’re going to consult”, and it is having a meeting again today. That is all very welcome. I recognise that the new chair of IPSA takes a very different approach from the previous administration. I have worked on these issues for the last two years and I wrote to IPSA before the last election, begging it to come out and say that it was at least looking at these concerns so that nobody of childbearing age would be deterred from standing in the election, but it refused to do so, so it is welcome that there is movement.

But, as ever, the pace of change is glacially slow—for me, literally, because yet again I find myself in a position where I cannot be confident of what I can say to my community to answer the question posed by the member of staff of the hon. Member for Strangford: “What cover will there be?” I cannot even look my own staff in the eye because of the lack of cover that we offer staff in this place. If nothing else, that makes us terrible employees.

This legislation gives the lie that this is an independent matter. I have been told for the last two years that MPs’ employment status meant that it was impossible. Indeed, it says on the IPSA website:

“MPs as independent office holders are not employees and are therefore not eligible for statutory maternity, paternity or adoption leave.”

[Meg Hillier]

My hon. Friend will know that a Minister is on the payroll of their Department, so in that sense they are more of an employee. There is a really interesting issue here that we will need to consider carefully, and it is that MPs are not employees. We have a payroll, but we are not employees; we are obviously answerable to our constituents. That is one of the fundamental differences. For my part, when I was on maternity leave, I had a clear plan and support. Like my hon. Friend, I asked for some cover—some extra money for my staff—but it was not possible. There are certain things that an MP does that cannot be replicated by anybody else, as we know. This has obviously been well rehearsed. This is a complex area, and she is making some interesting points.

[Stella Creasy]

I thank my hon. Friend for her contribution. She hit the nail on the head when she said that it was not possible for her to have that support, so she had to put in place a system for herself. In what other workplace—

[Meg Hillier]

I just want to make it clear that I was not unhappy about the system that I put in place for myself. It was very clearly worked out: I had colleagues who were able to step up if my staff needed any extra support, and they had the right to be signatories. However, this was during the expenses scandal, and because my name was above the door, there were some things that it would have been very difficult to pass on to somebody else. So despite the great support I had, it was difficult, and I would have liked to be able to pay some of those staff a little bit more for the extra responsibility they were taking. That was the bit that I had the most issue with at the time.

[Stella Creasy]

I am grateful to my hon. Friend for sharing her experience. I think that speaks to the challenge of this legislation, in terms of the impact it will have in this place by setting up a two-tier system. For a member of the Cabinet or a Minister, it will now be clear what will happen and what their rights are. They can be confident and relaxed. I return to the honesty of my hon. Friend the Member for Enfield North in talking about how scared and worried she was and about the lack of clarity in the lack of parity on these issues, so that she felt she would be put at risk of people saying she was not pulling her weight or would not be able to support her constituents, or that she would be dragged back into work. We have a duty of responsibility and care to her, because she is in the same position as me, but a bit further on.

I want to be clear that this legislation recognises the Minister’s absolute right to a family life. That is an article 8 human right, and we need to protect that. We need to act to ensure that no one is discriminated against in that regard. The lawyers I have consulted tell me that it is arguable that this legislation breaches the human rights of those of us who are not covered by it but who are in the same position in seeking to do a job in this place, because article 14 says that we should not be discriminated against in terms of the rights that are accrued in the workplace. So for me, there is an arguable case here.

I do not want to be in the position of taking the Government to court. Frankly, I want to be in the position, especially now in the early stages of pregnancy, of being able to sit down and sleep for hours on end, and in later pregnancy probably just to sit down in general, but I know that it is vital for my constituents to have clarity about who will be covering the role that I do. The previous locum I had was fantastic, but we had to write the job description. We had to sort it out. In comparison to what the Attorney General and any other Minister will have, that is not parity. It is a form of direct discrimination because it affects the ability to have family life. I have been very clear with the Minister—

[Meg Hillier]

I wonder if my hon. Friend could clarify that last point, because I think we all approach our jobs slightly differently. Certainly, it was not at all an issue for me when I was laying out everything I did that would need cover. The description was really what I did already, so it was not a very difficult challenge. I would be very reluctant to have IPSA or somebody else write the job description for somebody who was providing support, whether it was my existing staff or anyone else. I would be interested if she could clarify that point.

[Stella Creasy]

I do not want to test the patience of the Chair of the Committee by going into what the different schemes might be.

The point we are making here is about parity, and the lack of parity as a result of bringing in this system. If we have clarity on the cover for the Attorney General and clarity about the amount of money that will be paid, it would be right to look at whether we should offer the same thing for Back-Bench MPs, and indeed set the standard for local government and the regional Assemblies, perhaps offering to work with them in terms of our experience.

My simple point is that this legislation blows a hole in the argument that has been given for the past two years that we could not look at these issues because it was all too complicated. As the Paymaster General set out earlier, the complications around ministerial employment have been overcome in a day because of the guillotine of having a clear deadline set by one Member of Parliament. One of the challenges that has created for some of the drafting is that this maternity right is following not the person who might be pregnant but the position that they hold.

My argument is that there is direct discrimination in this place because this says to my constituents that they are not as important. I am pleased that my hon. Friend the Member for Hackney South and Shoreditch was able to get cover, and I know that Kizzy, my locum, was invaluable for my community in ensuring that they got 100% of the service 100% of the time. I believe the residents of Walthamstow are owed that. That is why I will continue to fight for this, but I also recognise that it is for every MP to make that decision for themselves. The point is that we are now making sure that that decision can be made, but only by a select few. That has an equalities impact, and we should know that and recognise its impact on public life.

[Chris Loder (West Dorset) (Con)]

I thank the hon. Lady for giving way. I hope she will forgive my ignorance in some of my questions to her, but my understanding is that Members of Parliament are able to take maternity leave and their salary is paid for by the state, and that continues to be the case. My understanding is also that IPSA will provide contingency funding to support the offices of Members of Parliament, to allow them to have that leave and make provision for them to do so. Am I incorrect in my assumption?

[Stella Creasy]

The honest truth is that we do not know, because the only other MP who sought to take advantage of that system was discouraged and deterred, and was not able to do so. What I would say is that right now, it is not clear to me as a pregnant woman what support I would get. There is a conversation about pre-approved support; right now, I am one of the most expensive MPs in London because of the contingency application for maternity cover. I am sure the hon. Gentleman would agree that it is not appropriate to see maternity cover as an expense that might be reported to the public in that way. There is not parity, in the way that there is parity and clarity about what the scheme is for—

[Chris Loder]

rose—

[Stella Creasy]

I will happily give way, but I hope that explains the issue to the hon. Gentleman.

[Chris Loder]

I hope the hon. Lady will forgive me, but I am afraid I do not concur with what she has said. I think we are in one of the most fortunate situations in the entire nation. This Parliament has the ability to call on the taxpayer to support those who need to take maternity leave, to take care of their children and to physically recover from pregnancy, so if the hon. Lady will forgive me, I think she is wrong. We as a Parliament, as a state and as a nation are in the fortunate position that we do support our MPs, and we must be careful to not put out there that we do not, when there are many people who are struggling. I agree with the hon. Lady’s earlier point that across the nation, there are employers who do not necessarily fulfil their obligations, but I think we have to be careful about giving the impression to the nation that we in this place are hard done by, because I am afraid I do not agree.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Order. Just before the hon. Lady responds, I think it is quite important to note that this Bill is about Ministers, and we must not stray too far into the position of Members of Parliament as well.

[Stella Creasy]

I thank the hon. Gentleman for his comments. If he will forgive me, as somebody who has actually been through this process and actually understands what is available and what is not clear at present, I would gently encourage him to talk to his colleague the hon. Member for Stroud about her experiences.

It is really important that we are honest about the lack of clarity. As I have said, there is not a formal maternity leave scheme or formal maternity cover. Unless the hon. Gentleman is suggesting that if an MP disappears for six months, nobody would notice because they do not do anything, then there is work to be covered. The point about this legislation is that it recognises that. It is not about the pay—that is a red herring in this environment. It is about having somebody to cover the work we do outside of this room: the campaigns we run, the constituency events we attend, and the casework we do. For me, it was not acceptable to ask my staff to fill in everything that I did for six months, and expect my constituents to have a reduced service as a result, rather than to have somebody cover those roles.

I am very conscious of time and I do want to press on, but I would gently encourage the hon. Gentleman to look at what is actually being provided at the moment. It is not the same as what we are providing in this legislation, and that is my point: we want parity, because every woman should have six months’ paid cover so that they can actually take time off. Perhaps he might want to speak to my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), who was back doing casework three days after a caesarean section because, although people thought she could take maternity leave, the reality was that she could not. I know that it is not a situation in which the hon. Gentleman has found himself, but I hope that he can understand, through listening to those of us who have, why we need change. Certainly, I hope that he will join me in supporting paid parental leave for our male colleagues because that is really important. I have talked to many colleagues who find that this place takes them away from their families when we want to bring them together.

I want to highlight the other amendments that I have tabled. I recognise the cross-party support for new clause 1—I think the Paymaster General does, too—and the call for change and for us not to be blind about the messages we send from this place about the importance of paid maternity cover and ensuring that everybody can access it.

Amendments 1 and 2 are probing amendments to recognise some of the questions the Bill raises about the practical technicalities and what would happen. The Bill seems to take account of the idea that somebody might be demoted while they are on maternity leave and I am sure that the Paymaster General will want to clarify that. Although the Bill provides that no Minister would be in a financially difficult position if they were removed from their ministerial post while they were on maternity leave, it does not make the same provision for the small number of Opposition office holders. Will the Paymaster General clarify what would happen in that case? We all want to ensure that when any woman takes maternity leave, she can do so with confidence and certainty about her financial and logistical position.

There are still battles to be won, but I want every pregnant woman in this country who is facing problems right now to know that there are voices in this place that are prepared to stand up to those who tell them not to worry and to be grateful for the fact that somebody might employ them at all; not to worry about going home and being stuck with their children, and that equality does not matter to our economy. I know that there are voices and champions for the importance of not discriminating against pregnant women and new mums across the House, but it is time that we saw ourselves as we are now, and we are looking through the wrong end of the telescope if we do not understand the impact of the Bill on the messages that we send.

I know that the Paymaster General realises that we need to do the research. She is honest about how small the number of women affected by the Bill is. If she will not accept the amendment, I am keen to hear from her—because I do not want to have to take the Government to court—a clear timetable for action, a clear commitment by the Government to make parliamentary time so that we can resolve the issues in this place and support women of child-bearing age and their partners in local government and across the Assemblies as appropriate, for public life if nothing else. Deeds not words.

[Sir John Hayes [V]]

In George Orwell’s novel “Nineteen Eighty-Four”, protagonist Syme explains the objective of Newspeak:

“Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thought-crime literally impossible, because there will be no words in which to express it.”

Although there are those who do not understand or will not recognise this truth, language matters. It is through language that we understand, express, consider, challenge, think and articulate. Through language, we breathe life into sentiment. So we must ask ourselves a question. How did we get to a place where a Conservative Government bring a Bill before us that seeks in effect to abolish two beautiful words that have been used for centuries and embody goodness and truth: “mother” and “woman”? The Bill as drafted does just that. It rules those words out of law.

Is it now considered embarrassing to be described as a woman and to admit to being a mother? That seems to contradict the whole purpose of the Bill. After all, the Bill is about recognising the significance of motherhood and extending that recognition to those in the service of the Crown. Are we now acknowledging as a Parliament that the concepts of motherhood and womanhood are so radical that they must be censored?

You know as well as anyone, Dame Eleanor, that when tabling amendments, one is often seeking to make small, sometimes complicated technical changes to legislation. Today, with my hon. Friend the Member for Thurrock (Jackie Doyle-Price), my motivation is much more straightforward: to affirm the existence, worth and eternal value of womanhood and motherhood. By the way, if the need arose, I would do the same for men and fatherhood. By saying the words and including them in the Bill, we will cement the virtues that the Bill embodies in law.

As drafted, the Bill, in effect, extinguishes the ordained particular characteristics of human types. I do not know whether that is as a result of artlessness or heartlessness, but whichever it is, it anonymises and dehumanises. That is why I have introduced the two amendments that stand in my name, and I am grateful to Members from across the House for supporting them.

My speech will be uncharacteristically short but characteristically straightforward, because this is a matter of common sense—the common sense that prevails beyond this place and, clearly, beyond the wit or will of the people who drafted this legislation. Never underestimate the power of language, for there are those—those who are extreme and immoderate—who understand its power very well and those, as the hon. and learned Member for Edinburgh South West (Joanna Cherry) said, who seek to obscure the biological differences, which are, frankly, the very reason all of us are able to contribute to this debate, because we would not be here without them.

It is sad to see the attempts that have been made to blur the picture, muddy the waters and cloak this matter in denial. It is sad to see the descriptions of “drafting difficulties” and “legislative complications”, which were described to me today by one parliamentary lawyer, a distinguished one too, as entirely “clueless” and “baseless”. This is a matter not of drafting procedure, but of principle. Electors of all political persuasions and none, across our kingdom, from Caithness to Caerphilly to Cornwall, from Antrim to Arundel, from Kent to Kendal, expect us to do what they would anticipate is that common sense—to affirm womanhood and motherhood in this legislation, which is, after all, about maternity.

As Orwell understood, semantics matter, because through them, via meaning, we find truth. In the pursuit of truth, and in solidarity with every woman and mother in South Holland and The Deepings and beyond, I am proud to put forward the amendments that stand in my name, and I shall be seeking to divide the House on them at the end of this Committee stage, with your indulgence, Dame Eleanor.

--- Later in debate ---

[Wendy Chamberlain]

I am pleased to have the opportunity to speak in Committee, having been unable to do so on Second Reading. I start by wishing the right hon. and learned Member for Fareham (Suella Braverman) and the hon. Members for Walthamstow (Stella Creasy) and for Enfield North (Feryal Clark) all the best in their pregnancies. Indeed, it is particularly poignant for me to speak in this debate today because I am currently receiving updates on my stepson’s partner, who is in the early stages of labour; they are on the way to the hospital as we speak. Step-grannyhood awaits. I am not quite prepared for that.

The Bill corrects what is fundamentally a clear unfairness in relation to ministerial appointment legislation. Clearly, as we heard on Second Reading, there is support from all sides of the House for ensuring that Cabinet Ministers can take maternity leave, and rightly so. However, like many Members across the House, I find it worrying that this huge hole in legislation has been spotted only now. Sadly, I think that speaks volumes about this place, the current Government and—dare I say it?—previous Governments, in which my party took a part.

While today we may be updating antiquated rules, the Bill takes us not so much up to the present day as into the 1990s. Of course, a particular element of maternity leave is ensuring that a new mother can physically recover from the birth. I was a police officer for 12 years, and it was critical that we took time off work. That is why all mothers should take at least two weeks off work in the first instance. It was therefore incredibly saddening to hear of the experience of MPs who have been forced to attend this place either immediately prior to giving birth or shortly thereafter.

In 2021, there is wide acceptance of the fact that, no matter how a person is becoming a parent, they should be entitled to leave, whether it is maternity leave, paternity leave or adoption leave, to give the child that is coming into their family—the child should be at the centre of this—the very best start in life that they can. We should therefore expand the scope of the Bill beyond maternity leave, because that is clearly the direction of travel that we see in society. This must be a legislative first step, and I welcome the Paymaster General’s comments on Second Reading that it is. I look forward to hearing the timetable accordingly.

I worked for a number of different organisations throughout my career before I came into this place. I have seen a variety of policies on parental leave, and I have seen them change over time. In fact, when I was a police officer, they changed between the births of my children; when I had my daughter, I had six months’ leave, and when I had my son, I was able to take longer. However, I would have really struggled financially if it had not been for my mother, who was able to help us cover childcare. There was just no way that, as a family, we could afford the multiple days.

[Stella Creasy]

The hon. Lady is making an incredibly powerful speech. May I be the first person to congratulate her on her forthcoming step-grannyhood? I am sure she will be super-gran. One statistic that is very important in this debate is that a third of women get into debt when they take maternity leave. She talks about the financial penalties that she faced. Does she think that one of the things that we would need to look at if we were to have an equalities impact assessment is the different access to maternity leave and the time that people can have, due to the financial consequences for them of taking it because we have such poor maternity leave in this country?

[Wendy Chamberlain]

Absolutely; I agree. Continuing on my experience of maternity leave, I had to get my mother to help so that we could afford the childcare, but my husband was a police superintendent at the time of the birth of our son, and his two weeks’ paternity leave operationally did not really happen because there were a number of things going on. It just did not work for us as a family, and he certainly did not get the quality time he deserved.

I empathise with the comments made by the hon. Member for Truro and Falmouth (Cherilyn Mackrory) about the role of fathers. I simply would not be able to serve in this House if it were not for my husband taking the lead at home, although I have warned the children that I am checking Satchel One for progress on online learning on a regular basis.

The global drinks manufacturer that I worked for prior to my election introduced a parental leave policy in early 2019, which means that, regardless of whether it is maternity, paternity or adoption leave, employees are entitled to parental leave equating to six months’ full pay. I agree with the hon. Member for Glasgow North (Patrick Grady) that this has been transformative, not just for mothers but for fathers too. The biggest impact, I would argue, has been on men. For instance, the director of the global learning unit that I was part of, a man, took his full parental leave allowance, and that sent a very important message. It meant that many men on the supply and manufacturing side of the business in more operational roles felt empowered to be able to take that same leave. That is incredibly important.

--- Later in debate ---

[Wendy Chamberlain]

I agree. It is interesting that the Government are now much more supporting of proxies than they have been. The challenge around the pairing arrangements is not only the risk that they might be broken—that was certainly a very bad experience for Jo Swinson—but that the role that we play in this place is potentially much more visible than it has been in the past through apps such as CommonsVotes. People in our constituencies judge us, and rightly so, on our voting records, and pairing does not give people the opportunity to have their views recorded.

[Stella Creasy]

I have constituents who say, “I turned on the television and I couldn’t see you in the Chamber”, and I say, “Yes, that’s because I was working.” It is important to remember that only a third of what we do as Members of Parliament takes place in this room—there is also all the build-up to legislation, all the casework we do in our communities, and the role we play as an advocate for our localities. When we are considering the cover required, thinking only about what happens in this place and the end point of voting is a missed opportunity. We have to recognise what would happen in our communities if our role there was not played. Does the hon. Lady agree that we should not sell ourselves short with the idea that if we disappeared for six months people would not notice?

[Wendy Chamberlain]

I do agree. That would not only sell ourselves short but sell short the work done by our staff in our constituencies. Owing to the pandemic, it has been difficult for parliamentarians who came into this House in December 2019 to know what case workloads might normally look like, but I have experienced a very high level over the past year, and my staff have played a key role in relation to that. We need to be there to support our constituents. Constituents have said that they have had a better understanding of the role of MPs and what they can do as a result.

I do not want it to be thought that I do not agree with Cabinet Ministers being entitled to full pay and maternity leave. I absolutely support that; it is entirely right and in keeping with best practice, but it also potentially speaks to huge unfairness, on which other Members have touched. Secretaries of State will receive about £1,300 a week if they receive full maternity pay for six months, but millions of people around the country are eligible only for statutory pay, which after the first six weeks is just £151 a week—close to a 1,000% difference.

On Second Reading, the right hon. and learned Member for Camberwell and Peckham (Ms Harman) spoke eloquently about the deficiencies in maternity pay and allowances. It does seem odd to me for the Government to say, “This is the standard we are going to give to a Cabinet Minister,” and on the other hand say, “The statutory minimum is the standard by which you should treat your employees.” That seems a case of “Do as I say and not as I do.” The organisation that I worked for previously is now giving six months of parental leave, regardless of whether that is maternity, paternity or adoption leave. That is a big organisation.

--- Later in debate ---

[Wendy Chamberlain]

Again, I agree. We are not only paid on maternity or paternity—if Members choose to take time off—but we do not receive sick pay because we continue to be paid at that time as well. I acknowledge that during this period a number of people in my constituency and across the UK are really struggling because statutory sick pay provisions are nowhere near adequate.

I worked for a global organisation, but I am conscious of the impact of parental leave on small businesses. That is why the statutory support needs to be so much better. We would view it as unacceptable if the Bill said that the Attorney General would receive only basic statutory maternity rights, and yet fundamentally that will be the case for millions of people.

Hon. Members have touched on MPs’ staff and IPSA contracts, where I also have concerns. Many MPs employ staff who have worked for other MPs, especially after the churn of an election—indeed, I did that in January 2020—but to qualify for full maternity pay on an IPSA contract, a staff member needs to have worked for over a year. If staff members change MP, even if they have worked for a long time in Parliament, they effectively start a new employment and are penalised as a result. Although, like the hon. Member for Walthamstow, I was pleased to see in my mailbox this morning correspondence from IPSA on this issue, it was specifically related to MPs. I urge IPSA to consider MPs’ staff as part of the review. My first 15 months have certainly taught me that having excellent staff and supporting them is critical to success in this place.

I want to reflect on the work I have done with 50:50 Parliament since my election. I have spoken at a number of its events—obviously enabled by being online during the pandemic—and the common theme in the questions that come from women interested in or considering standing either in this place, at local authority level or, indeed, at the Senedd or at Holyrood are around how to manage family time and find a work-life balance, and having children as part of that. I continue to urge the Paymaster General to regard this Bill as a first legislative step. We have a real opportunity to send out a strong, positive message about diversity in this place, but someone who has served as a Cabinet Minister for less than a year is to receive full maternity pay. As I say, that is right, but we have an issue to address when a staff member who might have worked in Parliament for years would receive only statutory pay.

It is now a month before the Attorney General’s maternity leave, and it is worrying that the Government have only now realised that this is an issue. Obviously, the business changed last week to allow us to debate the Bill today. That tells me that equalities are not at the heart of the Government’s thinking. I always think about an inclusion lens: everything that we consider in this place should be looked at in the light of inclusion and therefore we will see the issues before they are pointed out to us latterly.

[Stella Creasy]

I agree with what the hon. Member is saying. Does she agree that it is concerning that normally an equalities impact assessment would be produced as standard and yet we do not see that because this legislation is being pushed through Parliament at short notice? We are all aware that the Government have had a deadline to work to, but they will have known of that deadline for some months, so there could have been time to do some of the work we are asking for in the amendment, with our better understanding the consequences of the legislation as a result.

[Wendy Chamberlain]

I entirely agree. Indeed, earlier I joked that this legislation brings us not into the 21st century, but into the 1990s. When I was a police officer, doing equality impact assessments, whether for operations we were carrying out or for anything else that was planned, was very much part of that. So it is disappointing that we are not seeing that in this place.

That lack of focus on equalities has become apparent over the past year, during the pandemic, and it is really disappointing. The hon. Member for Glasgow North mentioned my Liberal Democrat colleague Jo Swinson, who worked not only on parental leave but on gender pay gap reporting, which was one of the first business requirements to be jettisoned during the pandemic, and as yet there are no plans for its return.

When we watch the frequent Downing Street press conferences, it is usually a man we see at the lectern. These are potentially disappointing messages that the Government are sending out. In contrast, the pandemic has had a disproportionate impact on women, and I note the recent findings of the Women and Equalities Committee in that regard. Again, the hon. Member for Walthamstow spoke powerfully about this earlier. I, too, commend the work of Pregnant Then Screwed and wish them success in their case, but obviously I am saddened that it has got to that stage.

The Government talk a lot about levelling up, but clearly there is work to be done to get their own house in order when it comes to gender equality, both internally and in relation to the impact of their policies across the country. That is why I was very happy to co-sign new clause 1, tabled by the hon. Member for Walthamstow, which calls for that equalities impact assessment for this legislation, as she described so eloquently.

There has been progress over the past 10 years. Thanks to the efforts of Jo Swinson, we now have shared parental leave, which has been an incredible success, and I know that many people across the country have taken up that opportunity. I know that more businesses and organisations have been improving the amount of fully paid maternity leave on offer, going beyond the statutory levels. That was the case with my previous employer, and indeed in the police service. However, it is very important that, as we consider the Bill, we think about how we can move forward, particularly in relation to covid. Given covid’s impact on businesses, with business margins tight, there is a concern that one of the first things to go will be provision that is above statutory levels. I am very concerned about that. Having had 10 years of progress, we cannot afford to have a lost decade when things go backwards as a result of covid. I therefore urge the Government to carry out an impact assessment on this issue. I hope the Paymaster General will address that point later.

To conclude, the aims of this legislation are very welcome but there is much more to be done. I hope that today’s debate will be the beginning of a conversation on how we modernise parental leave laws, how we encourage business to engage with that, how we recognise family life in 21st-century UK, and how we ensure that the legacy of covid is one of more flexible leave entitlements, rather than a reversion to statutory limits. Ultimately, however, the sadness of today is the Government’s failure to address the issue sooner. Perhaps they could have done that by carrying out an equalities impact assessment sooner. Sadly, that means we are talking today about one woman and the specifics of her case, and that should never have happened.

--- Later in debate ---

[Penny Mordaunt]

Before I turn to the nitty-gritty of the amendments, I will address wider points that Members have made. I thank all Members for their contributions and their thoughtful remarks in this important Committee stage.

In particular, I thank the hon. Member for Hackney South and Shoreditch (Meg Hillier) for coming to the Chamber today, and for her interventions. Her experience is incredibly valuable. One of the key points that she reminds us about is the different status that a single person may have for different aspects of the jobs that they do here. The hon. Member for Walthamstow (Stella Creasy) spoke about the peculiar employment status of a Member of Parliament, which is distinct and different from that of a Member of Parliament who is also a Minister. A Minister is also an employee, and there are slight differences there. That is one of several reasons why this is a highly complex issue, but that does not mean it cannot be tackled.

In addition to the issues that have been raised regarding Members of Parliament and the challenges they face, there are still outstanding issues for Ministers in relation to shared parental leave, an examination of paternity leave—although, as I have outlined, there is provision there at the moment—and adoption leave. Sickness and bereavement is a grey area. We also have an additional issue for our colleagues in the other place who may be unpaid Ministers. That needs to be resolved, but it obviously plays back into the issue of maternity leave. These are very complex matters, and I reiterate again my gratitude to Her Majesty’s Opposition for their engagement on this.

Let me turn to IPSA. Clearly, it is an independent body, and in the work that follows today we will have to respect that independence, but the Government are none the less absolutely determined to bring forward proposals collectively.

[Stella Creasy]

Over the past two years of seeking progress on this matter, and trying to ensure that Members have the options and the support that we are giving to Ministers, one of the things that I have been told is that IPSA has asked Parliament to offer a view. Indeed, this rather anarchic approach to what our employment status is has had an effect. Will the Paymaster General therefore commit to our having parliamentary time for a debate on this? It does not need to be a Government-led debate, but we do need parliamentary time for it, and that is in the gift of Parliament. That way, if IPSA, on a very short timetable, asks the House to take a view, we will get that view, so that we can resolve the matter.

[Penny Mordaunt]

Although time on the Floor of this House is not in my personal gift, I hope that what I am about to set out will demonstrate to the hon. Lady that we are not just doing this as an exercise. These issues must be resolved. Yes, this is a matter that immediately affects Members in this place, but resolving this is also vital if we are to meet our ambition of ensuring that everyone who wants to sit on these Benches and is elected to do so has the working practices that they need to thrive, live their life and raise a family. That is very well understood.

We respect the independence of IPSA, and while we have to work with it—the Government have committed to supporting it—and the House authorities, all Members of the House will want to contribute to this important analysis. We want to look at custom and procedure. We also want to examine what legislative change may be required, particularly with regard to Ministers, which is the most complex issue. Recommendations by and to IPSA will be made through the usual channels. There has been quite a large amount of discussion about this already, with the help of the Opposition. As I have said, the Government will support IPSA on any of that work, and on any of the issues that we are all seeking to address. Its independence will be respected in line with its statutory footing.

Many colleagues who spoke on Second Reading are concerned about the impact assessment. We have undertaken to carry one out, but I add this caution: if Members want an impact assessment of this piece of legislation, that is very easily done, and will be really great for a very small number of people, but of no use whatsoever in advancing anyone else’s rights or opportunities. We want—we have set this out in a note that we have shared, I think with the office of the hon. Member for Walthamstow, and certainly with the Opposition; I would be happy to share it with other colleagues around the House—to undertake an impact assessment that looks at current legislation on the issues we have discussed this afternoon in relation to Members of Parliament. We will also take into account work already done, or in progress, by the relevant Select Committees, particularly the Procedure Committee and the Women and Equalities Committee. As I have said, I would be very happy to share that note with hon. Members. Perhaps the best place for it is in the Library.

There are a couple of other issues that I want to address before turning to amendments.

[Stella Creasy]

It is incredibly welcome that the Minister is talking about doing a much wider impact assessment. For clarity—this issue has been raised today—looking at the wording of it, can she confirm that it will look at the impact on not just Members of Parliament, but their staff? We are drawing this distinction between parliamentary staff and people who work in Parliament. We need to look at everyone, so that we can be confident that every single woman and potential partner of a woman in this place will get the support they need.