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.

Ministerial and other Maternity Allowances Bill

Stella Creasy Excerpts

2nd reading & 2nd reading: House of Commons
Thursday 11th February 2021 Commons Chamber

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

It is an honour to be part of the debate and the work that we are doing to bring forward this legislation. Let me congratulate the Attorney General, the right hon. and learned Member for Fareham (Suella Braverman), and wish her well in her forthcoming maternity leave. What is so powerful about this legislation is not just the clarity over her income but the clarity about her actual cover: she will be able to spend time with her child and not receive calls at three o’clock in the morning when the Attorney General is needed.

I welcome the Paymaster General’s comment that we need to do more. It is that which I wish to speak on particularly, because, as she has recognised, the Bill benefits only a very small number of women. To benefit only a very small number of women at this time in this country’s life is to fail to recognise the peril that may come from this legislation, which is not about its drafting but its scope. We are sending a message that maternity leave should be a perk conferred by an employer as a benefit—just as a company car would be—if we only pass this legislation.

The Paymaster General said that the Prime Minister believes it is wrong that a woman might have to leave work to care for a child, but in truth that is happening in workplaces across the country, and it involves thousands of women. During the pandemic, one in four women who are pregnant or a new mum have said that they have faced discrimination, and that they are losing their jobs or being furloughed. In that context, to work only with that small number of women is not just a missed opportunity, but potentially sets up a two-tier system for maternity leave in this country. As the people who make the laws, we send such a message to businesses regarding how they should treat pregnant women at our peril.

The Government are currently being taken to court by Pregnant Then Screwed because, when they calculated the self-employment income support scheme, they forgot about women who are self-employed and who took maternity leave. We have heard from many Members about our concerns for public life. It is not an accident that most women who enter public life, not just in this place but in local government and our Assemblies, tend to be older women who have already had children, or those who have chosen not to have them. Even in this Bill, we have yet to begin talking about fathers.

The Bill tells the lie that I was told two years ago when I was pregnant and asked for a locum to cover work in my constituency, so that my constituents would not feel short-changed by having a woman of childbearing age as their MP. However, as MPs, our employment status was too complicated to enable us to act. If we can pass a Bill in a day in this place to address that issue, we could do so much more to ensure that our public life is open to all women. It is a missed opportunity not just for local government, but for the staff who have worked with us in this building, who have terrible maternity rights.

Two years ago I fought for a locum. No other MP has been able to have that, even though I know colleagues across the House who have had terrible experiences of being pregnant and trying to get support. We cannot say, “Don’t ask, don’t tell.” On that basis, let me be clear: the Government have made commitments today but, as the suffragettes said, this must be about deeds not words.

Yes, Mr Deputy Speaker, you may be looking and me and thinking that during lockdown I have been attacking the pies a bit, and you would probably be right. But I am also pregnant with my second child. I am early on in my pregnancy. I should not have to reveal that, but I am doing so today to be clear to pregnant women around this country that they will find champions in this place, and it is not enough for us to act only for that small group of women at the top of our society. We must act for every woman to be able to take maternity leave.

We must make sure that legislation such as that proposed by the right hon. Member for Basingstoke (Mrs Miller) is given time in this House, and we must stop IPSA prevaricating, as it has done for the past two years. We must give every woman in this place the same rights that we are giving the Attorney General. Please, Paymaster General, it is time for deeds not words when it comes to maternity and paternity.

[Mr Deputy Speaker (Mr Nigel Evans)]

The very best wishes of the House to you, Stella, on your great news.

Financial Services Bill

Stella Creasy Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 13th January 2021 Commons Chamber

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

I shall speak to new clause 7 in my name and those of over 70 other Members from across the House.

This Christmas, one in four consumers used “buy now, pay later” credit to pay for their Christmas shopping. It is a simple premise: these companies allow people to spread payments for items over a series of weeks, breaking what seems a high cost up-front into chunks they can take out on their debit or credit card, with no interest charged. There is a place for this industry in the UK, just as there is a place for payday lenders like Wonga, but Wonga is no longer with us because it used technology to exploit an age-old problem that many face: too much month at the end of their money. In lending to who it did and in the way that it did, ultimately Wonga went bust, but not before it had plunged millions in the UK into debt.

The companies in question say that it is not fair to compare—that this is just how millennials want to buy. Well, as old as I am, I do know this: when it comes to credit, if the deal is too good to be true, it probably is. Compare the Market research shows that these forms of credit have been used 35% more during the pandemic as everybody shops online. Most UK retailers have Klarna, Clearpay or Laybuy now as a payment option—indeed, it is often the first one people are given. Retailers pay for their services because they know that if people use them, they will probably spend more than they are meant to—on average 30% to 40% more. Which? research shows that 24% of users spent more than they planned to because such an option was available at the checkout. As the Minister said, many then end up taking out debt to repay that debt. If it looks too good to be true, it is.

Increasingly, consumers are being caught out, committing to more spending than they can afford. Twenty-seven per cent. of users said that they used the option because they could not afford the product they were buying outright in the first place. Currently, this slips through a regulatory loophole because the companies do not charge interest and make you pay within—[Inaudible.] It means that they do not have to abide by the existing information offers that other forms of credit have to.

FCA rules require lenders, before they lend, to highlight the key costs and risks of the credit product. Contrast that with the behaviour of these companies. Shortly before Christmas, the Advertising Standards Authority upheld my complaint about adverts by Klarna that involved social media influencers encouraging followers to use Klarna to buy products to improve their mood during lockdown: if they had mental health issues, debt was the answer. On its Twitter, it tells its customers who ask about its product that it is the “smoother” way to shop. You can get

“what you want, when you want”—

with no mention of what happens if you do not pay or checking of whether you can afford to repay. And because it is not regulated, there is no redress through the Financial Ombudsman Service either.

Ministers say, “Let’s wait for the FCA report”, and that they are ready to take swift and proportionate action. That is exactly what new clause 7 does. It ensures that whatever comes out of that review will get the parliamentary time to be put into practice within three months of the Bill becoming law. If we leave it longer, waiting and waiting as we did with the payday lenders, our constituents will suffer. Even the companies themselves, just like turkeys who think Christmas is a good idea, say that regulation should happen.

So much of the history of credit regulation in this country has been one of delay and dither—and debt as a result for our constituents. Constituents are now living through a time when millions are furloughed and many more are facing redundancy, so their income will get lower, not higher. I know that the Minister recognises that there is a problem here. I brought forward new clause 7 so that we can put his words into practice and make sure that it is not our constituents who end up paying the price later.

[Madam Deputy Speaker (Dame Rosie Winterton)]

We come to Angela Richardson on a three-minute limit.

Financial Services Bill (Eleventh sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 11th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

I stress that that is very different from a consumer going to their credit card provider and asking for an increase in their credit limit; of course, that should be available to consumers. We are not being prescriptive on personal freedom, but we are saying that this could go some way to redressing the imbalance of power and information between financial service providers and their consumers. That is why we have tabled the new clause.

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

It is a pleasure to serve under your chairmanship, Mr Davies, as ever, for the last time on this Bill. Let us make it a good one. I will try to keep it lively and maybe capture the attention of everybody on the Committee about the things we can do.

The new clauses provide the moment to finally talk about the big beast in this Bill: the Financial Conduct Authority. I say “big beast”, because, as someone who has tracked not only high-cost credit, but credit companies—as I know the Minister has for many years—I sometimes feel like Bob Peck in “Jurassic Park”, who played the warden, Robert Muldoon, who tried to warn people about the velociraptors, but was also supremely impressed by the way in which they evolved to be able to kill. In this case it is about evolving to be able to exploit.

It matters that we take a careful look at what the FCA is doing, because the FCA is our constituents’ best defence against the velociraptors of the credit industries in this country. I use “credit industries” widely, because for me this is not just about the high-cost credit industry. However, in supporting the new clauses, I want to share with the Committee the experiences around the high-cost credit industry and, in particular, the pay-day loan sector, because I think they speak to the challenges with the Financial Conduct Authority and why we need to amend the Bill, to ensure that as we give the FCA more powers, it truly has our constituents’ interests at the forefront of its mind.

I do not doubt the impact that the FCA has had. I want to put that on record, because the Minister and I have talked for a long time about my concerns about the FCA. I acknowledge that it has made progress. My point is about the pace at which it has made progress, about cutting through the stand-off that we sometimes see, whereby people recognise that this is a problematic type of credit or, as my right hon. Friend the shadow Minister has talked about, where issues arise for our constituents—the people who come into our constituency offices and tell us about their ongoing battles—and about ensuring that we do not just give them protection, which means avenues for redress, but actually prevent those problems. I believe that the FCA was set up to prevent problems, but if we look at its track record in some of those problem areas, we see where delays in dealing with them has led to our constituents paying the price.

Bear with me, Committee; I think it is worth sharing that example, because it explains why these amendments make sense. Indeed, I believe the Minister agrees with me on this. A bit like earlier, with the lead generators, I am sure he already has a folder full of examples of where the FCA has done brilliant work in tackling consumer detriment. In fact, I can see all the paper—goodness me, all the trees that have gone into that! However, I know that he wants the FCA to be more agile and does not want to have people like me continually coming to him and him knowing that there is a problem, but seeing this trade-off, as this aspect is overthought almost, with too much emphasis on the unintended consequences of acting and no emphasis on the unintended consequences of not acting on some of these issues. In order to cut through that, these amendments would give a clear direction to the FCA about what consumer detriment is, why and how it needs to act, and the particular issue it needs to take into account when it comes to debt.

On Tuesday, we talked a lot in this Committee about the debts already in our communities and the debts to come, which is why this is an urgent issue that cannot really be dealt with in another review or consultation, which will go on for 18 months, because by then, in every one of our constituencies, too many people will have lost their jobs and possibly their homes, and will be in what we are calling problem debt for decades to come. Indeed, I believe this Committee is already having a positive impact on that conversation, because on Tuesday we talked about the importance of making problem debt as much of an issue for the sidebar of shame in the Daily Mail as Kim Kardashian’s derrière, and last night I saw that the Daily Mail had started talking about the horror of middle-class people having to go to food banks.

Clearly we are starting that conversation in our country, but we need to do much more. Why do we need to do much more? Because it took too long to deal with the payday lending industry. In 2010, when I was first elected, I already knew many colleagues in this place were seeing these companies on their high streets and the problems with the eye-watering interest rates, where people thought they had missed where the decimal point was. Yet nothing was done for years, and those companies exploded, not just in our high streets but online, and our constituents got into huge amounts of debt. I know that the Minister agrees with me that it took too long. I know, too, that the Minister is not his predecessor, who, when I first went to see him about payday lending, literally patted me on the back, congratulated me on finding an issue that I could issue a press release to my local community about and sent me on my way. I know he is not like that; he recognises when there is a problem. However, if he looks at the regulatory history of the FSA on this issue, he will also see that there was a problem.

Let me set that out with companies that people will have heard of. They will have heard of Wonga, QuickQuid and BrightHouse, all of which operate in constituencies across the country. All these companies have collapsed or are in financial difficulty because of the debts they owe to their customers, our constituents, because of the way in which they lent them money on credit. They have not collapsed as a result of the work of the FCA, but because of the work of the ombudsman. In 2014, when Wonga was clearly a problem for so many of our constituents, the FCA agreed a redress scheme for 375 customers and announced that it had appointed a skilled person to monitor the new lending decisions that Wonga was going to make, to ensure that the issue was sorted. In November 2015, the FCA agreed a redress scheme for 4,000 QuickQuid customers worth £1.7 million, and in October 2017 it agreed a £14.8 million redress scheme for 250,000 BrightHouse customers in respect of 384 agreements for lending that may not have been affordable.

That is the critical issue here. At every point, the FCA has acted to look at the affordability of the loans. However—given it is that time of year—it does not take a rocket scientist to work out that if we ask turkeys to decide what is on the menu for Christmas, they will often say that a nut roast is better, and that is what happens when we ask these companies whether a loan is affordable. They would tell their clients that they could afford these loans, because the way they made their money was to re-lend. It was not for someone to borrow from them and pay it all back—it was for that person to borrow from them and get into a cycle of continually borrowing from them, because they would make a lot more money. Once a person was hooked, they would borrow and borrow. That was the decision about affordability.

At various points the FCA has been brought into these companies to determine whether they were making good affordability decisions—whether, in layman’s terms, they were ripping off our constituents. At every point, that affordability decision did not meet the needs of those customers. How do we know that? Because the ombudsman then had to interfere to help people who were in debt. The result was the same: the lenders all fell into administration, not because of the action of the FCA but because the ombudsman was making them repay our constituents, who had been ripped off by them.

--- Later in debate ---

[John Glen]

I thank the hon. Ladies and the right hon. Gentleman for their speeches, to which I have listened carefully. I will try to address fully the 10 new clauses that have been tabled. In essence, they relate to the effectiveness of the FCA’s oversight; that is the substantive point behind them.

The lead new clause is new clause 6, which has two functions. Subsection (2) requires the FCA to have explicit regard for vulnerable consumers when discharging its consumer protection objective, and subsection (3) introduces a statutory requirement for the FCA to make rules requiring authorised persons to adhere to a duty of care when providing a product or service.

UK financial services firms’ treatment of their customers is governed by the FCA in its principles of business, as well as specific requirements in its handbook. The FCA’s principles for businesses require firms to conduct their business with due skill, care and diligence, and to pay due regard to the interests of their customers and treat them fairly. The FCA already has recourse to disciplinary action against firms that breach the principles.

The FCA has already announced that it will undertake work to address potential deficiencies in consumer protection, in particular by reference to its principles for businesses. Although the coronavirus pandemic has caused the FCA to reprioritise its resources and delay certain pieces of work, including the next formal stage of this work, delaying these initiatives has ensured that firms are able to focus on supporting their customers, including the most vulnerable, during this difficult period.

I draw attention to the second purpose of new clause 6, alongside new clauses 38 and 39, which require the FCA to introduce a duty of care. A number of other amendments here also relate to the duty of care.

The Government believe that, as the FCA is already taking steps to ensure that consumers are treated fairly and financial services firms are obliged to exercise due care and regard when offering products, services and advice, a statutory duty of care requirement is not necessary. I have already set out a number of actions that the FCA is taking to ensure that customers are properly protected.

On new clause 39 in particular, the Government believe that the scope, which applies to all financial services providers, is inappropriately broad. For example, it is unclear whether that would include persons exempt under the exemptions order, which includes entities ranging from central banks to any employer offering a cycle-to-work scheme. Furthermore, there is no indication of the territorial scope of the financial services provider. Assuming that the duty of care would apply only to actions being done within the UK, the vagueness is still likely to lead to enforcement difficulties if a provider is based outside the UK.

Finally, it is inappropriate to apply the provisions to all financial services providers as no assessment has been made, in relation to unauthorised firms, of the extent to which the existing common law and other consumer protection legislation is or is not sufficient to achieve the right level of consumer protection. For example, where providers are subject to supervision or oversight by other professional bodies, as is the case with professional firms, it is unclear how this proposal would interact with the remit of those bodies who may be better placed to assess matters relevant to duties of care.

New clause 40 would require the Treasury to review at least once a year the case for instructing the FCA to introduce a duty of care for all financial services providers. The Treasury will of course keep this question under consideration. However, it is disproportionate to set this requirement in statute. I have already set out the actions that the FCA is taking to ensure that customers are properly protected.

I want to pause here and note that I have enormous respect for the perspectives of the hon. Member for Walthamstow on this issue. I do not have her encyclopaedic knowledge of dinosaur names, but I do respect her engagement on the issue. I have engaged very closely with the FCA. I recognise that she is still dissatisfied with where things have got to and she makes some reasonable points, on which I am happy to continue the dialogue, but there have been significant changes in recent months with respect to the work that is going on—that is live at present. I suspect she will not be satisfied, but let me carry on and then we can see where we get to at the end of this.

On new clause 41, the Government believe that the FCA, as the independent conduct regulator for the financial services industry, is best placed to judge the merits of a duty of care for the financial services industry. It would therefore be inappropriate for the Treasury to instruct it to impose a duty of care on authorised firms, although that dialogue is ongoing.

On new clause 42, the FCA has already published a feedback statement following its discussion paper on duty of care last year. The FCA will also publicise the findings of its upcoming work on how to address potential deficiencies in consumer protection. Therefore, the Government view is that it would be unnecessary at this point for the Treasury to report on the FCA’s position on the need for a duty of care.

The Government believe that there are sufficient protections in place without expanding the FCA’s statutory consumer protection objective or introducing a statutory duty of care, but I reassure members of the Committee that we will continue to work closely with the FCA to keep this issue under review—I am not saying “No, never.”

New clause 15 would require the FCA to have explicit regard to the prevention of consumer detriment, including the promotion of unaffordable debt, when discharging its consumer protection objective. The Government believe that the FCA, as the UK’s independent conduct regulator, is best placed to judge how to protect financial services consumers from detriment, including that which arises from the promotion of unaffordable debt. The existing legislation accounts for the prevention of consumer detriment as a result of section 1C(2)(e), which outlines

“the general principle that those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate having regard to the degree of risk involved…and the capabilities of the consumers in question”.

[Stella Creasy]

I am conscious of time, but approximately 1 million households that could ill afford it have lost out on about £1 billion of compensation from Wonga and QuickQuid. Does the Minister really believe that under the existing regime that he is defending, there has been sufficient recognition of what it means to consumers when it goes wrong, and that there is no need for change?

Financial Services Bill (Twelfth sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 12th sitting: House of Commons
Thursday 3rd December 2020 Public Bill Committees

[Abena Oppong-Asare]

I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

New Clause 16

Consumer credit: extension of FCA rule-making duty

“(1) Section 137C of the Financial Services and Markets Act 2000 shall be amended as follows.

(2) In subsection (1A), substitute

‘one or more specified descriptions of regulated’

for ‘all forms of consumer’.”—(Stella Creasy.)

This new clause would extend the responsibility of the FCA to make rules with a view to securing an appropriate degree of protection for borrowers against excessive charges to all forms of consumer credit.

Brought up, and read the First time.

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

I beg to move, That the clause be read a Second time.

[The Chair]

With this it will be convenient to discuss the following:

New clause 17—Regulation of buy-now-pay-later firms—

“The Treasury must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non interest-bearing elements

to be regulated by the FCA.”

This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

New clause 22—Cost of credit: FCA assessment—

“In Schedule 6 of the Financial Services and Markets Act 2000 after paragraph 2F(3) insert—

‘(4) When considering the business model, the Financial Conduct Authority must have regard to the interests of consumers, in particular—

(a) the proportion of a firm’s revenues that are to be derived from re-lending, and

(b) whether customers are likely to be charged a total cost of credit in excess of one hundred percent of the amount borrowed both on the basis of the initial credit terms or following relending activities.

(5) Where the Financial Conduct Authority’s assessment concludes that a business model poses a significant risk that customers will be charged a total cost of credit in excess of one hundred percent of the amount borrowed, then the threshold condition will not be met.’”

This new clause would ensure that the Financial Conduct Authority assesses the business models of firms and does not allow excessive relending activity to take place, or for firms to be granted permission if there is a significant risk of customers paying more in interest, fees and charges, than the amount they have borrowed.

[Stella Creasy]

It is a pleasure to serve under your chairmanship this afternoon, Dr Huq—all of us who have one of those titles but never really use it probably ought to, not least with our bank managers on issues such as this.

The new clauses we discussed this morning were about when the FCA, having been involved with a company, has let down our constituents, and that is why we pushed new clause 21 to a vote: fundamentally, there are thousands of people in this country, many of them our constituents, who will be denied compensation because the companies that owe them compensation have gone into administration on the FCA’s watch.

These new clauses are about how we can get proper consumer protection so that we do not get into those positions at all, as well as taking on board what we have learned in the past seven years about what actually works to protect consumers, and the reality is that it is capping. Capping the costs of credit has been a very effective, cheap and clear form of regulation, which has benefited industry and consumer alike. These new clauses are about giving the FCA the power to use that evidence to help to protect our consumers, because, sadly, the detriment that made capping payday lending such an effective thing to do is now appearing in many other industries. That speaks to the whack-a-mole challenge that we have with credit in this country.

As I said this morning, the challenge is that the FCA moves very slowly, but this industry—credit in its broadest sense, not just high-cost credit—moves very quickly. We know that what has stopped consumer detriment is being able to cap what these companies can charge, and we know that most of all from the payday lending industry. The payday lending industry still exists in this country, but the reason we have not had people turning up to our surgeries, or seen these companies on our high streets or indeed in our inboxes, is that regulation has meant that people are not being exploited by them in the way that they were. The companies can still operate—those that want to lend to people in a short-term and effective way without exploiting them. However, the point at which people get into debt and cannot get out of it—that business model that was about hooking people in and keeping them paying—has ended, because of the cap.

In this country, if someone takes out a payday loan, they will never pay back more than double what they borrowed, including the interest fees and the charges. That is a really important point in these new clauses, because the whole point was capping not just interest rates, but the whole cost of a loan. As I said earlier, exploitation in the credit industry is like water: it finds the loopholes. These new clauses speak to other forms of loopholes.

--- Later in debate ---

[Alison Thewliss (Glasgow Central) (SNP)]

The hon. Lady is making a very good point. Is she aware that the Young Women’s Trust has suggested that 1.5 million young women have lost income during the pandemic?

[Stella Creasy]

Absolutely. We know who such companies are targeting, and they are doing so deliberately. I hate to say this, as I do want to win over the Committee, but we might not be their target audience at this point in our lives, because we might not be actively reading the social influencer media posts. I might be completely wrong—I am sure some Government Members are regularly on their Instagram accounts looking at posts by ASOS.

Some 20% of those young people say they have missed a payment in the last year—the figure has doubled in the last year—because they thought that a purchase would cost a certain amount and that they had an income, but that income has gone. The companies will say that they are very good to their customers because they do not lend more than people need and they do not charge interest—the companies’ interest is in people paying back the money—but those companies go silent on what they do when people do not pay back. What happens to people’s credit references? How do they chase money? Do they use debt collection agencies?

Those companies are growing rapidly, just as the payday lending industry did. We watched that happen and, in that Cassandra-like way, all tried to warn of it, but it took too long for us to act. In 2019 Klarna was boasting that it had signed a partnership with a new merchant every eight minutes in this country. By the end of 2019, 6 million people had used its product, and it said that 55,000 were using it weekly. Imagine what it is like now, with people having been stuck at home and stuck on their phones.

The Money and Mental Health Policy Institute found that more than 3 million people with mental health problems have found it harder during the pandemic to control their online spending, and two in five said the BNPL industry has been “harder to resist”. Because it is not regulated, it does not have to follow any of the rules we might want to point to that protect consumers. That is why we see all those adverts saying, “No interest, no fees—don’t worry about it.” The industry does not have to provide the normal financial information we see in other forms of credit because it is not regulated in that way.

Just as with the payday loan industry, as soon as we started talking about these companies, along came the offers of dinners and discussions and talks, where the industry says it is in fact a misunderstood new technology. Those of us who are not regularly on the internet have obviously missed them.

[Mr McFadden]

rose—

[Stella Creasy]

I am sure the shadow Minister is about to tell us about his Instagram account.

[Mr McFadden]

No, I am not, but I am interested to hear that my hon. Friend got an offer of dinner. All I got was an email.

[Stella Creasy]

Sadly, during the pandemic, none of us has been able to take up any of those offers to explain our concerns to these companies directly, as opposed to on Zoom. It is a simple concern: the way in which these products are marketed encourages people to spend money as a way of dealing with the emotional and social impacts of the pandemic. The adverts, using those social influencers, say, “When you’re feeling low, sat at home by yourself with nowhere to go, there is something to make you feel better.” Essentially, the message is, “Get into debt. Don’t worry about it. You can spread the payments. Don’t worry about whether you can afford it.” They get away with saying and doing that because they are not covered by the regulations.

I know the Minister is looking at this issue—he said so—and that the FCA is doing so. I have made a series of complaints to organisations such as the Advertising Standards Authority about these issues, because, just as with payday lending, we have seen the rapid expansion of these companies. My worry is that if we take 18 months it could be too late in terms of consumer detriment. I do not doubt these companies when they say they want to have a sustainable business model, but it is for us in this place, in crafting the Bill, to decide what sustainability is and how they make their money. Otherwise, we are handing them our young consumers, in particular, on a plate to be exploited. The new clauses speak to those issues.

New clause 16 would ensure that all forms of consumer credit are covered by regulation, because the gap that Klarna and company have fallen into is arguing that they are not a form of consumer credit so they do not need to be regulated. We should always apply a sniff test: if somebody is giving us money to buy things on tick, that is a form of credit. If it walks like a duck and talks like a duck, it should be regulated like ducks should—see, we have moved on from the dinosaurs to ducks.

New clause 17 would make rules explicitly about the buy now, pay later industry. I do not believe we can wait another year or so before we do something. It makes sense to bring the industry under the FCA’s umbrella so that the FCA can act. The new clause would ensure that Ministers could act based on the industry’s actions, given the risks that come from them. Unlike customers of Amigo Loans or indeed the remaining payday loan industry—or even the credit card industry—nobody who uses buy now, pay later can go to the ombudsman for redress, so what do they do if they get into difficulty? I pay tribute to Alice Tapper from Go Fund Yourself, who has been collecting the evidence about young people getting into debt from unaffordable forms of spending with such companies and not knowing how to get out of it.

--- Later in debate ---

[The Chair]

I call Stella Creasy PhD.

[Stella Creasy]

As well as winner of a Titmuss prize, I think you will find, Dr Huq. My father got excited that I meant Abi, and my mother thought I meant Fred—it was neither.

I listened to the Minister, and was all eerily familiar. It was like the conversations that we had on payday lending, when everyone mentioned the then Office of Fair Trading. I appreciate that that conversation was not with the Minister, but the outcome for our constituents will be the same. It is Christmas; does he think that Klarna, Clearpay and Laybuy will not be heavily pressing their product on our constituents?

We could vote to send a message that change will come in the next couple of months. We could sound the alarm that we did not sound on payday lending until millions of people were in debt. The Minister knows that the FCA has been, and will continue to be, timid about using capping, because it is looking for political leadership to say that capping is the right to do.

I am happy to withdraw new clause 16, but I will press new clause 17 to a vote because I think we should send a message that we are listening to the consumers who are already in debt with those buy-now-pay-later companies. It is an incredibly reasonable clause that says that we will regulate and not leave people hanging. The Minister has not given any succour to that idea. He has talked about a review and the possibility of some consideration later, but that is just too late. Too many people are already in debt with those companies. I hope, if the Minister will not listen to me, that he will at least listen to Martin Lewis and Alice Tapper, who have been trying to help people in financial difficulty because they cannot go to the ombudsman. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 17

Regulation of buy-now-pay-later firms

“The Treasury must by regulations make provision for—

(a) buy-now-pay-later credit services, and

(b) other lending services that have non interest-bearing elements

to be regulated by the FCA.”—(Stella Creasy.)

This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.

Brought up, and read the First time.

Question proposed, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Stella Creasy]

I beg to move, That the clause be read a Second time.

I do not intend to speak to this new clause for very long because my case has already been made. This is a simple clause about the powers of the FCA to do investigations and about who has the power to require it to do them—currently, that is the Treasury. The new clause suggests that a Select Committee should be able to do that. It would most likely be the Treasury Committee, but the clause says “a relevant Select Committee”, because the issues may concern the Business, Energy and Industrial Strategy Committee.

The Minister will understand my disappointment and frustration that he has not offered any opportunity to look at whether amendments or investigations are needed. Change is likely to come to our credit industry in the time that this Bill is before Parliament. If the Treasury will not act, it falls to all of us in Parliament to ask where else we can scrutinise how our constituents are being lent to and whether they are being ripped off.

--- Later in debate ---

[John Glen]

The change proposed under this new clause to allow Select Committees to require the FCA to launch investigations in situations where there is suspected regulatory failure would mirror powers that are already available to the Treasury. As I set out earlier, section 77 of the Financial Services Act 2012 enables the Treasury to require the regulators to conduct investigations in cases of suspected regulatory failure in circumstances where it does not appear to the Treasury that the regulators are already doing so under, for example, the regulators’ power in section 73 of that Act.

The Treasury has used those powers to require the PRA and FCA to launch investigations where it considers that appropriate. As Members are aware, the Treasury Committee had the opportunity to scrutinise the investigation that was carried out into the Co-operative Bank in 2018, and it made a number of recommendations that were accepted by the PRA.

I am therefore confident that investigations under existing section 77 powers are useful in holding regulators to account, ensuring proper scrutiny of them and conducting investigators in the public interest. In determining whether an investigation is in the public interest, the Treasury will also consider the views of the relevant Select Committee in reaching its decision.

The Government agree that Parliament should play an important strategic role in interrogating, debating and testing the overall direction of policy for financial services. The Treasury is confident that proper mechanisms exist to allow the Treasury Committee to scrutinise and comment on investigations, as is right and proper. Ultimately, there is nothing to stop a relevant Select Committee launching its own investigation into an issue, calling witnesses, gathering evidence and making recommendations. That is a decision for the Committee.

[Stella Creasy]

Earlier today, we talked about the fact that the Treasury instructed the FCA to get involved in the debate around payday lending. Indeed, it went into companies such as Wonga and QuickQuid and set out redress schemes. We know that they were ineffective because it ended up with the ombudsman getting involved, and it was only then that those companies went into administration because it was revealed how much they owed to our constituents. In circumstances such as that, where no doubt there would be difficult conversations about what role the Treasury and the FCA played in the process, who watches the watchmen? Who would instruct that inquiry? At the moment, that inquiry has not happened, so we do not know why that redress scheme did not work. There is no sign that the FCA wants that. Is the Minister saying that he would instruct that so that we can get to the bottom of why the redress scheme did not work? If it did not, it seems rather apposite to have an independent third party that could look at issues such as that on behalf of consumers.

[John Glen]

I am very happy to look at that particular case. The point I am making is that there is a mechanism to compel the FCA to investigate, and the Treasury does not do that in isolation from the its wider accountability to Parliament, individual Members of Parliament and the Treasury Committee. I am very happy to examine the point that the hon. Lady has made and I will look at it carefully, but that provision exists. Frankly, I cannot and would never expect to act in isolation and without accountability to Parliament. Given the powers available to the Treasury, which can be used in that context, and the opportunity for scrutiny by Select Committees, I ask that this new clause be withdrawn.

[Stella Creasy]

If the Minister is saying that he is going to instruct a redress investigation, I will happily withdraw the new clause. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 21

Assessment of risks of consumer detriment

“(1) Schedule 6 of the Financial Services and Markets Act (2000) is amended as follows.

(2) After paragraph 2D(2)(c) insert—

‘(d) the risks of consumer detriment associated with the firm’s business model and the likelihood for compensation claims from consumers.’

(3) After paragraph 2D(3), insert—

‘(3ZA) When assessing whether the firm has appropriate financial resources to meet the risks of consumer detriment and the likelihood of compensation claims from consumers, the Financial Conduct Authority must ensure that, at all times, firms hold sufficient financial resources to meet any likely compensation claims from customers in full.’”—(Stella Creasy.)

This new clause would ensure that the FCA considers the likelihood of consumer detriment arising from the firm’s business model prior to, and following, authorisation, and that firm’s hold sufficient financial resources to meet potential compensation claims from customers in full.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

--- Later in debate ---

Brought up, and read the First time.

[Stella Creasy]

I beg to move, That the clause be read a Second time.

This is the final new clause for the final bit of the Bill, so I am hoping that this time round, given the season, the Minister will withdraw his Scrooge-like refusal to amend the Bill, not least because I genuinely think that on this new clause and this area of policy he probably agrees and recognises that there has been an oversight in its consideration. I also hope that Government Members will support the new clause, because it is surely what they came into office to do—to remove the red tape and bureaucracy that holds back enterprising, entrepreneurial people in our local communities.

I speak as a proud Co-op as well as Labour MP, and this new clause is about co-operative banking—perhaps not what people might first think of when they talk about co-operative banking, but it is about how mutual banks are set up. Local mission-led mutual banks are common in other parts of the world, but not so much here in the UK. They are, however, something that people are increasingly looking at and trying to support, particularly around Greater Manchester and elsewhere, and local leaders in Liverpool and Preston have plans to establish such institutions as well.

As people would understand, is quite difficult to start a bank: there are often requirements, even for a standard for-profit shareholder-controlled model. Much of the difficulty boils down to the challenges involved in raising the amount of equity capital that regulators require for institutions before they will issue an operating licence. That is what we are talking about today. Frankly, someone would need to raise millions in equity to get a banking licence.

The problem for mutual banks is that many investors struggle to understand what a mutual is. Ultimately, the mutual might offer good long-term returns, but there are no opportunities for those bumper dividends or speculative gains that people might traditionally associate with banking. That is part of a model that invests in communities, supports people and has people as part of the process. People think about credit unions; this is about what the 21st century co-operative banking models might be.

One of the challenges holding back the co-op movement is an antiquated piece of legislation. Let me be clear: the passage of the Co-operative and Community Benefit Societies Act 2014 was very welcome and helped to level the playing field. The capital requirements regulations are a hangover from Disraeli’s time. Those provisions can be traced back to the Industrial and Provident Societies Act 1876. I am talking about simply removing them from the legislation, because the requirements that they make are already covered for co-operative banks by other forms of prudential regulation in the Bill. Their existence creates an artificial level of complexity for the setting up of co-operative banks.

I do not want to go into too much detail, but the law currently prevents co-operative societies from being banks if they have what is called withdrawable share capital. That restriction was imposed in 1876; things have moved on. First, we now separate and have strong regulation of banks’ capital adequacies, as we discussed earlier in the Bill process. Furthermore, we have clear and specific regulation setting out how co-operative withdrawable share capital can safely be used to help to capitalise banks. It is firmly established today that societies retain the absolute right to suspend share withdrawals, giving their capital the essential features of equity under international and UK accounting standards.

If mutual banks were able to add withdrawable share capital to their mix, that would help to enable them to diversify their offer to investors and therefore broaden the range of investors to whom they could be marketed. It would open up significant opportunities for co-operative banks to get off the ground, because they would have the ability to raise the equity that they need to get a banking licence. Surely, Members from all parties can agree, in good Christmas cheer, that such competition in our banking sector would be a good thing, so it would also be a good thing to remove this archaic piece of legislation on capital equity from the legislation book.

The Bill is about financial services, and the co-operatives throughout the country want to offer financial services. The Minister may still be drawing on pot 3, on the Ghosts of Christmas past and present, but on the Ghost of Christmas future, in the Lords or on Report, might he give us a glimmer of hope, Tiny Tim-style, that he will listen to the co-operative banking sector? They have written to him in support of this amendment and I know he has met representatives from the sector to look at what more he can do to support them. I hope he will remove these pieces of red tape and take back control of the mutual sector this Christmas.

[John Glen]

I am grateful for the enticement to be generous, but I was quite generous on new clause 8. I gave some positive indications about the intentions of the Government, and I look carefully at everything that is said by Members from across the Committee. I am very engaged with the mutual banks and with the co-operative sector generally, which I will say more about in a moment.

This amendment aims to remove the restriction which prevents co-operative societies holding withdrawable share capital from carrying out the business of banking. I share the interest of the hon. Member for Walthamstow in how the mutual model of financial services can add much-needed diversity and competition to the sector. Treasury officials and I have had constructive conversations with individuals seeking to set up regional mutual banks, and I look forward to continuing those. I will not mention their names, because they are going through different regulatory processes, and I am told that that is sensitive and so I should not do so. I try to help them.

Ensuring that banks hold the appropriate capital is critical to a stable and functioning financial system. It is therefore important that we consider any legislative changes in this area. I have thought about the amendment, and there are several immediate concerns about the potential risks to financial stability and consumer protection, which the Government have a duty to consider.

I will set out our most pressing concerns. As the global financial crisis highlighted, sufficient regulatory capital is needed by financial institutions as a source of resilience and to ensure losses can be effectively absorbed. To ensure capital fulfils this function, capital held by banks must always be readily available to absorb losses, which cannot be the case where investors can withdraw capital. Enabling co-operative banks to hold withdrawable share capital, as this amendment intends, could place consumer deposits at risk, create an inconsistent regulatory regime between co-operative and non-co-operative banks, and cause risks to the stability of the financial system, if it led to banks being inadequately or inappropriately capitalised.

I have had representations from the prospective regional mutual banks sector that they would seek to use this amendment to issue additional tier 1 capital instruments, or contingent convertible bonds. These are complex instruments that would need further thought to ensure they fulfilled their purpose within the legislative framework for co-operatives. It is also unlikely that the ability to raise additional tier 1 capital would be very beneficial to regional mutual banks currently, given they are at the early stages of their development where raising core equity capital is the priority.

I also note that the activity of deposit taking, in the form of withdrawable share capital that co-operatives and community benefit societies carry out under the present legislation, is subject to certain exemptions from regulatory requirements, which are applicable to other institutions carrying out business activities. These may no longer be appropriate if they were generally allowed to carry out the business of banking.

In conclusion, the Government believe that the fundamental issue is that it is not appropriate for deposit takers to rely on withdrawable share capital. In any case, certainly a measure like this would need further consideration of the legislative and regulatory implications rather than being introduced by way of amendment. I will continue to look carefully at these matters with the sector, but in the context of what I have said I ask the hon. Member for Walthamstow to withdraw her amendment.

[Stella Creasy]

I am so sorry to hear that the Minister is still listening to Marley rather than Bob Cratchit about the true spirit of Christmas. This is legislation from the 1800s. It is about £400 worth of share capital. It is outdated and needs a little more Christmas cheer. The Minister said that he would commit to working with the sector to get this amendment right, and if amended this Bill could be great. I think I will push the new clause to a vote—if nothing else, to put on the record that there are those of us who understand that co-ops want to move into the 21st century—and wish everyone a merry Christmas at the same time.

Question put, That the clause be read a Second time.

Financial Services Bill (Tenth sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 10th sitting: House of Commons
Tuesday 1st December 2020 Public Bill Committees

[Mr McFadden]

As I said, I do not intend to press the amendment today. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment 34, in clause 32, page 38, line 23, at end insert—

“(2A) After subsection (3) insert—

(3A) Where, by virtue of subsection 2, the Secretary of State makes regulations establishing a debt respite scheme, the time period that the debtor protections provided for by virtue of section 6(2)(a) and section 6(2)(b) shall be no less than 120 days.”

This amendment would require the breathing space to provide debtors with a minimum of 120 days protection from the accrual of further interest and charges and enforcement action.

[The Chair]

With this it will be convenient to discuss new clause 11—Extension of the Breathing Space and Mental Health Crisis Moratorium—

“(1) The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 shall be amended as follows.

(2) In paragraph 1(2), for ‘4th May 2021’ substitute ‘31st January 2021’.

(3) In paragraph 26(2), for ‘60 days’ substitute ‘12 months’.”

This new clause would bring forward the start date of the Debt Respite Scheme and extend the duration of the Breathing Space Moratorium from 60 days to 12 months.

[Stella Creasy]

It is, as ever, a pleasure to serve under your chairmanship, Mr Davies, and a pleasure to have this debate. I see the Minister is already smiling. I know he has been looking forward to this debate, because he and I have talked for some time now about how best to help our constituents with debt.

As a nation, we find it easier to talk about anything other than money; even our intimate relations tend to get more coverage in our national press now than the state of our bank balances. Each of us, as representatives in this place, will know from our surgeries how critical this issue is for our country and how important it is to get right the measures to help people with their financial position, because the honest truth is that this is a country not waving but drowning. We all see it in our constituencies.

Mindful of what you said about scope, Mr Davies, in speaking to the amendments I will first set out why I agree with the Government absolutely that we need a breathing space scheme. The amendments come from a desire to work with the Minister to get that scheme right. I know he shares my concern to get these policies right, because we see in our communities the damage—the financial damage, the social damage and the mental health damage—caused by problem debt.

I do not think we can start to have the conversation about whether the Bill needs amending until we define what we mean by problem debt, which is a term that we use interchangeably in debates and discussions. We know that when people do not talk about their debts, they can get into all sorts of debt without thinking that it is a problem until it is too late. All of us, whether we have been an MP for a year, 10 years or 20 years, will have encountered the person who comes to a surgery and says, “I’m going to be evicted next week. Can you help me save my house?” We know it is too late, because they have got into a level of debt they cannot get out of, but they did not see it as a problem.

One of the things that we must do in this place is to make it as popular to talk about our debts and the problems that debt can create, how people can be good with money and how we can help people be good with money—and, when it comes to the Financial Conduct Authority, how we make sure it is a fair fight—as it is to talk about people’s intimate relations. Indeed, the sidebar of shame in the Daily Mail should be more about companies seeking to exploit our constituents by offering them poor levels of debt that we want the FCA to regulate than the size of Kim Kardashian’s derrière. I put that out there as something we should be more concerned about.

Problem debt has been an issue for generations, and over the past decade it has got a lot worse. It is important that the Government are proposing a breathing space, because we can layer on top of that debt the Monty Python foot that is covid and the disruption to people’s lives and livelihoods. I know that some Members would rather be in that debate today than in this one, but I hope I can convince them that this debate in Committee and getting these measures right is the most important place we can be.

As a country we do not talk about problem debt. We do not even see it as a problem, but the problems that will face our constituents and communities in the coming months will be horrific. Let us consider how almost half the UK adult population went into 2020 with debt already hanging over their head, with almost 5 million of our fellow citizens owing more than £10,000 in credit and loans alone. That is unsecured personal debt. This is not about mortgages and housing debt; it is about people having too much month at the end of their money, and people finding ways to deal with that that do not seem to them to be a problem because, if they can keep cycling things through the cards and keep borrowing and making repayments, they can probably keep going.

The nation went into coronavirus already in hock in ways that make people financially vulnerable, but without an awareness of what that might mean for their communities. When asked about their debts at the start of 2020, 40% of those polled said the debt was due to normal living expenses. One thing that we need to knock on the head is the fact in this country debt is not about people buying flash cars and tellies, much though that sidebar of shame might like to make us think it is. It is about people trying to put food on the table and keep the car going so they can get to work, and yes, there are people putting their mortgage on their credit cards.

When I talk about problem debt, I do not just mean the Wongas of this world. I mean the credit card companies that have a sort of respectability because they have helped to keep people going. I am not against borrowing or any form of credit at all, but when we know how the country and our constituents were leveraged at the start of this year, and we see what has happened this year, getting right our proposals to help them, because debt will be a problem, becomes all the more important.

[Alison Thewliss (Glasgow Central) (SNP)]

Does the hon. Lady agree with me that there is a big problem around catalogues and debt for basics such as school clothes, trainers and jackets? People are building up debt for the essentials of life and are told they can pay it back in tiny amounts, but it is over a very long period, which means the debt is never really cleared.

[Stella Creasy]

I completely agree. Many a time have I had conversations with constituents about how they buy things, and they do not see it as a problem. They have no other option, so they use the catalogues and do not look at the interest rates. What they need is not more financial education, but more options. The brutal reality is that it is very expensive to be poor in this country. That is why it matters that the things we do to help them if they get into difficulty work.

[Ms Angela Eagle (Wallasey) (Lab)]

Does my hon. Friend agree that when it comes to debt and interest payments incurred—the price of having that debt—the concept of an unfair contract is far too lax on those who lend the money and far too harsh on those whose circumstances often, as the hon. Lady just mentioned, mean that they have to borrow?

[Stella Creasy]

My hon. Friend knows that I completely agree with her. She also knows that she is tempting me to discuss other amendments that I have tabled about that fair fight, and I do not want to disrespect you, Mr Davies, or the Clerk in trying to keep us to the issue at hand. My point is that when we talk about a respite scheme to help people with problem debt, we have to be clear about what we mean by problem debt and whether people recognise that they have a problem. The point of a breathing space is to be able to address that problem.

The hon. Member for Edinburgh West (Christine Jardine) and I tabled the amendments because we recognise that people do not necessarily see things as a problem until it is too late, so when we construct measures to help people in these difficult places, we have to be able to work with them and where they are at, and how people deal with debt. We might look at something and say, “That is an unsustainable financial situation that you have got yourself into,” but our constituents not see it that way.

I said at the start that it was worth thinking about where this country stood at the start of the year. There are conflicting figures, which I am sure the Minister has been looking at. I know he shares my concern about consumer debt and consumer credit. Bank of England data shows that during the coronavirus crisis people have actually been trying to pay down their debts—frankly, they have been stuck at home, so they have money and they think, “Well, I’ll try to pay down my debts.” Since March this year, £15.6 billion of household debt has been repaid, and credit card debt has fallen by 13% in the last year.

--- Later in debate ---

[Mr McFadden]

My hon. Friend has done a huge amount of work on this over the years. Amendment 34 seeks to extend the breathing space period to 120 days. Does she think that covid factors add to the case for having a longer period than was initially envisaged?

[Stella Creasy]

My right hon. Friend is right, and that was one of the points I was going to make. If we are dealing with a new group of people who have never been in financial difficulty before, one of the sources of help and support for them may well be our welfare system. Anybody who has ever dealt with people trying to make new claims in our welfare system knows that 60 days is an incredibly tight timeline for that to happen—to deal with any appeals and paperwork, and to even get a response to the claim that has been made. Yet experience tells us then when people do get into problem debt, sometimes they do not know what support they are entitled to.

The amendments speak both to the reality of people and to the practicality of making a breathing space work. I hope the Minister will see them in that way and recognise that that is why so many debt advice providers support the amendments and say, “Yes, actually, what’s proposed does feel too tight to get things right.” Some people’s situations can be resolved in 60 days; others’ will take longer. It is not right to close off the opportunity of a breathing space by setting a deadline or threshold that means that for some people who are waiting for information it will be too late. The amendments speak to how we can make the process work for everyone, giving debt advice providers the discretion to be able to work with people and to use the breathing space for its intended purpose, which is to give those who recognise they have a problem the chance to get it sorted before we go into some of the more serious options.

The brutal reality is that we know that, with jobs thin on the ground, debt already mounting up and the cost of living not reducing any time soon, not everybody who gets a breathing space is going to be able to breathe again. I know the Minister would be frustrated if, rather than the financial position of the people involved, it was that timing, that threshold, that meant the breathing space did not work in the way in which it is intended.

The Minister will have seen that I have tabled other amendments on we make this breathing space work. I know he cares about getting this right. In these Committees, there is always pressure on Ministers to say no to amendments, but I hope he will acknowledge that this is about making the policy work, recognising the evidence on the ground about what works with people who are in problem debt and how long it takes them to see that they have a problem. If he does not accept the timescales, if he does not accept the intentions of myself and the hon. Member for Edinburgh West in acknowledging the distress people feel when they have to front up and talk to a stranger about the financial position they are in and their fears in an environment where unemployment is widespread. Goodness knows, getting people to take debt advice at the start of this year, when there seemed to be jobs in our economy, was difficult—anybody who tried to refer a constituent to Citizens Advice knows that. Getting people to a point where they have the chance to breathe again means making this process work.

If the Minister does not think the extension is right, I am keen to hear what he thinks we should do to make sure that that threshold is not a cliff edge over which people fall and cannot come back from. We are all going to be seeing a lot of people in financial difficulty in the coming months in our surgeries—people who have nowhere else to turn, people who are very frightened, and people whose families, homes and mental welfare depend on us getting this right.

[Ms Eagle]

I wish to spend a short amount of time congratulating my hon. Friend the Member for Walthamstow on the focus and experience she brings to this very important topic. As she said, debt is one of those taboo subjects. People feel ashamed if they have got into debt and tend not to discuss it—sometimes within their own relationships, let alone with other people—because it is a source of shame.

To some extent, it is a bit like the people who fall for scams or fraud. It is a uniquely difficult thing because if someone has got themselves into that situation, it makes them feel ashamed of their behaviour or that they have fallen for something. They feel isolated and unable to discuss it and go to get assistance. To some extent, even getting to what my hon. Friend is suggesting in her amendment means someone has gone a considerable distance: first, admitting there is a problem, and secondly, seeking help and trying to see what can be done to alleviate the problem.

I also feel that when people get into debt in this manner, they are uniquely judged by those looking on. The taboo is reinforced by the judgmental nature of onlookers who think, “I would never get into debt like that,” or, “How on earth have they done that?” There are caricatures of how people who get into debt behave that are almost designed to blame them for their debts, suggesting that somehow they are incoherent with money, that they cannot manage, that they have inadequacies, or that they have gone on spending sprees all over the place and not thought about the future. I suppose in a minority of cases that might be true, but in the majority of cases, in my experience—certainly in my advice surgery—it is not. People get on a slippery slope.

We live in a consumer-oriented society where those who wish to sell us things, and the financial services companies that wish to provide us with the wherewithal to buy them immediately, are very sophisticated. We are in a culture very different from the one I grew up in. I will now reveal how old I am: when I was growing up, one had to put money away and pay for goods gradually before one could get them. Now there are all sorts of electronic currencies that can be used.

On Black Friday, I was shopping for deals from my room, but—uniquely—had no positive results because everything was out of stock. That demonstrates how easy it is to spend money to acquire things, and to get into debt. It is now instantaneous. With the shift to online, one does not even have to physically be in shops to buy things; one is two clicks away from having this kind of problem.

If ever there were something that made it easier for people to get into trouble, it is the speed and effectiveness with which they can click on things and spend money. We talk about that with regard to gambling, but buying goods can also be addictive. People are propagandised the whole time about how success comes with having goods, and that one has to have the right trainers and the right brands.

--- Later in debate ---

[John Glen]

Forgive me, Mr Davies; I did not acknowledge what a pleasure it is to serve under your chairmanship in my previous remarks, so I do so now. I will address amendment 34 and new clause 11, but first I feel that I should respond to the general context that colleagues have raised. The hon. Member for Walthamstow is right that I share many of her perspectives, if not always her solutions.

High-cost credit will always be with us; the question is about the terms on which it is made available and what we can do to make available better alternative provision of credit. As the hon. Lady acknowledged, we have had conversations and debates about the issue many times. It will be useful for the Committee to know that Chris Woolard, the former interim chief executive of the FCA, is currently conducting a review into high-cost credit, particularly looking at the explosion of new models of payment—“buy now, pay later” in particular.

I have also been very focused on making more of the alternatives, by supporting the credit unions to allow them to lend more easily and by looking with the Association of British Credit Unions, one of their trade bodies, at what legislation we can bring forward. That is something we have committed to. I have also committed to working on pilots for the no-interest loan scheme, because that could be really useful; if we can establish where that can be used, it would provide a meaningful alternative.

Some of my most compelling experiences as an MP have come from working on the all-party parliamentary group on hunger and food poverty with the hon. Member for South Shields (Mrs Lewell-Buck) and the former Member for Birkenhead. On a visit to South Shields in 2014, I remember seeing first hand some of the really challenging situations that people get into with debt. That has been echoed in my own constituency in Salisbury, where the Trussell Trust was founded. That is why it is really important we have invigorated the support that the debt advice sector can have. We have allocated an extra £37.8 million in May, so that it has £100 million this year.

The main objective of the breathing space mechanism is to get people to a place where they can evaluate their situation and find the right option. The effect of amendment 34 is to require the Government to provide protections that last at least 120 days when making future regulations concerning breathing space or the statutory debt repayment plan. The amendment does not amend the existing breathing space regulations, which, I believe, was probably the intention. The aim of breathing space is to provide temporary debt relief, and extending the duration by that amount of time does not align with the policy intent.

In the 2017 manifesto, we committed, as an aspiring Government, to a six-week moratorium breathing space period. That is what we consulted on and it was, I think, through my direction as the Minister two and a half years ago that we committed to extend that to 60 days. That was the expectation and consensus among those who contributed to that. The Government consider those 60 days to be an appropriate period for a breathing space moratorium. I have not received any direct representations from charities, although StepChange believes that 60 days is the right period, although that could be changed in exceptional circumstances. I recognise that that charity may consider that as being met, but I am told by my officials that I have not received direct representation about that.

[Stella Creasy]

Apologies; I just want to clarify. Some 80 debt advisers have written to the Committee to support the measure on precisely the grounds that I have set out. Is the Minister saying he has not seen those representations or that he does not see them as a voice of the sector? There is a difference and I do not know whether that is an absence we need to address.

[John Glen]

The difference is that, as a Minister, I have not been written to by them. I recognise that there is a range of views out there, but I also recognise that a significant piece of work was done to consult on and to establish these measures and to secure cross-party support for them.

We believe that the time period will allow individuals to identify and access a debt solution, while the fixed period will provide certainty to creditors. It is important to reflect on that: this is in the interests of both the debtors—the individuals who have significant debt—and also creditors, often small businesses, who are owed money. There is a judgment to be made about how that balance is achieved.

Given the current circumstances, I understand why Members believe that a stronger moratorium would benefit those in problem debt who are struggling with their finances during this difficult time. The Government have put in place an unprecedented package of support to help people with their finances during the covid-19 pandemic. We have worked with mortgage lenders, credit providers and the FCA from the outset to help people manage their finances. A lot of work has been done and is still being done by financial services firms to make those measures work.

During the consultation period, the Government explained their position on the duration of the scheme and were supported, as I said, by many stakeholders. The regulations were approved by Parliament in October and by the Welsh Senedd in November and have subsequently been made.

The amendment would also apply to any regulations made in the future on the statutory debt repayment plan—the second part of the debt respite scheme, which the clause is focused on. It would set a new minimum duration for an SDRP of 120 days. Of course, in practice, most SDRPs are likely to last for a period of years rather than months, allowing individuals to repay their debts to a manageable timetable. Introducing a minimum duration is not likely to be a necessary protection in this scheme.

New clause 11 would do two things. First, it would require the breathing space scheme to commence on 31 January 2021 instead of 4 May 2021, which was set out in regulations that we approved in October, as I said earlier. Secondly, the new clause would also extend the duration of a breathing space moratorium from 60 days to 12 months.

Increasing the duration of the scheme to 12 months would create much greater interference in creditor rights without increasing any of the corresponding safeguards. For example, the midway review process, which regulations stipulate must take place between days 25 and 35 of a breathing space moratorium, would need to be reconsidered and redesigned.

As the breathing space regulations have already been made and the proposed amendments would not achieve the policy intent, I ask, with some regret, the hon. Member to withdraw the amendment.

[Stella Creasy]

I thank the Minister for his response. I am sorry to hear that he did not see the document, which I know was sent to his office yesterday by the debt advice workers, because I think we all recognise that we are dealing with unusual circumstances. Covid is that Monty Python foot coming down on any of the plans that might have made the policy intent 60 days prior to our current situation.

Unless the Minister thinks that the Office for Budget Responsibility is wrong about the levels of redundancies, unemployment and financial contraction—we have not even mentioned the B-word, Brexit, on top of that—that will face the economy that we want to provide the jobs that allow people to earn the money to pay off their debts, he is having a bit of a tin ear to what people are saying. In this circumstance, we need to extend the breathing space for it to be a breathing space.

This is not just about high-cost credit; this is about the people who are stuck on credit cards as well—the people who will end up spending 25 years to pay back the credit card average debt at minimum repayments. He talks about small businesses. This is about people who have mortgages, for example—

[John Glen]

It is small businesses.

[Stella Creasy]

Well, but there are also major banks. If we push too quickly, problem debt will sink any possible financial recovery. We have never learned that lesson as a country. I really wish we would. With the greatest respect to the Minister and his talk about policy intent, he is in the wrong place on these measures at this point in time. I will press this to a vote because I think it is important that we set on the record the concern that we should listen to the debt advisers who say that we will need longer in the pandemic to sort the issues out.

Question put, That the amendment be made.

Division 6

Ayes: 6

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Labour: 5
Scottish National Party: 1

Noes: 10

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Conservative: 10

[Stella Creasy]

I beg to move amendment 35, in page 38, line 23, at end insert—

‘( ) After subsection (3) insert—

( ) Where, by virtue of subsection 2, the Secretary of State makes regulations establishing a debt respite scheme, these regulations shall not extend to placing debt advice providers under any obligation to initiate a review of debtor eligibility for the protections provided by the scheme.””

This amendment would remove the requirement in the current draft regulations for debt advice providers to conduct a ‘mid-way review’ of eligibility for breathing space.

This amendment follows in a similar vein to amendment 34 in trying to make the Government’s policy work. It is about how we translate policy intent into the practical reality of dealing with people who are in problem debt. I said in the previous debate that problem debt might be when people realise that they have a problem with their debts and finally seek help. A breathing space in those circumstances would be useful.

Amendment 35 is about the midway review. I encourage the Minister to check his inbox because he will see the note from the 80 different debt advisers, who are the people we will be charging to deal with the debt respite scheme and make it work. They say that there are two very practical reasons why they would like the clause to be amended. Any good debt adviser will be in continual contact with their client and will try to make the breathing space a genuine one that leads somewhere rather than simply limbo. To those debt advisers, the requirement always to have a midway review does not work for two very simple, practical reasons. First and foremost, it moves them from being somebody who might be able, finally, to offer a helping hand and wise counsel to being someone who is policing their relationship with that debtor. We have all had someone come into our constituency surgery who is in financial difficulty and had them cry because they are embarrassed and ashamed. At that point, censure is not helpful; for someone in debt, practicality and kindness are the things that get them through. To ask debt advisers to police the breathing space could have a negative impact on the relationship with the debtor. We are simply suggesting that rather than making the midway review a requirement, we should give the debt advisers the discretion to decide.

The second reason that debt advisers support the amendment is entirely practical and refers again to the policy intent that the Minister set out. The brutal reality is that there will be a big increase in the numbers of people needing debt advice. The Minister has given more funding to the debt advice sector, but that is being done in an environment where millions of people are out of work, and millions already have debts and limited credit options. I wish that the expansion of the credit union movement could happen; as a Co-operative Member as well as a Labour Member, we have been talking about that since I was elected in 2010, but that has yet to materialise. The reality is that people will be looking for credit and it is likely to be had at an expensive price; we can all debate what expensive is, and I know that later amendments refer to that. The reality is that there will be a lot of people who will need debt advice and to include the mandatory requirement of a midway review will limit how debt advisers can manage their caseload.

To put it into context, and I wager that I am not the only Member in this situation, in the last seven months, 42% of my constituents have come to be dependent on some form of Government support. People are in a completely new scenario; they have suddenly found themselves without the income on which they have always relied.

--- Later in debate ---

[Mr McFadden]

Is my hon. Friend’s fear about the midway review that it is too onerous a burden on the debt advisers, or that it may exclude from the breathing space people who still need it, but who are pushed out halfway through?

[Stella Creasy]

My right hon. Friend raises a real concern. If we have a large influx of people needing to speak to a debt adviser, and there are no appointments, will they get access to help? One reason why they will not be able to get an appointment is because debt advisers will have to do a midway review with people. We should simply trust debt advisers. Anybody who has worked with them, as the Minister has, will know that they are part Martin Lewis, part Alison Hammond from “This Morning”—a kind person who makes jokes so that a person feels better about themselves. They are trying to help people in distress. Through the legislation, we are asking them to do a job; we should let them do it as they see fit.

I hope that the Minister will listen to the sector when it says, “Let us hold those reviews when we need to, rather than telling us that we have to hold them, because if we are overwhelmed by people, we can’t do the job that you are asking us to do.” I do not disagree on the policy intent, but the context is different, and if we do not react to the context, all this good work, and all the legislation, will be for nothing, because there will not be appointments. There will be a negative relationship between debt advisers and the people whom they are trying to help, which will affect whether people listen to what advisers are saying; debts will continue to rise; creditors will go unpaid; and for people, the breathing space will feel like holding their breath, rather than coming up for air.

[Alison Thewliss]

We should recognise the professionalism, expertise and qualifications of those giving debt advice to our constituents, and not try to put a provision in the Bill that prejudges what they do. Speaking from experience, they have worked incredibly well, over time, with my constituents, so I question whether the midway review is necessary.

Let me give a case from my constituency. A woman came to my office very upset, very much in the way that the hon. Member for Walthamstow described, because she was being evicted the next day. We had to swing into action and try to find ways around that, and spoke to the Glasgow Housing Association. It did take time to make that happen, but the GHA sat down with her, went through all her bills and outgoings and worked with her intensively over a period, to make sure it would get the rent money and that the other debts she had, that were also causing her problems, were taken care of.

I was struck by the professionalism of the GHA advisers and by the fact that they were experienced and were tough but compassionate with the woman. They made sure she could see a way through. If people see an arbitrary cut-off point halfway through, that will give them fear, not reassurance. There is a risk that the respite will be removed from people who are supposed to be helped by the midway review, if it is put at an arbitrary halfway point. The Minister should consider whether that is really the outcome that he wants to achieve. Yes, there should be some kind of review mechanism, but my experience is that it is done all the way through the process. There is no need for the midway review, because reviewing is already happening.

[John Glen]

Amendment 35, put forward by the hon. Member for Walthamstow, would restrict the Government’s ability to require debt advisers to complete any review of debtor eligibility in any future regulations made concerning breathing space or the SDRP. As the Committee will be aware, breathing space regulations were approved by the House in October, and they state that a debt adviser must complete a midway review after day 25 and before day 35 of the moratorium.

The amendment would not amend the existing breathing space regulations, which I believe was the intention. In addition, it would apply to any regulations made in the future on the SDRP and the second part of the debt respite scheme, which the clause is focused on. That would restrict the Government’s ability to require debt advisers to complete any review of debtor eligibility related to a plan. It is expected that SDRPs will be reviewed annually, or when requested by a debtor, to ensure that payments are set at the right level and the plan remains appropriate. If those reviews could not consider a debtor’s eligibility in any way, that could be a significant constraint on the design and effectiveness of the scheme in future, and would remove the safeguards put in place for creditors.

[Stella Creasy]

What the Minister has just said suggests he thinks there is a binary choice between debt advisers reviewing and being involved in seeing how the breathing space is working, and their being completely absent. Does he recognise that, in the words of a previous Prime Minister, there could be a third way? Debt advisers could be given the professional courtesy of having the responsibility of doing their job. As part of that there might, absolutely, be some people they would spend more time with, whereas they might know that others had got on the right course. It is not that debt advisers would be absent if not put under a requirement; sometimes red tape can be a burden, not a benefit.

[John Glen]

Absolutely; that is why we listened carefully to the sector in constructing the measure. For example, when we were designing the breathing space scheme, we worked with the Money and Mental Health charity to design a different pathway for different groups with chronic crisis in mental health, allowing them to re-enter the scheme on multiple occasions in a year, and giving an extra provision. It is not something where I am being prescriptive when, alongside the SDRP regulations, it is being consulted on. However, we are in danger of making arbitrary changes in a similar vein.

If I leave aside the question of drafting, which I think I have addressed, the Government consider that a midway review is necessary to the breathing space scheme, to assess whether the debtor continues to comply with the conditions of the moratorium. I see that not as a policing exercise but an appropriate step in reviewing the suitability of the mechanism. The breathing space mechanism will not work for everyone, and it is important for a review to take place.

During the consultation period the Government explained their position on the midway review and it was supported by many stakeholders. The regulations were approved by Parliament in October and by the Welsh Senedd in November, and were subsequently made. I respectfully ask the hon. Lady to withdraw the amendment.

[Stella Creasy]

Again, I am afraid that the Minister has a slightly tin ear to the reality of what people will be asked to do and what they are trying to do. We cannot have it both ways. It cannot be claimed that our amendments about how services should be run are too prescriptive but it is not prescriptive for the Government to specify that after 30 days there must be another meeting, something which puts at risk the ability of debt advice providers to manage their own diaries. That does feel like the dead cold hand of the state going overboard, and I am sure that many Conservative Members present who perhaps have pledged their lives to fighting such intervention would recognise that that requirement is rather prescriptive.

Above all, I am listening to the sector, and those debt advisers say that in the current environment, when they will be overwhelmed by so many people needing their help, they should be allowed to do it in the way that they know best. I do know that the Minister wants to get this right, but I think he is not listening, and I think it is important that Parliament does, so I will press the amendment to a vote. We can then say to the sector that we have tried to articulate its concerns about this particular prescriptive clause.

Question put, That the amendment be made.

Division 7

Ayes: 6

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Labour: 5
Scottish National Party: 1

Noes: 10

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Conservative: 10

[Stella Creasy]

I beg to move amendment 33, in page 38, line 38, after “applies.” insert—

‘(4B) The regulations must include provision for an assessment, before the introduction of any debt repayment plan, of the debtor’s resources by a debt advice provider which must—

(a) disregard the value of the debtor’s main residence, provided that this does not exceed the median house price reported by the Land Registry for the local authority in which the debtor resides;

(b) make a recommendation about the timetable under which the individual can repay the debt whilst maintaining a living standard at least equivalent to that of households in the second quintile of income distribution.”

(4C) The regulations must require any debt repayment plan to take account of the assessment under subsection (4B) in determining the timetable over which the debt can be repaid.

(4D) The regulations must make provision for a revised assessment in the event that it is not possible for the debtor to repay their debts within three years and maintain the required living standard during this period, in which the debt advice provider must consider, and offer advice on, insolvency options available to the debtor.”

This amendment requires any regulations for the Statutory Debt Repayment Plan to make provision for an assessment of a debtor’s resources and, should the debtor be unable to pay their debts within three years, for a revised assessment to advise on insolvency options.

I am hoping for third time lucky in convincing the Minister that there are things that we need to address.

Amendment 33 is about maths. It is about how debts are calculated and how we understand whether someone is able to take advantage of the debt advice scheme—I am sure we always looked forward to double maths on a Tuesday afternoon at school. It is about how we make the scheme work while recognising that some of the guidelines and regulations on how to deal with those in problem debt have not kept pace with the times. I am not talking just about covid but about some of the calculations that have made been over a period of time.

I am incredibly mindful of what you said, Mr Davies, about insolvency and not straying into a discussion of the Insolvency Act 2020. When we are thinking about debt advisers and what work they can do with people, however, it is relevant to consider the options, as the Minister said. That is what we have the debt adviser for—they may push people towards different statutory formats. The reality is that the cost of those options and the cost of living will, I believe, artificially restrict debt advisers’ ability to give the best advice. The amendment is about giving clarity to how those calculations should be done, so that we do not see people pushed into further difficulties, or indeed fail to seek help because of those artificial thresholds.

What am I talking about? At the moment, it costs £680 to file for bankruptcy. If someone is broke, filing for bankruptcy is often beyond their reach. That means that they are stuck in limbo. The breathing space protections are designed to operate before someone reaches that point, so that they have space to sort out what they are able to do. If the calculations mean that none of the available options are open to someone, because they have no money, which is why they need a breathing space and why they turned up at a debt adviser, that is no choice at all. It is the Henry Ford choice—every option is the black car.

I started by talking about the average debt of £10,000—in those Tuesday afternoon maths lessons we will have studied the mean, the mode and the median. Households with the worst debt, who owe more than £20,000, will be excluded from some of the available options. The debt adviser will be unable to have that conversation with those people because those debts mean that they are too far gone. In fact, a debt relief order is open only to the very poorest because people have to be at the point where their monthly surplus income is less than £50 after accounting for their expenses. That £50 threshold was set in 2009. We all studied inflation in our Tuesday afternoon maths lesson, so we recognise that a £50 threshold in 2009 does not make any sense in 2020.

The amendment would help to set out the level of living expenses we should expect people to have before we start talking about their debts, so that we are not asking people to be in penury. That does matter, because we could be talking about people being in that financial position for a very long period of time.

--- Later in debate ---

[John Glen]

Amendment 33, tabled by the hon. Member for Walthamstow, would dictate specific eligibility criteria for a statutory debt repayment plan, which would involve requiring debt advice providers to carry out a complex assessment of a debtor’s resources against external data and benchmarks and, where a debtor is unable to repay their debts within three years, to conduct a revised assessment of the debtor’s circumstances and advise on insolvency solutions.

I reassure the Committee that the Government are keen for any eligibility criteria to strike the right balance between allowing suitable debtors to enter the protections of an SDRP and ensuring that creditors are repaid over a reasonable timeframe. The Government set out the proposed eligibility criteria in their consultation response of June 2019, and they expect the principles to remain the same.

Imposing an additional obligation on debt advice providers to conduct an assessment of a debtor’s living standards, fixed by reference to income distribution and local house prices, could lead to inflexibility and inconsistency in the way the SDRP is provided. In any case, the appropriate mechanism for setting out that level of detail is the regulations, on which, I absolutely reassure the Committee, the Government will consult.

I turn to the suggestion that debt advice providers be required to conduct an assessment of a debtor’s circumstances, and to consider insolvency solutions if the debtor is unable to repay the debt within three years. Again, let me reassure the Committee that it is absolutely the Government’s intention for debtors’ plans to be reviewed regularly. In fact, our consultation response proposes that debt advice providers complete an annual review to ensure that a debtor’s plan continues to be the most suitable solution for them. This review can propose changes to the planned payments if the debtor has experienced a rise or fall in surplus income.

In line with the consultation response, we expect to include in the SDRP regulations provision for a debtor to request a review, and provision for payment breaks in the case of an income shock. The ability for an individual’s plan to last longer than three years, and up to a maximum of 10 years in exceptional circumstances, is intended to support sustainable repayment plans over time. If, once the SDRP scheme is up and running, a debt adviser considered an insolvency solution more appropriate for an individual than their entering into an SDRP over a longer period, that option would remain available.

[Stella Creasy]

I thank the Minister for what he is saying, and I appreciate that he is setting out that he thinks the amendment is not needed because there will be earlier interventions. Does he understand that the £680 cost of going bankrupt can be a barrier to taking up the options that he is talking about? It could lead to people above these very low thresholds staying in the same position not for a couple of years, but for seven, eight, nine or 10 years—not because they want to live like that, but because they have not got enough money built up to take the alternative.

[John Glen]

I recognise that these are complex matters. There will sometimes be a need to pay fees over a much longer period, and that option exists. The consultation on how the regulations will work will engage very closely with the sector, and I anticipate that it would get to the right place. I do not think that I have reassured the hon. Lady, but I hope that I have reassured other members of the Committee about the Government’s intentions. I ask her to withdraw the amendment.

[Stella Creasy]

I thank the Minister for what he said. If he is saying that he is prepared to engage on the subject of debt advice—perhaps the debt advisers’ writings for the Committee on this point were lost in translation—I am happy to withdraw the amendment. It is about recognising that the thresholds have to change, and it sounds like the consultation is the right place to have that conversation. If the Minister nods and says that that is the sort of thing that the consultation will consider, that is perfect.

[John Glen]

indicated assent.

[Stella Creasy]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

New clause 12—Impact of COVID-19 on the Debt Respite Scheme: Ministerial report—

“(1) The Treasury must prepare and publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme.

(2) The report must include—

(a) a statement on the extent to which changes to levels of household debt caused by the COVID-19 pandemic will affect the usage and operation of the Debt Respite Scheme;

(b) a statement on the resilience of UK households to future pandemics and other financial shocks, and how these would affect the usage and operation of the Debt Respite Scheme; and

(c) consideration of proposals for the incorporation of a no-interest loan scheme into the Debt Respite Scheme for financially vulnerable individuals affected by the COVID-19 pandemic.

(3) The report must be laid before Parliament no later than 28 February 2021.”

This new clause would require the Treasury to publish a report on the impact of the COVID-19 pandemic on the implementation of the Debt Respite Scheme, including consideration of a proposal for the incorporation of a no-interest loan scheme into the Debt Respite Scheme.

New clause 19—Report on functioning of debt respite scheme and compatibility with personal insolvency regime—

“(1) The Treasury must prepare a report on—

(a) the functioning of the debt respite scheme under section 32;

(b) the extent to which it is achieving its objectives;

(c) its compatibility with personal insolvency legislation and policy.

(2) That report must be laid before Parliament no later than one year after this Act is passed.”

New clause 25—Debt Respite Scheme: review—

“(1) The Chancellor of the Exchequer must review the impact on debt in parts of the United Kingdom and regions of England of the changes made by section 32 of this Act and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.

(2) A review under this section must consider the effects of the changes on debt held by—

(a) households,

(b) individuals with protected characteristic as defined by the Equality Act 2010,

(c) small companies as defined by the Companies Act 2006.

(3) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland; and

“regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a review of the impact on debt of the changes made to the Financial Guidance and Claims Act 2018 in section 32.

[John Glen]

Clause 32 builds on existing legislation, and will allow us to implement a statutory debt repayment plan that will help people who are in problem debt. The Government want to incentivise more people to access professional debt advice, and to do it sooner. To this end, we are introducing a debt respite scheme.

The first part of the scheme is a breathing space, which commences on 4 May 2021. The second part is the SDRP, which will be a new debt solution for people in problem debt. It will provide a revised, long-term agreement between the debtor and their creditors on the amount owed, and a manageable timetable over which those debts are to be repaid. It is intended that during the agreement, debtors will be protected from most creditor enforcement action, and from certain interest and charges on debts in the plan.

The clause amends sections 6 and 7 of the Financial Guidance and Claims Act 2018 to allow the Government to implement the SDRP effectively, as set out in their policy consultations on the debt respite scheme. The amendments will allow the Government to make regulations that can compel creditors to accept amended repayment terms and provide for a charging mechanism where creditors will contribute to the running of the scheme, ensuring it is fair and sustainable.

The clause will also allow the SDRP to include debts owed to central Government, which is crucial to helping people in problem debt. In time, I hope that will encourage more people to access debt advice sooner and enable them to repay their debts within a more manageable timeframe.

We are debating a number of new clauses alongside the clause, and I will allow hon. Members to speak to those before I respond to them. I recommend that the clause stand part of the Bill.

[Stella Creasy]

I will speak to new clauses 12 and 19. New clause 12 appears in the name of my friend, the hon. Member for Edinburgh West, but I recognise that she and I share a similar concern about seeing these measures in the round. As the Minister has spoken this afternoon, he has made the case for doing that, because he has talked very strongly about the policy intent and all the work that has been going on, but he has said limited amounts about the Monty Python foot of covid coming down on those best intentions.

Both of these new clauses speak to that Monty Python foot and the very different circumstances people face in terms of having a stable income to be able to repay any debt, problem or not, over the coming years. We know that there is already a problem brewing on top of a problem—a double problem, as it were. I am sure I could think of a better analogy if it was not a Tuesday afternoon.

One in three of those people reporting a fall in income over the past seven months has already borrowed to try to make ends meet. They are already on that carousel, going round and round, putting a bit of money here, hoping they can put another bit there and wondering when it will stop—hoping that schemes will come through. I am sure we will have heard about the economic impact in the debate in the main Chamber today, so I simply say to colleagues on the Government Benches: “You cannot be concerned about the economic impact of the tier system if you turn a blind eye to the debts in our communities and what happens to them.” It is dangerous simply to presume that we can spend our way out of this, knowing that debt is not equally distributed in our country.

That is why the new clauses are about having that evidence in front of us. I am a big fan of evidence-based policy making—although it has not often been in vogue in the 10 years I have been an MP—particularly when it comes to debt. That is partly because the figures change. As I said in my first set of contributions, there is some evidence that people are paying down their debts and trying to be more financially resilient, but we know that a tsunami of unemployment and low incomes is coming our way, and we know it will hit people who have not had to deal with it before—people who have never had to budget in the way that they will have to budget in the coming months.

The new clauses are about having that information and understanding why people take up particular options. Again, I do not wish to prosecute the Insolvency Act 1986 and how it works, but I do wish to set out that, if people cannot access those mechanisms, the breathing space is no breathing space at all—it is just limbo. We will not know that unless we put those measures in the context that these new clauses create by asking to have that information and that detail. If we do not ask ourselves why it is that every six minutes a person is declared insolvent and bankrupt in the UK, is that going to change over the year ahead? If not, is the breathing space working, or is it that people are not able to access alternative support?

The Minister will need that information to be able to flex the policies, as he inevitably will have to because of the Monty Python foot of covid. The longer this place pretends that that is not going to be a problem—that debt is not going to be part of everyday life for millions of people who have never really had to deal with it before—the more the vultures will circle. I have tabled other amendments later on in the Bill, and I do not know whether we will get to them today, but I know we will get to them on Thursday. Those amendments are about how we protect consumers, but sunlight is the best disinfectant—knowing where the damage is being done.

These new clauses and this data are about recognising that we will not get everything right now. There may be all sorts of consequences. What happens if the implementation of the vaccine takes longer to do and more industries go bust? We have already seen Arcadia going into administration today. What happens if it comes in more quickly, but the jobs that are created or the jobs that are available to people pay a fraction of what they previously earned? There are huge uncertainties ahead in the policy context into which the policy intent is being put.

I hope the Minister will see the new clauses from myself and the hon. Member for Edinburgh West as they are intended, which is to be forewarned and forearmed so that we can take a muscular and proactive approach in this place to not just protecting consumers and our constituents, but preventing problem debt in the first place. We would then not have to have that conversation with people about whether it is a problem that they have put everything on the credit card, taken out a payday loan in one of its various forms, taken out an Amigo loan or gone to the buy-now-pay-later industry, which we are going to come on to.

--- Later in debate ---

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to be under your chairmanship, Mr Davies. I would like to speak to new clause 3, which calls on the Government to prepare and publish an annual report on the Help to Save scheme for each financial year that it remains open to new accounts.

The Help to Save scheme is a form of savings account that allows eligible people to receive a bonus of 50p for every pound they save over four years. The scheme is particularly good, as it targets people who are entitled to working tax credits or who are in receipt of universal credit. Given the failure to support jobs during covid-19, the number of households currently receiving universal credit has risen from 1.8 million in May 2019 to almost 4.6 million as of October 2020. I am sure everybody on the Committee agrees that that is a very high figure, although I appreciate that we are going through really difficult times because of covid.

One of the things that I am seeing as a local MP in my constituency—I am sure it is the same for everybody on the Committee—is a huge increase in universal credit claimants. We are likely to see an even bigger increase as people are no longer able to rely on their personal savings, so the Help to Save scheme is more important than ever.

After a two-year delay, the Help to Save scheme was launched by the Government in September 2018, to much anticipation. However, the scheme to date cannot be considered a success, and I am eager to find out why. We tabled the new clause because we feel that an annual report would help us in uncovering that. Of the 2.8 million people eligible to take up the scheme, only 132,150 accounts had been opened by July 2019—just 4.6% of those eligible for the scheme. I am still struggling to understand those figures and to believe that the Government are truly committed to a savings scheme and to creating a culture of household saving.

Furthermore, in last year’s spring statement of March 2019, the Government’s Budget watchdog slashed by half its forecast of how much the taxman would have to spend on Help to Save by 2021, citing lower than expected take-up. However, as I mentioned, I am in favour of the scheme and want it to succeed. That is, after all, why the previous Labour Government spent time highlighting the scheme and planning to launch it in 2010 as a savings gateway, only for it to be scrapped in 2010 by the then Chancellor.

Members may agree that the information we have so far does not paint a picture of commitment from the Government to supporting people to save. When the savings gateway was created, Labour worked with banks, building societies and credit unions, which invested in software and promotional literature for the launch. Some potential savers had received letters informing them of their eligibility and telling them about local providers just hours before the scheme was scrapped by the incoming Conservative Government.

I am really interested to hear what measures the Government have implemented to promote take-up of the scheme. I could raise many issues about universal credit and working tax credits, but as you advised, Mr Davies, we need to keep to the new clause, so I will raise them another time. My primary concern is to ensure that those who are eligible can access the scheme, now and in the future.

The Government’s pilot scheme found that 45,000 individuals saved a total of £3 billion during the trial period. We know that the scheme works. Charities and debt support services are hopeful that it can directly tackle asset poverty. The Help to Save scheme is due to come to a close in three years’ time, in September 2023, which means that we still have time to support people to save over £800, if we act now to make the scheme more widely accessible.

Publishing an annual report on the scheme, as provided for by the new clause, would allow us to see in detail where take-up has been successful and what we can do to ensure that people are aware of the scheme and how to engage with it. We feel very strongly that a report would help us to capture what areas we need to improve. The Minister mentioned that the Government are committed to providing support. I hope that they are, but agreeing to have an annual report would show further commitment.

In the meantime, I believe that more can be done, particularly to integrate with credit unions and debt management services so that the scheme functions more effectively in the years it has left to run. I would also be really interested, in lieu of an annual report for 2020, given that at the end of last year it was estimated that only 4% of eligible people have signed up to the Government’s Help to Save scheme, if the Minister could tell the Committee whether he thinks it has been unsuccessful and what the Government are doing to promote take-up.

[Stella Creasy]

I rise to support what my Front-Bench colleague said on new clause 3 and to speak to new clause 14, which seeks to underline the question that she set. Given that this is a good scheme, why has it not been taken up more widely?

The Minister may have thought that I was just a one-trick pony, obsessed with debt. Let me tell him that my difficult second album is very much about savings. I know that he had concerns about the drafting of my previous amendments and I want to put on the record my thanks to the Clerks, who have been incredibly helpful and patient with me in seeking to get the wording right. We all appreciate the hard work that they do behind the scenes to ensure that our drafting is intelligible, even if it is not inevitably accepted by the Minister.

I hope that the Minister will accept this new clause and my difficult second album about savings. This is two sides of the same coin of how people make ends meet. I would wager that that is why he has put them together in this portmanteau or Christmas tree Bill––given that it is 1 December, we may as well call it that. It is about how we make sure that people have the money they need, whatever the weather or time of year and whether things are going well or badly for them. Just as we would want people to get help when they get into debt, we also want them to get help to have rainy day money, as it might quaintly be called now. I said that to a member of my staff who looked blank and probably tried to look it up on Instagram.

Clearly, helping people on low incomes to save is critical. One reason why I support the new clauses is that I do not think we can have a conversation about savings without talking about assets. There are increasing inequalities in our society. Indeed, the new inequality is not so much about income as assets. We are looking at why people do not take up the scheme, what we can do to make it work and whether it serves the purpose that we are trying to get at. While we come from different political traditions, I hope that the Minister would agree that income inequality is of itself a negative draw on our economy and social cohesion. Perhaps that is the best way I can put it to him. One day, I will tempt him towards the more radical socialism of egalitarianism.

When we have people who have plenty and people who have very little, or indeed no access to anything, our society suffers. The Help to Save scheme is about improving that situation. It is increasingly obvious that in constituencies and communities like mine that are riven by gentrification and inequality, it is assets that are the difference between success and failure. That is necessarily different from savings accounts, and it is right that when we are looking at what we are doing to help those on the poorest incomes succeed in life, we are cognisant of that fact and include it in our thinking.

What do I mean in layman’s––or perhaps laywoman’s––terms? One in five mortgages are issued with the help of the bank of mum and dad. People with the bank of mum and dad are always going to be more successful and stable than many of those constituents who do not have access to that. Those are the people at whom the scheme is targeted. The 10 million households that have no savings at all stand in a very different place from the one in 10 children born in the 1980s who will inherit more than half average lifetime earnings. Property is the divider within our society and that trend has got a lot worse over the last 30 years, yet very little Government policy on tax and savings begins to address that and the income inequalities that it creates.

When we are looking at a savings scheme and expecting people to have money to put aside––even what might seem very modest sums––we have to set it in the context of the other assets they have access to if we really want to get to grips with those inequalities in society. In looking at tax and benefit policies, and savings policies, the fact that someone can inherit £1 million in property without paying any tax at all stands against those families with £15,000 of debt who will never be able to put any money aside because they will always owe somebody else. All Governments of all colours have been burned before in trying to address some of these factors, and in taking a narrow view purely of income levels. I am old enough to remember TESSAs—not just the fantastic Dame Tessa Jowell who is sadly no longer with us, but tax-exempt special savings accounts, which drove income inequality in this country in terms of people’s ability to put money aside.



It is right that we ask ourselves whether this measure will get to the root of that problem—to the communities and people we represent who will not be able to save and whose lives will always be askew, because their counterparts have been able to benefit from that growing asset wealth, whether that is people who have inherited property or people who are now in communities such as mine, where housing costs and housing values have risen to such an extent that their children will be able to benefit from them, including from schemes such as remortgaging. In situations such as that with covid, which we know is an income shock, people might be expected to use their savings account, but they cannot because they do not have any money in it, so it is even more apposite to ask whether they have other assets that they might be able to draw on in comparison with their counterparts.

Financial Services Bill (Seventh sitting)

Stella Creasy Excerpts

Committee stage & Committee Debate: 7th sitting: House of Commons
Thursday 26th November 2020 Public Bill Committees

Separately, I note that there is already clear legislation that covers manipulation or attempted manipulation of a benchmark and provides sanctions for such activities. Under the Financial Services Act 2012, it is a criminal offence to make misleading statements in relation to benchmarks. In fact, in the Bill, as the right hon. Gentleman also rightly mentioned, there are measures that increase the maximum sentence for such a crime to 10 years.

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

It is wonderful to serve under your chairmanship, as ever, Mr Davies. The Minister is explaining that there is a process for enforcement. We all know that this issue is very specialist. If he thinks the current regulations and sanctions are appropriate, could he set out how they are being enacted and monitored? Frankly, it requires someone with a specialist understanding of how these rates can be manipulated to enact them in the way he outlines. If he does not want to add the amendment, could he explain how these issues can be investigated, and what resources there are to do that?

[John Glen]

I thank the hon. Lady for her point. These matters are administered by the FCA. I have set out the framework under which it operates. Its resourcing is a matter for it, and I speak on a six-weekly basis to the chief executive about that. The sanctions available to the FCA vary considerably according the nature of the breaches. Some will be small, modest technical breaches.

[Stella Creasy]

The Minister has set out the criminal sanction. I am interested in whether there is support and resourcing expertise in relation to the criminal element, as opposed to the regulatory element.

[John Glen]

At this point I cannot give her chapter and verse on the exact attribution of resources to this measure, but I can look into that and come back to her.