Oral Answers to Questions

Debate between Stella Creasy and Damian Hinds

Monday 11th March 2024 Commons Chamber

[Damian Hinds]

I join my hon. Friend in congratulating Ruislip High School and Hillingdon Council’s children’s services team. Nearly 90% of schools in Uxbridge and South Ruislip are now rated good or outstanding by Ofsted, up from under 70% in 2010, following the great work of teachers and our relentless focus on improving school standards.

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

19. What steps she is taking to help ensure the availability of high-quality childcare for children with special educational needs and disabilities.

Financial Services and Markets Bill

Debate between Stella Creasy and Damian Hinds

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

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

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

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

[Stella Creasy]

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

[Damian Hinds]

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

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

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

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

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

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

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

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

Timpson Review of School Exclusion

Debate between Stella Creasy and Damian Hinds

Tuesday 7th May 2019 Commons Chamber

[Damian Hinds]

The position on children with special educational needs and exclusion is a very important subject. It is quite a complex picture. Alongside today’s report, we have published some quite detailed analysis on the odds on different groups being excluded, when we control for other facts. As I say, it is quite a complex picture, and I would encourage the hon. Gentleman to have a look at it. However, he is absolutely right that the early support we can give to children with special educational needs, which often means the support that we give to schools and to teachers in schools, is incredibly valuable.

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

The report paints a powerful picture of many of the issues faced by those of us working in communities with children who are at risk of violence and of being violent, and in particular the all-too-familiar story that when a child is excluded from school that sometimes means they are forgotten, rather than it being a trigger for intervention. In Walthamstow, over the past year, we as a community have been looking at mentoring in our schools, to try to work with some of these young people. Will the Secretary of State meet me and some of the community groups involved in that work, to see what we can learn from it and help to ensure that every child has a bright future within education?

Rent-to-own Sector

Debate between Stella Creasy and Damian Hinds

Tuesday 14th July 2015 Westminster Hall

[The Exchequer Secretary to the Treasury (Damian Hinds)]

It is a great pleasure to see you in the Chair, Mr Hollobone; I think it is the first time I have served under your chairmanship in this way.

I start by congratulating my actual and honourable Friend the Member for Blackpool North and Cleveleys (Paul Maynard) on bringing this important subject to Westminster Hall. I also thank Mr Speaker for granting time for the debate. It has been good to hear from all the other contributors to the debate. There was the hon. Member for Ross, Skye and Lochaber (Ian Blackford), representing the SNP, and the hon. Member for Strangford (Jim Shannon)—the renaissance man of the 2010 generation in respect of the breadth of subjects on which he contributes in this place; he should be much congratulated on that.

It is always a joy to hear from the shadow Front Bencher, the hon. Member for Walthamstow (Stella Creasy), and I pay particular tribute to the hon. Member for Makerfield (Yvonne Fovargue), who brings a great deal of personal experience to these subjects from her time with Citizens Advice. She has been a great campaigner on fee charging, debt management companies and other aspects of the broader sector.

My hon. Friend the Member for Blackpool North and Cleveleys spoke powerfully and persuasively about the market—not only through personal stories, anecdotes and his experiences with his constituents, but far more broadly. He raised a number of very important points on disclosure, affordability, comparability, repossession, debt advice and financial management. Others have also touched on those subjects; I hope to cover most of them during my remarks and come to some others at the end.

On my hon. Friend’s point about meetings, the Government are always open to hearing from him and other colleagues who have special knowledge and interest in this area, because we have a shared objective to minimise consumer detriment and generally make the market work better.

The Government are committed to supporting hard-working people to be financially independent and resilient, and to save for unexpected events and for the future. Financial matters, as we all know, can be daunting, and making a poorly informed or sometimes just bad financial decision can have far-reaching consequences over a long period. The Government have taken a number of significant steps to improve the consumer credit market and ensure better outcomes for consumers. As well as fundamental reform of the regulatory framework, there is now, as we have heard, a cap on the cost of payday loans to help protect consumers from harm.

Crucially, the Government are also committed to ensuring that consumers are given the education that they need to make better informed financial decisions. Financial education is now on the national curriculum—something that I know a number of hon. Members campaigned for over an extended period. Pupils now learn about the importance of budgeting, sound management of money, credit and debt, as well as how to understand different financial services and products. It is really important in financial education to understand the principles behind these things and not just the products that might currently be on the market. If we had learned about the financial services products on the market when we were all at school, that would have been of absolutely zero relevance to the world we find ourselves in today: we have to learn about the principles of sound personal financial management and budgeting.

The Government are committed to providing sustainable financial services that give customers greater choice in accessing credit. With greater choice comes greater competition, and from greater competition should come—and generally comes—better outcomes for consumers. For example, the Government have already introduced several initiatives to support the credit union sector, including the credit union expansion project—up to £38 million—and the raising of the maximum interest rate from April 2014, which makes it that bit more possible for the credit union sector to compete in higher-cost, higher-customer-risk markets. That will help to allow consumers access to more alternative forms of consumer credit. For example, a consumer may now use a credit union for a loan to buy a household product, rather than go directly to a rent-to-own store.

That said, as my hon. Friend and, I think, the hon. Member for Walthamstow acknowledged, the rent-to-own sector is an important and legitimate part of the consumer credit landscape, allowing people to purchase essential items that they would otherwise have difficulty in finding the lump sum to buy. However, it is important that consumers who use rent-to-own agreements are protected appropriately from harm and adverse outcomes. There are times when unexpected, one-off expenses mean that consumers require access to credit—that happens throughout the income scale in different ways—either to fund shortfalls in income or to replace essential goods. Rent-to-own agreements allow payments to be spread over a long period, which is valuable for some customers on low incomes who do not have access to more mainstream forms of credit such as credit cards or overdrafts, and who lack the savings to be able to purchase household goods up front.

To help deliver the Government’s vision for a well functioning and sustainable consumer credit market that is able to meet consumers’ needs, the Government have fundamentally reformed regulation of the consumer credit market. That has created a new, more robust regulatory system and transferred regulatory responsibility from the Office of Fair Trading to the Financial Conduct Authority on 1 April last year. The new regime has been designed to strike the right balance between proportionality and consumer protection. The Government have ensured that the FCA has the robust powers that it needs to protect consumers. It will thoroughly assess every firm’s fitness to trade as part of the authorisation process and has put in place binding standards on firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has a broad enforcement toolkit to punish breaches of its rules. There is no limit on the fines that it can levy and, crucially, it can force firms to provide redress to consumers.

In the evidence session for the all-party debt and personal finance group’s inquiry into the rent-to-own sector, the FCA expressed concern about firms in the market. It stated—this quote was used earlier—that practices in the sector “rang alarm bells”. For that reason, it has brought forward the authorisation period for these firms to this summer. Rent-to-own firms that wish to obtain authorisation needed to apply by 30 June. That will ensure that any firms that do not reach the rigorous standards required are not able to continue in business and that poor standards start to be driven out of the market.

With regard to the price of credit, the Government believe that consumers should be protected from unfair costs and charges in the market. The Government showed their commitment by legislating to require the FCA to introduce a cap on the cost of payday loans, which came into force on 2 January 2015. The Government were clear that an interest rate cap or a cap that covered only some of the fees and charges that payday lenders may impose would be ineffective; I remember discussing some of the finer points of that sentence at some length with the hon. Member for Walthamstow. The FCA therefore designed a cap to include all fees and charges that may be incurred in relation to a payday loan, including arrangement fees and default penalties.

The Government legislated to give the FCA the power to cap the cost of all forms of credit. They have placed a duty on the FCA to use that power to impose a cap on the cost of payday loans because of the clear evidence of consumer detriment in that sector. The objective was to target payday lenders. However, the FCA retains the power to cap the cost of all forms of credit if it thinks that that is necessary to protect consumers, and it has said that it will keep the issue of capping the cost of credit in other markets under review.

[Stella Creasy]

Can the Minister set out for us, then, what evidence he would look for in order to introduce a cap on the charges that the rent-to-own sector may impose? I wonder whether he has a note that will help him to explain what levels of detriment, of costs, would have to apply. Some of us may argue that the cap on the payday lending industry is a little high at the moment, but it could be brought down. The Minister makes the point about a test. What tests would he set?

[Damian Hinds]

The test would be to appoint a regulator that we believe in and give it the tools to be able to make the decisions—give it the enforcement powers and the analytical capability—rather than, as a Government, meddling in the individual decisions on the details of the regulation. Appointing a regulator is historically how we have done things in this country, not just in this market but in others. It does not always please everyone all the time. Sometimes, people may feel that things should move more quickly or more slowly or be somewhat different, but in general it is a good way to protect consumers.

If at some point we think that the regulatory system in toto is not working, we change the regulatory system, but I do not think that it is right for Government necessarily to have a prescriptive answer to every subsection of the market; as the hon. Member for Walthamstow rightly said, this market, in its broader form, has a remarkable ability to shape-shift. If we go very specifically after one part of it and try to change one specific practice, we will find that something else changes somewhere else that we did not know about. That is why it is important to have this broad regulatory framework that includes high-level principles of fairness to the consumer, with the regulator stepping in to license and delicense operators when it feels that that is necessary.

[Stella Creasy]

Obviously, the Minister will be conscious that doing nothing has consequences, too; we have seen that in relation to all the people we have been talking about today, who have been ripped off by these companies. The Minister will also be aware that, on payday lending, the Government did not accept the argument that he is putting forward—that the Government should not intervene and set a cap—and did recognise the need to set a series of tests. Opposition Members would be incredibly sympathetic if he wanted to break his vow of libertarian conservatism and say, “Actually, there is a need to intervene because we see this predatory behaviour in this industry.” I want to press him. Is he saying that he would be opposed to learning the lessons from payday lending and to the Government’s stepping in and introducing proposals for a cap on the rent-to-own sector, despite the consequences of doing nothing, which we are seeing now?

[Damian Hinds]

The hon. Lady, although passionate, is not right when she says, “The Government did specifically this.” The Government put a duty on the FCA with regard to that part of the market. They also, at the same time, gave a power to the FCA to do something in parallel, in other parts of the broader consumer credit market, if it deemed that necessary.

Ultimately, individual organisations make their own commercial decisions on prices, interest rates and default fees for their products. However, the Government believe that it is in the interest of lenders to consider the impact on their customers and, of course, to treat them fairly.

On the affordability of credit, rent-to-own firms must fulfil a number of requirements. When the responsibility for regulating consumer credit transferred from the OFT to the FCA, the FCA turned key elements of the OFT’s irresponsible lending guidance into binding rules. Those are enforceable with the full range of FCA enforcement powers. They set out that a firm should assess the customer’s creditworthiness, having particular regard to the potential for the commitments to impact adversely on the consumer’s financial situation and taking into account information that the firm is or ought reasonably to be aware of at the time and the consumer’s ability to make repayments as they fall due. The FCA’s rules are aimed at strengthening consumer protection and are based on the simple principle that money should be lent only to a person who can afford to repay it. Firms are also provided with greater clarity on what is expected of them and the sanctions if they lend irresponsibly.

Rent-to-own firms, like all consumer credit businesses, are required to make affordability checks for consumers taking out an agreement. The FCA makes it clear that a firm should lend responsibly and should take reasonable steps to assess the customer’s ability to make repayments in a sustainable manner, without undue difficulties and without having to borrow further. Ultimately, credit should be extended to a consumer only if they can afford it. The extent and scope of affordability checks are determined by a number of factors, which include, as well as the financial position of the customer, their vulnerability and in particular whether the firm understands that the customer has some form of mental capacity limitation or reasonably suspects that to be so. Some of the casework examples given by my hon. Friend the Member for Blackpool North and Cleveleys throw that requirement into sharp relief. In addition to that, on 23 February 2015 the FCA published a paper on consumer vulnerability and a practitioners’ pack to assist firms in addressing the needs of customers in vulnerable circumstances.

Some concern has been expressed that rent-to-own agreements are not always adequately explained to consumers before they enter into them. That point was made from the Opposition Benches. The FCA requires firms to provide adequate pre-contractual explanations to enable consumers to assess whether the proposed credit agreement suits their needs and financial situation. Consumers can compare the cash price quoted in the pre-contractual information with the price of equivalent goods elsewhere to decide on the best deal. That ensures that consumers have the ability to make the financial decision that best suits their needs.

The Government are aware that consumers are sometimes required to take out insurance and service deals when entering into a rent-to-own agreement and that that could cause consumer detriment. Although there is concern that those deals raise the total cost of an agreement, the Government have ensured that where insurance is required as a condition of credit, the cost of the insurance must be factored into the APR, so that consumers can make a comparison on the basis of total costs and make informed decisions about the agreement that they are entering into. Furthermore, when firms sell insurance products, they must do so in line with the FCA’s requirements about assessing consumers’ eligibility to claim on a product.

The reforms made to consumer regulation by the Government and the FCA have given consumers new protections, and the regulatory framework means that consumers will continue to be protected in the future. It is important that avenues of credit remain open to those who need them, while consumers are protected from harmful practices.

[Stella Creasy]

I have asked the Minister about the Consumer Rights Act 2015 and the commitments given to hon. Members by BIS Ministers that these practices—the selling of warranties and insurance products—would be covered by consumer rights legislation. The things that he is saying do not quite match what those Ministers said. Can he clarify whether he has spoken to the Ministers in BIS about the Consumer Rights Act and its role in tackling the bundling up and selling of insurance products and warranties, and will he commit to raising that issue with the consumer rights implementation group? If nothing else, he could get that group to look at whether being required to buy an additional product when someone simply wants to buy the original product breaches basic consumer rights.

[Damian Hinds]

I will have to write to the hon. Lady about the details of the regulation on bundling. In general, price bundling in markets is not illegal, but on the specifics of this market I will have to get back to her.

The Government have set up the Money Advice Service, which provides a single point of debt advice for consumers and allows those who face problems with debt to obtain free and impartial money advice. This year, MAS will spend £47 million on debt advice, delivering through its third sector partners an increase of almost £9 million on the previous year.

It is important to take a joined-up approach to the provision of free debt advice. Following the independent review of MAS, the Government welcomed the creation of a debt advice steering group, which will help to improve the effectiveness and efficiency of free debt advice provision by bringing together senior representatives of the debt advice charities, high street banks, water and energy bodies and devolved organisations.

[Damian Hinds]

The steering group will be an open forum to involve all relevant and interested parties, and I take on board the point that the hon. Lady makes. I wanted to come back to a point that she raised earlier, which my hon. Friend the Member for Blackpool North and Cleveleys also mentioned: where the consumer stands in relation to part-paid goods. The Consumer Credit Act 1974 states that in a hire purchase agreement, a court order is required to repossess goods if a third of the total cost has been repaid. Furthermore, where 50% of the total price has been repaid, a consumer can return a product without penalty and the agreement will finish.

[Stella Creasy]

One thing that we see with such companies is that they move the goalposts with consumers. First, they do not tell consumers that a court order is required to repossess goods. Secondly, the amount that constitutes 50% moves, because of some of the charges applied. Will the Minister commit to reviewing that area? As he says, consumer protection exists, but because companies change how they lend to people, consumer rights are not being upheld.

[Damian Hinds]

The hon. Lady raises an important point. It is one thing to have rights, but another to know what they are. That is not restricted to the rent-to-own sector or to consumer credit, and organisations such as Citizens Advice have an important role to play in making that plain. It is an important part of disclosure for firms to make that known. The regulatory regime and enforcement are designed to provide confidence that that is happening in reality.

That brings me to my more general concluding point. We are in a new era, with a new framework. I pay tribute to Martin Wheatley and the FCA for the speed at which they have introduced a more positive framework. Many of us have taken an interest in consumer credit issues and detriments in the market over several years, and the FCA framework now contains a lot of what people have asked for. In addition, I pay tribute to hon. Members from all parts of the House who have taken a constant interest in the subject and kept it at the forefront of public policy debate.

None of the issues that we have talked about today is new. The leading home credit provider first came into being in Victorian times, catalogue lending has been with us for as long as anybody here can remember and rent-to-own shops existed long before 2010. Moreover, the market can and does change; we talked earlier about its ability to shape-shift. The Government have adopted a proportionate approach to the market. The hon. Lady suggested that I might have felt constrained by being in coalition between 2010 and 2015. I wonder what constrained her, or her colleagues in the Labour party, for the 13 years before 2010, when they did not do all the things that she is now demanding from the Government of today.

More broadly, I think that the approach has to be a judicious combination of financial education, sensible regulation and ensuring that alternatives are available. In all three of those areas during the past five years there has been a significant shift, with the inclusion of financial education on the national curriculum, the new FCA framework, Government support for the credit union sector and the accompanying regulatory change.

Rent-to-own is an important part of the consumer credit market. My hon. Friend the Member for Blackpool North and Cleveleys is absolutely right to keep our focus on it, and we will continue the dialogue.

Consumer Rights Bill

Debate between Stella Creasy and Damian Hinds

Tuesday 13th May 2014 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

I want to talk briefly about new clause 3 and new schedule 1, particularly because they relate to the private sector and one of the three sectors named under the Enterprise and Regulatory Reform Act 2013.

As the hon. Member for Walthamstow (Stella Creasy) has said, this country, like the rest of the world, is undergoing a revolution in data in terms of their volume, richness and accessibility, and, in some ways, their associated risks. There is also a rapidly changing market in price comparison, and the hon. Lady has referred to some of the benefits that can accrue from that. The development of that market is not entirely benign and is certainly not without cost. There are two opposing forces: consumers’ ability to compare prices and services side by side tends to bring prices down, but the nature of the marketing—the branding land grab, the cost of advertising and particularly the pay-per-click auction model on the internet—tends to drive costs and therefore prices up. It is certainly true, however, that price comparison has great potential to make markets work better. I am very proud of everything the Government are doing with midata to help make that a reality.

One market that does not work at all is one of the three mentioned in the 2013 Act: retail banking current accounts. The actual cost to consumers of having a current account is, on average, £152 a year, but nobody we talk to, including informed consumers and even Members of this House, knows that. Whenever we talk about “free” banking, we should use inverted commas, because, of course, there is no such thing as free banking. If consumers could see how much they are actually paying, both explicitly in behavioural charges and implicitly through forgone interest, the retail banking market would work better because there would be more diversity and competition.

Critically and perhaps even more importantly—this touches on some of the new clauses and amendments we will debate later—the fact that people do not know how much their banking is costing them inhibits the development of new retail banking products. Such products include budgeting bank accounts—so-called jam jar accounts—for which people have to pay a fee, but through which they are much less likely to tip into debt, because they make it easier to budget money and also that tiny bit easier to save a small amount.

New clause 3 is not necessary because progress is already being made. The powers already exist.

[Stella Creasy]

indicated dissent.

[Damian Hinds]

The hon. Lady shakes her head, but the powers already exist under the 2013 Act. The Government are looking for voluntary progress, which I think is the right way to proceed on reforming markets. A review of progress is due about now, and I hope the Government will continue to do what they are doing. They have the reserve right to push for more and have said explicitly that if not enough is being done, they will consult on the wording of regulations in order to make those markets work better compulsorily. That is the right approach, as opposed to jumping the gun.

--- Later in debate ---

[Damian Hinds]

It is always a pleasure and an honour to follow the hon. Member for Makerfield (Yvonne Fovargue) who talks not only with passion but with a great deal of knowledge and expertise about these matters. I wish to speak briefly about new clauses 11 and 6. Before I do, may I say that it was a little unfortunate that the remarks of the hon. Member for Walthamstow (Stella Creasy) took the turn that they did at the end? What she said is simply not true, and everybody in this House who takes an interest in these issues, which she certainly does, knows that the sub-prime high-cost credit market has been around for donkey’s years. It has not started—[Interruption.] No, it has not started, or even in its totality dramatically shifted, in the past three years.

The hon. Lady mentioned statistics for payday lending and logbook lending, but, if she was being complete in her analysis, she might have talked about when the big growth spurt came in home credit. She might even have talked about when the growth spurt came in rent to own. Perhaps she would like to take the opportunity to talk briefly about those things now. I would happily take an intervention.

[Stella Creasy]

Will the hon. Gentleman clarify whether he voted three times in the House over the past three years against capping the cost of credit and therefore tackling some of these problems? If he recognises that there are problems, is he saying that he will support the new clauses today?

[Damian Hinds]

Clearly, I was not saying that. I was asking the hon. Lady whether she wanted to comment on the growth of home credit and rent to own. We have had many opportunities in this House to discuss a cap on the cost of credit, and she and I—and she and many other Members—have had an opportunity to discuss some of the practical aspects. There will now be a cap on the total cost of credit, but that is not to say that the definition of that is without difficulties. It remains a tricky thing to do. All of us, including her, who take a close interest in these issues know that there is no single silver bullet solution that solves any of these market problems. We need regulation, empowerment for consumers, financial education and sensible alternatives. This House is at its best when we are discussing what those practical approaches might be, and I welcome the new clauses, which allow us to talk about those very things. I have an awful lot of sympathy for the sentiment behind new clause 11, which was put forward by the hon. Member for Makerfield, and for what is behind new clauses 7 and 9, but we must be wary about seemingly straightforward legislative solutions that may not deliver all they purport to.

We always talk in the plural when we refer to rent-to-own companies, but in reality there is one really big company. There is a problem with the pricing and marketing of these companies. I have recently been added to the BrightHouse e-mail marketing list. I do not know what I have done to deserve that honour—I am not sure whether I should take it as a compliment—but I am now bombarded with messages saying how easy it is to pay weekly, and it is those messages that go to the heart of the problem. To be fair, the slightly misleading approach that we are talking about does not necessarily apply just to rent-to-own companies. We could say that it applies to every pay-monthly mobile phone contract, through which we not only pay for our calls but finance the phone, but it is never advertised how much is for the phone and how much for the calls. We always see it as one all-together monthly amount.

--- Later in debate ---

[Stella Creasy]

It is not simply an assumption; it is based on the evidence we have seen from Scotland, which is that this money would be incorporated in the centre of the tenancy and so that the landlord would pay the fee. We would expect the tenant to pay one fee—the credit referencing fee—but once the tenancy was secure and the landlord could therefore be confident that the person was back in the place, we would expect it to be refunded. We are very clear that the practice of charging fees to both parties at the same time is a conflict of interest and therefore needs to be addressed, which is what our proposal would do. It would spread the fee over the course of the tenancy.

[Damian Hinds]

Just to complete the point, is it also the hon. Lady’s assumption, and that of the Opposition, that were landlords to face greater fees, they would not seek to recoup that extra cost in some other way?

[Stella Creasy]

One issue is what landlords are charging for. I see landlords who are charging twice for credit referencing, because they are charging the landlord and the tenant that fee. [Interruption.] The presumption the hon. Gentleman makes is that all the fees are for different activities—

[Damian Hinds]

I am asking what your presumption is.

[Stella Creasy]

Our presumption is that the fees would then be taken on by the landlord and taken as part of the tenancy agreement. Our approach would resolve the problems we are seeing for tenants and the conflict of interest over whom the agent would act for. Our proposal is about making sure we deal with that conflict, particularly how for landlords and for tenants it creates a series of perverse incentives whereby both can be charged for the same service.

Financial Services Bill

Debate between Stella Creasy and Damian Hinds

Monday 10th December 2012 Commons Chamber

[Stella Creasy]

My hon. Friend is right. I pay tribute to the work that she has done in this regard, and also in regard to debt management plans.

Bad practice is widespread in this industry. The Financial Conduct Authority will have an opportunity to set the tone when it comes to the sort of consumer credit industry that we want in the future, but let us use the opportunity presented by the OFT to do something about the problems now, and to prevent 2013 from being boom time for the legal loan sharks.

The Minister must be aware that three quarters of consumers are looking towards Christmas with severe financial concerns, and that 10 million of us in Britain feel financially squeezed. Will he state explicitly whether he will support my proposals and take them to the OFT, so that we can be certain that 2013 will be a time for legal loan sharks rather than consumers to be worried? I urge him to read the Bristol research findings—which are already in the pocket of the Department for Business, Innovation and Skills—in order to understand how measures such as this, and total cost-capping, can work, so that we can finally say that Britain is a legal loan shark-free zone.

[Damian Hinds (East Hampshire) (Con)]

It is an honour to follow the hon. Member for Walthamstow (Stella Creasy), and to speak in favour of the spirit of Lords amendment 78.

The problems of high-cost sub-prime debt are widely acknowledged. Although they have come much more to the fore through opinion-formers of late because of payday lenders, they are not, of course, new, and by extension—this is somewhat at variance with what the hon. Lady said—it is not new that Government are not capping the cost of problem credit. It worries me slightly that we use the term “payday” as a catch-all shorthand for all these problems, and I hope that the Minister will reassure us that we are not just talking about payday lenders.

Dealing with problems of this kind requires an integrated approach involving financial capability and the provision of alternatives for people who need access to credit, but it also requires regulation. Disclosure is not enough in this market, especially as it often involves very vulnerable consumers and the ready, easy availability of credit. It could be said that supply sometimes creates its own demand. Some people tend to opt not for the solution that best suits their needs, but for the most recent that they have seen. In seeking to address these costs, however, we need to look at costs in the broadest sense. This is not just about interest rate charges.

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[Stella Creasy]

It is wonderful to hear the hon. Gentleman talking about the positive aspects of capping. I suggest he look at total cost capping, because arrangement fees are not the only issue; there are also issues to do with late payment fees and the incentive they give lenders to push people to keep rolling loans over. Like the hon. Gentleman, I want this to be a future-proof—that is a dreadful term—proposal. We must also ensure lenders cannot get around it, however, which is why we need to cover all the costs involved.

[Damian Hinds]

The hon. Lady is entirely right, and I alluded to that point when I talked about behavioural charges. It is wrong to think we can legislate perfectly for all eventualities in advance, however. This market has an amazing ability to shapeshift and find its way around any regulation we might put in place, as has been seen in the United States.

I would like to hear an assurance from the Minister that under the new regime it will be possible to have a flexible capping regime that allows for all parts of the market to operate while also insisting that they do so in a responsible way. I also seek an assurance that we will not just address “payday” loans, which are a relatively new phenomenon in this country. Home credit is massive, and it has been with us since Victorian times, and has been a problem for quite a long time. There is also pawnbroking, which my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) mentioned. Logbook loans are a big market in the United States; they have not appeared in a major way here, but we can bet our bottom dollar that they would get a big boost if other parts of the market were capped. Rent-to-own is another area.

On the basis of the Minister’s conversations across Government, can he assure us that the Government will continue with an integrated approach that addresses not just regulation but boosting financial capability, starting with children’s capability with mathematics in school? Will they also continue to support operators that provide responsible credit, in particular credit unions? I pay tribute to the work the Government are doing in supporting that sector, and would like them to go further in modernising it and making credit union services more widely available, such as through the post office network.

Education Performance

Debate between Stella Creasy and Damian Hinds

Thursday 12th May 2011 Westminster Hall

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

Can the hon. Gentleman enlighten us on what the pass rate among private schools was for the English baccalaureate? One of the problems with a retrospectively applied mechanism is that many schools were not doing the courses and subjects involved, so the figures that he mentioned are not really equivalent. Perhaps this is a debate and a point that he might want to make in two or three years’ time, when everyone has been forced to do them by this policy.

[Damian Hinds]

As the hon. Lady should know—her colleagues may help her—we are not talking about the national curriculum, but a measure of how many children take one particular subset of subjects. The measure is not to be compulsory. The fact that it was revealed that some private schools were not offering those subjects tells us other interesting things. We have not got time, sadly, to debate them all now, but I would love to on a separate occasion.

Conversations with colleagues from all parts of the House on the subject have been interesting. I am sure that there will be exceptions to this, but most colleagues to whom I talk, whether they went to a comprehensive, grammar or secondary modern school, all studied the English baccalaureate. We did not necessarily pass all those exams, but that was pretty much considered the obvious set of exams that kids would take. The fact that that happened in the past does not make it perfect or right, but it does raise the question of why that has changed. As I say, we are not talking about a perfect measure. In fact, I would suggest that any single measure of performance of any particular age group will promote gaming behaviour. A particular issue with the English baccalaureate—I fully accept this—is that not every child is ever going to be in contention, as it were, for making that benchmark. There needs to be a balanced basket of measures. Alongside the English baccalaureate, I would hope that we might see a technical baccalaureate, and perhaps others, too.

Ministers are going down that exact track. We had the opportunity to talk to the Minister about that in the Education Committee the other day. There are more, rather than fewer, measures coming through, but that memo does not seem to have arrived in a lot of staff rooms, where the assumption seems to be that the English baccalaureate will be the sole or primary measure. In fact, in that basket of measures—this was alluded to earlier—the most important measure or measures should be things that track not a snapshot of achievement, but progress over time. That is what school is all about: developing the individual and helping them to fulfil their potential. If we lead on measures of progress, we get rid of any incentive there might be to select only those children who will be, as it were, easiest.

Contextual value added is not that measure. I have now sat on the Education Committee for a year; I am still waiting for the first teacher, head teacher, union leader, educational psychologist, education professional or anyone else to mention contextual value added as a measure of the achievement of any school, local authority or anything else. That has not happened, because it is an impenetrable measure—it is impossible to figure out what it means. When I have asked people to explain, I have quickly wished that I had not.

The Government are working on a specific measure or measures of the progress of children at the most challenging end of the scale. In our recent Select Committee report, “The role and performance of Ofsted”, we recommended something in which I firmly believe: a metric system tracking the performance of all the different ability groups—by quintile, for example—and measuring the progress of those not only in the middle and bottom of the range, but in the gifted and talented category at the top. We recommended Ofsted as probably being in the best position to interpret the accompanying complex data and to convert them into the English language in a way that contextual value added struggles to do.

There is a real danger of drowning in a sea of measures—uncapped GCSE scores, five or more A* to C grades, five or more A* to C grades with mathematics, contextual value added, raw value added and the English baccalaureate—or, potentially, a technical baccalaureate, the new measure of progress among the most challenging and challenged students. Ultimately, we need one or two lead measures to hold schools to account so that parents know what the key things to look at are.

I am keen to hear the Minister’s comments, but I suggest that the five or more A* to C grades is not that measure for a couple of reasons: first, because of its tendency to focus on the average and on that borderline between C and D grades; and, secondly, because it is a cliff-edge binary measure, which therefore does not take into account enough of the richness going on in that cohort.

I suggest that the best lead way in which to measure school performance is a combination of some sort of average point score measure—perhaps the average point score towards the English baccalaureate subjects, or something else—and a progress measure, whether a simplified version of value added or something more like the progress by quintile that I was outlining.

I still managed to speak for more than the five or six minutes that I thought I was going to, for which I apologise profusely.

Consumer Credit Regulation

Debate between Stella Creasy and Damian Hinds

Tuesday 9th November 2010 Westminster Hall

[Damian Hinds]

My hon. Friend makes a fine point, which I do not disagree with at all. I should say, for the avoidance of doubt, that my own savings account is with the United Savings & Loans credit union in Bordon. That fantastic institution has a high-street presence, but because of the rents in my part of the world, it is not the most prominent high-street presence. The established network of the Post Office could make a big difference to that. Of course, this is not just a matter of saying, “We’ll work with the Post Office.” It is also about the infrastructure that goes behind that—the electronics and the systems. That is why it is necessary to build a robust back-office system and interface. That takes money, but it does not necessarily have to come entirely from the Government, and it would be a mistake to think so. Such activities do of course carry with them a future income stream, and as everyone knows one can borrow against a future income stream. There is certainly a role for the Government in financing such a thing, but not just grant funding is needed.

Overall, the provision of alternatives is the surest and most important initiative that can be taken in this area. Whatever the regulation, people will always find ways to get around it, and we must strive to make things better.

[Stella Creasy]

I take the hon. Gentleman’s point, and I understand and recognise his experience in the credit union movement. Does he agree that these are the very issues on which the credit review should be formally consulting? It should be looking not just at store and credit cards but at access to credit, and also the home credit market, pay-day lending and the many other products that may well be expanded, to try to tackle once and for all the needs of the poorest consumers.

[Damian Hinds]

I am supremely relaxed about the names that are given to reviews, discussions and discussion documents. The important thing is that members of the coalition Government take a keen interest in this area and are interested in making progress, and I know that they are. The name or title is of secondary concern.

The surest thing we can do is to provide a good, robust alternative, and thereby revolutionise affordable credit. We can also improve the savings culture in this country and provide a real alternative to the doorstep lenders about which we are all so concerned.