Finance (No. 3) Bill

Debate between Stella Creasy and Richard Fuller

Monday 4th July 2011 Commons Chamber

[Stella Creasy]

I am interested in the hon. Lady’s impression that consumer credit is a bad thing, because I do not agree. I would also be interested in her views on research by the Office for Budget Responsibility, which shows that as a direct consequence of the Government’s Budgets an extra £10,000 of debt is being put on to households. Perhaps she would like to comment on the implications of that for family finances. No? Then I will continue.

The problem is not just the high-cost credit industry but the nature of the industry and the way in which it operates, which is causing so many problems. What most worries many Opposition Members is that so many families are struggling. Indeed, we know that 46% of families say that they do not earn enough in a month to pay all their bills. Crucially, of that 46%, 10% say that the reason they are struggling is the repayments on high-cost credit. It is those very products that are pushing them into financial difficulty.

For the avoidance of doubt, I say clearly that I am not trying to put Wonga and the other companies out of business. I do not hold with the constituent of mine who argued that we should learn a lesson from Dante and put them in the seventh circle of hell, but we can make the credit market fairer for all concerned. It is important to set out, therefore, the kind of companies we are talking about and just how quickly this industry is growing in the light of recent economic circumstances.

Many people know about payday lending—the form of credit whereby a borrower gives a creditor a cheque or an authorisation to make an automatic withdrawal from their bank account. That is used as security for a short-term loan to be repaid, supposedly on the next payday. It is a long-established form of credit in other countries, but it is relatively new to the UK—and it is growing rapidly. By 2009, the payday lending industry was worth more than £1.2 billion, and the figures I have gathered from the Department for Business, Innovation and Skills, which were released under a freedom of information request rather than being put in the public domain, show that it is now worth £1.9 billion. Indeed, in its “Keeping the Plates Spinning” report, Consumer Focus estimates that payday lenders are expected to quadruple the scale of their operations in the UK in the next few years alone.

[Richard Fuller]

The hon. Lady says that the payday lending market was £1.2 billion in 2009. According to the Office of Fair Trading review of the payday loan market, it was £600 million. To clarify the situation, and for my education, will she explain the difference between the two numbers?

[Stella Creasy]

I will happily explain the difference between the two numbers. The hon. Gentleman might have heard me say that I made a freedom of information request to obtain the most up-to-date data from the Department, and it is a source of concern that Ministers did not share the information with MPs. Research shows clearly that the market has grown to £1.9 billion. If I tell the hon. Gentleman that 5% of the population have taken out a payday loan in the last year, representing 2 million, perhaps he will understand the discrepancy. Perhaps he might like to account for why the Government did not want to put that information in the public domain.

[Richard Fuller]

I just wish to point out to the hon. Lady that I think there is a lot of consensus, which I hope she does not destroy in her passion for this issue.

As a point of clarification, the 5% figure in the OFT’s analysis came not from the payday loan market but from participation in the high-cost credit market, which includes credit unions and credit cards. Given that my source is the OFT, perhaps she will clarify that point too.

[Stella Creasy]

I am happy to share the figures with the hon. Gentleman, although I am afraid to say that his interpretation is incorrect. One of the things that I have done—perhaps I am getting a reputation for it in the House—is my homework on this market, and I have sought as much accurate information as possible. That was why I made the freedom of information request, and I would be happy to share the data with him. One of the challenges is that the Government have information about how quickly this market is growing, but they are timid about confirming it.

Big Society

Debate between Stella Creasy and Richard Fuller

Monday 28th February 2011 Commons Chamber

[Stella Creasy]

I am going to press on, because I do not have much time.

We on the left have always understood that for any organisation to work, it needs a sense of purpose and a common goal. It needs to know what it is trying to achieve, not just how it will try to achieve it. People can then be brought together around that current goal.

That leads me to my second point about why purpose is so important in the big society. It seems to me that in the points that are being made about it, a whole series of objectives are conflated, whether democratic engagement or increasing volunteering. We all understand that volunteering is not the same as voice, but the conflation of more meetings at a local level with encouraging more people to volunteer and looking to commission more within the voluntary sector seems to reflect a lack of purpose.

[Richard Fuller]

rose—

[Stella Creasy]

I am not going to give way, because the clock is ticking. I do apologise.

Either the big society is a programme about the devolution of power, with single, double or treble participation, or it is about encouraging more people to be involved in running services. A lack of purpose comes from not having a mechanism to ensure that the purpose of those processes is fair and balanced. We on these Benches are very clear that all the purposes of Government should be about achieving a more equal, fairer society.

Equally, there is no mechanism in a process-driven purpose for judging value for money. As a member of the Public Accounts Committee, I look forward to seeing some of the reports that will come to us. Above all, there can be no clarity about the tough choices that any Government or any public may have to make about the type of services that they want if there is no sense of what those services are intended to achieve. Why are free schools and encouraging people in the voluntary sector to work together more seen as the same thing? It seems like apples and pears.

That leads me to the second problem with the big society, which is that it does not show an understanding of the voluntary sector as it is currently constructed. The focus on processes obscures as much of the work as it illuminates and shows a misreading of the fact that civil society is intricately connected with the public sector as much as it works with the private sector. Many charities are little different from businesses, as I believe the hon. Member for Stourbridge (Margot James) set out earlier, and many people who work in the public sector do so with an ethos of care and concern for their communities. Taking the argument for reform of the state and using it to call for its abolition like cutting off one’s nose to spite one’s face.

The history of the co-operative movement proves that. It was set up as a form of protection against the absence of publicly provided services—to fill a gap rather than to replace those services. The modern voluntary sector is intricately interconnected with the state, whether through the funding that it receives or the people with whom it works. The voluntary sector organisations that many Members have mentioned having in their communities will struggle without a sense of purpose to draw people together.

We have to be clear that the voluntary sector in itself is not a panacea. Some voluntary sector organisations work well and others do not work so well, so there needs to be a sense of purpose and a series of tests to set against it. We must also consider the type of volunteering that people are prepared to do. We are seeing a rise in what people call “episodic volunteering”, and there are many questions about whether such volunteering can deliver the purported goals of the big society. There are questions about whether there will be the sustained involvement and participation that people wish to see, or whether people will be willing to turn up for a day to volunteer on a stall but not to volunteer in the long term.

That leads me to my third concern about the big society, which is that it shows a misreading of the nature of community. Basing our view of community on the “little platoons” that people are so fond of talking about makes little sense in a contemporary era when we can know and feel the consequences of riots on the streets of Libya, poverty in Asia or earthquakes in New Zealand. Connectedness happens in many different ways around the world, locally, nationally and internationally, and through many different life stages.

I appeal to Conservative Members to learn the lessons that we on these Benches did about the danger of reading too much into communitarianism and the work of Etzioni. I found it fascinating to find out over the weekend that Robert Putnam and Colonel Gaddafi had once met to talk about whether there was a connection between “The Green Book” and social capital.

If we are to secure change in contemporary society, we need a better way of understanding how and why people connect. We also need a better reading of how and why people are connecting in their current societies, given that nearly 40% of people already currently volunteer through formal organisations and a further 56% volunteer in informal ways. The idea that Britain is broken or a nation of people who are alienated from their communities is simply not true. Furthermore, there is a danger in forcing our vision of what community looks like on communities that may have many social networks but are not connected to the public sector. The big society needs a better analysis of the nature of community and community bonds than it currently offers.

That leads to my fourth concern about the big society, which is that it does not show an understanding of the resources that communities have to give to volunteering and public service. We can learn not least from the experience of the big society ambassador himself, who found that he did not have the time to be involved in the way that he wished to be.

Anyone who has worked in the voluntary sector knows that time, money and confidence are critical factors in securing the contribution that anybody can make. The big society needs a better articulation of how that time, money and confidence will be shared out more equitably among society, so that we can unlock the potential that many people have. Asking people to do so much in such a short period does not allow for the time and effort that is required to allow that potential to grow.

I urge Members to look again at a case such as Porto Alegre and see that it took 20 years for people to be involved in the delivery of public services in Brazil in the way that many now want here. Perhaps they should learn from New Harmony, a colony set up by Robert Owen in Indiana that for 20 years developed libraries, community centres and hospitals, and then fell apart because all the people involved decided that they hated each other. That is the reality of trying to get people to work together—it is complex, messy and difficult, and without a sense of purpose it is destined to fail.

That is why I urge the hon. Member for Hereford and South Herefordshire (Jesse Norman) to read a little less Burke and a little more William Morris, who understood that fellowship is life and a lack of fellowship is death. We on the left understand from Morris’s work that fellowship was about not just asking people to work together but about the conditions under which they worked. He understood the tyranny of inequality and the ability to bring people together to work in co-ops.

I also encourage the hon. Gentleman to read Tawney, who talked about fellowship being expressed not only through relationships between people but through institutions. We see the national health service as the best social insurance policy that the nation can have, and we work together at many different levels to achieve such goals. We look to the purpose first, and then to the different models for delivering it, rather than starting with the process of volunteering and asking what it can do. I hope that in this short time I have set out some alternative suggestions, and I would be happy to discuss the matter further.