Armed Forces Personnel

Debate between Stella Creasy and Sheryll Murray

Thursday 10th November 2011 Commons Chamber

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

I am honoured to follow the hon. Member for Poole (Mr Syms), who talked passionately about the importance of supporting the families of servicemen and women in this country.

I think that I bring a slightly different dimension to the debate because I am possibly the only person here who is the partner of somebody within our military, and therefore feels absolutely passionately—

[Sheryll Murray (South East Cornwall) (Con)]

indicated dissent.

[Stella Creasy]

I apologise—I see the hon. Lady shaking her head. I was not aware that she had a connection as well.

[Sheryll Murray]

Will the hon. Lady acknowledge that my hon. Friend the Member for Gosport (Caroline Dinenage) is married to a member of the armed forces?

[Stella Creasy]

Absolutely. My point in raising this is simply to say that the concern for all of us who are interested in the welfare of our armed forces is not only about the people who serve but about those who support them. We have to support not only our armed services but those in their families who are affected by what they do.

Each of us is here today to remember the sacrifices of those who have served within our communities and our country. My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) admirably put on record our gratitude to the people who, unfortunately, have lost their lives in the past few weeks alone. I echo those sentiments. I also want to put on record the gratitude that I am sure we all feel towards the people from my own community in Walthamstow who gave their lives. Let us therefore say to the family of Regimental Sergeant Major Darren Chant of the Grenadier Guards, who gave his life for our safety on 3 November 2009, that we will never forget his sacrifice.

I also want to recognise the contribution of those who have served and come home. In particular, I put on the record my thanks to Rob Richier, who retired recently after 35 years of service in the forces. He is now leading the Royal British Legion in Walthamstow. I was honoured to host a dinner for 150 people for his retirement and in support of the work that he is doing in Walthamstow. I have seen at first hand from working with him what a difference he is making to support members of the armed forces in Walthamstow.

I wanted to speak in this debate to raise a particular concern that affects forces families. My hon. Friend the Member for Barnsley Central (Dan Jarvis) referred to the tragic case that many Members will have seen in the press yesterday of a serviceman and his wife who felt so forgotten that they took their own lives after they had fallen badly into debt and were struggling with their financial situation. A critical issue that we must address in dealing with the welfare of our armed forces and their families is their finances. My hon. Friend the Member for Clwyd South (Susan Elan Jones) raised the particular concern of homelessness in relation to the armed forces. I want to consider the experience of the armed forces in accessing finance. I will draw on evidence of how the American military have dealt with this issue and of their concern about how armed forces personnel manage their money.

In 2006, the Department of Defence in America conducted research into the impact of payday lending on servicemen and women and their families. It recognised that companies were targeting them because of a number of factors, not least the relative youth of the military and the cash-flow fluxes and shortages generated by life in theatre and at home. Another factor was that the American military took a strong line on indebtedness among their members, which meant that many of them did not seek debt advice and counselling early on to avoid debt problems.

What is particularly striking is that the American military recognised the problems of debt among their servicemen and women as a threat to military readiness. They recognised that debt was the second most stressful aspect of the military lifestyle and that it outpaced separation from families and being on deployment. In particular, they recognised that because military families were not necessarily able to access credit in the way that the rest of can, they were particularly vulnerable to a reliance on high-cost credit. The research found that the average borrower in the American military had taken out nine payday loans in a year and was paying back $834 for a $339 loan.

Consequently, the John Warner National Defence Authorisation Act was passed in 2006. It closed the loophole that allowed American lenders to exploit service personnel and introduced an interest rate cap to make it impossible to lend to military personnel at more than 36% APR. Clearly, there are still problems in America with indebtedness in military families, but awareness about the issue has been raised, as has the protection for those families. Indeed, America’s Consumer Financial Protection Bureau now has a special service dedicated to soldiers, the Office of Servicemember Affairs, which is headed by Holly Petraeus. One of her many acts is to promote credit unions to service people.

I raise that example not simply to say how much the Americans have done to support the families of those who serve in the military, but to raise my concern that exactly the same problems are happening among military families in the UK. The payday loan companies that have exploded in the UK in the past 18 months are already targeting the military. Loansite.co.uk markets itself as the forces loan finder. Easymilitaryloans.co.uk—the title alone is a giveaway—makes a virtue of lending to service personnel in the UK with poor credit histories. QuickQuid, whose interest rate is 1,734%, states on its special military site:

“You provide security and protection for your country—shouldn’t your armour against financial problems include access to military loans when you need them?”

The consequences of that targeting are becoming all too clear, not least to the Royal British Legion, which has a dedicated benefits and money advice service that does fantastic work to help service personnel and veterans with debt problems. That service is up against it in the current economic climate, especially given the rate at which the high-cost credit industry is growing. It is particularly striking that whereas in its first year of operation in 2007 the service helped 2,500 army personnel, last year the figure rose to 11,000. It predicts that the figure will keep rising. The most telling point for this debate is that nearly a third of the service’s clients turn to it because they have taken out unsecured loans.

We know that high-cost credit is increasingly used by those who have no access to mainstream credit. Indeed, research in Sheffield found that 40,000 people in that city alone were in that position. We know that a worrying proportion of people taking out payday loans are doing so just to make ends meet. One in four of them need the money to buy food or essentials, with 44% of them using it just to pay off other debts. In that context, people who are financially fragile because they or a member of their family serve in the military are particularly at risk.

The Royal British Legion states that debt problems tend to be much more complex for Army personnel than for civilians, and that they require a higher level of debt advice. It estimates that 63% of the debt advice that it offers is classified as specialist advice, compared with just 12% of the casework of normal citizens advice bureaux. Such figures demonstrate not only the importance of what the Royal British Legion’s money advice service does but the uniquely complex nature of the debt problems that many of our service personnel face.

We know that the payday loan industry is growing rapidly in this country, and that the risk of its targeting our military service personnel is increasing. We know, too, that we could act quickly to regulate the market as a way of providing real protection not just to service families but to the 6 million people in our country who are financially fragile. That was why I wanted to raise the issue today.

I hope that I can encourage the Minister to consider doing exactly what the American military have done, and at least commission research into the nature of debt in our forces’ families in the UK, so that we can understand the consequences of payday loan companies and the difficulty that those in the military face in making ends meet. I also hope that when he has seen that research, or even the work that the Royal British Legion is doing on welfare advice, he might be persuaded to speak to his colleagues in the Department for Business, Innovation and Skills to talk about how it would be possible to introduce a cap on the cost of credit to protect people. I also encourage him to consider how to ensure that we have a credit union that serves the UK military and their families, so that they can access affordable credit.

We all remember today the service of those who have made the ultimate sacrifice and given their lives for a better tomorrow. I have simply raised my points to ask that that better tomorrow does not include debts, and that we as a Parliament act as quickly and appropriately as we can to ensure that we give all our citizens protection from payday loan companies.