Budget Resolutions

Yvonne Fovargue Excerpts

Tuesday 30th October 2018 Commons Chamber

[Yvonne Fovargue (Makerfield) (Lab)]

I welcome the rise in mental health funding, but people with mental health problems also need support from other Departments, not just Health, particularly when they have problem debts. A person is four to six times more likely to have a debt crisis if they have mental health issues, and half of all those seeking debt help have a mental health issue. The two are interrelated. Debt can trigger clinical depression, anxiety attacks and more, while mental illness can build debts. Universal credit is not helping. I am thinking not only about the complex and stress-inducing work capability assessment but about the wait for the first payment. Also, if people are able to get an advance payment, they struggle to pay it back. None of that will do anything to relieve their mental health issues.

If the Government really are intent on prioritising the nation’s mental health, they need to guarantee that no one will be left without sufficient income as a result of moving to universal credit. Under the rules, any advance payment could be deducted at a rate of up to 40% of the standard payment. It was also possible to have other debts, such as council tax arrears or money owed to utility companies, taken at the same rate. The Chancellor has announced a reduction of this rate to 30%, but that could still mean a combined deduction of up to 70%, which is much higher than for pre-existing legacy benefits, so actually the change will be of little help. For some people, having deductions taken from their benefits to pay their creditors can be a positive method of repaying debt and managing their bill payments, but a rate of 70% is ridiculous. What steps is the Department for Work and Pensions taking to determine whether a deduction is appropriate or even affordable for the individual? I recognise that this method can be positive, but for many people it is inappropriate and unaffordable.

Universal credit can push people further into debt. The Government’s data confirm that people on universal credit are falling into rent arrears, with more than two in five saying that that is due to problems with universal credit. More than half the recipients of universal credit that Citizens Advice helps have had to borrow money while waiting for their first payment. We know that 97% of tenants in Wigan who live in social housing go into arrears because of universal credit, and that 60% of those tenants have arrears of more than £600. It is therefore perhaps ironic that the Chancellor has finally announced a breathing space in the form of a statutory mechanism to give those in problem debt a period of respite while they get their financial lives in order.

[Alex Cunningham (Stockton North) (Lab)]

I met representatives of Macmillan Cancer Support this morning, and they were talking about the challenges facing cancer patients in the self-same circumstances that my hon. Friend has just described. Does she think that action needs to be taken for them, as well as for people with mental health issues?

[Yvonne Fovargue]

I absolutely agree with my hon. Friend. I also think that the rules on terminal illness should be changed.

Going back to the question of the breathing space, the devil will be in the detail. For a breathing space scheme to work well, it has to have minimum standards. It has to provide enough time for the person in debt to get advice on the best way to resolve their problem debts, to recover from temporary financial difficulties and enter a statutory debt solution, and to pay their debts at a manageable rate. There must also be funding so people can access free, independent and impartial services speedily, because when people decide they are at the end of their tether, they want to see someone quickly.

The Government suggest a breathing space of 60 days, but debt advisers need the flexibility to recommend an extension. I worry that if the arrangement is too rigid, creditors may well delay until someone gets out of the breathing space period so they can start chasing them again. Call me cynical, but that is what 23 years at Citizens Advice does.

There is clear consensus that a breathing space solution must cover all debts, including debts to the Government—household bills such as council tax and moneys owed to central Government. It must also offer protection against further interest and charges, and against enforcement action. Creditors must stop collection activities such as calls, letters and visits—that means no more bailiffs. Returning briefly to universal credit, there must be no deductions from benefits or other income to recover outstanding debts during the breathing space period, future deductions must be affordable, and—please—there must be no public register of people who enter a breathing space. Evidence from Scotland shows that that deters people from doing so. If there is going to be such a register, let us make it private between creditors and people in debt.

I welcome the announcement that the Government will look at no-interest loans, although the long timescale will allow many people to fall into debt. It is unfortunate that, despite the work of the Law Commission, Government time was not given to debate ending the exploitation of a Victorian law that was used as a vehicle for logbook loans.

I turn to education—in particular sixth-form funding, which is at crisis level.

[Sir Edward Davey]

Will the hon. Lady give way?

[Yvonne Fovargue]

I have to move on, I am afraid. There is a range of new requirements, the needs of schools and colleges have increased, and under-investment in sixth-form education is having a negative impact on the education of the young people in my constituency. That simply means the Government will be unable to meet their stated objective of having a strong post-Brexit economy and a socially mobile, highly educated workforce. That is bizarre, frankly.

At least £760 per student is required to continue providing 16 to 18-year-olds with a high-quality education, but the Raise the Rate campaign asked the Chancellor to increase national funding by a more modest £200 per student. That would at least have been a start. It is disappointing that there has been no action.

Will the £400 million to provide the “little extras” be shared with sixth-form colleges? That might have helped Winstanley College in my constituency with the little extra of providing a teacher so German A-level could be reinstated, or allowed St John Rigby College to reinstate one-to-one time to support students who are struggling emotionally or academically—it might have, had that money not been ring-fenced for building maintenance and purchasing equipment.

Let me comment briefly on the raising of personal allowances. Families on the average wage in Makerfield will gain just over £12 a month, while people on more than £50,000 per year will gain just under £40 a month. It is pretty obvious who will gain the most. It certainly is not women over 50, who are still waiting for any measure to help them.

The Chancellor said he chose not to unveil the Budget tomorrow as he wanted to avoid Halloween jokes. It is a good job he did not wait until next Monday, as my constituents, having heard that austerity is over, may have expected a firecracker of a Budget that lit up their lives. Instead, all they got was a damp squib.