Financial Education

Yvonne Fovargue Excerpts

Thursday 15th December 2011 Commons Chamber

[Yvonne Fovargue (Makerfield) (Lab)]

Thank you, Mr Deputy Speaker. I can promise that I will not take too long over my speech.

It is always a pleasure to follow the hon. Member for Brigg and Goole (Andrew Percy), and I congratulate the hon. Member for North Swindon (Justin Tomlinson) on the all-party group and all Members who have contributed to the report.

I was lucky enough to be involved with a financial education project for 10 years when I worked for Citizens Advice in St Helens, and we started from a very low base, with schools that had never before thought of having such a project. We also worked with tenants’ and residents’ groups and with a wide range of organisations, and I was fortunate to employ a passionate member of staff who gained the first-ever teaching qualification in financial education. That was vital in moving our project forward into schools, because we found that teachers were not confident about teaching the subject. They understood that it needed to be taught, but they did not have the confidence to include it in the curriculum.

I therefore totally support the idea of a financial education champion in schools, because in our work we found that the maths department was not always the one that came forward. In one school in which we worked, the drama department was keen on the idea, and an excellent play, which I think is on a website somewhere, was written about the three little pigs living in their houses. We also offered qualifications, including the ASDAN qualification and open college network qualifications, so schools and organisations involved in the Work programme, with which we also worked, could offer qualifications to young people. That was important in making teachers realise that financial education was an actual subject. It was not an add-on; it was an important part of the curriculum.

However, as my hon. Friend the Member for Cardiff West (Kevin Brennan) mentioned, there was an unexpected side-effect; we had not anticipated the rise in the number of parents coming to us with their debt problems. Students would go home and say, “Today I learned all about annual percentage rates. Let’s have a look at our household finances as an example.” The parents would sit there and think, “We’re beginning to hit a problem here. We are noticing that we cannot pay all our bills and that we’re borrowing on one credit card to pay off another.”

There absolutely needs to be a referral mechanism for advice about debt. It has to be sensitive and local. As my hon. Friend also mentioned, it could be the local citizens advice bureau. We were fortunate; somebody from the CAB delivered the financial education classes and they could talk to the parents and refer them to a specialist money adviser.

The only thing that I would like to take issue with is the part of the motion that mentions “irresponsible” debt. I can honestly say that in 24 years of working for a citizens advice bureau, I never saw anyone who had aimed to get into debt. Debt was often caused by irresponsible lending; innumerable people came to us with debt, cut up their credit cards, sent them back and were immediately sent a new credit card. Now, obviously, there is also the rise of the payday lenders, who will roll over debts when people say that they cannot pay them. I really feel that there needs to be regulation on that.

Most people take out loans intending to pay them back, whatever the level of interest. However, anyone’s circumstances can change. One of the most distressing cases that I ever saw involved somebody whose child was born with a disability. They had taken out an awful lot of loans to pay for the conversion of their property and were relying on the disability benefits for the child, who died unexpectedly. They were left with a mountain of debt. That was responsible, not irresponsible, borrowing. We need to look at the causes of debt. I agree with the hon. Member for Brigg and Goole—we should not be moralising. Debt happens. It could happen to any of us. If a person walks down the street and gets hit by a car, they are likely to end up not being able to pay their bills.

I also agree with my hon. Friend the Member for Darlington (Mrs Chapman), who is no longer in her place, that education is only 25% of the solution. Debt advice has to be available and there has to be regulation on the advertising by payday lenders and debt management companies, which offer to get people out of debt but often push them further into it, to make sure that they do not make a bad problem even worse.

[Lyn Brown]

May I ask my hon. Friend the question that I asked our hon. Friend the Member for Darlington (Mrs Chapman)? Does she, like me, see more such cases in her surgery week by week? Are there fewer people offering good-quality and independent advice who we can refer constituents to? Is that not the biggest problem that many of our people face at the moment?

[Yvonne Fovargue]

I completely agree. I am extremely concerned for the future, when the transition fund ends. To be honest, I do not know where the advice agencies are transitioning to—some are transitioning to oblivion. There is also the ending of legal aid for debt. The Minister mentioned the importance of early advice. Much of the funding for early advice is going, because legal aid funding is now for advice only at the point of eviction, which is absolutely not cost-effective.

Yes, I totally support the idea of compulsory financial education in school, but it has to be part of a package. Part of the package should be to ensure that people do not get into debt with payday lenders, do not go to the fee-charging debt management agencies but do have access to early advice to help them when they realise that they are getting into debt. They need to be able to realise when the debt is becoming a problem.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I have been in another debate in another place, so forgive me for intervening, but when I was Chair of the Select Committee on Education and Skills, we did a lot of work on the issue. We found that many financial institutions put money into CABs. Would my hon. Friend encourage the private sector to carry on with that? There are many demands on its time, but Nationwide particularly was putting money straight into the CAB.

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[Yvonne Fovargue]

I would certainly encourage that, but I would like to see a more strategic approach to debt. I would hope that the Money Advice Service provides that. However, it would have to have the money to be able to provide such a service. There is no use having a strategy but no money to give to the organisation. It is no use putting money into debt advice if the generalist advice to support it is not there. The agency depends on all levels of funding and a lot of it is going.

I support the motion and hope that we can look at a package of measures to tackle the rising problem of debt and personal insolvency.

Oral Answers to Questions

Yvonne Fovargue Excerpts

Thursday 31st March 2011 Commons Chamber

[Yvonne Fovargue (Makerfield) (Lab)]

T4. There are still high numbers of rogue operators in the fee-paying debt management industry and they often charge high amounts and pay not one penny to creditors. Does the Minister agree with the argument advanced in Wednesday’s Daily Mirror by the free advice sector that it is no longer tenable to stand by and fail to protect vulnerable individuals from those companies?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

The hon. Lady is right to raise this matter. She will know from her time working in the citizens advice bureau in her area how significant this matter is. Some debt advice agencies out there—frankly—do not act in an acceptable way. We are considering this issue under the consumer credit and personal insolvency review, and will make an announcement after the Easter recess.

Independent Debt Advice

Yvonne Fovargue Excerpts

Tuesday 8th February 2011 Westminster Hall

[Yvonne Fovargue (Makerfield) (Lab)]

I am pleased to have secured this important debate and to serve under your chairmanship, Mrs Riordan.

Research from Money Advice Trust suggests that at any given time up to 5 million people report being in arrears with consumer credit and mortgage payments or find that their credit commitments are an unsustainable burden. However, planned cuts to funding will significantly reduce the capacity of independent advice agencies to assist such people, which could result in potentially serious consequences both to the individual and the state.

I shall quote an example from my local citizens advice bureau in Wigan. John—not his real name—was receiving numerous letters from creditors. He came for assistance when his debts were beginning to get on top of him. He had even mentioned suicide. His community psychiatric nurse was concerned that the increasing pressure from his creditors was causing further harm to John’s mental health. An urgent home visit was arranged. A specialist debt adviser went through John’s benefits and discussed his options. John had wrongly believed that bailiffs could take all his goods and that he could be imprisoned and evicted. Time was taken to reassure him and to go through both his options and rights, and those of his creditors. He decided that bankruptcy would be the right option for him. The adviser completed the forms and accompanied John to court. The creditors can now no longer contact him. Moreover, the adviser helped to reinstate John’s benefit entitlement, which had been the reason why he got into debt in the first place.

John now needs less input from his care co-ordinator. He said, “I was in a real state, but I am now no longer afraid to answer the telephone, open my door or open my post.” John needed face-to-face advice to help deal with his problem. Without it, he would still be a suicide risk, living in isolation and fear.

More than 500 specialist advisers in independent local advice agencies are funded by the financial inclusion fund. Since 2006, more than 380,000 people have been helped to manage debt worth more than £6 billion in an extensive network of outreach settings, community centres, GP practices and Sure Start units. People who do not normally feel comfortable about seeking advice are able to go to such centres and speak in a place where they feel comfortable.

The CAB service managed the largest proportion of that funding, and it supports 338 advisers in local bureaux. Loss of the funding reduces the capacity of the CAB service by more than 70,000 cases a year, which is a cut in casework capacity of between 40% and 50%.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I thank the hon. Lady for being generous so early in her remarks. I completely agree with everything that she has said. The financial inclusion fund is of immense importance to my citizens advice bureaux in South Lakes. Most people think that the CAB is a state service; they do not realise that it is a charity, and that its ability to raise funds from other sources is incredibly limited. The fund is critical to its survival and to its ability to help people who are often in the most desperate circumstances.

[Yvonne Fovargue]

I totally agree. Having worked for a CAB, I know that people are extremely confused about where the funding comes from. The organisation gets very few donations. The depth of its service is often misunderstood as well. I have heard people say, “Oh, CAB, they tell people where to go.” We did not often do that.

[Chris Ruane (Vale of Clwyd) (Lab)]

My hon. Friend has given us some of the current statistics. Looking ahead over the next few years when hundreds of thousands of public sector workers will be sacked by the Conservatives and Liberal Democrats, what burden does she think that will place on Citizens Advice? In my constituency of Vale of Clwyd, some 50% of workers are in the public sector, about 4,000 of whom may be laid off. What effect will that have on citizens advice bureaux in my constituency and elsewhere?

[Yvonne Fovargue]

Indeed, over the past year, the number of debt clients seen by the CAB has risen by 23%, and a significant increase is expected in the next few years as well, so the loss of skilled advisers in local bureaux will have a catastrophic effect. It is essential that local links are retained. The trust that has been built up between local agencies, such as that between the bureau and the local authority council tax collection department, will be lost, to the detriment of local people who are struggling to pay. St Helen’s citizens advice bureau had regular meetings with the head of finance and the bailiffs to discuss tactics and to raise issues from clients’ experiences. It developed a protocol to assist residents, particularly those entering employment who found that all their creditors immediately descended on them, causing quite a number to leave work, feeling that they were better off on benefits, despite their increased income, because their debts had come back to haunt them.

[Kate Green (Stretford and Urmston) (Lab)]

Does my hon. Friend not agree that debt problems often come with clusters of other problems, including some related to employment and welfare benefits, as she suggested? Is it not therefore regrettable that neither legal aid funding, which we have previously been able to look to, nor—now—funding for debt advice will be available to support people with a multiplicity of difficulties?

[Yvonne Fovargue]

I completely agree. The idea that there were clusters of problems was identified at least 10 years ago. The legal aid cluster of social welfare law was developed so that the person could be addressed as a whole and not just seen as a set of individual problems.

A national telephone advice system could not help with our current problem of debt. Local knowledge, particularly about bailiffs, is vital. That was evidenced on Saturday in an article in The Times, which highlighted the different practices of bailiffs employed by neighbouring local authorities. The cuts cannot, however, be taken in isolation, as my hon. Friend pointed out. The consultation paper on legal aid proposes to remove debt from scope for all cases except those with an

“immediate risk of losing their home”.

That flies in the face of all the research demonstrating that early and timely intervention is crucial and actually saves the public purse money. For every £1 of expenditure on debt advice, the state potentially saves £2.98. Indeed the figure could be higher, particularly for the NHS.

Last Thursday in the Chamber, I mentioned a project that had been funded by my local primary care trust, which I managed until last May. It measured stress levels on a recognised NHS scale before and after the debt advice process. In the first nine months of the project, the PCT estimated that three suicides had been prevented. The project was a finalist for a national NHS innovation award due to its low cost and good outcomes for clients and the NHS.

Local authorities are also cutting the amount of money available for advice. The CAB in England and Wales faces an expected cut of 10% in 2011-12. If that is factored in with cuts to the financial inclusion fund and the proposed changes in legal aid from 2012, local bureaux can expect, on average, a 45% cut in funding.

[Mr Dave Watts (St Helens North) (Lab)]

With the cuts that we are seeing right across the spectrum, whether in local government or, in my case, the PCT, which part funds some of the posts in CABs in my area, does my hon. Friend agree that the only way to resolve the matter is for the Government to make a direct grant to citizens advice bureaux so that they can handle the massive increase in demand caused by the cuts imposed by the Tories and the Liberal Democrats?

[Yvonne Fovargue]

I have long been a supporter of a statutory duty to fund advice services, and I still believe that it is the only way in which the absolute importance of advice can be highlighted to local government and other funders. The cut to debt advice funding and the proposed cuts to local authorities and legal aid will be felt most significantly in urban areas, which have the greatest numbers of clients. To whom are those people expected to turn for advice on their debts?

The Government have announced their intention to establish a national money advice service to deliver free financial advice and an annual financial health check to provide people with a holistic overview of their finances.

[Mr Mark Williams (Ceredigion) (LD)]

I am grateful to the hon. Lady for giving way and I congratulate her on securing the debate. I think that she will agree that it would be wrong to characterise the issue as simply an urban issue. Rural areas in west Wales, such as my constituency, are served by only two citizens advice bureaux. She is right to highlight the cuts that such bureaux will suffer; those cuts will make access to the existing services even more difficult for people.

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[Yvonne Fovargue]

I thank the hon. Gentleman for that intervention. I agree. There are already “advice deserts” and people in rural areas already have difficulty getting access to face-to-face advice. They have to travel long distances to get it. These cuts will only make that situation worse.

I welcome any expansion of financial education but I would like the Minister to answer two questions. First, where will people who are identified as being in debt by the financial health check offered by the national money advice service go, as the number of local debt advisers will be dramatically reduced—to nil in many cases?

[Mr Chuka Umunna (Streatham) (Lab)]

I congratulate my hon. Friend on securing this debate. Merton and Lambeth citizens advice bureau operates in my constituency. We have one caseworker, whom we are to lose as a result of what the Government are doing. That caseworker has dealt with more than 400 debt advice queries. I asked what the effects of their loss would be and Merton and Lambeth CAB was very clear: without that debt adviser there will be nowhere else for people to go. Does my hon. Friend agree that that situation will be repeated up and down the country?

[Yvonne Fovargue]

I thank my hon. Friend for that intervention. I completely agree. I will come to the issue of where people are likely to go in the future.

[Mrs Jenny Chapman (Darlington) (Lab)]

I am very grateful to my hon. Friend for giving way and I too congratulate her on securing this debate. On the issue of where people will go for their debt advice, I suspect that they will have somewhere to go, which will be into the arms of fee-charging providers who advertise their services and, according to the Office of Fair Trading, mercilessly use every opportunity to recruit people inappropriately to use their services.

[Yvonne Fovargue]

I thank my hon. Friend for that intervention; I will come to the issue of fee-paying debt management companies shortly.

As I was saying, I have a second question for the Minister. Does he expect financial education to eradicate the need for debt advice in the future? It is my experience that most people fall into debt due to unplanned events, for example bereavement, illness or the loss of a job. People do not plan to get into debt, and borrowing is only debt when people cannot afford to pay the money back. At such stressful times in people’s lives as dealing with a bereavement or an illness, timely advice is vital. Indeed, one of the most distressing cases that I have dealt with personally was that of a family who had a child with a severe disability. They received all the disability and carers’ benefits, and they had taken out loans to adapt their home and car to enable their daughter to be cared for at home rather than in residential care. However, she died suddenly and unexpectedly, and they were left on vastly reduced benefits and facing a high level of debt.

Where are those people to go in the future? Like my hon. Friend, I fear that they will be thrust into the clutches of the fee-charging debt management companies, the same companies that the OFT found flouted debt management guidelines by misrepresenting their services as free when they are not free. The OFT also reported that many front-line advisers working for those companies lacked competence and provided poor advice based on inadequate information. Unfortunately, urgent action was not taken to address the problem and the issue is now being considered as part of the consumer credit and personal insolvency review. Unless action on the regulation of debt management schemes is fast-tracked, it is very unlikely that the necessary protections will be in place until autumn 2011 at the earliest, if they are put in place at all.

Vulnerable people should not be put into the position of paying unregulated and often incompetent providers to deal with the fact that they do not have enough money to pay their bills. The situation is becoming more urgent daily, with more and more advice agencies closing their door to new debt clients, so I urge the Minister to consider extending the financial inclusion fund programme until the review of advice services is complete, or to provide sufficient alternative funding for free face-to-face debt advice to continue in local agencies. Not to do either of those things will have a great cost—both in human terms and for the state.

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[Helen Goodman (Bishop Auckland) (Lab)]

It is a pleasure to see you in the Chair this morning, Mrs Riordan. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this important and timely debate.

A few months ago, I spent a morning in the court—which, incidentally, is also to be closed by the Government—in Bishop Auckland with a CAB adviser who was helping people who were in court because their rents or mortgages were not paid, and they were under threat of losing their homes. That morning I saw how vital the service provided by the CAB is to people at the critical moment when their homes are at risk. I was, therefore, absolutely appalled to discover that the Government are proposing to end the financial inclusion fund in March.

Last year, 1.5 million people were given advice on debt by citizens advice bureaux. Those services were concentrated on people who are most in need in deprived and low-income areas. In my constituency, there are three CABs. The Wear Valley CAB lost a grant of £95,000 in the FIF cuts, together with the legal aid cuts and the cuts that have been forced on the county council by the Secretary of State for Communities and Local Government. It will lose half its workers, which means that there will be no debt advice whatever in the whole of the Wear Valley district. The branch manager, Carol Shreeves, wrote to me in an e-mail:

“We have this week begun to tell clients coming to the bureau that we cannot take them on. Many have been very upset, as it has taken a lot of courage for them to come and seek help. The cut means that the bureau will have to reduce the number of hours it opens and will need to make approximately half its staff redundant. The difficulty is that since Christmas we have seen rise in demand for our services as various statutory agencies trying to save money at this difficult time have been referring clients to us…It seems to be generally accepted that debt advice is needed but the support for it is being withdrawn from all sides.”

[Yvonne Fovargue]

Does my hon. Friend agree that when there is an expansion of debt relief orders, requiring skilled advisers who have to take a complex examination to qualify to be an intermediary in the scheme, it is completely the wrong time to take funding away from skilled debt advisers? The CAB deals with 70% of debt relief orders, so there is no point in expanding the scheme and then leaving people with nowhere to go. There is no point in the expansion of the scheme.

[Helen Goodman]

My hon. Friend has made an extremely well-informed point and demonstrates to us all the complexity of this area and the significance of losing that kind of advice. Of course, the one group of people providing more advice are the loan sharks and the independent debt advisers, who are going round my constituency putting cards through letter boxes, saying, “Come to us”. If people go to them, they will be directed to precisely the people who will put them into a worse situation.

At the same time that that is happening, the Government are cutting the growth fund, which is the money that the Labour Government put into support for credit unions—another place where people can get low-cost finance and have a chat with somebody about how to manage their money.

Post-16 Students

Yvonne Fovargue Excerpts

Tuesday 1st February 2011 Commons Chamber

[Nic Dakin]

My hon. Friend makes a good point. What is happening in education should be put in the context of what is happening in services available for young people outside the classroom. I fear that without the provision of culture and sport in post-16 education, students will access these pursuits only if they or their parents can pay for them. That is the danger, and my hon. Friend emphasises that by drawing attention to the pressures on youth services at this time as well.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree that colleges such as those in my constituency, Winstanley and Wigan and Leigh, might find the excellent links they have developed with employers jeopardised by the lack of funding and the lack of ability to send students out on visits, work experience and day trips to try some employment? In an area of high unemployment such as Wigan, those are particularly vital.

[Nic Dakin]

I thank my hon. Friend for that contribution. Colleges are resilient and imaginative places, and I am sure that they will work hard to ensure that those student experiences are maintained. However, she is right that some of the funding for those activities comes from entitlement funding and that, if it is being cut by 75%, there is a need to square the circle, so colleges will need to look at ways of doing that. That might mean that class sizes rise or that there are other impacts on the system. However, she is right to emphasise the importance of vocational experience, sometimes quite short bursts of vocational experience within a package of learning as well as fuller training directly in the workplace, which will continue to be fully and properly resourced.

The size of the cut is unfair in comparison with the cut in funding per learner in primary and secondary education. It is also quite amazing that sixth-form colleges, rightly applauded by the Secretary of State and widely recognised as one of the most efficient parts of the education system, should be hit so badly. Surely that is an unintended consequence of a change in policy.

Will the Minister look again at the potentially very disruptive impact of the change to entitlement funding on different types of post-16 providers and consider ways of mitigating any unintended consequences? Will he provide information very soon on how much disadvantage funding will be allocated to each post-16 provider? Will he meet me and a group of college principals so that he can better understand the impact of the changes on those at the sharp end of understanding what is going on?

Finally, and slightly tongue in cheek, although I would welcome a positive answer, if he wishes to witness at first hand the excellence that the current arrangements resource, he might join me for John Leggott’s spring concert on 5 April to experience one example of what we have at the moment and what these changes might put in jeopardy.

Schools White Paper

Yvonne Fovargue Excerpts

Wednesday 24th November 2010 Commons Chamber

[Michael Gove]

I am very grateful to my hon. Friend for her comments. I have had the great pleasure of visiting a sixth-form college in her constituency, which, using its autonomy, does a superb job in raising standards for children from a variety of backgrounds. There should be no compromise on academic excellence. That is why we are asking Ofqual to benchmark our exams against the world’s best.

[Yvonne Fovargue (Makerfield) (Lab)]

Given the intention to expand the use of traditional uniforms in schools and the fact that only a minority of local authorities provide grants for school uniforms, what support will be made available for already overstretched parents to meet the extra costs involved?

[Michael Gove]

One of the many things the last Government did that was wise was to recognise that it is important that support is given to all schools in order to ensure children have access to high-quality school uniforms. In many cases a high-quality school uniform is not only a shrewd investment for the parent, but a wise choice for the school in building a sense of corporate identity. We want to make sure that the cost of uniforms is never a barrier to a child accessing a school, and the admissions code specifies that.

Oral Answers to Questions

Yvonne Fovargue Excerpts

Thursday 8th July 2010 Commons Chamber

[Vince Cable]

There certainly was a problem of serious overcharging, and it was pursued through the courts by the Office of Fair Trading. I am going to meet the director general of fair trading very soon, and I shall try to establish whether any action needs to be taken by the Department, as opposed to through the legal channels that have been pursued so far.

[Yvonne Fovargue (Makerfield) (Lab)]

What assessment has been made of the impact of front-line services in local citizens advice bureaux, such as my own in Makerfield, of the £2.5 million cut to Citizens Advice?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)]

I have met representatives of Citizens Advice England and Citizens Advice Scotland to discuss any difficulties they might have in implementing in-year cuts, as I have with all partner organisations of the Department. They have given me their assurance that they are managing, and they are working with my officials to try to ensure that those cuts can be made without hitting the front line in the way that the hon. Lady describes.