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Mr. Speaker: I thank the hon. Lady for raising the matter with me. First things first: if she sends me all the relevant papers, I will investigate the matter and get back to her.

Mr. Oliver Heald (North-East Hertfordshire) (Con): On a point of order, Mr. Speaker. Since 1945, the convention in this place has been that what is described as a first-class constitutional Bill is committed to the Floor of the House for its Committee stage. The Government have followed that procedure on all Bills of substance about the constitution—for example, the Scotland Bill, the Government of Wales Bill and measures on our relationship with Europe. Part of the proceedings on some borderline Bills that have definitional issues have been held Upstairs. However, on all the major constitutional Bills, that has not happened.

On 7 May 1997, Madam Speaker ruled that a constitutional Bill had to be debated in the Chamber. If the Leader of the House wishes to take a different stance and change the convention, should he not make a statement in the House and allow questions from hon. Members of all parties? The matter is important because on a measure such as the Constitutional Reform Bill, which deals with the separation of powers, the role of our courts and of the Lord Chancellor and so on, we might be unable to consider provisions such as the appointment of judges in Northern Ireland, which appear late in the Bill, on the Floor of the House. It would be wrong not to deal with such a matter on the Floor.

Mr. Speaker: That is a matter for the House after Second Reading, which will take place on Monday. I hope that that helps the hon. Gentleman.
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Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6)(Standing Committees on Delegated Legislation),


That the Northern Ireland (Sentences) Act 1998 (Specified Organisations) Order 2004 (S.I., 2004, No. 3009), dated 14th November 2004, a copy of which was laid before this House on 17th November, in the last Session of Parliament, be approved.—[Margaret Moran.]

Question agreed to.
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Orders of the Day

Consumer Credit Bill

Order for Second Reading read.

1.36 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I beg to move, That the Bill be now read a Second time.

The Bill is the final stage in the most significant reform of domestic consumer credit law in almost 30 years. It caps the work begun by the former Minister with responsibility for competition and consumers, now the Minister for Public Health, who initiated the wide-ranging consumer credit review. Today, the Bill marks a major step forward towards a fairer, clearer consumer credit market for the 21st century. It will offer benefits to consumers and industry and fulfil our manifesto commitments.

I am pleased to say that, with so much support from hon. Members of all parties and their welcome for the Bill and the White Paper that preceded it, the measure will empower and protect consumers. It will increase competition and equip the credit sector to meet the challenges of the modern marketplace.

Mr. David Clelland (Tyne Bridge) (Lab): I am grateful to my hon. Friend for giving way so early in his speech, but those of us who are in Committee have to take what opportunities we can.

Will it be possible during the Bill's passage to introduce provisions to give the Secretary of State the power to put a ceiling on interest rates? My hon. Friend knows that some constituents are unwittingly led into credit agreements incurring interest rates and charges that can exceed 300 per cent. If such a provision cannot be included in the Bill, will he at least ensure that the measure provides for secondary legislation so that one could be introduced in future?

Mr. Sutcliffe: I understand my hon. Friend's problem with the Committee sittings this afternoon. I shall refer to ceilings on interest rates shortly but I give him the commitment that although we will not include such powers in the Bill, we shall keep the issue under review, for reasons that I shall mention later. I am sure that my hon. Friend will get a copy of Hansard and I am happy to meet him to talk about the matter.

We did not embark on reviewing and amending the consumer credit law lightly. The scope of the markets that we are considering is huge and the United Kingdom has one of the most highly developed credit markets in the world. We represent a quarter of the EU credit market generally and more than half of the EU credit card market. My right hon. Friend the Chancellor of the Exchequer said in his pre-Budget report last month that we had the best combination of low inflation, low unemployment and rising living standards for decades.

With the achievement of that macroeconomic stability, to which the Government committed themselves, we have enjoyed interest rates at a level not experienced since the 1950s. I understand that the Monetary Policy Committee said today that rates are to remain unchanged. Those rates have brought about
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improved access to affordable credit for consumers across the country, and the benefits of affordable credit are plain to see. When it is used effectively, a combination of sensible borrowing and saving enables consumers to enjoy the freedom that credit gives: freedom to improve their home, to take a holiday, or to buy the car that they need for work or family use.

However, one in eight households still have arrears on either consumer credit or household bills, with all the strain on families, on health and on well-being that that level of debt can bring. Sometimes, the effect can be even worse. We have heard hon. Members tell the House about tragic suicides related to debt. I have no doubt that in all hon. Members' constituencies, there will be casework that shows the level of abuse by unscrupulous lenders who prey on the vulnerable, and on the poorly informed consumer. I know that there are such cases in mine. They highlight the real human misery that underlies the statistics on debt.

More than half the households that are over-indebted have an income of less than £7,500 a year. I heard of one couple, both of whom suffered from mental illness, who were persuaded to take out a loan of £500. Within 12 months, the same lender had pressured them into taking out a further 10 loans, leaving them with a total debt of more than £5,000. That was 10 times the amount that they had originally agreed. The couple also owed another £19,000 to other lenders. Most importantly, they had no means to repay any of these loans. Thankfully, the couple were offered assistance by a local support organisation, and I am pleased to be able to tell the House that the debt was written off.

No humane society can stand by and do nothing to prevent this sort of predatory lending. We certainly could not, and we are not going to. That is why this Government are committed to toughening the laws to combat rogue traders, unfair terms in contracts, and loan sharks who prey on the vulnerable and use despicable tactics to ensnare their victims. But this commitment cannot be fulfilled by new legislation alone. Building a credit market for the future means not only legislating for consumers but working with them.

Mr. Peter Pike (Burnley) (Lab): Is it not important that, as well as introducing this legislation, the Government encourage people who need to borrow money to go not to the loan sharks but to credit unions? These provide a very good way for people to borrow at fair and reasonable prices, and allow them to understand fully what they are committing themselves to.

Mr. Sutcliffe: My hon. Friend has pre-empted what I am going to say later. He is right to say that credit unions have a tremendous role to play. In the Chancellor's pre-Budget report, £120 million was given for a financial inclusion fund. The Bill needs to be seen in the context of all the other work that is going on in the Treasury, the Treasury Select Committee and the Financial Services Authority. This Bill is not just about credit; it is about the whole issue of financial inclusion.

Angela Eagle (Wallasey) (Lab): I want to give a great welcome to the Bill. However, there is something rather odd in it that I want to ask my hon. Friend about, as he has been talking about extortionate credit. I want to ask
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him about the very unusual presence in the Bill of a maximum fine of £50,000 for those who are discovered dealing in extortionate credit, in contravention of the terms of their licence. It is very unusual to see such a maximum set down in a Bill rather than in secondary legislation. Will my hon. Friend consider this matter very carefully? It is 30 years since the Consumer Credit Act 1974 was put on the statute book, and it seems wholly inappropriate to fix in the Bill a fine for this despicable behaviour of which many of us, on the Labour Benches at least, have had direct experience through people visiting our constituency surgeries. These people have been viciously exploited by the sellers of extortionate credit.

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