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Mr. Battle: I was interested in the debate just before the lunch break, because what is most encouraging is that we are all regulators now. When the hon. Member for Tewkesbury spoke about credit cards, he was actually pressing for more regulation, and he was absolutely right. We have had some 50 years during which the market was not properly regulated even by the 1974 Act, and he himself put it well when he said that we really have a duty to make sure that we protect the poorest from paying the most, which is what happens in the borrowing market: those at the bottom of the pile pay most. So I welcome the fact that we are all regulators now.
Mr. Robertson: The right hon. Gentleman mentioned the term ''better regulation'', and that is what I wanted to press for.
Mr. Battle: I am delighted that the Conservative Party is in favour of better regulation. We will go all the way with it, and we can have meetings and Committees like this from now to eternity. That is the point.
The problem with this Bill is not the intention. Our intention is to have better regulation and to make this a better Bill. But we have a difficulty, because we are caught between two words that could be incredibly vague—unfair and reasonable. At the same time, we want an open policy, so vague words help. Philosophers refer to the huge vague being incredibly helpful, because it is a loose holdall. We need to be specific to ensure that we actually catch people with the language that we use, as it were, and to make sure that the law is effective. It is that tension between the vague and the specific that we have to address, and I want to make a helpful suggestion, if I may.
I have not moved an amendment, but I want to introduce a concept that is not so broad that it will not do anything but which has quite particular links to
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other legislation and might enable us to sharpen up the Bill. We do at least have consensus in this Committee: we all agree that unfair relationships between creditors and debtors are wrong. I have never heard anybody arguing that those lending the money are being unfairly treated by those borrowing it. I do not get the impression that the banks are saying: ''The people borrowing our money are screwing us terribly.'' Quite, honestly, that is not the tone of the debate. So I welcome the fact that in the Bill we have moved away from the extortionate credit bargains. That phrase itself did not work.
I sought the list of the number of times that poor people, who pay the most through doorstep lending, were able to bring a case to court. The answer is none. Therefore, I welcome the Bill.
The fact that the Bill contains the words ''Unfair relationships'' in the heading and
''Unfair relationships between creditors and debtors''
in the sub-heading is real progress. It goes even further, and refers to the court determining whether
''the relationship between the creditor and the debtor arising out of the agreement . . . is unfair to the debtor''.
It does not say ''unfair to the creditor''; it says ''unfair to the debtor''. My argument is that we must shift the law in favour of those who are hit hardest by credit card borrowing and doorstep lending.
We must be careful in the complex market not to dismiss the whole lot in grandiose terms that oversimplify the debate. There is a big difference between the high street banks and credit cards, between store cards and what is called the ''sub-prime lending'' market, in which people go round knocking on doors, practically lending money on the doorstep, just with a handout or an advert—the hon. Member for Richmond Park referred to adverts. We need to segregate the market, and know what the problems are that we are trying to address.
Dr. Tonge: Whether it is extortionate or whether it is an unfair relationship, the point has been made over and again that the person still has to go to court to get redress. As the hon. Gentleman said, the hardest hit debtors are the least likely to go to court. If they did not do so under the previous legislation, they will not do so under this Bill. Surely prevention is better: make sure people know what they are letting themselves in for in the first place.
Mr. Battle: The Minister accepted—he can speak eloquently for himself—the hon. Lady's point about education right through the system. I am neither a mathematician nor a lawyer, but the court issue is important. Some Members suggested that getting a case to court will act as a test and help to define ''unfair''. It will not. Every case will have to stand on its own. No precedent will be set, because cases will not be heard in the criminal court but in the ordinary county courts.
The hon. Member for Tewkesbury has a point; we must look at the definition to some extent. What do we mean by ''unfairness''? We are going in the right direction—it is the unfairness of the relationship, where the lender can crush the borrower, particularly
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if that borrower is poor, through interest rates and extra charges, by changing the conditions without properly informing people.
I would suggest the rather narrow concept of ''proportionate to the means''. What do I mean by that? I want to stop going round in the circles that the hon. Member for Richmond Park referred to and put that proposal to the Minister. Take the example of a lone parent who has had to borrow some money. The man may come round with his dog to collect the debt payment, and the lone parent may not be able to keep up with payments on other bills. Not everyone pays by direct debit, so the person might be in trouble with housing or council tax payments.
When people default on bills they get taken to court. When they go to court they have to fill in a form—a statement of income and outgoings—on which it states:
''The information on this form may be used by a magistrates' court, or any other authorised agency acting under the court's instructions, to enforce collection of any court-ordered penalty imposed against the person named on the form in the event of non-payment of that penalty.''
If they go court because they defaulted on their rent and the court says, ''Okay, you owe £500 rent and we will fine you £2,000 on top of that for the court costs'', how will they pay that fine if they have no money? Therefore, the fine imposed by the court must be proportionate to people's ability to pay it back.
Why can we not invert the idea and make sure that before creditors lend money to people they check whether those people are capable of paying it back. Unlike a Capital One application—which asks about three questions, the main one being, ''Do you have a house that we can have a claim on later?''—a court statement is very clear. It asks for personal details: date of birth; national insurance number; occupation; and employer. It asks for details on income: if the person is employed, it wants to know about pay and any other income; and if he or she is unemployed, it wants to know about income support, pension credit or any other benefits. It asks for details on weekly outgoings: rent, mortgage or board; council tax; food; county court orders or fines that must be paid; travel expenses; clothing; telephone, including a mobile; gas; electricity; water; insurance; fuel; loans; television, including cable or video; lottery; entertainment; drinking; smoking; car insurance; catalogues; hire purchase; credit cards; and any other outgoings. That is an incredible list to ascertain whether people can pay a court fine. I simply suggest to the Minister that we ask that that proportionality be part of the process when dealing with the relationship between creditor and debtor. The ''unfair'' relationship between creditor and debtor is a great concept, but it pushes it into the court.
I take note of some of the comments made by the hon. Member for Tewkesbury, but if individual cases are left to the Court without guidance, every case will be judged on its own merits. We could do a bit more to weight the balance in favour of the person who borrows and gets into debt.
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4.30 pm
Gregory Barker: I have listened very carefully and strongly agree with much of what the hon. Gentleman has said. On the issue of unfairness and the weight in favour of the creditor or the debtor, would he not agree that many people, particularly the most vulnerable, who often find themselves at the grubbier end of the loan market, are by necessity in very difficult circumstances? They will not look into those issues thoroughly. They will not be thinking straight. They may not make a rational decision. Through force majeure—perhaps through their own fault or perhaps not—they will be put in a very difficult and trying situation, and they will be desperate. Some companies take advantage of that desperation, and the measures the hon. Gentleman proposes seem a very sensible antidote to that problem.
Mr. Battle: I make cheap political comments about whether Conservative Members are now in favour of regulation. In all fairness, I deeply appreciate the comments that the hon. Member for Bexhill and Battle has made, and the empathy and understanding that he and his colleagues have shown in these matters. Sometimes we find it hard to imagine the circumstances of the people who are lent money. A relationship may have broken up, another house must be set up and money may be needed pretty quickly, perhaps for a bed or a cooker, in extreme circumstances. If a child arrives, money may be needed to buy a cot, or to send a child to school. That money must be raised when people are under incredible pressure and with other demands on them. People are living on incredibly low incomes at the bottom end, and when a loan has been taken out, it is not surprising that people become absolutely desperate. I am saddened by such tragic cases. We do not know the scale of the problem because sometimes families, friends and relatives help out. However, we could do more in law to back those people up, and that is precisely the purpose of the Bill.
The Minister made a good point early on, and he has made it consistently throughout the Bill, that we could take a total line—I doubt Conservatives would even go this far—and propose to ban all lending. We do not ask for that and no one suggests it. We must strike a fairer balance between good lending so that people can borrow—because they need to borrow; and we do not want to stop lending—and making sure it is fair, so the person borrowing knows what they are getting and is able to make the repayments rather than be driven down into more debt. Having that sense of proportion could be important, because the unfair relationship between the creditor and debtor may be built into the agreement—the amount of money plus interest and charges that are written in may be disproportionate.
That is why the problem must be considered at the early stage. The hon. Member for Richmond Park asked at what stage we should deal with these matters. It should be right at the signing of the agreement. Caveat vendor should apply, because at that point the lender can check out properly the borrower and use the statement of income and outgoings that the court might use.
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I am grateful to Zaccheus 2000 Trust, the body that has campaigned unstintingly and with some energy on poverty in Britain, and that has pushed the idea that more should be done. In 2002, it had a letter from the then Lord Chancellor, in which it was spelled out that Parliament could take notice of the enforcement of fines regulations. The Lord Chancellor wrote:
''For fines to be effective they must be proportionate to means. To enable this it is vital that magistrates have accurate and up to date information about an offender's means at the time of sentencing, and throughout the enforcement process.''
I am not for one minute suggesting that everyone at the poorest end who borrows money is an offender. I am merely arguing that there ought to be proportionality before these companies push money at people who will never be able to pay it back. I am convinced that companies know that they will be unable to pay it back. That is what we must challenge, as they are driving people into debt. I am not asking the Minister to put the word ''proportionality'' in the Bill, and I will not be supporting the amendment as the necessary words, however vague, are already in the Bill.
On the Floor of the House and in the Committee, the Minister referred to the process of our deliberations. It is significant that there is almost unanimity of intention and spirit on what we want from the Bill. We believe that we are going some way to rebalancing the relationship between creditor and lender. We would like it to be tighter to ensure that it is effective; that is the spirit and intention of the Committee.
A Minister's word is law if said on the Floor of the House or in Committee, and the lawyers must work with that. Perhaps the courts should be encouraged to say that proportionality should be a factor. That would provide a narrow definition of unfairness for the benefit of the borrower. Guidance could be issued under section 44 of the 1974 Act, to which my hon. Friend the Member for Rhondda referred.
It is important that we make clear our intentions in the Bill. It is obvious that the intention is not to say that the unfairness is in favour of the lender. The intention is to deal with the unfairness against those who borrow because they simply cannot pay the money back.
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