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Mr. Andrew Love (Edmonton) (Lab/Co-op): I am not nearly as sanguine as the hon. Gentleman in relation to mortgaging and remortgaging when lenders are now offering sums equivalent to five times income. That is a matter of genuine concern. My question relates to responsible lending: is not there an onus on the industry, including all the major banks which now find that they have substantial bad debts on their books, to lend more responsibly?

Mr. Robertson: I entirely agree with the hon. Gentleman, and I think that most would do so. As with most legislation, we are addressing the small percentage of cases in which that does not happen. Most borrowers would probably take an interest in what they were borrowing, examine the interest rate and assess whether they could afford it, but some do not, and that is the group whom we are trying to help. That is a difficult balance, and legislation needs to be shaped to take those different circumstances into account.

With regard to the proposal for an interest rate ceiling, I agreed with the Government in Committee and opposed that not only because it is my natural tendency to want to see the free market work, but because practical problems can also arise. The interest rate charged is not the only difficulty—other charges can be levied, such as a charge made when a loan is taken out, a charge made for running an agreement, a charge made for defaulting, and a charge made for sending letters to borrowers who have missed payments. I remember one example of a loan that I had many years ago. The lender claimed that I had missed the end payments, I said that I had not, and I had to take a solicitor's advice. I won the case— I did not owe the lender the money that it was suggesting. The lender, however, wrote to me and tried to charge me £20 per letter. I wrote back to it saying, "That is fine, I charge £30 a letter." Most people would not have my nerve or confidence, and would end up with a lot of debt because of that. My point, therefore, is that the interest rate is not the only factor about which we need to be concerned.

As I said earlier, I would have preferred a guideline—I tried to introduce such an amendment in Committee—under the unfairness test in the Bill perhaps considering prevailing interest rates at the time and the relative strength of the parties. Including such guidelines would not mean that other things could not be taken into account by the courts—the Minister's argument was that the court's hands would be tied if the Bill were too prescriptive. I do not think that that would be the case, however. The court could consider other factors if the wording of the Bill were right.

Maximum interest rates could have the effect of dragging up the average of the interest rates charged, and as the Minister said earlier, could exclude those who need to borrow at the lower end of the market and who take out short-term loans. I know that those tend to be the people whom we are trying to protect, but again it is a question of striking the right balance, and I do not
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think an interest rate ceiling is the answer. I do not think a Minister—not this Minister in particular, for I trust him entirely, but Ministers in general—should have the authority to introduce such a draconian measure.

A suggestion that I made in Committee does not seem to have been adopted in the new Bill. Under the "half" rule, someone can take out a four-year loan to buy, say, a car, with the option of returning the car after four years and ending the loan altogether. I have spoken to representatives of both sides of the argument, consumers and motor manufacturers, and I am convinced that that degree of uncertainty helps no one. I think that when people can get out of an agreement in that way, interest rates may become somewhat higher than they would be otherwise. The caveat emptor rule should apply, and those who take out a loan for four years should have to pay it off. We must have balance and fairness. I know that the Government consulted widely at the time, and I should like to know whether they have made any progress.

By and large I welcome the Bill, and recognise the need to update the 1974 Act. I hope that the Minister will be a little friendlier to the new Committee than he was when I was trying to get certain amendments past him, because I think the Bill could be improved. It needs a few more teeth in some respects, and needs to be less burdensome in others. It does not quite strike the right balance. Nevertheless, it represents a good step forward, and I wish it and the Committee well.

5.27 pm

Gordon Banks (Ochil and South Perthshire) (Lab): At the risk of repeating what others may have said already, let me say that I welcome the Bill. The existing legislation is more than 30 years old, and in that time we have seen many fundamental changes in our attitudes in society and to our attitudes to borrowing money and consumer credit.

Credit cards have become a way of life in the United Kingdom. Many of us are quite capable of managing our credit card debts, but others are not. In 2004, Citizens Advice Scotland published debt research entitled "On the cards", which showed a 64 per cent. increase in card debt since 2001, with the average debt in Scotland approaching £13,500. I believe that part of the reason is the order in which credit card payments are made. Customers are given the impression that they are paying off the high-interest debt first, or at the very least are not given the opposite impression. In fact, they are paying off the lower interest first. Most responsible credit card providers would recognise that every customer would prefer to pay off the debt with the highest interest first: that is only logical. The only reason for leaving the high interest to be paid off later is a desire to make more money at the customer's expense.

I do not believe that we can trust the market to reform itself, or to reform the system alone. We cannot rely on those who seek to make a profit from lending money to make and implement changes, and to regulate themselves adequately. I should like the Bill to give the Office of Fair Trading power to impose fines without limit—which the Financial Services Authority already has—and to include a requirement for statements of account to be issued on short-term loans lasting less than 12 months. I should also like to see restrictions on high payment protection insurance offered on short-term loans, which has already been mentioned today.
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The Bill's aim, however, is clear. The credit industry is needed to assist those with long and short-term financial needs, and indeed to assist modern life in general. We all use cards and we all use credit. There is a need to modernise and to adapt in order to provide a significantly more responsible market. The credit industry makes hundreds of millions—perhaps billions—of pounds. I doubt whether legislation such as this, or many of the suggestions made by Members today, will damage the industry; in fact, they can only serve better to protect the British public.

5.30 pm

Charles Hendry: With the leave of the House, Madam Deputy Speaker, I should be grateful to respond to some of the comments made in today's debate. It has been of an extremely high standard and we have addressed a wide range of issues of tremendous importance. We have also been privileged to listen to five remarkable maiden speeches from my Conservative colleagues, and I pay tribute to each and every one of them. They spoke with great clarity, passion and enthusiasm, and they are people from whom I know we all look forward to hearing a great deal more.

My hon. Friend the Member for Tunbridge Wells (Greg Clark), with whom I worked very closely during his time as the head of Conservative party policy, has an outstanding brain and I am delighted to have him as a constituency neighbour. He will be a very doughty campaigner, following on from Archie Norman's work in campaigning for issues in Tunbridge Wells. If my hon. Friend can secure improvements to the A21, that would be of great benefit to the hon. Member for Hastings and Rye (Michael Jabez Foster), as well as to my own constituents. My hon. Friend said that on one occasion, Archie Norman described him in three rather damning words, but the three that I would use today are "Excellent—keep going." It was a pleasure to hear the great fluency with which he spoke to the House today.

It was also a great privilege to listen to my hon. Friend the Member for Basingstoke (Mrs. Miller), who gave us a fascinating insight into her constituency's history. It is a much longer, broader history than most of us have imagined, driving past it on the M3. She will clearly be a tremendous champion of what is best for her constituents, and she will ensure that the best of the past is preserved, while being ready to campaign on future challenges. It is clear, too, from the way in which she spoke how engaged she already is with the issues affecting her constituents.

I also listened with great interest to my hon. Friend the Member for Rochford and Southend, East (James Duddridge). He spoke in the best tradition of Southend—East and West—in being a strong, powerful, clear and determined voice for his constituents, and a resolute local campaigner. I was struck, however, by his evident admiration—almost over-admiration—for all things from Tunbridge Wells. After my hon. Friend the Member for Tunbridge Wells said that he had a peer in his constituency—Lord Mayhew—my hon. Friend the Member for Rochford and Southend, East said that he had a pier as well: one of the largest in Europe. He said that he had something of a love affair with Tunbridge Wells, but I became slightly concerned when he told us that his constituency was gradually slipping closer to Tunbridge Wells, moving across the Thames and into Kent, which we
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in the south-east would of course greatly welcome. His was a very impressive speech and we look forward to hearing from him further.

My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) also spoke with tremendous fluency and showed a detailed and insightful understanding of the issues in this Bill. He spoke of the dangers of racehorses for Members of Parliament. When the late lamented Donald Thompson missed a vote, he explained that he had been at the races. His Whip, Spencer Le Marchant, who happened to own a racehorse that he was keen to sell, got him out of trouble by selling him a third of that racehorse, which immediately went lame and never won anything again. So my advice is to steer clear of racehorses. But the speech of my hon. Friend the Member for South-West Hertfordshire was extremely impressive and we look forward to hearing from him again.

Of the five of my hon. Friends who made maiden speeches today, my hon. Friend the Member for Hornchurch (James Brokenshire) is the one who actually gained a seat at the election. His was a remarkable result and I congratulate him on a tremendous gain. He spoke with enormous fluency, and with great warmth about his predecessor, John Cryer. Many of us would be very happy to see John Cryer back in this House—albeit in a very different constituency—although that might not be quite in keeping with the Labour Whips' wishes. My hon. Friend will clearly be a very effective campaigner on the issues affecting his constituents.

Those speeches provided us with a remarkable tour of English history: of the Romans in Basingstoke; the Saxons in Hornchurch; the Normans in South-West Hertfordshire; the Stuarts in Tunbridge Wells; and the Victorians in Rochford and Southend, East. I am not quite sure about Wantage, although we are very glad to see the end of the "Jackson" era. All those speeches revealed a group of Members of Parliament who are extremely dedicated to their constituents' interests. That filled me with tremendous hope because I believe passionately that the Conservative party must look more like the country that it aspires to represent.

In the speeches that we have heard today, we have heard from Conservative Members to whom people can relate, whom they will trust and feel are truly plugged into their constituencies and by whom they will be very well represented. I had better stop there for fear of incurring your wrath, Madam Deputy Speaker, or giving anyone the impression that I am setting out my credentials for the leadership of the Conservative party. [Interruption.] I hear the demands, but I shall resist them all the same.

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