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Given the Government’s desire for individuals to take more personal responsibility for their long-term financial well-being, the only real surprise is that that
education need has not been addressed already. For many adults, however, debt is a problem that already exists. People in debt simply do not know how to climb out of the debt trap, and in many cases some simple advice and support can help people to turn their lives around.
Yet the problem is growing. Since 1997, total British household debt has risen 170 per cent. The average interest paid on debt by each household per year has risen to approximately £3,800—an increase of £500 over the past year alone. According to Credit Action debt statistics, 80 per cent. of Britons regularly admit to overspending.
One tool for decreasing the problem is to ensure that people have access to free independent advice and assistance. The Thoreson review is currently looking into the matter, but Otto Thoreson has stated recently that providing a national, generic financial advice service would improve financial capability across the UK, and that the benefits would outweigh the costs by about three and a half to one. He has already identified the cohort of the population most in need of the advice, and calculated that there are 19 million or so people with significant needs. That represents nearly half the UK adult population.
Some advice is available already, but the organisations offering it face an increased burden. The National Association of Citizens Advice Bureaux received 434,592 requests for help in November last year. That is 30,000 more than in the whole of the 1996-97 accounting year, which shows how the problem has grown.
The Government should be working actively with the financial services industry to achieve a national roll-out of independent advice centres that would provide financial health checks. Currently, NACAB provides a valuable service but it usually offers help only once people have got themselves into considerable financial difficulty. It has recently trialled a new initiative called Moneyplan, whose aim is to find a way to meet the advice gap that has been identified in the provision of generic financial advice.
The main findings so far suggest a great deal of unmet demand. The project does not deal with crisis management, but it often has to deal with explaining financial documents that the individual simply does not understand. Also, the Resolution Foundation has investigated the feasibility of establishing a new national financial advice resource, funded by a public-private partnership, to provide financial advice targeted at people on low incomes. The foundation makes the point that a significant proportion of that group are currently making poor financial choices. I suggest that making poor financial choices is not restricted to people on low incomes.
The Resolution Foundation report also concludes that, by drawing on technology and harnessing learning from existing services, the financial advice needed could be provided at high volumes and at a reasonable cost. The time has come for Government to take a lead on the problem, rather than wait for some third-party organisation to try to get people together.
My Bill would provide a mechanism for achieving a national roll-out of independent advice centres that provide financial health checks. A network that
provides genuinely independent advice would be in the best interests of the financial industry. It would be in the industry’s interests to finance the scheme collectively, as it would help to restore battered confidence by providing advice of a high professional standard that is not linked to any particular product.
However, it is no good having improved financial literacy if lending practices are confusing to the consumer. There is a need for greater transparency in a number of areas. Young people often collect store cards and, despite recent changes, some of the charging remains complex and fairly opaque. We need to have a simpler mechanism for explaining to people what their average monthly repayments will be for each £100 that they borrow—both in the initial phases of the loan, and once any offer period has expired. The current concept of APR—the annual percentage rate—is meaningless to most people.
There is also a need for tighter guidelines by the Financial Services Authority over non-income verified mortgages. We do not want to return to the days when the self-employed found it hard to obtain loans, but the recent growth in the number of unverified mortgages suggests an eagerness to promote competitive lending. Lenders should have more responsibility for ensuring that a mortgage is granted only if it is proven that the suggested repayments are feasible. The issue is hugely topical. Only this morning on the “Today” programme, Hector Sants, head of the Financial Services Authority, acknowledged the need to return to a rather more old-fashioned world in which banks lent money, kept risks themselves, and had to make rather fuller judgments about the people to whom they lent.
The aforementioned measures can only go so far, and there is a pressing need to find ways in which to
put the brakes on irresponsible financial behaviour. One way of doing that would be to adopt greater debt-inflation pooling, in order to prevent irresponsible lending and borrowing. At present, about 60 per cent. of debt data are pooled; the 40 per cent. that are not includes student debt, and figures show that more than 59,000 graduates are in arrears of student loan payments by more than six months. Clearly that information needs to be part of the bigger picture, so that young adults are not allowed to get further into debt and lenders have the greatest possible amount of information on the people to whom they are lending.
This is very much a 21st-century problem. I pay particular tribute to my hon. Friend the Member for Twickenham (Dr. Cable), who has done much to highlight the issues in the past. The Bill is a modest contribution to tackling the problem, and I hope that the Government will support its aims.
Bill ordered to be brought in by Sandra Gidley, Rosie Cooper, John Bercow, Peter Luff, Mr. David Drew, Mr. Don Foster, Dr. Vincent Cable and Lorely Burt.
Personal Debt (advice and Regulation)
Sandra Gidley accordingly presented a Bill to require schools to provide education on personal money management; to make provision about advice centres on personal finance; to impose conditions on the activities of money-lending companies; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 25 April, and to be printed [Bill 77].
Points of Order
12.42 pm
Julia Goldsworthy (Falmouth and Camborne) (LD): On a point of order, Mr. Speaker. Have you considered the instruction on the Order Paper in the name of my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg), and will you be selecting it?
Mr. Speaker: I understand that the matter does not arise today, so the question is rather hypothetical.
Simon Hughes (North Southwark and Bermondsey) (LD): Further to the point of order, Mr. Speaker. I am sorry about this—
Mr. Speaker: As I have said in the House before, the cares of tomorrow are for a day still to come.
Simon Hughes: I am very aware of that, Mr. Speaker. I am keen that none of us should have this care tomorrow or the day after, which is why I am raising it today.
On the issue of Standing Order No. 66 and instructions, may I ask your advice on whether you might be able to help us in two ways, Mr. Speaker? I think I am right in saying that, under the present arrangements, when an instruction is issued there is no early indication of its selection like the indication through your office of the selection of amendments, for instance, or other selection in the Lobby. Will you consider whether it would be possible for you to indicate selection or non-selection of instructions with some notice, so that the House as a whole knows in advance whether an instruction has been selected? That is my first question.
Mr. Speaker: I cannot possibly give an answer just now, but I will consider the hon. Gentleman’s point. That is question No. 1 out of the way. As an engineer, I like to do one thing at a time. Now let me deal with the next question.
Simon Hughes: You have been very helpful, Mr. Speaker. I have one more request, to which I hope you will be equally sympathetic.
There are some instructions which it seems to me may not be necessary—although they are perfectly legitimate as instructions on the Order Paper—because the legislation to be debated could include the business that is the subject of the instruction. I have been present—as you have, Sir—on occasions when instructions have been issued and it has been accepted that the matter in question is one with which the Bill could deal: Crossrail is one example. Will you, Mr. Speaker, give consideration to whether I might be spared the need to have to raise such an issue in future because you are able to rule that a Bill covers the matters dealt with by an instruction so we do not have to put it on the Order Paper?
Mr. Speaker: The hon. Gentleman must understand that I deal with the business of the day, and I therefore cannot give hypothetical rulings.
BUSINESS OF THE HOUSE (LISBON TREATY) (No. 7)
Motion made, and Question put forthwith, pursuant to Order [28 January],
That the Order of 28th January be further amended as follows: in the Table, in the entry for Allotted Day 8, in the third column:
(a) for ‘4Â1/2 hours’ substitute ‘3Â1/2 hours’, and
(b) for ‘1Â1/2 hours’ substitute ‘2Â1/2 hours’. —[Mr. Watts . ]
Treaty of Lisbon (No. 8)
Mr. Speaker: I inform the House that I have selected the amendment in the name of the right hon. Member for Richmond, Yorks (Mr. Hague).
12.45 pm
The Secretary of State for Environment, Food and Rural Affairs (Hilary Benn): I beg to move,
That this House approves the Government’s policy towards the Treaty of Lisbon in respect of provisions concerning climate change.
I am sure that the whole House welcomes the opportunity to debate the part that Europe should play in tackling dangerous climate change. Leadership on this most important task facing our planet is exactly what we need Europe for, and in providing that lead Europe is building on the environmental foundations it has created since its early days. It was in 1987 that environmental protection was first brought into the treaty of Rome, with the signing of the Single European Act. In 1993, the Maastricht treaty established the environment as an activity of the EU. The treaty of Amsterdam in 1997 included balanced and sustainable development as a new objective of the European Union. There was a declaration by member states alongside the treaty of Nice in 2001, which expressed determination that the EU play a leading role in promoting environmental protection both in the EU and globally. Finally, the Lisbon treaty specifically recognises combating climate change as an important strategic objective of EU policy.
Colin Challen (Morley and Rothwell) (Lab): Regardless of what we think of the nature of the protests that have taken place today on the roof of Parliament and a few days ago at Heathrow, they point to a major contradiction in EU policy. On the one hand, the approval of the open skies treaty between the United States of America and the EU could lead to 25 million tonnes of carbon being released into the atmosphere, while on the other we have this debate today about climate change. Will the Secretary of State press for the treaty’s provisions on climate change to trump the other things that are pushing to make matters worse?
Hilary Benn: I shall address aviation later in my speech. Interestingly, although the abandoned constitution did not contain a specific reference to climate change, the Lisbon treaty specifically recognises the need to combat climate change as a strategic objective of the EU. I hope my hon. Friend acknowledges that. [Interruption.] As my hon. Friend the Minister for Europe says, it is an improvement. That is because it recognises the changes in politics, in science and in understanding and awareness. If I may say so, that makes the Opposition amendment look pretty strange. I am looking forward to hearing the speech of the hon. Member for East Surrey (Mr. Ainsworth), because what on earth would the rest of the world make of us if, having put that into the Lisbon treaty—for reasons that many Members have advanced—we were to take it out? What message would that send to the world about how serious Europe is?
Mr. John Gummer (Suffolk, Coastal) (Con): Does the right hon. Gentleman agree that those who are concerned about the precise, detailed wording of the Lisbon treaty, lest it should lead to uncovenanted results, ought to be particularly keen on the introduction of these words, because the results to which they will lead will be covenanted? They will mean that the European Union makes this a much more central issue than it would otherwise be.
Hilary Benn: The right hon. Gentleman absolutely makes the case. I pay tribute to the work that he has done over many years to advance the cause of environmental understanding in the UK and in Europe. That is absolutely the argument. Bluntly, it would look really odd if, having gone into this recognising that we all understand the problem, we were then to argue that it should not be in the treaty and that we should take it out. What sort of message would the House be sending out if that were to happen?
Mr. Graham Stuart (Beverley and Holderness) (Con): Does the Secretary of State accept that adding six words to the Lisbon treaty is hardly going to transform the centrality of climate change to European policy making? As he has set out in his speech, the EU already has the powers and the established position to take action on this matter. With respect to my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), whose point I take on board, might not the practical effect of the measure be that international treaties on climate change would need the approval of the European Parliament, which could put a brake on action on climate change, rather than leading to an improvement?
Hilary Benn: Methinks the hon. Gentleman doth protest too much. Yes, this measure will institutionalise what the European Union has already been doing—I will say more about that in a moment—but that is not an argument for not putting it in the treaty. If we recognise, as we all do—I am sure that that goes for the hon. Gentleman as well—that climate change is one of the two greatest threats that the world is facing, why would we not want to put in the treaty a reference to dealing with the dangerous consequences of climate change as a strategic objective of the European Union, given the opportunity and given what Europe has done up to now? I have to say, in all honesty, that I really do not get the hon. Gentleman’s argument, which is why his speech on the subject will be very interesting to listen to.
Mr. David Chaytor (Bury, North) (Lab): Is it not clear that the suggestion in the Conservatives’ amendment that
“the Treaty of Lisbon is effectively irrelevant to the vital issue of climate change”
is completely absurd? Is it not also clear that their attempt to set the purpose and policy of the European Union against the processes of the European Union is also based on a false dichotomy? Without streamlined processes, the European Union would not be able to advance its policies.
Hilary Benn:
I agree with my hon. Friend entirely. Indeed, part of the purpose of the Lisbon treaty is to enable Europe effectively to address the challenges that
the world faces, and today we are discussing climate change, which is one of the greatest of them all.
Mr. Nick Hurd (Ruislip-Northwood) (Con): The Secretary of State has warned the Opposition about the danger of sending baffling messages on climate change. May I put it to him that actions speak a great deal louder than words, and that the decision to expand Heathrow is utterly baffling to my constituents, and to people all around the world? I really must ask him to reconsider it.
Hilary Benn: I will come to the emissions trading scheme and aviation later. The hon. Gentleman will know that a consultation is taking place, and that, in the context of the much lower total of carbon emissions that we will be able to emit if we are to achieve our international objectives, society has a choice about where it decides to make those emissions. It is because of Europe that aviation will now have to make a contribution; it did not have to do so in the past. Aviation has a particular set of characteristics, along with shipping, including the fact that it is international, and we will need to agree on a system for divvying up responsibility for coping with the consequences of those emissions. We now have a vehicle for doing something about that, but only because the European Union has acted.
Mr. Mike Weir (Angus) (SNP): I am following what the Secretary of State is saying, but is it not the case that, although aviation will come into phase 3 of the EU emissions trading scheme, there will be an opt-out for industries in competition with businesses in countries without comparable carbon restraints? Does not that mean that international flights from the EU to the United States or the far east, which do not have carbon restraints comparable to those of the ETS, will not be included in the scheme? Will not the scheme therefore affect only flights within the EU?
Hilary Benn: The EU has competence in relation to flights that come in and out of the Union. Frankly, if the International Civil Aviation Organisation were doing its job properly, it would be addressing this issue, because ultimately we need an international solution, as we do in the fight against climate change. That is not an argument for Europe not trying, however, and the significance of the agreement that we reached at the Environment Council in December was that member states said, “Yes, we wish to see aviation included.” Britain would have liked aviation to come into the scheme earlier than 2012. It looks as though that is when it will happen; it now depends on negotiations with the Parliament. The cap that will be applied, subject to those negotiations, will be based on 2004-06 emissions. That means that any rise in emissions above that level will have to be compensated for by emission reductions elsewhere.
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