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Westminster Hall

Tuesday 21 January 2014

[Mr Philip Hollobone in the Chair]

Debt Advice (FCA Levy)

Motion made, and Question proposed, That the sitting be now adjourned.—(Gavin Barwell.)

9.30 am

Mr Robin Walker (Worcester) (Con): It is a pleasure, Mr Hollobone, to speak under your chairmanship. I am grateful to the Backbench Business Committee for allowing one of its first Tuesday morning debates in Westminster Hall to be about this important issue. Following last night’s positive cross-party debate on the recent report on the payday loan sector by the Select Committee on Business, Innovation and Skills, this debate allows us to expand on a vital and timely matter, which was subject to a key recommendation in that report.

I particularly welcome the cross-party support for this debate from the Chair of the Select Committee, from its Labour members, including the hon. Members for Sheffield Central (Paul Blomfield) and for Glasgow North (Ann McKechin), from my Liberal Democrat colleagues, my hon. Friends the Members for Edinburgh West (Mike Crockart) and for Chippenham (Duncan Hames), and from a good number of Conservative colleagues, both on and not on the Select Committee. It is good to see my hon. Friends the Members for Gosport (Caroline Dinenage), for East Hampshire (Damian Hinds) and for North Swindon (Justin Tomlinson) here to contribute to today’s debate.

This debate is timely because, over the next year, the payday lending sector and other high-cost lenders will begin to be regulated by the Financial Conduct Authority and to pay the levy that it raises to cover the costs of regulation and to fund the Money Advice Service—and, through that, the provision of free debt advice services.

Hon. Members will be as surprised as I was to note that, until now, the highest-cost lenders have not had to make the same contribution to free debt advice services as their competitors in the banks and the credit unions. That has been unjustifiable, but I am glad that, thanks to changes made by the Government and the FCA, such lenders will shortly be making at least that contribution in future. However, there is concern that if the machinery of regulation and the levy remain as they stand, and no guidance is provided, the opportunity for those lenders to contribute additional resource to free debt advice services might be missed.

Another reason why this debate comes at a crucial time is that the Money Advice Service is negotiating with free debt advice services over their future three-year plans and budgets. Almost all hon. Members will benefit from the important work that the likes of the citizens advice bureaux do in our constituencies, and will recognise the enormous value to constituents of being able to access free, timely and impartial debt advice. I value highly the work of Worcester CAB, Worcester Housing and Benefits Advice Centre and other small debt advice charities such as Two Pennies Money Advice and Christians Against Poverty. I am grateful to all those organisations,

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as well as to national charities such as StepChange, for their work with constituents and for the information they provided to inform this and other debates.

A key way in which the free debt advice sector is funded is through the Money Advice Service and that, in turn, is funded through the FCA’s levy. The problem was discovered by a cross-party group of MPs who have been working together on these issues; I am grateful to the hon. Members for Sheffield Central, for Glasgow North and for Makerfield (Yvonne Fovargue), and to my hon. Friend the Member for East Hampshire, for sharing their meetings in this regard.

Understandably, the FCA sees itself as a collection organisation for the levy, with powers to agree what is put to it, but not to set the terms of the levy or measure the demand for debt advice services. Meanwhile, the Money Advice Service has been under pressure to show that it is delivering value for money and running efficiently, and its representatives have told me and other hon. Members that it has no current plans to ask for an increased budget in the years to come. If things remain as they are, we could miss the opportunity offered by the fact that new organisations will be paying the levy and contributing at last to the budget for free financial advice; their contributions could be cancelled out by a levelling down of the charges to other financial institutions.

I recognise that some colleagues, and even the Treasury Committee, are worried about the cost of regulation encompassed in the current levy, and I do not want to rule out a reduction in the contribution to the levy of other financial organisations. I have no reason to object to any such changes, but I want to ensure that they are not made at the cost of funding valuable and necessary support for free financial advice.

I also recognise that there is a legitimate debate about the role of the Money Advice Service, and that it has been the subject of reports by the National Audit Office and the Treasury Committee. The latter recommended a full independent review of its work and questioned whether it should continue at all. However, today’s debate is not the avenue for taking forward that particular discussion. If we accept that the Money Advice Service is the established channel for allocating funds to the free debt advice sector and that its negotiations with free debt advice providers are likely to set the limits of lenders’ financial contributions to the sector, we must show political leadership in calling for those limits to be raised.

I would like the proceeds of the levy for debt advice to be allocated among an even wider group of organisations, including some of the smaller players in the voluntary free debt advice sector, alongside the major providers, but that is also an argument for another time. I note that the National Association of Citizens Advice Bureaux confirms in its briefing that the six lead organisations work with more than 240 smaller organisations to deliver free debt advice.

In previous debates on high-cost credit, I have advocated the advantages of a levy on the highest-cost lenders to create a competitive advantage for more affordable lenders such as credit unions. I have pointed out that if such a levy were related to the rates of interest charged and the extent to which they go beyond the existing cap on credit union lending, that could create a virtuous circle whereby the growth of the high-cost lending market would fund ever greater provision of debt advice

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or the availability of more debt advice might direct borrowers to cheaper forms of debt, such as credit unions. I still believe strongly that such a system is desirable, but I recognise that it is not what we currently have. As a pragmatist, I want to make the system that we have work better.

Charities such as StepChange have made a clear case that the high-cost lending industry in general, and payday lenders in particular, are contributing to the growth in demand for free debt advice. As the BIS Committee report reflected, tens of thousands of people have been put into severe financial difficulty by taking out loans that turned out to be unaffordable for them. They are in addition to the hundreds of thousands who struggle to meet their obligations and the millions for whom short-term, high-cost loans might not be the best financial choice.

StepChange and citizens advice bureaux have reported rising numbers of people seeking advice as a result of getting into trouble with payday loans. The latter reported that the number doubled in the last year alone, and the former referred to a sevenfold increase over five years. Citizens advice bureaux highlighted that, in the last four years, there has been a tenfold increase in the proportion of clients receiving casework help with multiple debts that included a payday loan debt. They also reported many problems with people taking out multiple payday loans, and I hope that the speedy introduction of real-time data sharing and action on rollovers will address that.

However, we should not believe that, just because regulatory action is being taken on some of the most pressing issues of high-cost credit, all the problems will go away. Research by the Money Advice Service shows that 8.8 million people in the UK are over-indebted and, of those, 1.9 million are considering seeking advice. Although levels of household indebtedness have come down from a peak during the last Government, they remain well above long-term averages.

The evidence of the last few years is that demand for short-term, high-cost products is here to stay, and that consumers put a greater premium on ease of access than on price in many transactions. That point was well made in yesterday’s debate. There is a vital role for the free debt advice sector in ensuring that consumers understand the true cost of the financial decisions they are taking. The FCA’s current guidelines include recommendations for greater signposting to free debt advice services. Such signposting, although welcome, is likely to create more demand on a sector already under financial pressure.

I do not intend to go into a long discussion of the financial and fiscal difficulties that the Government inherited, but one consequence has inevitably been pressure on the direct and indirect funding of free debt advice services. Whatever our political views on that—those are likely to differ from one side of the House to the other—hon. Members of all parties should welcome an opportunity to secure funding for these very important services at no cost to the taxpayer and at no risk of being removed by political necessity further down the line.

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Securing greater funding through the FCA levy would achieve that aim. In its recent report, the BIS Committee recommended:

“When payday loans come under the authority of the FCA, they will be subject to a levy. This must be additional to the existing levy and not used to off-set the level of payments by other financial organisations. We recommend that the levy paid by payday lenders is ring-fenced by the Money Advice Service solely for the funding of front-line debt advice services.”

Similarly, the briefing that StepChange kindly prepared for this debate concludes:

“StepChange Debt Charity believes the inclusion of payday lenders and other consumer credit firms as levy payers should be used to significantly boost funding for free debt advice. It should not be used to level down the total payments other financial services organisations have to make. The OFT says around a third of payday loans lead to repayment problems, suggesting the strain lenders place on debt advice is exceptionally high. StepChange Debt Charity believes the contribution different financial services firms make to debt advice should be based on the level of detriment they cause as well as the firm’s size. Payday lenders cause a disproportionate level of consumer harm relative to the amounts they lend; relative to turnover, they should therefore pay more towards debt advice.”

In succinct terms, the briefing from Citizens Advice concluded:

“The additional contributions from payday loan companies should result in an increase in the funding available for debt advice.”

I know that the Minister, my hon. Friend and Worcestershire colleague, is a sensible and reasonable man. Rising Treasury star though he undoubtedly is, I realise that not all aspects of the debate fall within his diktat, although I hope that he can reassure the Chamber today that the Government will look carefully at the issue. Huge progress has been made on the regulation of high-cost lending in recent months and the Minister can take a great deal of credit for important decisions that have been taken to date, as a result of which many more lenders will be paying the FCA’s levy and the bizarre anomaly of their not contributing while credit unions did is at last being dealt with. I hope the Minister will agree that we should take the opportunity to ensure that the free debt advice industry is properly and adequately funded and that institutions that drive up demand for its services make a proper contribution to the costs.

The FCA is a regulator and independent of the Government and the Money Advice Service is an arm’s-length organisation designed to deliver support to the free financial advice sector. Both have made strides in improving their approach to high-cost lending but the danger is that, without clear guidance about the will of the House, they could miss an opportunity to go further. As things stand, neither has a mandate to match the resources made available to the free debt advice sector to the growth in demand for its help.

It is also worth our noting the Low commission’s recommendation to increase substantially the funding made available for free financial advice. The measure that I have been discussing is one of the means by which that can be achieved. I hope that today’s debate will help to provide much needed guidance and that the Money Advice Service will consider taking the opportunity of having new contributors to the levy, to increase the resources that it passes on to the free debt advice sector.

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I am grateful for your chairmanship, Mr Hollobone, and to the Backbench Business Committee for allowing the debate. I look forward to the Minister’s comments on how we can best address the important issue to the advantage of all involved.

Several hon. Members rose

Mr Philip Hollobone (in the Chair): Order. Seven hon. Members are seeking to catch my eye. I do not want to call the Front-Bench speakers after 10.40 am, so we have just under an hour. I do not want to impose a time limit, but please, if we are to get everybody in on an equitable basis, Members should seek to limit their remarks to no more than eight minutes. Let us see whether we can do it without an imposition. With eight minutes each, everyone will get in. The hon. Member who will first demonstrate how to do it is Paul Blomfield.

9.42 am

Paul Blomfield (Sheffield Central) (Lab): Thank you, Mr Hollobone—no pressure at all then. It is a delight to be here with you in the Chair, and I congratulate the hon. Member for Worcester (Mr Walker) on securing the debate. He has been a committed champion of the cause and one of several colleagues on both sides of the House who have sought the effective regulation of payday lending.

The reason for today’s debate is simple: the need for free and independent debt advice is growing, which is due in no small part to the unscrupulous practices of payday loan companies. We now have a unique opportunity to tackle the problem without cost to the public purse. Payday lenders, as the hon. Gentleman pointed out, will soon have to pay the FCA levy to fund free debt advice. When they do, we need to ensure that they pay an amount commensurate to the problems that they cause and, crucially, that the total pot of money collected increases to fund the additional advice that is needed. There certainly should not be any levelling down of payments simply because more financial service companies will be paying the levy.

As has been pointed out, the Money Advice Service is consulting on its draft business plan as we speak. Extraordinarily, it is suggesting keeping the budget for debt advice unchanged. That cannot be right and, to my mind, it brings into question the organisation’s judgment. MAS’s own research, which was conducted last year by YouGov, indicates that

“there is a growing need for impartial money and debt advice in the UK”.

It estimates that 8.8 million people are over-indebted, from struggling students to working families, and that only 1.5 million of those people are getting advice. That is an extraordinary figure, but it is only the tip of the iceberg, because a further 900,000 have said they were planning to seek such advice and another 1 million said that they were actively considering it. The FCA’s very welcome proposal that payday lenders should signpost borrowers to free debt advice at the point of roll-over means that the demand for debt advice will only grow. Indeed, many of us think that the signposting should be on the initial health warning, too.

According to the Office of Fair Trading, one in every three people who take out a payday loan seek debt advice, which is a sure sign of the link between the

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payday loan product and the problems it creates. The number of people contacting the StepChange debt charity for help with payday loan problems increased sevenfold between 2008-09 and 2011-12, as has been pointed out, while Citizens Advice has seen a tenfold increase. In the past two and a half months, my local advice bureau said that it had one new case resulting from payday loans every day. One new case might not seem a problem, but in a stretched local advice it is, given that these are complex problems—they involve not quick interventions, but detailed engagement in which people need considerable support. As I said, those who are actively seeking help at the moment are just the tip of the iceberg.

As well as increasing overall funding for free debt advice, it is important that the FCA looks again at how it calculates the levy paid by each firm. For example, StepChange has argued that rather than looking at a firm’s income and write-off rate—companies would, perversely, be encouraged to pursue vulnerable borrowers more aggressively if having fewer write-offs was rewarded—a better formula for calculating the levy would take account of default rates, the number of complaints made about lenders to the Financial Ombudsman Service and intelligence on repayment difficulties from debt advice agencies. The aim of the levy, after all, is to fund support for people when things go wrong. If the business model of the payday lending industry means that things go wrong relatively often, the lenders, rather than profiting from that, need to pay to help to pick up the pieces.

None of the arguments that will be made this morning negate the need for better regulation, and many of us who are in the room made that case yesterday in the Chamber. If such regulation works, we might look forward to a time when there is less need for debt advice. That would be something that we could welcome, and we could review the levy at that stage, but at the moment there is more need for debt advice, so we should not miss the opportunity for it to be funded by those responsible for the problems. I hope that the Minister will reassure us, while recognising that this is a decision for MAS and the FCA, that he and the Government will support such a funding increase.

9.47 am

Damian Hinds (East Hampshire) (Con): It is a great pleasure to see you in the Chair, Mr Hollobone, and I thank the Backbench Business Committee for recommending this important debate. I join others in congratulating my hon. Friend the Member for Worcester (Mr Walker) on bringing the subject to Westminster Hall and his overall leadership on the issue, which he has pursued consistently and compellingly.

We all know the true human cost of problem debt, because we hear about it all the time in our constituency surgeries and from our local citizens advice bureaux, such as mine in Alton, Petersfield and Bordon. Problems often start when someone gets a little overstretched and then a shock happens, such as them losing their job, suffering a bereavement, or facing an enormous unexpected expense. As we know, couples are often reluctant to talk about money. Letters are left unopened, but calls and demands get more frequent. It might be that an enticing ad leads someone to borrow even more money, or that they go to a fee-charging debt management company that seems to offer a solution. Then, at one point, panic

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sets in. Stress and mental health problems can follow, and great strains can be placed on relationships—all too often, the family suffers.

At some point, such a person may decide to seek debt advice. That is the time when they can begin to take control, make a plan and start to turn the corner. It is vital that, at that moment, good-quality, free and impartial debt advice is available. I pay tribute, alongside others, to the work done by citizens advice bureaux, StepChange—formerly the Consumer Credit Counselling Service—and others in that regard.

This debate is particularly timely because the FCA and the Money Advice Service are considering how to levy and how to use funds from payday lenders to provide money advice and debt advice. The FCA levies two sums for the Money Advice Service: the money advice levy, which funds MAS directly; and the debt advice levy, which is onward allocated to third parties providing debt advice. Those organisations rely heavily on that funding from MAS, and all the more so because of the strains on public finances. It is worth saying, however, that there is another source of funding from lenders in the form of fair-share agreements and other contributions that they make to some of those charities.

Soon payday lenders, too, will have to contribute to the debt advice levy. I think that we all welcome that development, but we understand that, as things stand, it may not lead to an increase in the total pot available for debt advice, but rather that the budget would be held flat, with decreases in the contributions from other lenders to compensate for the new source from payday lenders.

Our focus today is on payday lenders, which make up the most visible part of the market, given their sponsorship of TV shows and adverts on the sides of buses. However, payday lending is certainly not the only part of the high-cost, sub-prime market, or the only part that causes problems. Home credit lenders—doorstep lenders as they are sometimes known—logbook loans, rent-to-own and good old catalogues are all significant players in the high-cost sector, as are mainstream prime operators when people get into trouble. At a time when payday lenders are becoming subject to the levy, we have a good opportunity to ensure that total funding for debt advice is increased, which would help to put advice organisations on a more stable, firmer footing.

Moreover, there is good evidence that payday loans generate a disproportionate number of debt problems. My hon. Friend referred to the StepChange statistics showing that although the payday market doubled in size between 2008-09 and 2011-12, the number of people contacting the charity with payday loan problems grew sevenfold over that period. As the sector grows further—I am afraid that it does, and it probably is not about to stop growing—it is important that the availability of debt advice keeps up with that growth.

There is a particular area due to which I assume that debt advice providers face above-inflation cost increases: online—so-called pay per click—advertising. Its pricing model involves an auction element, and those who make money out of people’s debts have an incentive to bid higher, so there is a tendency for costs to spiral. If debt advice providers are to be able to compete, as it were, on the internet, they need to be able to afford that.

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It is important that we stress two things today, the first of which is a will for the total amount of funding available for debt advice to grow. Secondly, we need to give some input on how firms should contribute. As we consider those two things, there are two funding principles that should in turn underpin them. The first is a principle that has long existed in the debt advice sector: the beneficiary pays. When a creditor stands to regain some of what they are owed, it is right and fair—and, in fact, in their interests—that they support the organisations facilitating that. Secondly, a key principle of economics and internalising externalities is the concept that the polluter pays. In this case, that means that those associated with the greatest numbers of knock-on problems should contribute the most.

I think that the argument for a larger total pot of funding from the industry is self-evident, but I also want to say something about the formula that is applied, which was touched on by the hon. Member for Sheffield Central (Paul Blomfield). The FCA recognises that there are certain higher-risk operators and parts of the market, and that they should contribute more. I understand that the basis of the levy would be a split—50:50, I think—between an element based on the firm’s size and one based on the amount of debt that it writes off, with the idea being that the amount of debt written off is a proxy for riskiness or consumer harm. That principle is good but, like the hon. Gentleman, I worry about the specifics. Such a measure may tend to under-charge newer operators. By definition, when operators are new to the market, they do not have any debts being written off—that takes some time. It may also deter some firms from writing off debt and instead, as he said, they will use more aggressive collection techniques. More generally, if there is one thing that we have learned from the field of education and the metric of achieving five or more GCSEs at grade C or above, it is that if we give people one big hairy metric to be measured on, they will find 14 ways around it. Instead, we need a more balanced scorecard.

Obviously, there is another balance to be struck: accuracy versus simplicity. It could be argued that the amount of money that goes from the profit and loss to the debt advice levy is so small that it is unlikely, relatively speaking, to drive gaming, but I do believe that a slightly more nuanced formula would be useful. It could perhaps include—we may have slightly different lists, and I am not an expert—a broader range of things, such as the age of the debt due, numbers of consumer complaints and so on. I hope that the FCA will consider that.

We have an opportunity not to be missed to improve the sustainability of funding for debt advice. I congratulate the Business, Innovation and Skills Committee, whose Chair, the hon. Member for West Bromwich West (Mr Bailey), is with us today, on its very good report, as well as my hon. Friend on bringing the debate forward. I hope that the FCA and the Money Advice Service will find the debate a useful input into their work and that they will take the opportunity to bolster debt advice in this country, for the sake of all our constituents.

9.55 am

Yvonne Fovargue (Makerfield) (Lab): It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Worcester (Mr Walker) on securing this important debate.

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The demand for free debt advice is rising, which is not surprising, given the cost of much short-term credit and the desperate financial situation that many people face due to unemployment, under-employment, rising prices and stagnant incomes. There are a great many people with problem debt. According to the MAS report, as we have heard, 8.8 million people—18% of the UK adult population—are over-indebted but, as we also hear, not all of them seek debt advice. In fact, the same report from MAS shows that only 17% of such people are actively seeking advice, so many people are not receiving the advice that they almost certainly need.

There are various reasons why people do not seek advice. I have talked about the “behind the clock” syndrome: when people are too frightened to open envelopes and just always put them behind the clock, until the clock drops off the mantelpiece. For some people, the reason is stigma—they cannot admit that they are in debt, as they see being in debt as a failure. However, for many others, the reason is simply a lack of signposting or the fact that if they have decided that they need debt advice, they will ring the local CAB or charity to ask for debt advice only quite often to be told that there is a six-week waiting list. After plucking up the courage to make the call, a great number of people are put off when they are told that they have to wait another six weeks. However, that may change soon, when payday loan advertising is required to provide information about sources of debt advice. People will then know where to go. We have to assume that more people will be seeking debt advice and that therefore more debt advice will be needed.

Of course, the extra debt advice must be paid for. It might be free for the client—rightly so—but it is not free to provide. In fact, it is expensive to provide such advice, especially face-to-face advice, although I make a plea now that face-to-face advice is available. That applies even to people who normally can deal with their problems. The worst debt case that I saw involved an accountant who just could not face the fact that she could not deal with her debts. She had to be seen face to face; she could not have dealt with the matter over the telephone. Face-to-face advice is expensive, but valuable.

It costs a lot to provide good advice, and it is right and proper that firms that contribute to debt problems—by lending at a high rate of interest, or by allowing borrowers to over-extend themselves—should contribute to the costs. Let us not forget that those firms benefit from their clients making affordable repayment plans with them.

A large part of free debt advice is funded by the levy on financial services firms, which is regulated by the FCA and administered by MAS. It provides about £35 million of grants to six delivery partners that give specialist face-to-face advice: Citizens Advice, Capitalise, Community Finance Solutions, the Bristol debt advice service, East Midlands Money Advice and the Greater Merseyside Money Advice Partnership. As a founder member of the Greater Merseyside Money Advice Partnership, I would like to say how valuable that funding was so that advice could be provided to people who did not qualify under the legal aid scheme, but had a high level of debt.

Payday lenders will be subject to the levy when they are fully authorised, which could be as early as the autumn. It is right that they come under the regulatory regime and pay the levy. Many of us feel that this would

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be the logical time to increase the overall amount of the levy paid by the industry to reflect the increasing numbers of firms regulated by the FCA.

As we heard from my hon. Friend the Member for Sheffield Central (Paul Blomfield), the Money Advice Service’s draft business plan for 2014-15 bizarrely proposed to keep spending on debt advice at the same level. A freeze in the levy implies that current firms’ contributions will be reduced, on the basis that more firms will be contributing to the same pot. If that is the case, this is truly a missed opportunity. We do not want to squeeze firms dry or punish them, but it is appropriate that the inclusion of payday lending firms should trigger more funding for debt advice.

I am not against the payday lending industry, but that is not to say that it does not contribute greatly to the financial problems of a great many people—it does, and the problems are increasing at an alarming rate. In the past four years, Citizens Advice has seen a tenfold increase in the proportion of clients receiving casework help with multiple debts, including payday loan debt. When I left the bureau in 2010, although I had seen plenty of people with home credit, I had never seen a client with a payday loan, so there has been a big explosion in the practice since then. In the first quarter of 2009-10, 1% of citizens advice bureaux casework clients had a payday loan, but in the same quarter of 2012-13, 10% had at least one payday loan, which represents huge growth.

It has been mentioned that StepChange has dealt with a sevenfold increase in payday loan debt problems in the past five years. That increase far outstrips the growth of the industry, which doubled during that period. The average payday loan debt is £1,665, which has risen a third in two years. The fact is that payday lenders cause disproportionate consumer detriment, so there is a strong case for saying, as the hon. Member for East Hampshire (Damian Hinds) and my hon. Friend have done, that their contribution to the levy should reflect that. There seems to be an assumption that the levy will reflect firms’ income and the level of debt that is written off. I share my hon. Friend’s concern that that will encourage payday lenders to pursue people even more aggressively. If the size of the levy does not reflect the detriment caused by the industry, payday lenders will be getting off far too lightly.

We must ensure that the overall levy pot is increased substantially when the payday loan firms are regulated by the FCA because free debt advice is vital and can make all the difference to people’s lives. A YouGov survey undertaken by the Money Advice Service showed that individuals with a manageable debt who sought debt advice were almost twice as likely to have their debt become manageable than those who had not sought advice. Supporting people with financial burdens can help in other ways, too, including with family relationships and mental health, and by sustaining employment.

Much can be done to help people in crisis, and we have an opportunity to ensure that payday loan firms accept at least some of the burden of the problems that they have helped to create. However, we cannot let the banks and credit companies off, either. They have always contributed to the levy for debt advice, and their contribution to the overall level of individual debt has not lessened. The addition of payday lenders to the pot should substantially increase the amount available for

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free debt advice, but should not be a way of reducing the contributions of existing payers. Banks and credit companies are still responsible for the majority of personal indebtedness and they should continue to pay at least as much as they do now.

10.3 am

Justin Tomlinson (North Swindon) (Con): It is a pleasure to serve under your chairmanship, Mr Hollobone, because you are a true champion of Back-Bench business. The debate is a good example of how Back-Bench business can have an influence in a crucial and important area. We have heard several thoughtful and constructive speeches, and I am impressed by the degree of cross-party consensus in this important area. I pay particular tribute to my hon. Friends the Members for Worcester (Mr Walker) and for East Hampshire (Damian Hinds) for securing the debate, with the work and support of other Members.

I will not take up my full eight minutes as I simply want to concentrate on two small areas. I am the chair of the all-party group on financial education for young people, and I am delighted that the Government have supported our calls to include financial education in the national curriculum. That drove my support for the idea that we are debating. Underlining all our work, research by the Nationwide building society shows that 91% of people who get into financial difficulty say, “If only I had known better.” Hindsight is a wonderful thing, but we live in an increasingly complex financial world, partly because we are bombarded by marketing and partly because nowadays direct debits, standing orders, roll-overs and all sorts of other things encourage us to get into debt. If something happens—a bereavement, the loss of a job or a family breakdown, for example—people who have traditionally been good at managing their money quickly become overwhelmed. Because they understand that there is a problem, they might think “I will not go out at the weekend. I will not spend any money.” When they look at their bank account on Monday, however, they find that all the direct debits and standing orders have gone out and they quickly become overwhelmed.

My hon. Friend the Member for Gosport (Caroline Dinenage) will shortly tell us that such problems affect not only young consumers but existing ones. Although it is brilliant that the Government are supporting financial education, it will take generations for the benefits to filter through and to ensure that consumers are equipped with the skills to make informed decisions. That will not end the problem, but it will certainly help to tackle it. We must also tackle the situation faced by people today. The YouGov survey that the hon. Member for Makerfield (Yvonne Fovargue) cited showed that those who get face-to-face debt advice are twice as likely as those who do not to get their debts into a manageable situation in 12 months.

I praise the hon. Lady’s comment about putting envelopes behind the clock, because it sums up the situation very well. People come to our surgeries with a carrier bag full of unopened envelopes, having passed the point when they should really have tackled the situation to reach a position at which they are completely overwhelmed. We do our level best to help them, and we have organised training with our local citizens advice bureau so that my staff know the best way to deal with

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such issues as swiftly as possible. The reality, however, is that it is costly for organisations such as StepChange or Citizens Advice to sit down with people, unravel the complex mess in which they have found themselves and start to broker deals that will allow them to get back on the right path.

I absolutely support the need for face-to-face debt advice. If money from the levy is to go to the Money Advice Service, which commissions services from several different organisations, it should be ring-fenced for face-to-face debt advice. People should not simply be pointed to a website, because that approach has not worked. That might help consumers who already kind of know what they are doing to go that bit further, but people in real distress can be helped only by face-to-face debt advice. I also support calls for the funding to be additional so that it provides for additional face-to-face advice, rather than the new money simply offsetting the current levies that the banks pay. Although payday lending makes a big contribution to the increasing complexity of our world, other factors are also involved, so we need to increase funding rather than simply offsetting it.

We need to ensure that debt advice is clearly signposted, because consumers often do not realise that they can get help. When an individual takes out a loan, there should be a clear sign—a bit like the health warnings on tobacco products—giving them a telephone number to call or a website to visit. Even if people are not yet in a mess, they can simply ask whether the product is the most suitable one for them and whether there are other alternatives.

I think that we have made good progress. The Government have noticed that things need to be done and given the FCA greater powers, and the FCA has been proactive in meeting those of us who have campaigned on the matter. We must recognise that the market is ever changing, and I encourage the Government and the FCA to listen to what we are saying and to continue to work with us in our determination to protect and empower vulnerable consumers.

10.8 am

Ann McKechin (Glasgow North) (Lab): In the consensual and time-disciplined way in which other hon. Members have spoken this morning, I simply want to support my friend the hon. Member for Worcester (Mr Walker) in his call for the FCA to consider ring-fencing the levy. As other colleagues have mentioned, the need for increased debt advice is clear, because personal debt in this country is increasing and bringing with it increasingly complex problems. I share the concerns expressed by my hon. Friend the Member for Makerfield (Yvonne Fovargue) and the hon. Member for Worcester about the lack of debate between the FCA and the Money Advice Service about the demand for advice services and how best to use the additional funding, which I very much support, from payday lenders. I think it was the hon. Member for East Hampshire (Damian Hinds) who said, correctly, that for the welfare rights officers, citizens advice bureaux and StepChange, other funding avenues are becoming much more restricted.

My constituency benefits enormously from the work of the Maryhill citizens advice bureau, as well as from experienced welfare rights officers in our housing

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associations. Housing associations are also finding restrictions in their budget—the bedroom tax is having a direct impact, and arrears have increased—but the demand for their services is becoming ever greater. Last summer, I conducted some research in my constituency on a range of issues. A CAB worker there told me the following:

“Huge, huge changes have occurred as a result of the welfare reforms. We have much more cases where we have to help clients with appeals on benefit sanctions and ESA. There are many more people coming in angered, frustrated and desperate because of this. This puts a lot of strain on us. Furthermore a lot of people are coming in confused about how the new system works, including ourselves!

There is a big problem with sanctions from the job centre. They are being much tougher on families. More people are coming in with mental health issues—depression being a major one—caused by debt, unemployment and the stress of things like benefit sanctions.

There has also been a large increase in exploitative employers in this area…the rise in zero hour contracts.

Clients are coming in with more complex problems. All sorts of issues—and they’re all intertwined. We (the CAB) are definitely going to be facing much more problems in the near future with the changes to universal credit and it all going online.”

That fact is that debt is not the only issue that advisers are dealing with on the ground in our communities. They are having to deal with huge changes in the welfare system, the increase of insecure work—we discussed that in the debate last night, Mr Hollobone—and the increasing use of high-cost credit. All those are interlinked together. Basic training for a Citizens Advice volunteer takes 10 weeks—it is an intensive course. The people who have been working as welfare rights officers in my area have been doing so for many years. We benefit from their high level of experience, but it does not come cheap. We must train more people in the years ahead to be able to meet the demand, which is coming from a much wider range of our population.

I was interested to hear the hon. Members for North Swindon (Justin Tomlinson) and for East Hampshire talking about a range of people who had secure jobs but were now having great difficulty trying to manage their finances. The demand spans from people like that down to those in my constituency, where in some areas people are living on very reduced incomes and always have been. They are now finding their income even more stretched, and real incomes have declined significantly.

The need is utterly apparent. I hope that the FCA and the MAS will respond positively to this debate, and that when the Minister responds he will be a friend in persuading those institutions of the need to reconsider how they are going to use the levy in future.

10.13 am

Caroline Dinenage (Gosport) (Con): It is a great pleasure to serve under your stewardship, Mr Hollobone. I would like to add to the praise heaped on to my hon. Friend the Member for Worcester (Mr Walker) for securing this important debate and also for the sterling work that he has carried out with Members from all parties on championing such an important issue.

The hon. Member for Makerfield (Yvonne Fovargue) pointed out and properly articulated the fact that, a few years ago, most of us had not even heard of payday loans. They have grown like a cancer in the past few years and led many thousands of our constituents into

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a spiral of debt and despair. Addressing this growing, innovating and evolving industry is a matter of urgency. The FCA must take a firm grip on the issue to bring unscrupulous lenders under control.

Of course, in and of themselves, payday loans are not harmful; it is their propensity to turn into defaults and rollovers, as well as the insufficient quality of the advice, that is leading to so much misery. Unscrupulous traders and the devastating impact of continuous payment authorities are concerns for all our constituents who have taken out payday loans. That is why we must do all we can to bring clarity to the dangerous terms and conditions that leave borrowers caught unawares, with no means to pay for their food, utility bills and other household costs.

With a prophesy worthy of Mystic Meg, my hon. Friend the Member for North Swindon (Justin Tomlinson) pointed out that I might allude to some adult literacy and numeracy issues in my speech. He is quite correct. Recent research conducted by the OECD shows that there are 8.5 million people in England and Northern Ireland with the numeracy ability of a 10-year-old child. Payday lenders can seize the opportunity to take advantage of such individuals, who struggle to keep on top of their weekly shopping bills, let alone the complex percentages and interest rates involved in taking out a loan.

In order to strangle the problem at the roots, we need to address the problem of weak numeracy skills and promote the importance of financial education. That is why my hon. Friend has done such sterling work in this field. We cannot leave behind a generation of adults who are unable to comprehend the staggering interest rates that we see. We must improve how we signpost adults through debt advice to the numeracy training that they so desperately need. Independent debt advisers specialise in providing such a service, and their role in mitigating against the devastating impacts of payday loans is crucial. Without such targeted help and support, many of those who fall victim to payday lenders will be unable to break the cycle of financial trauma.

Over the past four years, Citizens Advice estimates that it has seen a tenfold growth in the demand for debt advice, as many colleagues have already said. That significant rise has undoubtedly been stimulated by an increasing dependence on payday loans, which take advantage of some of the most vulnerable people in our society. One aspect of payday loans about which I am particularly concerned is refinancing. The recent review by the Office of Fair Trading revealed that individuals seeking debt advice had, on average, refinanced their loans at least four times and were repaying six separate payday loans. Such shocking figures show the extent of the difficulty that borrowers can get into before seeking help, as the hon. Member for Makerfield said.

What we see is not responsible trading. The absence of ready access to helpful information prevents people from gaining the necessary autonomy that they need to put a stop to successive borrowing. Although the FCA’s proposal to force payday lenders to signpost borrowers to debt advice will promote greater responsibility and hopefully discourage the selling of unaffordable loans, it will also place even greater pressure on organisations that have limited resources. Therefore, like many colleagues, I strongly advocate the new powers that the FCA will

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have to levy all consumer credit firms to help to fund MAS. We must ensure, however, that the level of payment is commensurate with the problem.

Consumer choice is a paramount factor in the issue of payday loans. Individuals must be well informed and aware of the risks before and during their engagement with payday lenders. That is why debt advisers are so important and must be provided with the financial resources needed to continue their good work. It is also important to emphasise that we are not seeking to eliminate the access to credit streams that provide a safety net to many of the lowest paid. However, such borrowing opportunities must be subject to rigorous regulation and injected with the responsibility needed to bring about greater consumer advice and confidence.

10.18 am

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): It is a pleasure to serve under your chairmanship, Mr Hollobone. I would like to reiterate what the hon. Member for North Swindon (Justin Tomlinson) said about your commitment to Back-Bench involvement. I also thank the Backbench Business Committee for recommending this issue for debate.

Above all, I thank my colleague on the Business, Innovation and Skills Committee, the hon. Member for Worcester (Mr Walker), for having the foresight and judgment to table this debate at this time, because its timing is crucial. Last night, we debated payday loan companies in the Chamber. A number of headline-grabbing issues that have long been discussed publicly were debated, but there is a real danger that the significance of the BIS Committee’s recommendation on ring-fencing may have fallen below the radar. Certainly, in the numerous interviews that I have done with the media, I have yet to be asked a question on it. The sheer significance of it may well have gone unrecognised. He has taken up the issue and run with it, and the timing is impeccable. It is extremely important.

I emphasise that this is not just a dry academic issue. Debt advice does not sound very exciting, but I was first confronted with its importance in deprived areas when I was approached by members of my local branch of Christians Against Poverty, based at St Matthew’s church in Tipton, who wanted me to see the work that they had done. I have attended events run by the branch and talked to people who have spoken of the life-transformative experience of taking advice from Christians Against Poverty and adhering to the organisation’s recommendations and support. They were so grateful that it was almost unbelievable. It was very moving. Make no mistake: debt advice is not just about somebody sitting in an armchair talking to people on the other side of a desk. It is about talking to them, giving them support, comfort and advice, pointing them in the right direction and monitoring their life as they come out of the trough that debt imposes on them.

The issue is very important, and there is a danger if MAS goes for a flatline budget. We could be left in a position where although demand for the service is increasing hugely—all the indications are that it will continue to increase—the budget is static, meaning that an increasing number of people would not be able to access the

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support that they need to transform their lives. I support the recommendations made by the previous speakers. I will not go into all the detail, as they have argued the case effectively and I realise that others want to contribute to this debate, but to finish, I will say one thing to the Minister: this is an easy win. It does not cost the Government anything. Politically, it would be highly popular across the board to ensure that the major contributors to the problem fund at least part of the solution.

That is the positive side. The negative side is that the social cost of people running into heavy debt and the potential impact on families can be so devastating that the Government will incur costs by picking up the bill for the resulting social breakdown and deprivation. If the Government ignore the opportunity to get more money from the private sector that is creating the problem, they will incur greater social problems with a price tag, and they will have to pick up the tab. That is illogical and incoherent. There is an easy win that has popular and political support. It will benefit Government finances in the long run and address the problem that we confront.

Mr Philip Hollobone (in the Chair): I am about to call the Front-Bench speakers. I thank all hon. Members for their contributions and for being so disciplined in the timing of their remarks. We have just over 35 minutes left. As this is a Back Bench-sponsored debate, I encourage Back-Bench Members who want to hold both Front Benches to account to do so through interventions.

10.24 am

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I have listened intently to the debate; Members may wish to intervene during the course of my remarks. I congratulate the hon. Member for Worcester (Mr Walker) on securing this debate and the Backbench Business Committee on seeing the wisdom of holding it. I am sure that it is due to the Committee’s good judgment rather than simple coincidence that we had a Backbench Business debate on payday loan companies last night in the main Chamber, followed by this one. The two debates are linked, and it adds value to be able to follow last night’s discussion with this one. There were 17 Back-Bench speakers last night, not counting interventions, and Members had the opportunity to lay out a range of reasons why tougher action is needed on payday loan companies generally and ways that regulation could be improved.

When I first saw that this debate was going to be about the levy, I feared slightly that people would think the issue was only a technical one and not quite as important, but it has been useful to hear a number of speeches linking the principles of what needs to be done on payday lending and regulation and how it can be put into practice for the greater good. It has been heartening to hear that from Members from all parties; we have not got bogged down in the technicalities of the levy, as we might easily have done.

Anyone who has gone through the Library briefing—I am sure that everyone here has, although perhaps people outside this room have not—knows that it explains in great detail how the levy is calculated and the various different sections and categories. The Minister may want to say something about that and whether, in the longer term, he has any plans to review the levy further.

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I know that the Government always say that they keep everything under review—he and I often exchange comments on that particular approach—but it might be useful to hear from him whether he has any further work to do on that.

We have heard that although better regulation is of course important, it is also important that we continue to ensure that proper debt advice is available. In his opening speech, the hon. Gentleman made the key point that there is a danger that the Financial Conduct Authority might simply be seen as a collection agency. Several speakers made the point that the Money Advice Service has a flatline budget—I hesitate to use that word—but the Government are not seeking to increase the budget, at a time when we have all heard about and know the pressures on various organisations that provide support. That is a potential problem, and I hope that the Minister will address it in his reply.

We want to ensure that the cost of regulation does not take up all the available resources. That is why I highlight the point about the complexity of the levy as it currently operates. We do not want the FCA and MAS to spend all their time trying to administer it, so that resources do not get to the front line. Another key point made is that we do not want the amount of advice available to be reduced.

On the nature of advice, we want the opportunity to widen the scope for funding. I will return to that, but I want to mention a couple of the points made by my hon. Friend the Member for Sheffield Central (Paul Blomfield), who has a long track record of campaigning on payday loan issues, as do the majority—in fact, all—of the hon. Members here. He made the point early on that we have a unique opportunity to tackle the problem without additional cost to the public purse, a point reiterated by my hon. Friend the Member for West Bromwich West (Mr Bailey). I am sure that it will always be attractive to the Treasury, when we have a problem, if we can identify a potential solution that will not cause additional cost to the public purse, especially at a time when we are trying, as I am sure the Minister will mention, to reduce the deficit and look to the future. That ought to be considered.

I would certainly be concerned by any suggestion that the changes to get more companies paying the levy by bringing them into the scope of the regulation would mean a levelling down in terms of what they pay. The point about the payday loan companies, which has been emphasised in a number of debates, is their potential detriment to individuals, because of the way they operate. They should certainly not get off the hook, particularly as we are hearing that more problems are being identified.

It was also correct to suggest that the FCA should not simply exist to signpost people at particular stages, for example rollover, however important that role is. Nevertheless, we need advice to be available and easily accessible.

I am also concerned about an issue that was raised in the briefings that I have been provided with, for example by Citizens Advice and the StepChange charity. We must not have a perverse incentive whereby the system would mean, for example, that on the issue of write-offs companies were somehow moving to operate in a way that would be detrimental to the individual debtor, so that those companies could somehow avoid paying what would be seen as their fair share of the levy.

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Lenders should pick up the bill for some of that levy. Again, I hope the Minister will say something about that issue.

My hon. Friend the Member for Makerfield (Yvonne Fovargue) talked about the “behind the clock” syndrome and I think it was the hon. Member for North Swindon (Justin Tomlinson) who referred to carrier bags. I do not want to make this debate sound like a competition, but I spent many years as a front-line social worker providing a lot of welfare benefits advice, among other things. I recall occasions when people had large black bin bags full of information. What never ceased to amaze me at the time was the fact that people had kept all of the paperwork, including every letter that had come in. Quite often, those papers were stacked in fairly neat order, with elastic bands around them, but they were not then dealt with; they had simply been put away because the problem they related to was too difficult to deal with.

One thing that I learned from those experiences was that we do people no favours whatsoever if we do not have a face-to-face discussion and work with them to get them out of the mess they are in. Simply telling someone to go and read a website, or to get information online or even a pamphlet, is not enough; it ought to be an introduction to them, so that they can sit down face to face, assess the scale of the problem and work it out. Again, the importance of that process was raised by a number of hon. Members.

Caroline Dinenage: I do not want to bang on about the same subject, but does the hon. Lady agree that sometimes adults lack the necessary literacy and numeracy skills to address the issue of debt and so, even if they wanted to address it, debt is a massive puzzle for them? We also need to look at the ways that we signpost people to address that skills issue.

Cathy Jamieson: The hon. Lady makes an important point, and the issue of financial education was raised in the debate in the main Chamber last night. Financial education is important because there are people who have literacy and numeracy problems, which are often picked up at the point that they come for advice. They may not have felt able to tell people before then, but the problem becomes very apparent in a face-to-face meeting with advice workers, who can perhaps assist them to get help and support.

More broadly, financial education in schools is, of course, valuable; I have said that many times. It is the right thing to provide, but if it is only seen as something to be provided in schools that is not enough. There are key points in people’s lives when there is the opportunity to introduce them to different forms of financial education.

Mr Robin Walker: As the hon. Lady points out, financial education in schools is very valuable, but it is not the whole solution. Recently I visited a community primary school in my constituency where the local anti-loan sharking team were holding an assembly, which was entirely funded by money confiscated from illegal loan sharks. That is one example of how good work can be funded with no direct cost to the taxpayer and is this debate not another example of that, whereby we can

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help to fund the good work of debt advice charities and the rest of the sector without any cost to the Exchequer or the taxpayer?

Cathy Jamieson: Again, the hon. Gentleman makes a valid point. It reminds me of a previous career, when I was in another Parliament and worked closely with the predecessor of my hon. Friend the Member for Makerfield on tackling some of the illegal loan sharks and trying to ensure that they were brought to justice.

Of course, it is important that we consider everything we can do to establish the principle—I think it was referred to as “the polluter pays” principle—whereby the people who cause the problem have a social responsibility and, in this context, a financial responsibility to provide some of the funding to pay for the resources we need to tackle the problem.

My hon. Friend the Member for Glasgow North (Ann McKechin) asked if there has been a lack of discussion between MAS and the FCA. Again, I hope that the Minister can enlighten us on that issue, perhaps giving us some more information about the involvement of the two organisations. Also, can he say whether or not he can ensure at this crucial stage that all the organisations are brought together for further discussion? I am almost hesitant to say this again, but, as I have already said, there is sometimes a danger that people involved on the Treasury side would perhaps look in isolation at this issue; they would look at the money flows, the funding streams and so on, without necessarily looking at the people involved. In this context, it is very important to look at the people involved.

Ann McKechin: Does my hon. Friend agree that because the FCA is such a massive organisation—in terms of its scale and what it is intended to cover—compared with MAS and because it is just getting off the ground, trying to set some parameters for what the FCA and other organisations need to consider is an important part of the Treasury’s function?

Cathy Jamieson: Again, my hon. Friend makes a valuable point. In bringing my remarks to a conclusion, I want to reiterate some of the points that were made in the debate in the main Chamber last night. As she said, the FCA is a new organisation and it has been given a wide-ranging remit. It has consulted on a number of issues and new rules will be introduced for a range of things, but I would not like to see the specific issue of the levy slip through the net. My hon. Friend the Member for West Bromwich West referred to the recommendation for a levy in the Business, Innovation and Skills Committee report as the recommendation that has almost gone “under the radar”. Hopefully it is no longer “under the radar”; as I say, I certainly do not want it to slip through the net because of the FCA’s wide range of responsibilities.

The Minister, who has been listening intently, will have heard the view expressed in both debates on this subject—last night and today—that there is a genuine consensus across the House on this issue, and hopefully people from the FCA and MAS have heard that too. There may be other areas where we would disagree, but there has been a genuine consensus on this issue, which

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has built up during months, if not years, of campaigning by individuals who have been very committed to tackling this problem and by organisations that have been absolutely at the sharp end and see it every day. Those individuals and organisations have the ideas both to deal with the problems when they are identified and—crucially—to put in place preventive measures. There was some discussion of those measures last night, which include, for example, action on advertising, education and so on, so that we can try to prevent people getting into debt in the first place. However, if they do get into debt, the correct services must be there for them, not only to point them in a direction to get a bit of information but to help them to work their way out of debt, including making some of the lifestyle changes that are perhaps associated with getting out of debt.

Yvonne Fovargue: Does my hon. Friend agree that today is really a good time for this debate and that, if people want to see that the levy is not a dry subject and has an effect on individuals, they should know that this week Twitter has the hashtag #cablive, where the real-life experiences of people visiting CAB, and of the volunteers and paid staff who are crucial to helping them, are being demonstrated?

Cathy Jamieson: My hon. Friend makes a very important point because, as we discussed last night, this is of course debt awareness week. The comment that I made last night was that for some people this week may be a week of awareness but for others it is how they have to live their lives, to deal with debt problems. I am sure that the information that she has just given will encourage people to follow the process on Twitter and obtain more first-hand information from those who are using these services and those who are providing them.

I want to give the Minister further time to respond to the debate, and to allow for further interventions, because these debates give Back Benchers the opportunity to ask questions. First, however, can the Minister say whether he has already had any discussions with MAS and the FCA about this issue? Does he intend to look in more detail, over the coming months, at the structure and the nature of the levy and whether there could be any improvements there? Will he also consider an idea that we Opposition Members have been advancing, which is that, in addition to the provision of debt advice and money advice resulting from a levy on payday lenders, there should be a levy supporting credit union development and alternative low-cost providers? I hope that the Minister will answer those questions.

I thank all hon. Members who participated in the debate last night and, crucially, in this debate. I am sure that the debate is no longer under the radar. I hope that it will be out there more and that people will see that it is important in the wider scheme of things, as we try to tackle the problem.

10.40 am

The Financial Secretary to the Treasury (Sajid Javid): I welcome you to the Chair, Mr Hollobone; it is always a pleasure to serve under your chairmanship. I congratulate my hon. Friends the Members for Worcester (Mr Walker) and for East Hampshire (Damian Hinds) on securing the debate. I listened carefully to them and the other hon. Members who contributed, and I thank all hon. Members for their contributions. I think that I am right

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in saying that each of them contributed to yesterday’s important debate on the payday lending sector in general. Once again, they shared thoughtful and well-balanced comments.

The Government believe that consumers should have access to free, independent money and debt advice. The Money Advice Service has the important job of ensuring that consumers get that advice. The Government want to empower consumers to manage their money well and to make responsible financial decisions, which is where MAS’s money advice role comes in. However, as we have heard, for consumers facing difficulties with debts, the first step in getting those debts under control is debt advice, and MAS also has a role to play in that regard. Money advice can help consumers to keep on top of their finances and stop them getting into problems in the first place.

Let me say something about payday lending generally, because it is connected to consumer detriment issues, which we heard about both yesterday and today. As well as giving MAS responsibility for ensuring that consumers have access to debt advice, the Government are tackling the root causes of spiralling debt. We are fundamentally reforming the regulatory system that governs lenders and we are, in particular, clamping down on payday lenders.

The Financial Conduct Authority takes on its consumer credit responsibilities from the Office of Fair Trading in April. The FCA will have far stronger powers over lenders than the OFT has, and it will be more nimble, meaning it is able to keep pace with a fast-moving market. The FCA is already flexing its regulatory muscle in advance of taking on regulatory responsibility for high street lenders. It plans to cap roll-overs, hold payday lenders to account on affordability assessments, curb the misuse of continuous payment authorities, and mandate risk warnings on payday lending adverts that signpost borrowers to the advice and help that MAS can provide.

The Government have taken decisive action to tackle the harm caused by the cost of payday loans. In the Financial Services (Banking Reform) Act 2013, we gave the FCA a clear mandate and duty to put a cap on the cost of payday loans by the beginning of 2015. This is not just an interest rate cap, but a cap on all fees and charges associated with a payday loan including, of course, default charges and roll-overs.

As we have heard—I agree with hon. Members about this—the provision of debt advice is vital. Free debt advice is currently funded by a levy on financial services lenders, which stand to benefit from advice that helps borrowers to get back on their feet and in control of their borrowing again. Once the responsibility for consumer credit transfers to the FCA, it is absolutely right that the levy begins to apply to consumer credit firms including, of course, payday lenders.

I welcome the focus of my hon. Friend the Member for Worcester and the Business, Innovation and Skills Committee on this issue. We all agree that payday lenders must pay their fair share towards the provision of advice. However, although I listened carefully to points made by my hon. Friend and other hon. Members, I am not yet persuaded that the levy collected from payday lenders should be ring-fenced for debt advice only and used to top up funding for front-line debt advice, and I shall now explain why.

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We should not consider debt advice separately from money advice. The two go hand in hand to help consumers to get back in control and to give them budgeting skills and financial awareness to help them to stay out of problem debt, which is crucial, as my hon. Friend the Member for Gosport (Caroline Dinenage)said. We also should not forget that money advice can be vital in helping those on the brink of taking out a payday loan. It can help them to understand what they are getting into, how to borrow responsibly, how to find out whether there are better and cheaper options available, and whether they should be turning to payday loans at all. As money advice could help to stop people from getting into trouble with payday loans in the first place, it is right that payday lenders contribute to funding free money advice and debt advice services. The Money Advice Service has a statutory objective to provide money advice and debt advice.

Ann McKechin: I have listened carefully to what the Minister has said about money advice. The Money Advice Service primarily uses a website to provide access to money advice. In Glasgow, less than 30% of those on the lowest incomes have broadband access in their house, so the people who need advice the most are the least able to access it. It is not just about giving money advice; it is about how that is delivered. I have to say that, in my experience, it is poorly delivered.

Sajid Javid: I listened carefully to what the hon. Lady said, and others have also made that point. When I visited MAS’s office in London last week, I looked much more closely at how it provides money advice. The hon. Lady is right to say that it relies considerably on a website, but it is more than just a website—there are individuals involved. I listened to a lengthy recorded call that was an example of how people who wanted money advice before entering into a financial transaction could be guided through the process. I saw for myself how that was adding value. Although that was obviously a phone call and not face-to-face advice, it was more than just web advice. The hon. Lady highlights the importance of MAS continuing to consider how it can continue to improve its service and ensure that it is providing appropriate advice.

Justin Tomlinson: There are a couple of problems. The MAS website is a poor man’s version of Money Saving Expert and it spends a fortune on self-promotion and advertising for its inferior product. The reality is that the financial world is changing, with direct debits and standing orders, and there has never been a greater need for face-to-face help for those who have become overwhelmed by difficulty.

Sajid Javid: I agree with my hon. Friend about face-to-face advice, including debt advice. All the debt advice that MAS provides through its partners is face-to-face debt advice. More than 158,000 face-to-face sessions took place in the last financial year, whereas 150,000 had been planned for, which shows that face-to-face debt advice is crucial. I agree with many comments made by colleagues, including the hon. Member for Makerfield (Yvonne Fovargue), about the importance of face-to-face advice.

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Paul Blomfield: I am a little bit concerned by how the Minister is counterpoising money advice and debt advice. I think that all hon. Members in the Chamber would agree that money advice is important, although there are questions about how MAS delivers it, but that does not overshadow the need for effective debt advice. Given all the contributions that have been made and all the evidence there is, does he agree that the demand for debt advice is growing?

Sajid Javid: I agree that demand seems to be growing, and evidence on that is emerging. It might help the hon. Gentleman if I move on to how MAS determines its budgets for money advice and debt advice, and how it has to take demand into account.

Mr Robin Walker: As the Minister will be aware, the Treasury Committee, among others, pressed MAS to justify the efficiency with which it delivers those services, and it was right to do so—I am the last person to object to that. Does he agree that it is important that MAS does not take from that the message that the only way to justify itself is by keeping its budget flat or spending less money? Delivering a greater service and providing more money to debt advice services would also be a sign of efficiency, so a message that MAS could take from this debate is that there is support for it providing a better service, and potentially more money, to the free debt advice industry.

Sajid Javid: I completely agree with my hon. Friend. He will know that I gave evidence to the Treasury Committee’s inquiry on MAS last year in my previous role as Economic Secretary. I said that the Government would have a full review of MAS during this Parliament, and over the coming weeks and months, I will set out how that review will take place. The review will consider some of the issues he raises.

Damian Hinds: As the Minister is on a roll, I have a question. Will he confirm that he said only that money would not be ring-fenced for debt advice, rather than that money would not go to debt advice? Perhaps we should all welcome that extra flexibility, but if he is suggesting that the money would still come in and would not necessarily involve levelling down other contributors, who would decide—and how would they decide—how that extra funding would be allocated between money advice and debt advice?

Sajid Javid: As my hon. Friend will find out, I am coming on to how MAS determines its budget. As we all would hope and expect, the budget is based on demand. More generally, MAS has a statutory responsibility to consult on its budget for the forthcoming year. Right now, MAS is consulting on its budget for 2014-15. This debate, the Business, Innovation and Skills Committee report and the information from stakeholders, which we have heard about today, are important in providing MAS with the information it needs to develop its budget for the future. That makes a big contribution to how MAS decides the correct allocation of resources for forthcoming years.

MAS’s budget is based on what it needs to achieve its statutory objectives. Although it is right that payday lenders contribute to that funding, it is also right that the funding is based on demand and that it delivers value for money. In the year ahead, MAS’s budget for

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debt advice will be based on its assessment of demand for such advice. MAS must consult on its plans for providing debt advice each year, which must then be approved by the FCA.

The National Audit Office recently commended MAS for delivering value for money in its debt advice provision. As we have heard, MAS is also carrying out ongoing research to ensure that the debt advice it funds has the best impact on consumers and that it reaches those who need it most. MAS recently conducted an in-depth study of where in the UK debt advice is needed most. The study shows that 21% of over-indebted people do not even recognise that they are in debt and that 44% of people who are in debt are not aware of the solutions available to them. It is important that MAS reaches such people and engages with them successfully to give them the help that they need. MAS will use the report to inform how it funds debt advice, thereby ensuring that it targets those who need it most. It is important to note that more money does not necessarily mean better provision.

Paul Blomfield: I accept that more money does not necessarily mean better provision, but the Minister has acknowledged that there is increased demand and that that increased demand is only the tip of the iceberg. He will also know that many of those delivering services on the ground have been hard pressed because of the reduction in other resources, especially those available through local authority funding. In many parts of the country, citizens advice bureaux are trying very hard to reorganise provision. In my own city of Sheffield, there is a comprehensive reorganisation to deliver value for money and ensure that the challenge can be met. Nevertheless, given the escalating demand for debt advice, which he has acknowledged, would he not also acknowledge that there is now an opportunity, which should be addressed, for that increased demand to be matched with additional resources?

Sajid Javid: Where there is emerging evidence of increased demand, I would expect MAS to respond. I am looking for the actual numbers, but off the top of my head, in 2012-13, the most recent financial year, MAS planned for 150,000 face-to-face debt advice sessions, but provided 158,000 sessions. The trend increased in the first six months of this financial year.

Yvonne Fovargue: The Minister’s concentration on the number of sessions is somewhat concerning because it is easy to provide a one-off session to someone with one debt. Providing for ongoing work with individuals with a high number of small debts, who continually have to write to creditors, is what costs time and requires expertise, which is why such organisations need paid staff with a high level of expertise. Such staff also help those people with money advice, because they identify the difference between priority debts and non-priority debts, and hopefully, following that advice, the individual will be more empowered to address their own problems.

Sajid Javid: I value what the hon. Lady says. She has considerable experience of this subject from before she came to the House and she makes a good point. If she would find it useful, as I certainly would, I would love to sit with her and learn more about what she says, which could help to inform decision making. If she is agreeable, that would be a good step forward.

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In the interest of time, I will answer some of the questions that have been raised. Spending time on debt advice, when there is a demand for it, is clearly the right thing to do, and it is crucial to establish how debt advice can best be delivered to reach consumers. My hon. Friend the Member for Worcester is right that debt advice should be funded appropriately to meet demand and to provide services that directly benefit consumers. Last year, 94% of MAS’s £34.5 million budget for debt advice was spent on front-line delivery services. MAS aims to provide 150,000 debt advice sessions this year; last year, it exceeded the same target by 8,000.

The shadow Minister asked whether I have had direct discussions with MAS about this issue. I have not had specific discussions about the levy, as it would not be appropriate for me to get involved at this stage, given the independence we rightly give to the FCA in its oversight of MAS regarding the levy structure. She may be aware that the FCA is still deciding the best way to structure the levy on the consumer lending industry, and it will publish details on that shortly.

The hon. Lady asked me about MAS more generally, and I again point her to the review that will take place, as the Government have promised, during this Parliament. She also rightly asked about alternative sources of lending, which we discussed in yesterday’s debate. She mentioned credit unions, and of course the Government are committed to helping to promote them. We have a credit union expansion project under which there is £38 million of Government funding to help credit unions to modernise and to increase their customer base across the country by more than 1 million. We also recently made regulatory changes to the interest rates that credit unions can charge to ensure that they are not losing money each time they make a loan commitment. As I said in closing yesterday’s debate, I would like to see what further action the Government may take to promote that important sector.

I once again thank my hon. Friend for securing the debate. He and many others made important points, and I know that he in particular cares deeply about consumer detriment in regard to the payday loan sector. He has already played a significant role in the Government’s response to consumer detriment in that area. He mentioned that he recognises that the FCA is independent, and I am sure that the authority has heard the arguments today and will reflect on them. I assure him that I will also further reflect on the points he and other hon. Members have articulated so well.

Mr Philip Hollobone (in the Chair): I thank all who participated in that debate for their contributions. If they are not staying for the next debate, I ask them to leave quickly and quietly.

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Croydon NHS (Financial Losses)

11 am

Sir Richard Ottaway (Croydon South) (Con): It is a pleasure to serve under your chairmanship, Mr Hollobone, for what is probably the first time. I speak today in a desperate bid to get some answers on a matter of grave importance that has brought my local national health service trust into disrepute. An internal audit, an external audit, an independent report and a council investigation have been unable to provide those answers. The debate concerns the huge sum of £28 million that was mis-stated in Croydon primary care trust’s financial accounts of 2010-11. I hasten to add that the issue does not apply to the present board.

Croydon PCT, now known as NHS Croydon, posted a £5.5 million surplus, despite sitting on an estimated £23 million black hole. More than two years after that mis-statement was exposed, we are still no closer to finding out exactly how much, how, who and why. Our best idea is that it was the result of a combination of incompetence bordering on neglect and cover-up. A significant lack of documentation and a conspiracy of silence from the people in charge have made it all but impossible to ascertain the truth.

Other people and I have tried time and again to hold the people in charge to account; many of those people have moved on to other lucrative jobs in the NHS. Rules shield them from answering to the people they have failed. Those of us trying to get to the bottom of this financial fiasco have discovered, to our dismay, that they are beyond the reach of not only NHS England’s chief executive, but the Secretary of State as well. That is quite baffling. The implications, not only for Croydon and its NHS cluster, but for the NHS as a whole, are deeply disturbing. That a health trust can lose such enormous sums of money without anyone noticing, and without anyone accepting responsibility subsequently, is frankly unacceptable. The people of Croydon and the NHS deserve better than that.

Allow me to recap the events that led to today’s debate, which has the full support of my hon. Friend the Member for Croydon Central (Gavin Barwell), who shares my frustration. In February 2011, NHS Croydon merged with four other primary care trusts in south-west London to form a cluster. Four months later, when the final accounts were signed off, a £5.5 million surplus was reported for 2010-11. By that time, however, a new financial director had begun to identify issues regarding the budget-setting for the 2011-12 financial year. The budget was indicated, but the figures lacked detail and transparency. For example, there were unpaid invoices that were not budgeted for.

In October 2011, the cluster’s chief executive sent an e-mail to staff informing them of a

“change in our understanding of NHS Croydon’s financial position”.

NHS Croydon, it appeared, had been living beyond its means and other PCTs in the cluster would have to cough up with their reserves. Suspicion fell on the previous year’s finances, even though an external and internal audit had signed them off at great expense; Deloitte charged £60,000 and the Audit Commission charged £250,000. The matter was referred to NHS London, which commissioned an independent review by Ernst and Young. The final report, published in May

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2012, confirmed that the final accounts had been mis-stated by at least £28 million. It also highlighted limited scrutiny by the trust board and audit committee, a lack of leadership in the finance team and the move from PCTs to clusters as contributing factors to the multi-million pound black hole.

The report found that an unqualified accountant, Mark Phillips, who had been left in charge of a finance department where 50% of the staff were on interim appointments, had made unwarranted adjustments to the accounts. He reported directly to Caroline Taylor, the trust’s chief executive, yet NHS London concluded that

“no individual was entirely at fault”,

and that there was

“no need for any further inquiry into what had happened.”

It said that the priority was to ensure that lessons learned were applied across the NHS in London. Let me translate that—it is called a whitewash.

Washing one’s hands of a problem does not mean that it ceases to exist. The financial liabilities of NHS Croydon became the financial liabilities of the health care services throughout the cluster. Local authorities within the cluster were unhappy with NHS London’s verdict and set up a joint committee to investigate. The management, who had by now moved on to other parts of the NHS, showed utter contempt for that inquiry.

Of 11 people whom the joint committee identified as being significant to their investigation, only three dignified it with an appearance. Key officers from NHS Croydon snubbed it, including the chief executive, Caroline Taylor—she moved on to a top job in charge of PCTs for NHS North Central London before becoming administrator of the failed South London Healthcare NHS Trust on a salary of £165,000 a year. The interim deputy director of finance, Mark Phillips, who was effectively in charge of the finance team, also snubbed it, while his boss Stephen O’Brien, who also refused to give evidence, was off on sick leave. Other key players who refused to answer questions were the Croydon councillors David Fitze, who was in charge of the audit committee, Toni Letts, the former chairman of the trust and Labour leader Tony Newman. The committee also sought to speak with the authors of the report, but NHS London was not able to confirm who they were. Too many failed in their duty to give evidence.

Those who did oblige presented damning indictments of the culture at NHS Croydon. Dr Peter Brambleby, the trust’s director of public health at the time of the scandal, said that officers were under immense pressure to achieve a balanced budget at the end of the year and were therefore reluctant to challenge the sums as long as they added up. He also contested the claim that the poor finances had not affected the provision of local health services, identifying an early screening scheme for high-risk patients that had to be pulled in 2010-11.

Ann Radmore, chief executive of the south-west London cluster, told the committee that she believed that the mis-statement of accounts was deliberately hidden. John Power, former chairman of the audit committee, who briefly replaced David Fitze—a year before Mr Fitze was reinstated as chairman, he was deemed not to have sufficient financial qualifications—claimed that the £22 million deficit was largely, if not entirely, avoidable.

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There were just three witnesses, so there was not a lot to go on, but the joint committee concluded from the scraps of information presented to it that the multi-million-pound mis-statement might have occurred due to individuals acting to safeguard their occupations and that that was to the detriment of NHS Croydon. Even if the overspend went on health care within Croydon, the committee said that it was

“unlikely to have been spent efficiently or in accordance with agreed priorities.”

That is not a good result. Crucially, the committee raised concerns that no one had been held to account for the financial mis-statement. It stressed that that was not to attribute blame, but to ensure that such behaviour was not repeated or left unchallenged within the NHS.

What about the future? We have not made much progress. We are left mulling over the shameful legacy of a local health care system that lacks transparency and accountability, rewards people who do not challenge inconsistencies, puts the interests of staff before those of patients and taxpayers, and flies in the face of justice. It cannot be right that the chief executive did not properly manage and scrutinise her team, the interim financial director did not have the proper accounting qualifications, the Audit Commission did not carry out thorough auditing, the board did not ask the right questions, and inquiry after inquiry failed to get to the bottom of the scandal.

NHS London said that there were “lessons to be learned”. It is a hackneyed cliché. How can we learn if we fail to understand what went wrong and how, and who was responsible? I am delighted that the Health Minister is here; I should like to think that she will be as alarmed as I am about the conduct in this case. When I asked her during oral questions last week for an assessment of its causes and effects, I was told that

“NHS London in June 2012 identified a systemic failure of financial management within NHS Croydon”.—[Official Report, 14 January 2014; Vol. 573, c. 709.]

What does that mean? Does it mean that there is a problem with the system at NHS Croydon, or in the NHS at large? An organisation “living beyond its means” is not systemic failure, and nor is the making of “unwarranted adjustments” to the accounts, a reluctance to challenge the sums as long as they have added up, the deliberate hiding of accounts, or a deficit that was largely if not entirely avoidable. It sounds like obfuscation to me, and I believe that Ministers are receiving bad advice.

There is a systemic failure that has not yet been resolved. Neither Sir David Nicholson, the chief executive of NHS England, nor the Secretary of State can force the likes of Ms Taylor—on a six-figure salary courtesy of the public purse—to respond to questions about the catastrophe that she presided over. No one has the power to compel senior NHS officers to co-operate fully with scrutiny if they have already moved to a new job, even if that job is within the NHS. That seems equivalent to telling a suspected thief that they can burgle a home and avoid court by moving on to the next property.

The system is broken. I have said this before, and I say it again now to the House:

Ms Taylor and senior executives should be forced to give evidence about the huge scale of the losses. If their bosses cannot make that happen—I do not challenge the idea that they want it to happen—and if the

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Government cannot make it happen either, perhaps the Department of Health should get specific statutory powers to deal with former officials who have moved on. I hope that the Minister will do everything in her power to get to the bottom of the mess.

The Health Secretary has made a lot of positive noises about accountability and transparency in the NHS. I applaud that, whether it is a question of doctors and nurses saying they are sorry when they make mistakes, or of NHS managers being warned that they cannot expect to keep their jobs if they preside over failings in care. However, the Department may be interested to hear that members of the finance team at the former Croydon PCT have transferred to the south-west London cluster and others may have transferred to other NHS bodies. In the words of the joint committee:

“It is very possible that those who were possibly doing wrong things in all innocence, are now scattered throughout the wider NHS with who knows what consequences.”

Does the Minister agree that it is high time we got some answers and accountability? If she is unable to hold Ms Taylor and her senior colleagues to account, the responsibility will have to lie with her Department.

11.14 am

The Parliamentary Under-Secretary of State for Health (Jane Ellison): I tell my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) at the outset that if I cannot respond today to some of the concerns he has outlined, I will be happy to follow them up later. I have already had a couple of meetings about the details of the matter and my officials tried to contact him yesterday.

I congratulate my right hon. Friend on securing the debate. I know that the issue is a big one in his constituency; as he said, it is also a big issue for the NHS. I share his frustration at the catastrophic situation that arose at the former Croydon primary care trust. As we have heard, a stated surplus of £5.4 million in NHS Croydon’s accounts for 2010-11 was revealed to be a deficit of £22.4 million, so there was a funding gap of £27.8 million.

I understand that the gap arose from an overspend on the provision of health services, but my right hon. Friend makes a fair point when he says that such an overspend, in as much as it is not controlled, is hardly likely to have been directed to the most beneficial places. It is probably fair to say, and the Ernst and Young report pointed out, that patient care was not compromised as a result of what happened. The situation is slightly different from money being misappropriated and not spent on health care. That does not make the situation better, but there is a difference.

I am not going to try to defend the indefensible. The Government position is clear: overspends are not acceptable and all NHS organisations must live within their means. As my right hon. Friend is aware, an independent review commissioned by NHS London was published in spring 2012 and it identified a series of failures in financial management. I realise that my right hon. Friend is not happy with the use of the word “systemic” but I would dispute his view slightly. There were several systems, none of which picked up the problem, so to that extent “systemic failures” is a fair description. The question is what we have done to change the systems and make it more likely that such a

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combination of circumstances cannot occur again. I think that we have made progress on that, but there are probably further things we can do.

The failings in question, together with substandard financial processes and poor management reporting—and, indeed, poor management—led to an inaccurate picture of the organisation’s financial position. The report highlighted contributory factors, including limited scrutiny and challenge by NHS Croydon’s board and scrutiny committee; a lack of leadership in the finance team during the finance director’s sick leave—as my right hon. Friend said, the interim finance director was insufficiently qualified—and difficulties with leadership and operational continuity during the move to the cluster.

The PCT commissioned an internal audit and the Audit Commission commissioned an external audit, both of which failed to uncover the significant financial irregularities. That is extraordinary. One of the audits was conducted by a well known firm of auditors; in a discussion of the matter yesterday with officials there was a feeling that that money was not well spent and should ideally have been refunded, given that it did not uncover the issue. The Ernst and Young report found that no individual was entirely at fault—rather than that no individual was at fault—but clearly there were people who performed poorly. It also found no adverse effect on patient care and no evidence of personal gain.

As I said in the House last week, it is important to note the measures that have been taken to prevent what happened at Croydon from happening again. Understanding what happened will give us an understanding of prevention methods. Following publication of the report, NHS London wrote to all primary care trusts outlining the lessons to be learned, as one would expect. In south-west London, the joint boards of the PCTs established a work programme to ensure that all the recommendations from the independent report would be addressed. That programme was overseen by the audit committee of the joint boards, implemented by management and assured by internal audit.

Furthermore, since their establishment the clinical commissioning groups have adopted a harmonised ledger system, ensuring that they all approach their accounts in a similar manner. That will make it more difficult to conceal irregularities, and will allow more effective scrutiny by NHS England and others. Someone coming to look at the books of another CCG would not be thrown by a different ledger system but instantly encounter a familiar system, making it more likely that they could spot what was going on. Problems would not be concealed by a particular version of the system.

I know that my right hon. Friend is frustrated about the fact that no former officers of NHS Croydon have been held to account, and I understand that. He wrote to my right hon. Friend the Secretary of State in support of a recommendation, from the joint health overview and scrutiny committee in south-west London, that such committees be given powers to enable them to compel former employees of NHS bodies to appear.

As my right hon. Friend knows, the Secretary of State was unable to accept that recommendation. Employees attend before local authorities to answer questions on behalf of the relevant body and not in a personal capacity. Accordingly, the Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny)

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Regulations 2013 do not impose duties on people who are no longer employees of the NHS body in question. Where employees have moved, we would expect the relevant body to have appropriate handover arrangements and to identify another suitable person to attend. It should not be the case that people can move on and no one else will attend as a result; someone else should be able to respond as part of the handover arrangements.

The Department of Health will, however, publish new guidance shortly on local government health scrutiny, and I am happy to ensure that it is discussed when available. In addition to supporting local government, the guidance will help to ensure that NHS organisations are aware of their duties and responsibilities. We want to start to tackle the culture that my right hon. Friend describes of people being able to move on without their mistakes catching up with them.

It is extremely unfortunate that Croydon’s clinical commissioning group is now operating with a deficit as a result of overspending by the former primary care trust. It is important, however, to concentrate on what has happened since, such as the measures being taken to bring the local health economy back to financial balance.

My right hon. Friend is rightly concerned about the impact on his constituents and others in Croydon. I have already touched on some of the steps being taken to minimise the risk of such a situation arising again, but there are other steps to take and further questions to ask. The CCG has developed a five-year financial improvement plan and is working closely with NHS England to help to achieve its target. I understand that NHS England’s London regional team is meeting the CCG monthly to track delivery against the plan. Furthermore, Croydon will be receiving budget growth of around 3.5%, compared with the national minimum of 2.1%. Setting aside the problems of the past, that reflects Croydon’s being some 7% below target and the growth, which is above average, should help to ease its return to financial balance and to close the gap faster.

I am also advised that the Croydon financial management team has been restructured with new leadership, clear accountability and new team members in post since April 2013. NHS England has retained reporting oversight through the national financial reporting system, which is another substantive change since the unfortunate events took place. I am pleased to assure my right hon. Friend that, as I mentioned briefly in the House last

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week, when CCGs were established all chief financial officers were subject to a rigorous independent assessment and appointment process. I hope that he agrees that that is a welcome development.

Furthermore, NHS England has been involved in the appointment of all substantive chief financial officers in London. I have asked officials to consider the appointment of interim CFOs, as it was clearly a real weakness in Croydon. I have not yet received assurance that there is the same level of scrutiny for interim CFOs, so I have asked for more work on that. NHS England and NHS London are looking at how to bring in more oversight in the same way as they have with substantive chief officers. Going right to the heart of what my right hon. Friend says, I have also asked how we can prevent people from popping up in another position where they could repeat the mistakes that they made in the past. Some such systems are in place, but oversight of appointments is critical, so more work must be done there.

The clinical commissioning group has established a finance committee, as part of its membership constitution, to oversee the financial performance of the organisation and to provide additional time for board members to scrutinise the financial position. I am assured that Croydon CCG’s governing body remains committed to achieving its financial targets—I would hope that it would say that, but I have no reason to believe otherwise and know that it is taking the matter seriously—based on clinical and quality led service improvement programmes.

I understand and share the frustration of my right hon. Friend. I think that I have picked up on some of the points made in his very good speech, but we accept that others need further investigation. I am happy to discuss those with him after the debate, so that he can feed through any other questions or concerns.

It is not enough just to say that we have learned lessons; we need to do everything in our power to reduce the chance of such things happening again. I have met NHS England specifically to discuss the issue and, obviously, I communicated my concerns. I will follow that up after this debate and look at what more can be done to ensure that such catastrophic events cannot happen again. I hope I have given my right hon. Friend some reassurance, although I accept that he will continue, rightly, to campaign for more satisfaction.

11.25 am

Sitting suspended.

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Ticket Abuse

[Mr David Crausby in the Chair]

2.30 pm

Mrs Sharon Hodgson (Washington and Sunderland West) (Lab): It is an honour to serve under your chairmanship, Mr Crausby. I am grateful to Mr Speaker for granting this timely debate.

The all-party group on ticket abuse, which I am pleased to chair with my friend, the hon. Member for Hove (Mike Weatherley), ably assisted by the hon. Members for High Peak (Andrew Bingham) and for Selby and Ainsty (Nigel Adams) and my hon. Friends the Members for Bristol East (Kerry McCarthy) and for Liverpool, Walton (Steve Rotheram), who are vice-chairs, was set up shortly before the Christmas recess. Our short inquiry into the state of the secondary ticketing market was due to start next week, so this debate is very much intended as being, I hope, the first of many in Parliament over the coming months.

Our inquiry had been due to start next week, but unfortunately we have had to cancel our first sitting, in which we were to hear evidence from the major players in the secondary ticketing industry. It was a shame that none was able to attend, however, including the boss of Seatwave, who sits on the Minister’s departmental board. None the less, the inquiry will go on, and over the coming months we will hear from the live events industry and consumers, as well as those who do whatever they can to design out, or otherwise prevent, the exploitation of events by resellers.

Mr Christopher Chope (Christchurch) (Con): The hon. Lady says that her all-party group—an organisation that has already made up its mind that something is wrong—will be carrying out a non-independent inquiry that will be addressed by a select group of people. How will it ever be able to produce an objective response?

Mrs Hodgson: We have not already made up our mind—obviously that is the purpose of the inquiry—but we have already received evidence from the Metropolitan police that has proved that abuses are taking place. We are looking for solutions, as Ministers asked us to do when we met them. I hope that the inquiry will uncover solutions to some problems that have already been identified. We are not self-selecting, and if the hon. Gentleman wants to come to give evidence, we will be happy to hear from him.

The Minister and hon. Members are no doubt aware of where I come from on this issue. In 2010, I promoted a private Member’s Bill, the Sale of Tickets (Sporting and Cultural Events) Bill, which was debated on Second Reading on 21 January 2011. I will try not to repeat the speech I made that day, because it was around an hour in length, but many of the points I raised then are as true and as worthy of being made today. Other hon. Members who attended that debate are present today, and I hope that they do not use the same arguments—they might have come up with some new ones. Perhaps this debate will convince them to change their minds.

I am going to go through what has happened since that debate and what should happen in the future. It is worth restating first, however, why I embarked on this campaign all those years ago and what has sustained me, despite the continued stonewalling of the current

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Minister’s predecessors. My daughter is a second-generation Take That fan—I being the first generation—and I was alerted to this scandalous practice by her sense of great unfairness that she had not been able to acquire Take That tickets for us, despite being ready to buy them online the minute the tickets went on sale, only to see them moments later on other websites for many times the original price.

I looked into the practice further and found that neither my daughter nor Take That were alone. In fact, that day I found just the tip of the iceberg, because this happens week in, week out with music, comedy, sport and theatrical events up and down the country. The same situation affects not only Wembley arena gigs and international matches, but small and medium-capacity concerts in provincial towns and cities throughout the country. It even affects art exhibitions; someone would have been very lucky to pay face value to see the recent David Bowie exhibition at the Victoria and Albert museum at a convenient time or, similarly, the da Vinci exhibition at the National Gallery last year. The Chelsea flower show regularly makes the news when its tickets hit many times face value on secondary sites. The most recent example to hit the headlines and inspire columns and features about the secondary market was the Monty Python reunion, probably because lots of journalists and editors wanted to go themselves.

My daughter’s experience started me on this crusade, but I have kept fighting in the light of the experiences of countless other fans of all kinds of events who are disgusted by this practice. I thank all those people who have e-mailed and tweeted me over the past few years for their support.

This is not just an emotive issue, however, although that is often the case—bear in mind that famous line about football being not a matter of life and death, but more important than that. As I did my research and more people supported my campaign, I met more stakeholders in the live events industry and became increasingly aware of the real concern that this kind of parasitical practice is detrimental to our creative industries. It stands to reason that if someone is creaming off money from the sector without putting anything in, the industry will suffer. In the case of the creative and live events sector, it would make sense for the Government to do everything possible to protect and support it, given that it sustains more than 1 million jobs and accounts for a significant proportion of our exports to the rest of the world, especially with regard to music.

Tourism is important to the UK economy as well, and our creative industries are particularly important to tourism. How many tourists come to the UK to see a show in the west end, to attend one of our many excellent festivals or to see a gig at one of our growing network of regional stadiums, such as the Stadium of Light in Sunderland? According to a UK Music’s recent report “Music Tourism: Wish You Were Here”, music tourism is worth £2.2 billion to the economy, with each overseas tourist spending on average more than £650. Those tourists will not come over here to spend all that money in our service and retail sectors if they cannot get a ticket for a fair price.

In the same vein, domestic event goers with limited funds are not likely to go to other events, or to spend a great deal at or around an event for which they do have

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a ticket, if their ticket has cost them many times what it should have. Even worse, if people are priced out of going to a gig, game or comedy show, that could be the end of their relationship with the band, sport or comedian that they were planning to go and see, thus harming long-term sustainability. Ticket touting is bad for not only fans, but the live events business, which was why the fifth recommendation in the UK Music report was that the Government address the issue, including through legislation if necessary, to ensure that the sector keeps going from strength to strength.

Many within the industry have had to adapt their business models to fit the market following what I would call the green light that the secondary market got from the previous Government—I am sorry to say—and the Culture, Media and Sport Committee back in 2008. Both said that the secondary market served a purpose for fans and that it could regulate itself.

Kerry McCarthy (Bristol East) (Lab): I congratulate my hon. Friend on her work, about which I know that she is absolutely passionate. She highlights a point that is made over and over again by people who seek to defend the practice. Yes, there is a value to secondary ticketing when people want to offload tickets because they happen not to be able to make an event, or if people are able to snap up tickets at the last minute after thinking that they would not be able to attend. However, there is a big difference between those practices and the market manipulation that is taking place on a huge scale, and that is what my hon. Friend is talking about.

Mrs Hodgson: That is exactly the point that I want to expand on. We all agree that the secondary market can serve a purpose—if we have tickets to an event that we thought we could go to, but then find that we cannot attend because of a change in work patterns or whatever—but the exponential growth in online resale that we have seen since 2008, with major players coming from America to get a slice of the growing pie, proves my “green light” point. If the brakes were on before 2008, while we were waiting for the decisions, they were certainly smashed to pieces afterwards, and people in the industry have seen touts making more and more money from their work and investment without putting anything in. After all, when a ticket sells for double its face value, the tout makes more money than everyone involved in putting on the show.

People in the industry tried unsuccessfully to convince the Government and Parliament to do something about the situation. Having failed in that attempt, they decided—reluctantly, in my opinion—that if someone was going to make that money, it might as well be them. Some are doing so openly by selling premium packages or appointing a secondary website as an official partner, as Jessie J did recently. Some, however, are doing it through back channels because they do not want their fans to know that they are effectively being ripped off by the artiste they admire, as that would inevitably hurt their relationship.

The practice of allocating blocks of tickets directly to the secondary market was exposed by a “Dispatches” documentary in 2012, which I took part in. I hope the Minister watched it—I have a copy in my office that I can pass on to her if she did not. Such under the table

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dealing is a direct consequence of successive Governments failing to do anything to protect fans. At the very least we need to bring those dealings out into the open.

It is not as if there is no precedent for protecting fans, as we protected Olympic tickets from being exploited by touts. I am aware that doing so was a condition of being granted the games by the International Olympic Committee, but I would like to think that that would have happened anyway, given the national significance of the games and the obvious security considerations.

I note from the excellent Library debate pack—I put on record my thanks to our exceptional Library researchers for putting it together in such a short space of time—that the Scottish Parliament has passed legislation protecting tickets for the Commonwealth games, which is welcome. Colleagues will know that the unit set up to monitor Olympic touting and other crimes associated with the games, Operation Podium, also looked at the wider secondary market in the years it was in operation—from 2005 to 2013. It estimated that that market was worth £1 billion, and its initial findings resulted in the fine for touting Olympic tickets being quadrupled. I sat on the Public Bill Committee that considered the legislation that put that in place, and during our proceedings, a representative from the Metropolitan police told us that the people they were tracking who were trying to tout Olympic tickets were the same players who control most of the inventory on sale on a day-to-day basis. During our questioning, I nearly coaxed him into agreeing that action was needed to regulate the wider secondary market, but he stuck to his brief very professionally.

I might not have been successful on that occasion, but the recommendations in the report on ticket crime that Operation Podium published shortly before it was disbanded last year could not have been clearer. “Ticket Crime: Problem Profile” found:

“Due to the surreptitious way that large numbers of ‘primary’ tickets are diverted straight onto secondary ticket websites, members of the public have little choice but to try to source tickets on the secondary ticket market.”

Its findings led the unit to conclude:

“The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency and fraud.”

The unit therefore recommended:

“Consideration must be given to introducing legislation to govern the unauthorised sale of event tickets. The lack of legislation in this area enables fraud and places the public at risk of economic crime…The primary and secondary ticket market require regulation to ensure transparency, allowing consumers to understand who they are buying from and affording them better protection from ticket crime.”

The Minister’s predecessor, the right hon. Member for Faversham and Mid Kent (Hugh Robertson), told me repeatedly that if we provided evidence of market failure he would reconsider his position; I refer Members to Hansard, volume 551, column 997W from 25 October 2012, and volume 542, column 66WH from 13 March 2012. The latter refers to the long-awaited report from the Office of Fair Trading, which I hope we will see later this year.

Even given the damning report from Operation Podium, the Government have still refused to engage on how to protect fans. I hope that the new Minister will differ on that and agree with me and other colleagues that, when

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the police say that a market needs to be cleaned up because it is acting as a front for organised crime and fraud, we should probably listen to them.

If we needed confirmation that the secondary market is allowing fraud to be perpetrated, we got it in July last year, when it emerged through an investigation by Radio 4’s “You and Yours” programme, working with security expert Reg Walker, that thousands of counterfeit tickets had been sold through the major secondary market platforms. Those platforms tell people that tickets are guaranteed because sellers receive their money for a ticket only once the buyer has been to the event without incident. That would be the case if someone were to try to shift a few tickets for an event they could not attend or if they were small-time casual touts. However, the fraud could be perpetrated because the restriction does not apply to the big players, otherwise known as power sellers or brokers—although I would call them industrial touts.

The secondary platforms compete for inventory from those major players and the commissions from their sales, so they bend over backwards to win their business. That means preferential rates and premium services, and even the odd party, with drinks and networking opportunities; but importantly it also evidently means disbursing money paid for tickets before those tickets have been verified by the end user.

Unscrupulous individuals—they would be called “gangsters” or “organised criminal networks” in common parlance—were able to establish themselves as power sellers by selling large amounts of genuine stock, although we do not know from where they got it. When they then carpet-bombed the market with false tickets, they had ensured that they got their money within days of the sale. By the time the reported thousands of fans were knocked back from concerts by the likes of Beyoncé and One Direction, those criminals were long gone.

I am not saying that the four major secondary platforms that were stung by that fraud were complicit in any way, although my understanding is that they did not exactly run to the police about that criminal activity, probably because it would harm their reputation; it was an issue of damage limitation. However, the fact that their processes allowed the fraud to happen shows that the market is not foolproof—or gangster-proof—and desperately needs reform and transparency. I have heard it argued that if those websites did not exist, all those fans would be out of pocket, whereas now they will be reimbursed eventually, if they are tenacious. However, without those websites, with their aggressive marketing and their promise of safe transactions, the criminals or criminal organisations would not have been able to sell nearly as many counterfeit tickets in the first place.

The Minister will be well aware of the trouble that rugby union has had with the resale of tickets for high-profile games. Some have credited the Rugby Football Union with driving viagogo out of the country to the safety of Switzerland, after it won a High Court battle to be told the identities of people who had broken its terms and conditions by reselling tickets to high-profile games. Of course, it is only the company address that has moved abroad; the business retains an operation in London and trades here as before. However, we have to ask ourselves, why did viagogo run away if it has nothing to hide?

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Like many national sport governing bodies, the RFU is conscious of the need continually to feed the grassroots and drive participation at every level of the game. That is not all altruistic; if the grassroots are neglected, every level of the game suffers very quickly—gate receipts fall and talent does not come through, meaning that our clubs and national teams are not as competitive. That then feeds back again, damaging interest in the sport.

For that reason, the RFU ensures that a significant number of tickets for high-profile games are distributed to the 2,000 or so rugby clubs across the country. Indeed, it even announced before Christmas that that would include at least one ticket per club for the rugby world cup final in 2015. The RFU knows that it could get much more for those tickets—indeed, for all the tournament tickets—on the open market, but that is simply not the point. It wants to ensure that not just wealthy individuals and corporate buyers can afford to see the best rugby teams and players in the world.

The RFU wanted the identity of those reselling tickets to be known to ensure that they contribute to the long-term fostering of grass-roots participation, instead of making some individual a nice wad of cash. That is why the RFU and England Rugby 2015 have continually asked the Government to legislate to protect tickets for the 2015 rugby world cup from being touted. It is disappointing that, so far, the Government have refused to do that.

I hope that when the World cup comes around, our streets will not be littered with counterfeit tickets bought innocently from people who were selling them all over the place, or because they were available from unofficial outlets and fans could not tell the difference from legitimate tickets. The World cup organisers must do as much as they can to limit the number of tickets that fall into the hands of touts and to educate consumers about the official resale mechanism through which they will be guaranteed genuine tickets, as happened for the Olympics.

I am sure the Minister will be aware that touts cannot be blocked completely. She will be aware, from the last Department for Communities and Local Government questions, that if someone is desperate to secure a ticket now for the World cup final, they could do so today, on at least one of the secondary websites, for around 10 times the face value of one of the lowest priced seats. Some of the posh seats in the west lower tier would set them back almost £18,000 a pair, and that is despite the tickets not yet having gone on sale to the public; that will not happen for a further eight months. The touts obviously know that they will be able to obtain tickets, so they are selling them in advance at huge profits.

Does the Minister recognise that the situation is a direct consequence of her Department’s choosing not to get involved? The problem does not apply only to rugby; the governing bodies and major event holders in cricket and tennis have been at pains to try to enforce the non-resale clauses that they put on their tickets, for much the same reason. Alienating fans with ordinary means from prestigious events means risking the loss of their continued involvement with and patronage of the sport.

Top-flight football is the one sport in which there has historically been some protection for fans, but legislation introduced in 1994 to tackle hooliganism is increasingly being circumvented by people doing deals and accepting

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money from the secondary websites to authorise them to resell their tickets. That loophole must obviously be closed immediately, and there are growing calls from fans—including Spurs fans, as reported in local papers yesterday—in favour of that happening.

The websites are always at pains to point out that it is individuals, not them, who are selling the tickets. In that case, is it all right for someone to buy a season ticket for a premiership club, never to attend a match, and to make a fortune reselling their 19 home tickets on an “authorised” secondary market, when it would be illegal for a genuine fan who cannot go to one match to sell a single ticket at face value to their mate?

I asked in a written question a few months ago what conversations the Department had had with the football world about this issue, and the answer was “none”. I hope that the issue is now on the Minister’s radar, that she will give us her opinion on the practice and that she will have conversations with the football world. Does she think what is happening is in the spirit of the original legislation and will she close the loophole?

When the hon. Member for Hove secured a short Westminster Hall debate on this issue back in March 2012, the hon. Member for Chatham and Aylesford (Tracey Crouch) intervened on him and perfectly distilled the problems in the market. She asked:

“Does my hon. Friend agree that we should be putting the fan, not the salesman, at the centre of the ticketing process for live music and other events?”— [Official Report, 13 March 2012; Vol. 542, c. 59WH.]

That is exactly what we should be doing. We should put our constituents first, closely followed by the legitimate and important businesses that employ them and generate wealth for the UK. We should put last those who seek only to exploit. We can do that by legislating to make the secondary market more transparent and making people who profit from it more accountable to both the end consumer and those who own the intellectual property, on the back of which they are getting rich.

The all-party group will hear evidence on the best way of doing that. The intention is to table new clauses to the Consumer Rights Bill when it comes before the House later in the year. I will not prejudge the results of that process and the ideas that it will no doubt turn up. However, I suggest that the following is the minimum the Government can do to shut me and others up. Websites facilitating the unauthorised resale of event tickets should be made to reimburse a buyer for all costs incurred when tickets purchased through their service are found to be fraudulent. That should include all fees involved in purchasing the ticket, travel to and from the venue, and any accommodation and subsistence costs when evidence can be provided.

Mr David Nuttall (Bury North) (Con): Does the hon. Lady fear that if she introduced that proposal it would just send those websites offshore?

Mrs Hodgson: They are already on the internet. Viagogo’s head office is in Switzerland, so they are offshore.

Mr Nuttall: How does the hon. Lady propose that the law should be enforced?

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Mrs Hodgson: It should be enforced in the same way as we enforced the regulations on Olympics ticketing. Tickets could be sold abroad under different rules, but the number of tickets held here that had to go to UK fans had to follow UK legislation and the laws that we made.

Clive Efford (Eltham) (Lab): Does my hon. Friend agree that if the details of tickets were provided to the organising body and they were being sold illegally, it could then cancel them? That information would be important in enforcing the proposal.

Mrs Hodgson: My hon. Friend is right. That already happens with some events, including those at the O2. If a ticket is found to have been resold illegally and can be traced, it can be cancelled. That is one mechanism that can be used. My proposal would give consumers the peace of mind that they will not be left out of pocket if they are the victim of ticket fraud. The websites that make money facilitating ticket touting say they currently aim to make that happen now, so I hope that my proposal will not be considered too much of a stretch.

To bring to the market the much-needed transparency that the police and many others say is needed, the websites should ensure that all ticket listings display the face value and seat number, where appropriate, of the tickets being purchased. That would prove that the tickets were real and already in existence. Websites selling tickets they have acquired themselves, or through direct allocations from an event holder, should disclose that clearly to buyers, and individuals selling tickets via these websites should be able to provide proof that they own the ticket they are selling.

EBay was probably the original platform for web-based touts. The main websites these days could learn a lot from the information about a seller that it allows to be seen. EBay no longer allows tickets to be sold; that part of its activity has been moved to StubHub, through which it makes commission from the buyer and seller. However, providing information could still apply to other listings, so that the number of tickets sold to other events, the number currently for sale, feedback from previous purchasers, and the record of any previous accounts held by the individual when possible could be detailed. That would allow consumers to make an informed choice about whether to buy from a tout who sells hundreds of tickets, or from a genuine fan who is selling tickets because they cannot go to the gig or event.

There is a serious problem with how some touts acquire tickets through the use of botnets and sophisticated software programmes to circumvent restrictions placed on sales by primary ticketing websites, but that is arguably more a case of detection and properly enforcing existing laws and regulations, rather than making new ones.

The secondary websites have a role to play in questioning the legality of the methods employed by their power sellers to acquire the vast inventories that some of them have. I hope that that will be explored more during the APPG’s inquiry.

I have given the Minister and the other Members here a lot to think about this afternoon, but I hope she will try to respond to as many of the different points as possible. If she cannot, I hope she will simply tell the House whether she thinks her Government should carry

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on entrenching and exacerbating the situation. Even the chair of the Association of Secondary Ticketing Agents admits that

“the ordinary fan is screwed. The decks are stacked against them.”

Please do not say that the previous Government and the Select Committee looked at this issue years ago, so it is all okay. I have spent the past 30 minutes explaining why that just does not wash any more and why everything that has happened in the past six years shows that the wrong decisions were made.

I could have spent much longer speaking, but I will not. I have had lots of material sent to me over the past few years, which I will present to Parliament in due course to back up the case. If, as I hope, the Minister does not want her Government to reach the end of their tenure having made the same mistakes, I will be delighted to work with her and colleagues from all parts of the House to come up with a solution that tips the balance back in favour of the fans.

As I have said before in debates on this subject, tickets give access to an experience—sometimes, a once-in-a-lifetime experience—and the normal market rules of supply and demand do not apply. The tickets should not go just to those with the deepest pockets, access to back-channel deals or criminal methods of acquiring them, unless that is what the person putting on the event wants. The Government’s job is to legislate to prevent such market failure and to ensure as far as possible that everyone has a fair and equal chance of purchasing a ticket to their dream event, at the price those putting on the event intended.

3.1 pm

Philip Davies (Shipley) (Con): It is a pleasure to serve under your chairmanship, Mr Crausby, and to follow the hon. Member for Washington and Sunderland West (Mrs Hodgson). I admire her persistence; she comes back time after time on the same issue, but I am afraid that time after time she is wrong about it.

I also commend the hon. Lady’s ingenuity. This matter, as she rightly said, has been extensively considered by the Culture, Media and Sport Committee, on which I serve. We found that the secondary market was perfectly legitimate and worked, on the whole, in the best interests of the consumer. The Office of Fair Trading has looked into the subject as well; it also found that the market worked in the best interests of the consumer.

The hon. Lady has decided to set up her own inquiry, from which she can at least guarantee the answer she wants. I commend her for doing that, because none of the objective looks at this issue have ever fallen on her side of the argument. I also commend her for persuading the shadow Minister, her hon. Friend the Member for Eltham (Clive Efford), that this is another populist bandwagon on which he must jump. It seems that there is not one he is not prepared to jump on at the moment. He has added this one to the list.

The premise that the hon. Lady starts from is false. She believes that, by definition, all ticket touting and all reselling of tickets must be done at a profit, but ticket touts can make a loss—some 50% of the tickets sold on viagogo are sold at face value or below. When she and, I hope, the Minister go back over the Select Committee reports and the Office of Fair Trading reports, they will

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note the excellent contribution to our Select Committee inquiry made by the right hon. Member for Barking (Margaret Hodge), who gave evidence as a Government Minister. We all know she does a fantastic job as Chair of the Public Accounts Committee. She was robust in her defence of the secondary market and explained the reasons why we should not intervene and why it works in the best interests of consumers. I hope everyone will look over the evidence that she gave.

I see my hon. Friend the Member for Hove (Mike Weatherley) in his place, and I have no doubt he will be looking to trouble the scorers as well. He speaks consistently about intellectual property rights for event promoters, but I take a different view. My belief is straightforward: if someone sells something to somebody, they have sold it on for that person to do as they wish with it. It happens all the time in the world of retail, which is where I came from.

When I was at Asda, we sold products, people bought them and whatever they did with the products was up to them. We used to get lots of letters from people saying that our Asda-branded whatever had been spotted being sold in a corner shop down the road. Our view was that that was fine, because it was their product. If they wanted to sell it on at a higher price than they paid, that was fine, because that is how the free market operates.

My advice is that if someone does not want a person to sell a product on, they should not sell it to that person in the first place. The first rule of the free market is that if a product is sold to someone, the product belongs to them and they can do with it as they please. That happens in all walks of life. People buy stamps off other people as an investment and hope that one day they can sell the stamps on to someone else at a profit. People do it with gold. I am sure that the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), would have loved, when he sold the gold off at a ridiculously low price, to have said, “By the way, you cannot sell it on again at a price higher than what I have sold it to you at.” All that would have done was emphasise what a ridiculous mistake he made in the first place.

Kerry McCarthy: In a way, I am reluctant to intervene on the hon. Gentleman, because I know that is simply rising to his bait, but the difference surely is that in his examples—they are faintly ridiculous—the secondary market does not in any way, shape or form distort the primary market. The sort of secondary market that my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) is talking about completely and utterly distorts the primary market. The hon. Gentleman says that people can walk into Asda and buy whatever they like at the price that is charged to everyone, but they cannot do that with ticket prices these days.

Philip Davies: I do not agree with the hon. Lady. For example, when a new designer handbag comes on to the market and gets a lot of hype, there are massive queues in department stores of people hoping to buy one of the first 25 to go on sale. When new gadgets come out at Christmas time, there are massive queues of people hoping to be one of the few to get the few in stock.