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Westminster Hall

Tuesday 14 July 2015

[Mr Philip Hollobone in the Chair]

Rent-to-own Sector

9.30 am

Paul Maynard (Blackpool North and Cleveleys) (Con): I beg to move,

That this House has considered the rent-to-own sector.

It is a pleasure to serve under your chairmanship for the first time in this Parliament, Mr Hollobone, and to see the Minister in his place.

As is not traditional, I shall start with a string of apologies, particularly to the UK public affairs sector: it has experienced great confusion over the past week, having seen the title of the debate and been desperate to tell me all about rent-to-own home ownership. It will be fascinating to see whether the Opposition speakers have been similarly wrong-footed and have furiously to rewrite their contributions.

My second apology is to the hon. Member for Makerfield (Yvonne Fovargue), because I unwittingly gazumped the topic of the report published just before the election by the all-party parliamentary group on debt and personal finance, which she chairs. I discovered that only after I requested this debate a few weeks ago. I know that she will have plenty to say—indeed, earlier we discussed the fact that the two of us could debate this issue for an entire day. The Minister will be relieved that we have only 90 minutes, but I am sure that we can fill them. The hon. Lady will have to forgive me if I occasionally borrow from the APPG’s quality report.

The real inspiration behind this debate is not the public affairs sector—thank goodness—or even the APPG: it is what I see in my constituency on a day-to-day basis. I see families having to cope with the unexpected financial shocks that occur in day-to-day life. We often see the rent-to-own sector as a key component of that unexpected shock—when these things happen, the RTO sector becomes part of an almost transformative experience in how people deal with personal debt. I have spoken to my local food bank, citizens advice bureau and credit union, and they all tell me the same things.

I get frustrated when Members simply read out a list of case studies—I could easily do that for 20 minutes; I want to read out one that encapsulates the problem. The person in question has mental health problems and physical disabilities, and he is highly vulnerable. He does not understand contracts and finds it very difficult to assert himself and say no. He made a purchase from BrightHouse, and when he goes in each week to pay off his debt he comes under pressure from the sales team to buy something else. He finds it very difficult to cope. He has bought a laptop, a TV, a DVD player and a tablet, even though he cannot do emails on a computer and just uses Google.

As soon as he paid off the laptop, he came under immediate pressure to buy something else. The sales team know that he gets mobility allowance, and seem to think that it represents acceptable funds. He struggles to

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pay the rent and top up the electric meter. He defaulted on the payments for his mobile, which was repossessed. He was pressured into joining Utility Warehouse, so cancelled with BT, but because he cannot understand contracts, he did not realise that that would involve an £800 financial penalty for leaving his contract early. He is now having to pay off that as well. He still goes into BrightHouse every week to pay off his items, and finds it a stressful and fearful experience.

I could fill the rest of the 90 minutes with similar case studies. I am particularly troubled by the suggestion that those who are most vulnerable, who have the mobility allowance, are somehow fairer game than any other set of customers when it comes to extracting the extra few pounds a week that they rely on. Nevertheless, I should make it clear that I am not here just to bash BrightHouse or the wider RTO sector. Theirs is a legitimate business; there is a case for providing short to medium-term credit to people who need it. I recognise that, with a 70% market share, BrightHouse will get more than its fair share of horror stories, but the sector employs many people across the country, fulfils a consumer need and occupies space on the high street that might otherwise go vacant. I recognise all that, but it does not change the fact that vulnerable people are being exploited in troubling ways.

The challenge for the sector is how it can adapt what it does in order to continue to perform its role without taking advantage of people. I want to consider the extent to which the private sector models are truly broken, if they are; whether they are appropriately regulated, and how that regulation can be improved; and whether alternative, socially-funded models are viable, adequate and the right way forward. It is worth pointing out that not all private providers are the same. A firm called Buy As You View already adheres to much of the findings in the APPG’s report. It actually argues for better regulation, but regulation that is also proportionate and fair.

There needs to be some consistency with the principle that credit has a role to play if the object for which someone seeks credit will retain value after the credit has been paid off. In other words, credit is probably not appropriate for things such as food or electricity bills, but it may be for a consumer good. There is also a wider issue about how we ensure that markets function in the best interests of the consumer. That is a key Conservative principle, but I do not want a partisan debate because this is a cross-party issue. We all have vulnerable constituents who are at risk of being sucked into a situation that they cannot get themselves out of. I cannot possibly hope to encompass the entire debate in my short contribution, but I do want to set out a handful of areas that the Government should pay particular attention to and to encourage the Financial Conduct Authority to focus on them as well.

In the centre of Blackpool are the bus stops where people get on the buses. It is a complicated one-way system: people get on at one place but the place to get off is half a mile around the corner. Where people wait to get on the buses is a branch of BrightHouse. There will be dozens of people standing at the bus stops and admiring the scene inside BrightHouse, which has lots of cheerful, bright consumer goods. There are bright-coloured sofas, settees and beds, and enticing goods such as TVs and iPads.

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I am sure we can all imagine the range; it is very attractive and fetching. It is bright and modern, and it entices people with what they want in their lives. We live in a world where we are almost defined by what we own. I am tempted to stray off into a spiritual discursion about whether we are measured by what we own and whether that is good for us spiritually, but that is way beyond the Minister’s remit, and even that of the House. We will leave that to God himself.

People aspire to own, not to rent. I am concerned that the idea that the answer is to abolish the sector entirely, with people just renting, misunderstands people’s aspirations to own consumer goods. We should not place an artificial cap on what people want to own in life. Doing so would be a “nanny knows best” approach that fails to respect individual dignity. People on low incomes deserve the opportunity of ownership, but not in an exploitative market. When I think of my constituents and look at the typical customers in the RTO sector, there are broad similarities: 78% are female, 60% have children and 94% are in rented accommodation. Only 1% have hitherto used a payday lender. It is worth reflecting on that a little: although only 1% have used a payday lender before they go to an RTO provider, how many are using a payday lender by the end of their RTO experience?

The bulk of customers have an average of only £19 a week of disposable income to pay for these purchases. That does not represent a great degree of financial resilience. The rent-to-own model is about buying more and more goods over time, and they can quickly mount up. Of course, it is an appealing way to access credit. That misleading low weekly payment does not reflect either the entire cost after three years or what will happen as new items are taken on. I retain a degree of concern about how staff in these stores are being incentivised to sell more and more to each individual. Such incentives lead to perverse outcomes for the individuals concerned—they are not necessarily a good thing.

I will probably keep saying this for the next five years, but I represent the second most deprived Conservative constituency, which contains the fourth most deprived ward in the country. Right behind the Imperial Hotel—many will have been there over their time in the House—is Imperial Street, on which is a mother and baby sheltered housing unit. I have no doubt that some in that sort of sheltered housing may be transient and have experienced family breakdown, or worse, and will often need to furnish their houses rapidly and fully. They will need the full complement of consumer household goods. They cannot just buy one thing and then wait a few months, so they are often driven towards the rent-to-own sector, which is not always the right thing for them. It is a captive market: providers have no incentive to lower prices. Competition is neither transparent nor evident to such individuals, who may not have the necessary financial literacy to understand how to navigate their way through the market. The Blackpool, Fylde & Wyre Credit Union wrote to me and said:

“Some people do not understand the full cost, others do not believe they have a choice because they are frozen out from mainstream credit and have a lack of knowledge of alternatives such as Credit Unions.”

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Some in the RTO sector take advantage of the lack of legal understanding of how the system works to encourage payments.

The pricing is unclear. I sent Zach from my Blackpool office on an undercover mission—it was actually rather transparent—to the BrightHouse around the corner to find out what was going on and to look at some of the prices. Zach spotted a Samsung TV on display with a product price of £1,053.13, but the total payable after three years of weekly payments of £18 was £2,808, including what they call “Five Star Service”, which is neither optional nor separately priced and appears to add some £400 to the product price. Just down the road in Tesco, however, the same product was available off the shelf for £1,049 with optional insurance extras. It is worth noting that insurance in the RTO sector also seems to attract interest payments.

The different elements, such as the goods themselves, the warranty cover and the insurance, are all lumped into one tempting weekly payment. After years of pressure, it remains hard to compare properly the products available in the RTO sector with what can be obtained by other means. The product codes remain different due to slight tweaking of the products, such as a different-coloured fascia which might add something to the end of the code meaning that it cannot be directly compared with what one might get in Tesco.

Second-hand or repossessed goods are sold as “pre-loved”, often costing more than a brand new item would somewhere else. The APPG found that about one third of products on sale in the RTO sector were pre-loved. That is not necessarily a bad thing if the credit is made more affordable as a consequence or if it meets the consumer’s need better and more cheaply than a hi-spec alternative, but that depends on the ethics, systems and processes in place in each individual RTO provider.

Yvonne Fovargue (Makerfield) (Lab): Will the hon. Gentleman give way?

Paul Maynard: I will indeed: the hon. Lady will give me a chance to catch my breath.

Yvonne Fovargue: Getting someone to pay for goods and then repossessing them and selling them to somebody else for twice the price is a wonderful business model. Offence was taken when I mentioned that during the inquiry, but we have not yet been able to find out the providers’ break-even point, which is obviously commercially sensitive. There will be a break-even point, but providers can sell goods to someone else once they have been handed back voluntarily after, say, a year.

Paul Maynard: I thank the hon. Lady for that contribution, with which I have a degree of sympathy. Equally, an ethical provider bartering a customer down, because the pre-loved item is a better deal for that individual, can have a role to play. The hon. Lady is quite right, however, about the lack of transparency in the sector and the difficulty of assessing what different providers are actually doing. One cannot regulate in a non-transparent market, which may go to the heart of the matter.

The hon. Lady will perhaps make this point herself, but ownership requires one to make all the payments. One cannot own two thirds of a television. Some providers

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may seek to make exceptions when almost all payments have been made, but someone could make half the payments and still find themselves losing the product. I am unsure whether the regulations are clear or being applied consistently across the market. There is no mandatory health warning, as I believe payday loans now have—the hon. Member for Walthamstow (Stella Creasy) will tell me if I am wrong—saying that goods are at risk if payments are not made.

Shorter loan periods are certainly not advertised, and three years is the default option. I understand that shorter periods increase the weekly payments and make the deals less attractive to consumers, but why not sell products with more modest specifications or de-bundle the warranties or insurance, as companies such as Buy As You View already do? The three-year contracts matter dreadfully because of the nature of poverty. Child poverty has been discussed a lot recently due to the Government’s changes to the measurement—for the better—but behind that decision was some excellent investigative work about the ingrained nature of poverty and the churn rate. Around half of those in poverty in one year are not in poverty the following year. Around 10% are in persistent poverty, meaning three years out of four. If someone submits to a three-year contract, the probability that disaster could strike in one of those three years vastly increases. If more people could access one-year or two-year deals, the likelihood of having a problematic year might be reduced.

My local credit union said to me:

“The bigger issue we have seen is that people are not just sold one item. We have seen people with multiple debts to a weekly pay store. One customer on benefit income was paying for 8 different items at a total £120 per week (£520 per month) which would stretch the budget of the average full-time working person to breaking point, let alone the low-income people who tend to be the users of these stores. The fact that the goods may then be repossessed for non-payment introduces an element of fear that prioritises these payments in the customer’s mind causing them to pay the weekly pay store and falling into arrears with other essential bills.”

That might particularly be the case when customers have multiple disadvantages, such as mental health problems or a learning disability. It is simply unclear how such companies are protecting the vulnerable people who come through their door seeking to own a consumer good. No obvious assessment of affordability is built in to the selling process in some firms. I recognise that Buy As You View does assess affordability and rejects some 70% of applications, but it is almost unique in the sector in applying that degree of toughness. Such financial vulnerability goes beyond merely an inability to understand the annual percentage rate, and the cost to the taxpayer when vulnerable individuals reach crisis point has not been assessed. How vulnerable customers best access credit for goods is perhaps a separate issue, requiring particular attention, from the wider market of roughly 13 million low-income individuals who need to access low-cost credit for consumer goods.

I welcome the fact that the Government have extended local social welfare funds. It was a matter of controversy in the previous Parliament, but I am glad that they have taken that decision. Such funds are well used and well spent in Blackpool. Many councils may not be doing such a good job, but such funds should be maintained where they are well spent. We must consider the alternatives, however. The Minister is something of an expert on

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credit unions, some of which have tried to set up RTO providers. The APPG mentioned Smarterbuys in County Durham, which was set up by the Prince Bishops Community Bank.

Those are interesting models, which have something to offer, but I have concerns about their scalability and about the creation of a national network of different providers, all with slightly differing rules and regulations. The scalability is problematic, but I recognise that credit unions have an important role to play, in part because they often have to sweep up the consequences of an engagement with the rent-to-own sector that has not gone well.

What role might Big Society Capital play in inspiring innovation in the sector? Buy As You View is keen on a comparison website and, in the short-term credit market, the Competition Commission encouraged lenderscompared.org.uk, which is a properly regulated, independent price-comparison website in that sector. I can see no reason why we cannot have a similar website mandated by the Financial Conduct Authority or another body in the rent-to-own sector. It would be a great deal of help—in particular because many people use their mobile phones to shop—so that people can make the comparison at the same time and understand the best option.

I hope that the Minister accepts that there must be a fair regulatory playing field for the not-for-profit sector and the for-profit sector. We are not talking about bashing for-profit providers, simply because they happen to be for-profit providers—that would be a dangerous path to go down. There is already broad variety in the sector. We need well understood regulation that puts consumer needs first. I hope that the Minister, or the appropriate Treasury Minister, will meet me, perhaps the APPG members, the charities involved such as StepChange, the companies involved, and the regulator to look at how conduct can be improved across the board.

Will the Minister put on record his view that the FCA needs to focus on fair outcomes for the consumers, rather than only on inputs and what occurs before the individuals take their product away with them? We need to ensure that proper competition and choice for the consumer are the key indicators of effective regulation.

I would be grateful for some thought on how the sector can improve data sharing, not only to identify poor risk and prevent people from getting into problems, but to help the financially vulnerable, so that they can be identified and offered alternative means to access the goods that they need. I hope that the Minister agrees with me that bundling expensive warranties as a condition of the loan seems to contravene the principle that lenders ought to treat consumers fairly, which has to be at the heart of all regulation. Things should be transparent and clear for day-to-day consumer engagement in the shops, but in my view that is not occurring.

I want the Government to press the FCA to work more closely with the industry, to accelerate what it is doing and to ensure that we are as diligent on RTO as we were in the previous Parliament on issues such as payday lending. They are all part of the same financial resilience package.

Will the Minister also outline what steps the Government might take to improve people’s ability to manage their debts? Does he share my concerns about the examples

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that we have heard today of vulnerable people facing life-changing amounts of debt because of what is to all intents and purposes the mis-selling of consumer goods, credit and insurance?

Yvonne Fovargue: Will the Minister also review the advice available to people in debt? Managing one’s own money involves getting out of debt in the first place, then being able to manage the money. That is really important. A recent report on fee-charging debt management showed that 60% of the fees put people in a worse position, so we need to look at the availability of the free advice sector.

Paul Maynard: I am sure that the Minister heard that question. I am now trying to reach my conclusion rapidly, because I have been going on far too long.

Lord Freud has met with the debt-management charity, StepChange, but will the Minister agree to convene a cross-departmental working group consisting of the Departments for Business, Innovation and Skills, for Work and Pensions and for Education, and sector representatives? The issues stretch across Government and are not confined to the Treasury alone.

To finish, I want to make a point of principle with which I hope the Minister will agree. About four or five months ago I remortgaged my property, but it has never taken me so long to do so. I was locked in my bank for about six hours, or that is what it felt like, going through every last iteration. I understand why that is: we have to improve safeguards for borrowing, we have to reduce risky borrowing and we have to ensure that the banks are sustainable. Yes, my mortgage payments are a substantial element of my outgoings and part of my financial arrangements, but why are we not as careful about RTO-types of credit as we are about mortgages? If someone’s available disposable income is only £19 a week, even £12 a month is a sizeable payment. There ought to be a point of principle: it matters as much to those people how their consumer credit is regulated as it does to me how my mortgage is regulated.

We as a Government need to look much more closely at how we encourage financial resilience. We need multiple bulwarks for families against the unexpected—too often the unexpected leads us down a path to perdition financially. Proper and proportionate regulation, which does not seek to condemn the private sector simply for being the private sector, is the best way to allow people to fulfil their legitimate aspirations to own consumer goods.

I have asked a lot of questions and I have talked a lot today—I apologise to those present. I look forward to the Minister’s reply.

Mr Philip Hollobone (in the Chair): We will also hear from Mr Maynard at the end of the debate, because he has three minutes to sum up the other contributions that he has heard.

9.56 am

Yvonne Fovargue (Makerfield) (Lab): It is a pleasure to serve under your chairmanship, Mr Hollobone. I welcome the Minister to his place—it is all the better that he was a member of the all-party group on debt and personal finance in the previous Parliament. I also

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congratulate the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on obtaining this important debate.

The rent-to-own sector is not well understood. People think it is relatively new on the high street, but when I was a citizens advice bureau manager I had run-ins with Crazy Georges, the precursor to BrightHouse. In many ways the sector operates under the radar and I hope that the debate will raise the profile of the issue.

As the hon. Gentleman said, the all-party group undertook an inquiry into the sector towards the end of the last Parliament, producing a report in February. We did so because we were concerned about a number of the issues, not least the fact that rent-to-own customers seemed to be paying about three times more for their televisions, fridges and sofas than they cost on the high street or elsewhere.

I hesitate to say this, but the pricing structure is complex and possibly deliberately so: not only is the base price of the goods high, but customers pay a hefty interest rate on the loan taken out. BrightHouse, Buy As You View and PerfectHome charge annual interest rates ranging from about 50% from Buy As You View to a 94.7% annual percentage rate, or APR, from BrightHouse. As the hon. Gentleman said, the interest is usually charged over a period of three years—not only on the price of the item, however, but on the expensive warranty-style service agreements, insurance and the delivery charge. Everything is bundled together.

The latter items are the most troubling of the whole package, because deals are almost impossible to obtain from the leading firms without those expensive extras. The firms vary on whether such additions are compulsory or optional—in fact, BrightHouse has agreed to make them optional—but in all cases linked insurance and service cover are being sold at the point of sale: it does not matter that the customer is already covered by a statutory guarantee or might have home contents insurance. Moreover, there is little chance of a new TV or washing machine breaking down these days, but the selling is such that the emphasis is on people wanting peace of mind—“Complete peace of mind for you.” Everything is bundled together.

Furthermore, the insurance policies only cover a single item against fire, theft and damage—nothing else. By contrast, a single home insurance policy might cover any number of items up to a value of £50,000. For example, in BrightHouse a £490 double bed costs £55 a year to insure against fire, theft and damage; I have not actually set fire to my bed recently, and it has not been stolen, either, but there we go. Cover for a £725 fridge-freezer would cost £80. By comparison, both those items, up to a total of £50,000, could be insured by Direct Line with a similar level of cover for £118 a year. The more items there are, the more problems there are. There are very few circumstances in which customers get better value for money from insurance than through a single home contents insurance policy. When multiple items are purchased, the value for money will obviously get worse.

As I said, the total cost is higher. In September 2014 a Samsung freezer with a five-year service plan was £644 at John Lewis—Which? found that when it shopped around—whereas at BrightHouse the total repayable over three years was £1,716, three times the price. I accept that people cannot always afford to pay up front, but we need to look at making something available that allows those customers to shop around for goods.

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As the hon. Member for Blackpool North and Cleveleys said, weekly instalments are appealing because they give customers the ability to spread cost. The stress put on weekly payments is what is most attractive to customers, which is probably why BrightHouse still advertises itself on its website as “Your Weekly Payment Store”—it does not advertise its prices but the ability to pay weekly. The payments seem affordable—£5 or £10—but amount to a sizeable expense over a few years, as the hon. Gentleman said. For people on low incomes, that will often mean going without elsewhere. It also means that many rent-to-own contracts are left unfulfilled, as customers do not make their payments and goods are returned. As the hon. Gentleman said, two thirds of a TV is no TV at all. The payments are lost, and there is nothing to show for them except, perhaps, a shadow on the wall.

The irony is that the people who can least afford it end up paying the most. That is probably not surprising, as they have little choice but to go somewhere such as BrightHouse and pay those prices. The rent-to-own firms have them over a barrel. That lack of choice for consumers is why I believe that this market in particular needs to be regulated. They are often from low-income households, and many are significantly reliant on benefit income. The typical customer is young, female and has children, and almost all live in rented accommodation. When I spoke to the chief executive of BrightHouse, he said that the firm bundles everything together because it knows its customers are female, and “females like things simple.” Simple, but a little expensive, I would say.

Failure to pay rent-to-own debt means that customers face losing goods. That puts pressure on money available for food and household bills. The average rent-to-own customer is substantially worse off than the average payday loan customer, yet they probably feel they have made a better choice, because of the publicity surrounding payday loans—rent-to-own, as I said, has operated under the wire.

The all-party group was concerned that the financial promotions downplay or ignore relevant costs and risks. Full ownership has to be the target with rent-to-own, surely—owning is in the name—yet the advertising focuses on the weekly payments and does not draw attention to the risks, namely the total cost of the credit and the fact that the goods can be taken back.

At the APPG inquiry, the Financial Conduct Authority said that it shared concerns about how firms advertise the deals and the prominence of the weekly repayment. The emphasis on the low weekly cost could be why so many customers get into debt: according to the FCA, 50% of customers get into difficulty with their rent-to-own commitments. That is a really high proportion of people who cannot afford to pay. I agree with the hon. Member for Blackpool North and Cleveleys that it raises the question of what affordability checks are being done.

The all-party group owes a debt of gratitude to Damon Gibbons of the Centre for Responsible Credit, and the Stockton-based community group Thrive. Their efforts led to the three large firms promising to improve their operations and an agreement was reached for a customer charter, although that was then reneged on—another reason why the APPG undertook our inquiry. That proves that perhaps voluntary agreements do not always work in this sector. The Centre for

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Responsible Credit and Thrive also gave evidence to our inquiry. Unfortunately, they said that little had changed.

We also took evidence from the three big firms in the sector: BrightHouse, PerfectHome and Buy As You View. They defended their business model on the basis that their customers had peace of mind because of the extensive service contracts. That may give some peace of mind, but what peace of mind can there really be when people cannot afford the goods, as the deals are so expensive, or when, as we heard from Thrive, two big lads turn up late at night to take away the fridge-freezer—“voluntarily”?

We also took evidence from Linda Woodall of the FCA, who said that the practices were ringing “alarm bells”—that was her actual phrase—at the regulator, which is concerned about the high level of repossessions and incomplete transactions as well as the warranties and insurance. The FCA has engaged with the issue: since the publication of the report I have had a meeting with Linda and can see that the FCA is taking the issue seriously. I thank it for that.

The FCA’s intervention has helped to elicit changes in the market, not least on price transparency. Firms are now breaking down the prices they charge for the goods, the loan and the warranty, and we welcome that. BrightHouse has also stopped requiring customers to take out its insurance product compulsorily, if they can prove they have their own household insurance. However, the extended warranty remains compulsory with both BrightHouse and PerfectHome.

Paul Maynard: Does the hon. Lady agree that that requires staff in BrightHouse to be aware of and apply the rules, and that, no matter what the centre of the firm might think, that does not necessarily always happen?

Yvonne Fovargue: I agree absolutely with the hon. Gentleman; we have seen rogue managers. For example, a manager at PerfectHome actually took a customer’s house keys before handing over the goods, so that they could go into the house. PerfectHome said that was a rogue manager, but it shows that the stores are perhaps not being operated as they should be.

The FCA should go further. I would like to see it ban expensive warranties and insurance as compulsory parts of a rent-to-own agreement. I would love to see some mystery shopping, as well, to look at the staff and staff incentives. The FCA may need to be given a wider statutory remit to do that, so perhaps giving it that remit would be a way forward. However, even within the current FCA rules, surely the current bundling offends against the idea of a credit agreement’s fairness? The FCA took action against compulsory single payment protection insurance premiums, so why does it not have the powers to prohibit credit agreements sold with compulsory service charges? I would like to see those people who were sold such products after April but who already had home insurance come forward, as I think they could reclaim.

The FCA has also said it is concerned about the high level of goods repossessed or surrendered before the agreement is completed. Twenty-two per cent. of customers have their goods repossessed or surrender them—more than one in 10 of all agreements. BrightHouse said that it never repossessed goods, but having looked at its

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practices and received some information, I have found that it has its own companies that collect debts, Caversham Finance and Sigma. One term in the contract with those firms is for repossessing goods. Caversham is a branch of BrightHouse, and Caversham Insurance is registered in Malta.

I wonder about the idea that customers would give up their goods voluntarily. That beggars belief. Let us say that someone with three children, who will need a washing machine daily, pays hundreds of pounds for one—the idea that they would then happily give it back, leaving themselves without after paying for it for two years, stretches credibility. The firms defend the high levels of surrenders by saying that customers often think of themselves as renting the goods, and happily give them up to move on to something else. Well, possibly, if it is something like an iPad, but not if it is a washing machine, a bed or the sofa. The customer expects to see something at the end. The whole point, as the hon. Member for Blackpool North and Cleveleys said, is that it is “rent to own”—they expect to own the goods at the end.

Thrive gave evidence of people who were extremely distressed when their goods were taken back—or “voluntarily” surrendered; their arms were twisted somewhat. Surely if people wanted to rent, they would go to a specialist rental outlet and pay the lower charge. I have done some comparisons with that sector. The high level of repossession shows a failure of the initial affordability checking, the forbearance procedures or both.

We should also look at whether the companies give people who get into difficulties breathing space. As has been said, over three years people at that income level are likely to get into difficulties. That is not acceptable; the FCA should look at producing sector-specific safeguards to protect people in financial difficulties against the loss of essential items. There are rules that set out that some bailiffs cannot repossess essential items, such as children’s beds, so surely there should be rules for this sector as well. We also think there should be health warnings on rent-to-own stores and websites to ensure that customers are aware of the cost of the agreement and the risks of repossession.

The FCA prefers to promote a supervision-led approach, which elicits a voluntary agreement from the firms to behave more reasonably. However, as I have said, we have tried the voluntary agreement route. The Centre for Responsible Credit and Thrive had a voluntary agreement arrangement, but it did not work. The FCA thinks rent-to-buy is a small sector compared with other, bigger sectors, but it is growing. BrightHouse’s model is to open a new store every fortnight, often in areas of the highest deprivation. Its stores are in prime locations in our towns and cities—particularly in areas of deprivation—and they prey on the poverty and desperation of many of our constituents, who are charged exorbitant prices for goods that they may never own.

We have to promote the alternatives to the rent-to-own model to allow people to obtain a more reasonable deal. We also have to ensure that people who are forced into the sector have some control over the worst aspects of the market. Those customers, as has been said, are particularly vulnerable. The FCA has a particular

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responsibility to give them a higher level of protection than other customers. We look to the Government and the FCA to protect customers who are not able to go elsewhere and therefore need our protection.

Several hon. Members rose—

Mr Philip Hollobone (in the Chair): Order. Under the new arrangements, in which the third party can also contribute to the debate, the remaining Front-Bench time is meant to be split equally between the three Front-Bench spokesmen. I want to leave three minutes at the end for Mr Maynard to sum up the debate. Over to you, Ian Blackford.

10.13 am

Ian Blackford (Ross, Skye and Lochaber) (SNP): It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Blackpool North and Cleveleys (Paul Maynard) for securing the debate. He spoke with passion about this important matter, as did the hon. Member for Makerfield (Yvonne Fovargue).

The hon. Member for Blackpool North and Cleveleys said that non-transparent markets cannot be regulated, but our discussion this morning has highlighted the need for effective regulation. The fact that so much of it is not transparent—we are talking about protecting the most vulnerable, the poorest and the most disadvantaged in our society—means that the Financial Conduct Authority has got to take proper responsibility for this growing market, for all the reasons that have been set out.

We all recognise that the FCA is in its infancy, and that it has had a number of major tasks over the past few years. In our opinion, the FCA has got to take far greater responsibly for ensuring that the sector is effectively regulated. One of the issues is what has been described as the bundling of services. As we have seen in other areas of the market, there has to be an unbundling of services. It has to be made explicitly clear why the consumer is charged for each part of the service provided in the rent-to-own sector.

The Government must look at what legislation is required to force the FCA to take effective action to protect the consumer in this important area. We all accept that there is a need for the rent-to-own sector in our society. There are people who will be tempted by the desire to pay weekly for products. The sector has existed for a long time, but it is important that it is effectively regulated. I will confine my comments to that.

10.15 am

Stella Creasy (Walthamstow) (Lab/Co-op): It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone, and it is a genuine pleasure to take part in this debate. The Treasury Minister might be surprised to see a shadow Minister from the Business, Innovation and Skills team but, as he knows, I have form in this area. I am secretly delighted that he is now in the Treasury, especially on the issue of debt. I hope he will be the cuckoo in the nest of the Treasury when it comes to getting right the issue of how we help people in debt.

First, I acknowledge the work that the all-party group, the hon. Member for Blackpool North and Cleveleys (Paul Maynard), and my hon. Friend the Member for Makerfield (Yvonne Fovargue) have been doing in this area. I want to talk a little about some of the work that

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was done on this issue for the Consumer Rights Act 2015, and I also want to say something about the broader context in which the firms operate. Finally, as I always like to be helpful, I would like to suggest some proposals for making progress on this issue to the Minister, and test whether he is willing to support them.

I congratulate the hon. Member for Blackpool North and Cleveleys on securing this debate. He said he is concerned that shadow Front Benchers may not be aware of these companies and may make the same mistake that others have made in thinking that the rent-to-own sector is about housing. Let me reassure him that the Opposition call a spade a spade. Legal loan sharking takes many forms. My hon. Friend the Member for Makerfield and I are as concerned about the rent-to-own sector and debt management companies as we are about payday lenders. That is why we have been campaigning for a number of years for reform of the sector.

Hon. Members will recognise concern in my part of town about what we call the “BrightHouse knock”—when we are knocking doors during campaigns, we have to be careful not to knock like the bailiffs, because people think we are BrightHouse coming to repossess their goods. I may have expressed some surprise when my hon. Friend cited BrightHouse’s statement that it does not repossess goods—it seems, then, that that is happening only in my part of town.

Rent-to-own companies are legal loan sharks. They operate in exactly the same way as the payday lending industry and a number of other consumer credit industries. They lend in a way that is designed to encourage a persistent relationship. The problem is that they lend in a way that does not ensure that people have access to fair credit, but ensures that they continue to pay something back weekly. They make sure they always get money out of people. In what other industry is there such a high default rate, yet such high profits to be made? That should surely tell us that it is not a competitive industry, and that there are problems that need to be addressed. We have all seen at first hand people in our communities who are exploited by that predatory model of lending.

Jim Shannon (Strangford) (DUP): I apologise for not being on time, Mr Hollobone. I flew in this morning. We stayed for 12 July, which, as hon. Members will know, is a special day in Northern Ireland.

I, too, have great interest in this issue. My constituents regularly come to me when they have entered into hire-purchase arrangements, and sometimes arrangements with loan sharks as well. What I see is their desperation. They have made a decision based on what is right at that moment in time, rather than what is good for them in future. Does the hon. Lady have any idea about how the Consumer Rights Act can be better utilised, or how someone can control it, to ensure that when people make such desperate decisions, we can help them at the right time?

Stella Creasy: I do not want to keep the hon. Gentleman on tenterhooks. I have some ideas, growing on the work that the all-party group and my hon. Friend the Member for Makerfield have done on the industry. The hon. Gentleman is absolutely right that we can do things to change the situation. We need to recognise that it is predatory lending. The hon. Member for Blackpool

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North and Cleveleys talked about vulnerable people being exploited, and that practice is much more widespread than people realise.

The hon. Member for Strangford is right; people make what is probably the right decision for them at the time about where they could get a freezer, cooker or other basic consumer goods that their family need to live. The hon. Member for Blackpool North and Cleveleys was tempted into a discussion about consumerism and modern life, but the reason we began campaigning on legal loan-sharking in my community was that we could see that people were trying to make ends meet and needed to be able to wash their kids’ clothes so that they had school uniform. Those companies were their only option, and the method of lending increasingly prevented them from going to other companies. It affected their credit histories so they could not borrow from other parts of the industry.

Frankly, it is very expensive to be poor in this country, and the problems are compounded by the companies in question and by predatory lending. Consumers lack choice, and that distorts the market price that they pay. Some hon. Members have already talked about the method of selling, “pay weekly”. For the shadow Front Bench the issue is the mindset—lending to people in a way that means they cannot get away. We have all seen examples of what has been mentioned, when people pay double the cost of a washing machine, cooker or TV, and then some, only to have the goods repossessed like that—I do not know whether Hansard can record my clicking my fingers, but it is that quick. As soon as someone falls behind for a week the company comes round. There is no breathing space or recognition that something about the lending may have got people into difficulty so that they cannot make their repayments. There is no such responsibility.

The Opposition have tabled several proposals to deal with the companies in question, and other legal loan sharks, for some years. The Minister is aware of that and I know that he shares my concern about the companies. We may differ on how best to deal with them and with predatory lending, but he too is concerned about it. During the passage of the Consumer Rights Act we tried to address the issue of warranties and insurance sold with products, and how that breached people’s consumer rights. They would be sold a product with a requirement that created a lack of clarity and transparency about what they were buying. I recognise that some companies now say that those things are not compulsory, but we all know about the hard sell. I remember the Minister talking about his experience of being on the BrightHouse mailing list. I am interested to know whether he has finally managed to disentangle himself from that. He will know how hard the companies push the products, as part of the original deal that was agreed to. Even if they are not now compulsory, the arrangements are still difficult for consumers to get out of.

The Minister may take the opportunity, now he is no longer in coalition, to suggest that he was held back by his former partners in his attempts to deal with the problems, and say that he is now free to get to grips with legal loan sharks. He is among friends as far as wanting that freedom to be exercised. During the passage of the Consumer Rights Act, Jenny Willott, the then Under-Secretary, said:

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“If a warranty provides no more than the statutory rights and there is a charge associated with it, whoever is selling the warranty may well be in breach of consumer protection regulations. When shops sell goods and the warranty is purchased at the same time, the full cost must be disclosed and consumers must be informed of their statutory rights. Consumers also have the right to cancel the extended warranty within a set period, and those rights must be made known to the consumers when they purchase the warranty.”—[Official Report, 13 May 2014; Vol. 580, c. 623.]

The Under-Secretary was adamant that our proposals for prohibiting such agreements were covered under the consumer rights measures that were being introduced, so one of my questions to the Minister today is what he knows about the implementation of such rights since then. After all, the Act has been passed, and the Government set up a consumer rights implementation group. Is the issue of rent-to-own companies being investigated by that group? How are we making sure that consumers can exercise the rights they now have under the Act? That would also extend to marketing methods—the Minister will know about marketing lists—and how companies tell people their rights and make sure they know that they do not have to take out insurance or an extended warranty. Often such warranties are not worth the paper they are written on and offer consumers no additional protection or benefits. Is that being made plain to people?

Why does all that matter? Why must we get to grips with those companies? It is because we know the issue is fundamentally about debt. Consumer and personal debt in this country are rising into what might be called uncharted territory. Since March, unsecured personal debt has gone up £48 billion. Personal debt is rising three times as fast as wages. The Minister and I disagree about the Budget and whether it will make things worse or better, but we know people are finding that there is too much month at the end of their money. Therefore the companies we are talking about—and their credit agreements and their predatory lending behaviour—are here to stay, unless we show the political will to tackle them and unless we recognise how they make people’s already difficult situation worse. I may disagree with the hon. Member for Blackpool North and Cleveleys about the Government’s decision to abolish the term “child poverty”, but we can all agree that making it difficult for people to make ends meet by leaving them stuck with companies that exploit them and squeeze out every last penny will do no one any favours.

The hon. Member for Blackpool North and Cleveleys talked about mortgage debt, and many people with mortgages go to the companies because they have no alternative. If interest rates go up just 2% families will have to find £1,000 extra a year in interest alone, to keep a roof over their head. If they are also trying to pay off an expensive cooker or freezer, we can see what is coming down the road for them. Some of us who fought to retain the social fund will know about the lack of alternatives. Many credit unions do wonderful work trying to come up with alternatives, but the lack of options is compelling people towards the companies in question. In the context where personal debt is rising—and that will cause a massive economic problem for us and put our recovery at risk—there is a compelling case to be much more proactive about predatory lending in the consumer credit market.

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With that idea in mind perhaps I may give the Minister some suggestions for things to do, and things to raise with the Financial Conduct Authority. He will know that I have a slight sense that the Financial Conduct Authority is playing catch-up. If the banks were tyrannosaurus rex, legal loan sharks are the velociraptors of the consumer credit market. They are fast, nimble and ever-evolving, and that is evident when we compare the rent-to-own sector with the way lending is done by the lumbering beasts of banks. That is why voluntary action is not enough to deal with the companies. Will the Minister make a commitment to work with the Financial Conduct Authority and to get it to expand its remit, to look at the industries in question and how they can change? In particular, could there be a requirement on lenders to provide pre-contractual information on both the cash price of goods and the total cost of the credit agreement: the difference between the price at the start and what it could be by the end of the agreement? If consumers could have that up-front they would know exactly what the cost would be, including any additional fees and charges.

Companies could be banned from requiring consumers to take out additional products alongside the initial credit agreement—separating out the insurance and warranty to make it clear that, aside from its not being compulsory to buy them, it would be illegal to try to sell such additional products at the same time. The companies could be required to undertake affordability checks based on the possible total cost of the agreement rather than the initial up-front price of the good, so that companies would have to reflect, when doing the affordability check, on what debt people could possibly get into by borrowing in that way, and whether they could pay the money back. We clearly need to change the way affordability checks are done. [Interruption.] The Minister says from a sedentary position that they already do this, but clearly they do not, given the levels of debt that people are getting into. We need to recognise that it is possible for affordability checks to deal with the potential cost of the goods—the doubling of prices—rather than the minimum that someone could pay. They should deal with the maximum that someone could pay.

My hon. Friend the Member for Makerfield made a powerful point about breathing space. The companies do not give people breathing space when they get into financial difficulty. We want the Government to make a commitment to end fees for debt management. The fact that people have to pay to get out of debt compounds the issue, and I would like a time scale for that change. We recognise that the debt advice industry needs to grow. We would like the Government to use the levy—in fact, to double the levy on the companies—to pay for that. The Minister may want to take up that idea; I do not know. However, we all know that having to pay to get out of debt extends the debt. It makes it harder for people to get into a debt-management agreement. With the companies we are talking about, it would be good to stop the clock once people start the process of getting a debt-management agreement, so that no more interest would be accrued, and there would be no more pressure, visits or BrightHouse knocks on the door.

I encourage the Minister to go further and talk to his colleagues in the Department for Work and Pensions about a reinstitution of the social fund—funding for alternative ways in which people could get white goods

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in particular. I am sure that the Minister will know from his constituency that people cannot go without a washing machine or cooker. We may disagree about iPads but we can certainly agree that there is a case for basic white goods to be provided.

It would be helpful to hear from the Minister about the commitment that the Government made last year to reviewing personal debt. We have not seen any further information, so will he update us on that review and the work that is being done? There is also the issue of how credit histories are affected by this form of predatory lending, because, even if customers get out of payments required for an individual credit agreement, if that affects their future ability to borrow and to go to alternative or mainstream providers, there is a problem.

Jim Shannon: I apologise again for not being here for the whole debate. I am conscious of how many good groups there are—I have them in my area—such as the citizens advice bureaux, Christians Against Poverty, the Churches and many others. They offer good advice and can often come to an agreement with the hire purchase companies or mortgage groups to reduce the fees to a payment system that is manageable. Does the hon. Lady think that it is important to recognise what such groups do to help people in poverty and debt?

Stella Creasy: The hon. Gentleman pre-empts my final point, which is that what we really want is an alternative, but for an alternative to exist, it has to be funded, because this is not a fair fight. What I have noticed, as we have exerted pressure on the Government to tackle the payday lending industry, is that it is retreating from our high streets but that it is being replaced by the rent-to-own industry. This industry and legal loan sharking have evolved because there is no reform. We need an industry that works, because we need people to be able to borrow in this way to make ends meet—because they are not earning enough—and we need to end legal loan sharking by reforming the way in which these companies operate. That requires alternatives. However, our credit unions, housing providers and alternative forms of financing are struggling in an environment in which these companies are making a great deal of money from exploiting people. That is why it is right that the Government not only step in and are much tougher about regulating—learning the lesson of capping the cost of credit by capping what these companies can charge—but look at how we support the alternatives to grow and how we can level the playing field.

My final point is about the particular case for mainstream credit providers. Will the Minister commit to talking to mainstream credit providers, particularly to our banks, to ask them to review how many of their customers have entered into these agreements? I think he would be surprised—just as we found with payday lending companies—that half a million customers from one bank alone, who could have gone to it for a personal loan, were going to payday lenders. We need to make the case that these forms of lending and problems with debt are now so mainstream in Britain and so much part of modern life that there is a case not to see this as separate, small industry but part and parcel of how we help people to make ends meet. The mainstream credit providers have a vested interest in working with credit unions and providers—the Hoot credit union, for

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example—who do alternative forms of white goods provision to help their customers, because the consequences for the mainstream providers will become apparent when people default on their mortgages and personal loans.

This is not an either/or any more. We have to end legal loan sharking in Britain in its many forms. I hope that the Minister will take in good faith those examples of things that he could do now and accept what the priorities are. I look forward to a positive response from him and hope he will join the Opposition, as the cuckoo in the nest, in saying: let us end predatory lending in Britain once and for all.

Mr Philip Hollobone (in the Chair): Although the Minister can finish before 10.57 am, if he would be kind enough to finish no later than that, that will allow Mr Maynard two and a half minutes to wind up the debate.

10.33 am

The Exchequer Secretary to the Treasury (Damian Hinds): It is a great pleasure to see you in the Chair, Mr Hollobone; I think it is the first time I have served under your chairmanship in this way.

I start by congratulating my actual and honourable Friend the Member for Blackpool North and Cleveleys (Paul Maynard) on bringing this important subject to Westminster Hall. I also thank Mr Speaker for granting time for the debate. It has been good to hear from all the other contributors to the debate. There was the hon. Member for Ross, Skye and Lochaber (Ian Blackford), representing the SNP, and the hon. Member for Strangford (Jim Shannon)—the renaissance man of the 2010 generation in respect of the breadth of subjects on which he contributes in this place; he should be much congratulated on that.

It is always a joy to hear from the shadow Front Bencher, the hon. Member for Walthamstow (Stella Creasy), and I pay particular tribute to the hon. Member for Makerfield (Yvonne Fovargue), who brings a great deal of personal experience to these subjects from her time with Citizens Advice. She has been a great campaigner on fee charging, debt management companies and other aspects of the broader sector.

My hon. Friend the Member for Blackpool North and Cleveleys spoke powerfully and persuasively about the market—not only through personal stories, anecdotes and his experiences with his constituents, but far more broadly. He raised a number of very important points on disclosure, affordability, comparability, repossession, debt advice and financial management. Others have also touched on those subjects; I hope to cover most of them during my remarks and come to some others at the end.

On my hon. Friend’s point about meetings, the Government are always open to hearing from him and other colleagues who have special knowledge and interest in this area, because we have a shared objective to minimise consumer detriment and generally make the market work better.

The Government are committed to supporting hard-working people to be financially independent and resilient, and to save for unexpected events and for the future. Financial matters, as we all know, can be daunting, and making a poorly informed or sometimes just bad financial

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decision can have far-reaching consequences over a long period. The Government have taken a number of significant steps to improve the consumer credit market and ensure better outcomes for consumers. As well as fundamental reform of the regulatory framework, there is now, as we have heard, a cap on the cost of payday loans to help protect consumers from harm.

Crucially, the Government are also committed to ensuring that consumers are given the education that they need to make better informed financial decisions. Financial education is now on the national curriculum—something that I know a number of hon. Members campaigned for over an extended period. Pupils now learn about the importance of budgeting, sound management of money, credit and debt, as well as how to understand different financial services and products. It is really important in financial education to understand the principles behind these things and not just the products that might currently be on the market. If we had learned about the financial services products on the market when we were all at school, that would have been of absolutely zero relevance to the world we find ourselves in today: we have to learn about the principles of sound personal financial management and budgeting.

The Government are committed to providing sustainable financial services that give customers greater choice in accessing credit. With greater choice comes greater competition, and from greater competition should come—and generally comes—better outcomes for consumers. For example, the Government have already introduced several initiatives to support the credit union sector, including the credit union expansion project—up to £38 million—and the raising of the maximum interest rate from April 2014, which makes it that bit more possible for the credit union sector to compete in higher-cost, higher-customer-risk markets. That will help to allow consumers access to more alternative forms of consumer credit. For example, a consumer may now use a credit union for a loan to buy a household product, rather than go directly to a rent-to-own store.

That said, as my hon. Friend and, I think, the hon. Member for Walthamstow acknowledged, the rent-to-own sector is an important and legitimate part of the consumer credit landscape, allowing people to purchase essential items that they would otherwise have difficulty in finding the lump sum to buy. However, it is important that consumers who use rent-to-own agreements are protected appropriately from harm and adverse outcomes. There are times when unexpected, one-off expenses mean that consumers require access to credit—that happens throughout the income scale in different ways—either to fund shortfalls in income or to replace essential goods. Rent-to-own agreements allow payments to be spread over a long period, which is valuable for some customers on low incomes who do not have access to more mainstream forms of credit such as credit cards or overdrafts, and who lack the savings to be able to purchase household goods up front.

To help deliver the Government’s vision for a well functioning and sustainable consumer credit market that is able to meet consumers’ needs, the Government have fundamentally reformed regulation of the consumer credit market. That has created a new, more robust regulatory system and transferred regulatory responsibility

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from the Office of Fair Trading to the Financial Conduct Authority on 1 April last year. The new regime has been designed to strike the right balance between proportionality and consumer protection. The Government have ensured that the FCA has the robust powers that it needs to protect consumers. It will thoroughly assess every firm’s fitness to trade as part of the authorisation process and has put in place binding standards on firms. It proactively monitors the market, focusing on the areas most likely to cause consumer harm, and it has a broad enforcement toolkit to punish breaches of its rules. There is no limit on the fines that it can levy and, crucially, it can force firms to provide redress to consumers.

In the evidence session for the all-party debt and personal finance group’s inquiry into the rent-to-own sector, the FCA expressed concern about firms in the market. It stated—this quote was used earlier—that practices in the sector “rang alarm bells”. For that reason, it has brought forward the authorisation period for these firms to this summer. Rent-to-own firms that wish to obtain authorisation needed to apply by 30 June. That will ensure that any firms that do not reach the rigorous standards required are not able to continue in business and that poor standards start to be driven out of the market.

With regard to the price of credit, the Government believe that consumers should be protected from unfair costs and charges in the market. The Government showed their commitment by legislating to require the FCA to introduce a cap on the cost of payday loans, which came into force on 2 January 2015. The Government were clear that an interest rate cap or a cap that covered only some of the fees and charges that payday lenders may impose would be ineffective; I remember discussing some of the finer points of that sentence at some length with the hon. Member for Walthamstow. The FCA therefore designed a cap to include all fees and charges that may be incurred in relation to a payday loan, including arrangement fees and default penalties.

The Government legislated to give the FCA the power to cap the cost of all forms of credit. They have placed a duty on the FCA to use that power to impose a cap on the cost of payday loans because of the clear evidence of consumer detriment in that sector. The objective was to target payday lenders. However, the FCA retains the power to cap the cost of all forms of credit if it thinks that that is necessary to protect consumers, and it has said that it will keep the issue of capping the cost of credit in other markets under review.

Stella Creasy: Can the Minister set out for us, then, what evidence he would look for in order to introduce a cap on the charges that the rent-to-own sector may impose? I wonder whether he has a note that will help him to explain what levels of detriment, of costs, would have to apply. Some of us may argue that the cap on the payday lending industry is a little high at the moment, but it could be brought down. The Minister makes the point about a test. What tests would he set?

Damian Hinds: The test would be to appoint a regulator that we believe in and give it the tools to be able to make the decisions—give it the enforcement powers and the analytical capability—rather than, as a Government, meddling in the individual decisions on the details of the regulation. Appointing a regulator is historically

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how we have done things in this country, not just in this market but in others. It does not always please everyone all the time. Sometimes, people may feel that things should move more quickly or more slowly or be somewhat different, but in general it is a good way to protect consumers.

If at some point we think that the regulatory system in toto is not working, we change the regulatory system, but I do not think that it is right for Government necessarily to have a prescriptive answer to every subsection of the market; as the hon. Member for Walthamstow rightly said, this market, in its broader form, has a remarkable ability to shape-shift. If we go very specifically after one part of it and try to change one specific practice, we will find that something else changes somewhere else that we did not know about. That is why it is important to have this broad regulatory framework that includes high-level principles of fairness to the consumer, with the regulator stepping in to license and delicense operators when it feels that that is necessary.

Stella Creasy: Obviously, the Minister will be conscious that doing nothing has consequences, too; we have seen that in relation to all the people we have been talking about today, who have been ripped off by these companies. The Minister will also be aware that, on payday lending, the Government did not accept the argument that he is putting forward—that the Government should not intervene and set a cap—and did recognise the need to set a series of tests. Opposition Members would be incredibly sympathetic if he wanted to break his vow of libertarian conservatism and say, “Actually, there is a need to intervene because we see this predatory behaviour in this industry.” I want to press him. Is he saying that he would be opposed to learning the lessons from payday lending and to the Government’s stepping in and introducing proposals for a cap on the rent-to-own sector, despite the consequences of doing nothing, which we are seeing now?

Damian Hinds: The hon. Lady, although passionate, is not right when she says, “The Government did specifically this.” The Government put a duty on the FCA with regard to that part of the market. They also, at the same time, gave a power to the FCA to do something in parallel, in other parts of the broader consumer credit market, if it deemed that necessary.

Ultimately, individual organisations make their own commercial decisions on prices, interest rates and default fees for their products. However, the Government believe that it is in the interest of lenders to consider the impact on their customers and, of course, to treat them fairly.

On the affordability of credit, rent-to-own firms must fulfil a number of requirements. When the responsibility for regulating consumer credit transferred from the OFT to the FCA, the FCA turned key elements of the OFT’s irresponsible lending guidance into binding rules. Those are enforceable with the full range of FCA enforcement powers. They set out that a firm should assess the customer’s creditworthiness, having particular regard to the potential for the commitments to impact adversely on the consumer’s financial situation and taking into account information that the firm is or ought reasonably to be aware of at the time and the consumer’s ability to make repayments as they fall due. The FCA’s rules are aimed at strengthening consumer

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protection and are based on the simple principle that money should be lent only to a person who can afford to repay it. Firms are also provided with greater clarity on what is expected of them and the sanctions if they lend irresponsibly.

Rent-to-own firms, like all consumer credit businesses, are required to make affordability checks for consumers taking out an agreement. The FCA makes it clear that a firm should lend responsibly and should take reasonable steps to assess the customer’s ability to make repayments in a sustainable manner, without undue difficulties and without having to borrow further. Ultimately, credit should be extended to a consumer only if they can afford it. The extent and scope of affordability checks are determined by a number of factors, which include, as well as the financial position of the customer, their vulnerability and in particular whether the firm understands that the customer has some form of mental capacity limitation or reasonably suspects that to be so. Some of the casework examples given by my hon. Friend the Member for Blackpool North and Cleveleys throw that requirement into sharp relief. In addition to that, on 23 February 2015 the FCA published a paper on consumer vulnerability and a practitioners’ pack to assist firms in addressing the needs of customers in vulnerable circumstances.

Some concern has been expressed that rent-to-own agreements are not always adequately explained to consumers before they enter into them. That point was made from the Opposition Benches. The FCA requires firms to provide adequate pre-contractual explanations to enable consumers to assess whether the proposed credit agreement suits their needs and financial situation. Consumers can compare the cash price quoted in the pre-contractual information with the price of equivalent goods elsewhere to decide on the best deal. That ensures that consumers have the ability to make the financial decision that best suits their needs.

The Government are aware that consumers are sometimes required to take out insurance and service deals when entering into a rent-to-own agreement and that that could cause consumer detriment. Although there is concern that those deals raise the total cost of an agreement, the Government have ensured that where insurance is required as a condition of credit, the cost of the insurance must be factored into the APR, so that consumers can make a comparison on the basis of total costs and make informed decisions about the agreement that they are entering into. Furthermore, when firms sell insurance products, they must do so in line with the FCA’s requirements about assessing consumers’ eligibility to claim on a product.

The reforms made to consumer regulation by the Government and the FCA have given consumers new protections, and the regulatory framework means that consumers will continue to be protected in the future. It is important that avenues of credit remain open to those who need them, while consumers are protected from harmful practices.

Stella Creasy: I have asked the Minister about the Consumer Rights Act 2015 and the commitments given to hon. Members by BIS Ministers that these practices—the selling of warranties and insurance products—would be covered by consumer rights legislation. The things that he is saying do not quite match what those Ministers

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said. Can he clarify whether he has spoken to the Ministers in BIS about the Consumer Rights Act and its role in tackling the bundling up and selling of insurance products and warranties, and will he commit to raising that issue with the consumer rights implementation group? If nothing else, he could get that group to look at whether being required to buy an additional product when someone simply wants to buy the original product breaches basic consumer rights.

Damian Hinds: I will have to write to the hon. Lady about the details of the regulation on bundling. In general, price bundling in markets is not illegal, but on the specifics of this market I will have to get back to her.

The Government have set up the Money Advice Service, which provides a single point of debt advice for consumers and allows those who face problems with debt to obtain free and impartial money advice. This year, MAS will spend £47 million on debt advice, delivering through its third sector partners an increase of almost £9 million on the previous year.

It is important to take a joined-up approach to the provision of free debt advice. Following the independent review of MAS, the Government welcomed the creation of a debt advice steering group, which will help to improve the effectiveness and efficiency of free debt advice provision by bringing together senior representatives of the debt advice charities, high street banks, water and energy bodies and devolved organisations.

Yvonne Fovargue: I welcome the fact that there will be a body, but is it not appropriate to get local authorities involved as well, because they quite often fund free debt advice in their areas? I also feel that the Local Government Association needs to be involved in the body.

Damian Hinds: The steering group will be an open forum to involve all relevant and interested parties, and I take on board the point that the hon. Lady makes. I wanted to come back to a point that she raised earlier, which my hon. Friend the Member for Blackpool North and Cleveleys also mentioned: where the consumer stands in relation to part-paid goods. The Consumer Credit Act 1974 states that in a hire purchase agreement, a court order is required to repossess goods if a third of the total cost has been repaid. Furthermore, where 50% of the total price has been repaid, a consumer can return a product without penalty and the agreement will finish.

Stella Creasy: One thing that we see with such companies is that they move the goalposts with consumers. First, they do not tell consumers that a court order is required to repossess goods. Secondly, the amount that constitutes 50% moves, because of some of the charges applied. Will the Minister commit to reviewing that area? As he says, consumer protection exists, but because companies change how they lend to people, consumer rights are not being upheld.

Damian Hinds: The hon. Lady raises an important point. It is one thing to have rights, but another to know what they are. That is not restricted to the rent-to-own sector or to consumer credit, and organisations such as Citizens Advice have an important role to play in making that plain. It is an important part of disclosure for firms

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to make that known. The regulatory regime and enforcement are designed to provide confidence that that is happening in reality.

That brings me to my more general concluding point. We are in a new era, with a new framework. I pay tribute to Martin Wheatley and the FCA for the speed at which they have introduced a more positive framework. Many of us have taken an interest in consumer credit issues and detriments in the market over several years, and the FCA framework now contains a lot of what people have asked for. In addition, I pay tribute to hon. Members from all parts of the House who have taken a constant interest in the subject and kept it at the forefront of public policy debate.

None of the issues that we have talked about today is new. The leading home credit provider first came into being in Victorian times, catalogue lending has been with us for as long as anybody here can remember and rent-to-own shops existed long before 2010. Moreover, the market can and does change; we talked earlier about its ability to shape-shift. The Government have adopted a proportionate approach to the market. The hon. Lady suggested that I might have felt constrained by being in coalition between 2010 and 2015. I wonder what constrained her, or her colleagues in the Labour party, for the 13 years before 2010, when they did not do all the things that she is now demanding from the Government of today.

More broadly, I think that the approach has to be a judicious combination of financial education, sensible regulation and ensuring that alternatives are available. In all three of those areas during the past five years there has been a significant shift, with the inclusion of financial education on the national curriculum, the new FCA framework, Government support for the credit union sector and the accompanying regulatory change.

Rent-to-own is an important part of the consumer credit market. My hon. Friend the Member for Blackpool North and Cleveleys is absolutely right to keep our focus on it, and we will continue the dialogue.

10.55 am

Paul Maynard: Members will be glad to hear that I have only three minutes, so I cannot go on and on. I thank all hon. Members who have participated today, particularly the Front-Bench spokespeople and the hon. Member for Makerfield (Yvonne Fovargue), who was quite right to point out that the sector may be relatively small—indeed, it is—but it has a massive impact on the lives of some of the most vulnerable people if things go wrong.

I should like to focus for a few seconds on the word “vulnerable”, which we have heard so much today. It is a word that is being devalued in modern politics. Everybody, suddenly, is vulnerable in some way or another, which almost strips the word of its meaning. I would rather think of people who have poor financial resilience, but who can function effectively in the market. They are not vulnerable, by my definition. The ones who are vulnerable are those who, for whatever reason, cannot function effectively in the market. We need to recognise that quite precise distinction.

I commend the hon. Member for Walthamstow (Stella Creasy) on her undoubted vigour on these issues. I think, however, that the Minister in his concluding

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remarks made an important point: the answers to the problems that we have talked about today involve the judicious application of a range of measures. The hon. Lady needs to be alive to the nuances of the debate as she seeks to shoehorn it into her wider national narrative of us all going to hell in a handcart. Occasionally, we need to focus on some of the precise issues in the rent-to-own sector. There are alternatives to the BrightHouses of this world, and consumers need to be made aware of them. That is why I put such importance on the need for a comparative website.

I welcome the Minister’s offer of further engagement, and I look forward to that engagement. I join him in praising the FCA. It is at the start of a journey, and I see a role for Members from all parts of the House to urge the FCA along the journey as best we can, paying attention to the nuance of the rent-to-own sector as well as the wider debate about consumer debt. I thank all hon. Members for attending today.

Question put and agreed to.

Resolved,

That this House has considered the rent-to-own sector.

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Health Provision (South Gloucestershire)

10.57 am

Jack Lopresti (Filton and Bradley Stoke) (Con): I beg to move,

That this House has considered health provision in South Gloucestershire.

It is a pleasure indeed to serve under your chairmanship, Mr Hollobone. My focus in this debate will be largely on the Frenchay hospital site and the lack of any health provision there, which affects healthcare provision across South Gloucestershire. I am pleased to see in the Chamber my neighbours and hon. Friends the Members for Kingswood (Chris Skidmore) and for Thornbury and Yate (Luke Hall). I look forward to their contributions.

I have a great sense of déjà vu, because this is the third time in just over five years that I have spoken in such a debate and sought to enlist help from the Government to address the question of the promised community hospital at Frenchay. The previous Labour Government made the highly controversial decision in 2005 to downgrade Frenchay hospital. As part of their overall plan, which included building a new acute hospital at Southmead, a commitment was made to provide a community hospital on the Frenchay site. Five years later, in 2010, in the “emerging themes” proposals for healthcare in the area, we were again promised a community hospital at Frenchay. We were told that acute care services would move to the new acute hospital at Southmead and that the community hospital at Frenchay would have “step down” and “step up” services.

The “step down” service would allow patients who receive surgery at the new Southmead hospital to be moved to their local community hospital before being discharged, to reduce the number of beds required at Southmead and enable family and friends to visit patients more easily during their convalescence and recovery. The “step up” patients are those who require hospitalisation but do not require the full services of an acute hospital. The bed numbers for the new Southmead hospital were planned on community hospitals such as Frenchay being available for more minor matters.

In total, 68 beds were recommended at Frenchay. There was also to be a range of out-patient services, diagnostics and an enhanced community health service for care to be provided at home. There was also to be space left on the site for a doctors’ surgery, extra-care housing and possibly even a nursing home. Fine—that was not what local people wanted, but it was a clear plan with clear objectives.

Then, in July 2012, the primary care trust and the clinical commissioning group began to change their minds once again. However, they did not fully update South Gloucestershire Council’s public health and health scrutiny committee until April 2013. At that point, they confirmed that there had been a “stock take” of out-patient and diagnostic capacity at Frenchay.

In September 2013, the council’s health committee received confirmation that there was no longer a proposal to have out-patients and diagnostics on the Frenchay site. In August 2013, the CCG met and decided that, only for the interim, rehabilitation beds at Frenchay would be moved to Southmead for two years. My Conservative colleagues on the council’s health committee came up with a plan and identified funds within the

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council’s budget to keep the in-patient rehabilitation beds at Frenchay for two years until the new Frenchay health and social care centre opens in 2016. They proposed the plans to the health committee in September 2013. However, Liberal and Labour councillors joined to vote down the proposal. The issue was then referred to the Independent Reconfiguration Panel by the Secretary of State for Health.

The IRP made scathing comments on the way that local healthcare providers handled Frenchay community hospital, and Frenchay hospital in general. The IRP said it is understandable that residents

“should feel exasperated by the years of delay”

and by the

“amendments to plans”.

The IRP concluded that the whole process had shown a

“marked lack of empathy”

by local healthcare providers

“for patients and public who have the right to expect better”.

My hon. Friend the Member for Kingswood secured a debate on healthcare in South Gloucester in March 2014. I sought assurance from the Minister, and she said:

“I am assured that the local NHS is committed to finding a long-term solution for the provision of in-patient beds at Frenchay. Although the CCG is commissioning 68 beds at Southmead for May 2014, that is a temporary measure while the Frenchay site is being improved to accommodate them after April 2016.”—[Official Report, 19 March 2014; Vol. 577, c. 888.]

Frenchay hospital closed in the early summer of 2014 with a commitment that it would be closed for only two years and would reopen in 2016 as a community hospital. However, that date has moved once again and is now mooted for August 2018 at the earliest and more probably November 2019. Is it any wonder that a large number of my constituents feel bitter and that many are extremely sceptical that there will ever be a community hospital at Frenchay? Will the Minister explain why there is a further delay? I should like her to address the timings to help me explain to my constituents why that continues to happen.

More than ever, there is a case for a community hospital in South Gloucestershire at the Frenchay site. There will be a large population expansion in my constituency over the next 10 years. There was nearly a 10% increase in population across South Gloucestershire between 2004 and 2014, and a big increase in housing is planned over the next 10 years. For example, in my constituency the Cribbs Patchway new neighbourhood plan will create at least an additional 5,500 new homes. As a country, we have an ever-increasing elderly population, and the number of people aged 65 and over in South Gloucestershire increased by more than 30% between 2004 and 2014, and obviously that growth is ongoing.

The Save Frenchay Community Hospital group has recently published a report highlighting that Southmead hospital is currently unable to achieve the necessary national performance targets due to a lack of intermediate care beds in the community, which has resulted in a high number of patients being discharged due to a lack of appropriate sub-acute care beds in the community. Opening Frenchay community hospital would alleviate that situation and was supposed to be part of the

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overall solution and plan. I ask the Minister to insist that the CCG publishes its definitive plans for the Frenchay site. If the 68 beds are no longer required, I should like the CCG to explain how the gap in provision of intermediate care beds for patients discharged from Southmead hospital will be filled.

I am writing to ask South Gloucestershire Council’s health scrutiny committee to ask the Secretary of State to refer the matter back to the IRP. It has been more than a year since the IRP criticised the CCG for the length of time it was taking to make a final decision. Finally, my constituents and I need clarity and confirmation that a community hospital at Frenchay will actually happen with a realistic, achievable timescale that is in the public domain. The uncertainty and continual moving of goalposts drives the cynicism that has gone on for far too long.

11.5 am

Chris Skidmore (Kingswood) (Con): I thank my constituency neighbour, my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti), for securing this important debate. Many people in South Gloucestershire are listening, and I put it on record that he has been a strong local champion for his area. At every moment, he has not been afraid to speak truth to power about what we feel is going wrong with healthcare across South Gloucestershire. The Minister will be more than aware that we have put South Gloucestershire on the map in raising our concerns about local healthcare provision. We have met her twice, and the last time was on 23 June. My hon. Friend and I have also met the Health Secretary. Over the past five years, we have secured several such debates in the House, and we will continue to do so until we resolve the issues that need to be resolved on behalf of our constituents.

Today, my hon. Friend has raised the issue of Frenchay. The delay caused by the CCG, for whatever reason, is inexcusable and needs to be solved, but I also want to talk about the situation at Cossham hospital, which is also part of the feted Bristol health services plan that took accident and emergency services from Frenchay to give to Southmead on the other side of Bristol. As part of that health services plan, a minor injuries unit was promised at Cossham hospital. Do not get me wrong—Cossham hospital had a full £20 million refurbishment after it was threatened with closure under the previous Labour Government in 2004, which is fantastic. As a member of the league of friends of Cossham hospital, I have volunteered to make the tea and, before we had our new baby, we turned up for antenatal classes at the hospital. It is a superb facility, but it has an empty room that should have housed a minor injuries unit, which, alongside Frenchay, is an outstanding sore point among my constituents, who were promised a minor injuries unit at Cossham and a community hospital at Frenchay. Those promises have not been delivered.

Cossham hospital is just outside my constituency in Bristol East, but it is used by 80% of South Gloucestershire residents, so it is a critical healthcare facility. There has been a 20,000-signature petition to the House of Commons, of which I delivered 2,500 signatures. That petition led to these debates and, just the other month, a referral to the IRP was published by the Health Secretary, who signed off and agreed the IRP’s recommendations. I understand that no Health Secretary has ever not agreed

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with the IRP’s recommendations, but the recommendations were that the CCG could go ahead as planned and not provide a minor injuries unit at Cossham. Instead, the CCG wants to pilot the introduction of minor injuries provision at general practitioner centres.

There is a problem for my constituents, and for constituents elsewhere in South Gloucestershire. There is a minor injuries unit in Yate, which I am sure my hon. Friend the Member for Thornbury and Yate (Luke Hall) will discuss. It is a fantastic resource, and only one patient at the unit has not been seen within the four-hour target, but we should have had a minor injuries unit at Cossham because people pay their taxes and it was part of the deal, which has been signed and sealed but not delivered. We have now been grinding away at this for years, and we seem to be going around in circles. The CCG has not come up with any alternative provision, so someone in Kingswood with a minor injury such as a broken leg or a broken arm has to go up to Yate. There is simply no provision in place, which is totally unacceptable. The IRP reported the exasperation that constituents feel about Frenchay, which is happening all over again and is mirrored with the minor injuries unit at Cossham hospital.

I have three points to raise with the Minister as the MP for Kingswood. I will continue to fight for a minor injuries unit at Cossham. At the moment, the CCG has not ruled out a unit. It is common sense that, while a room is empty and there is an X-ray department just down the corridor, it is far simpler for someone with a broken bone to get to the X-ray department than having to go to a GP surgery to be treated by a nurse practitioner before getting in an ambulance to go up to a minor injuries unit at Yate or Southmead. It is that lack of joined-up thinking that I and my constituents find incredibly frustrating.

One of the recommendations in the IRP report published last month—moving forward from its regrettable conclusions—was about the CCG request for external support from NHS England to help to solve its problems with delivering the community hospital at Frenchay and minor injuries unit provision across South Gloucestershire. It has asked for help, citing the problems it has with the deficit it inherited from the PCT. To reassure constituents and campaigners that the CCG will gets the help it requires, can the Minister tell us what kind of support NHS England can provide and how soon that can take place? We need answers and we need a road map.

As CCGs become more embedded and more autonomous organisations, accountability becomes an issue, and I do not believe arrangements are in place. That is general point that could apply across the country. The Secretary of State for Health has rightly copied the model of the Department for Education and introduced an accountability regime into hospitals. We now have a chief inspector of hospitals and hospitals will be graded on whether they are inadequate or need improvements. We need that system for CCGs. We need to be able to turn around, as a local community, and stare at our CCG, and know that if it has failed in public engagement, as South Gloucestershire CCG patently has, it will be branded as needing improvement or even inadequate. I urge the Minister to take that policy proposal away and look at it, because the problem will only grow.

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Funding in South Gloucestershire is a well worn theme. My hon. Friend the Member for Filton and Bradley Stoke has raised the fact that we have a rapidly aging population. With 30% growth in the over-65s demographic since 2004, there will be problems with co-morbidities and long-term chronic illnesses, which effect everyone once we reach a certain point in life. That is what we need to deal with in South Gloucestershire, but we can only deal with it with improved funding. When we look at South Gloucestershire and compare it with Bristol, there may as well be a Berlin wall running through the county boundary: on one side is Bristol with several thousand pounds per head more funding than South Gloucestershire. Yes, we have had an incredibly welcome health funding increase of 7% in the past year—17th largest rise in the country—but we need a fairer funding settlement. We have the f40 group for schools, and we need the same in healthcare to ensure that South Gloucestershire residents get the healthcare that they desperately deserve.

11.12 am

Luke Hall (Thornbury and Yate) (Con): I thank my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) for calling the debate—I know how hard he has worked to keep the issue at such high prominence—and my hon. Friend the Member for Kingswood (Chris Skidmore) for his comments on healthcare in the region.

As a local man, born in Southmead hospital just next door, I have, like other hon. Members here, relied on the NHS in South Gloucestershire and Bristol all my life. I echo their thoughts, especially those of my hon. Friend the Member for Filton and Bradley Stoke, on Frenchay and the delays in the CCG. I followed the reforms to healthcare in the previous Parliament and broadly support the CCG approach, which is fundamentally a good one. I welcome the announcement that the CCG has recently signed a 10-year contract with Sirona Care & Health to continue providing services at Yate minor injuries unit—a fantastic resource for local people in my constituency. That has been a great relief to a large number of people across Thornbury and Yate.

According to provisional Government figures, South Gloucestershire is scheduled to receive an extra £1.5 million next year, which is extremely welcome and only possible because of the Government’s management of the economy. As my hon. Friend the Member for Kingswood mentioned, the difference between funding per household in South Gloucestershire and Bristol is stark. Spending will rise to £1,856 per house in South Gloucestershire, but it is more than £2,100 per house Bristol—£273 more in Bristol than South Gloucestershire. I appreciate the raise we are receiving, but it is clear that we are inadequately represented in our funding.

I am particularly keen that the Government continue to address the problems associated with an ageing population in South Gloucestershire. The CCG has identified the problems of ageing, particularly diseases such as dementia, to be a significant priority for the area. I will support those efforts where I can by holding Dementia Friends events around my constituency to raise awareness of the disease in our communities.

The healthcare provision offered at Thornbury hospital is extremely important to my constituents. The previous proposals for Thornbury involved redevelopment of

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combined health centre and hospital sites, to lead to NHS rehabilitation beds to replace the Henderson ward as part of improved rehabilitation, re-ablement and recovery services for South Gloucestershire; a replacement healthcare centre with space for additional ambulatory services; and new extra-care housing and nursing home capacity, which is extremely important when we consider the 28,000 homes planned over the next 11 years in South Gloucestershire. I assure the Minister and my constituents that I will work with all the relevant bodies, including the CCG, NHS England and South Gloucestershire Council, to ensure that the services are delivered to Thornbury. That emphasis will ensure that my constituents receive the care that they need to remain active members of our local community.

More broadly, I should like to mirror the comments made recently by the Prime Minister and the Secretary of State for Health regarding the aspiration for a seven-day NHS. Yate minor injuries unit, which treats relatively minor injuries such as broken bones, minor head injuries or minor eye problems, is only open until 1.30 pm on a weekend. If we are to relieve the pressure on primary care centres, we must work to ensure that our community services can perform their duties any day of the week. I know that the Minister shares that aspiration and is working hard towards it.

In summary, I am pleased to welcome the move by the CCG to continue to provide crucial services at Yate minor injuries unit. I hope that people will join me in working to provide services and increased provision at Thornbury hospital as quickly as possible.

11.16 am

The Parliamentary Under-Secretary of State for Health (Jane Ellison): As ever, Mr Hollobone, it is a pleasure to serve under your chairmanship. This is my first Westminster Hall debate of the new Parliament; I responded in the last Westminster Hall debate of the last Parliament. It is nice to be back responding to a debate. It is nice to respond to a debate from my esteemed colleagues, my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Kingswood (Chris Skidmore), and my new colleague, my hon. Friend the Member for Thornbury and Yate (Luke Hall), but I am sorry that we are revisiting themes that have been much discussed, both in private and in debates in the Chamber. My hon. Friends are, as ever, doughty champions for their local healthcare system. It is fair to say at the outset that I share some of their exasperation with regard to the timings that they expressed. I will revisit some of the history of the health service reconfiguration in the area and respond to the specific points they made.

I congratulate my hon. Friend the Member for Filton and Bradley Stoke on securing the debate and my other hon. Friends for coming to the Chamber and responding to the issues that were raised. This is a matter of long-standing importance—perhaps too long-standing, which is the thrust of what has been said today. I am sure that I speak for all my hon. Friends in saying that whatever the frustrations with the administration of healthcare in their local area, we have nothing but praise for the NHS staff who assiduously look after our constituents day in, day out.

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The Bristol health services plan is the background to much of the issue. As my hon. Friends will be aware, the local NHS in Bristol, North Somerset and South Gloucestershire agreed the Bristol health services plan, which was a 10-year strategic plan to modernise and improve healthcare services across the area. It was the basis for developing a series of integrated proposals, including a new acute hospital for north Bristol and South Gloucestershire on the Southmead site, which opened in May 2014 following the transfer of acute service from Frenchay; and the new community healthcare facilities in South Gloucestershire, including the plan for a community hospital on the Frenchay site. In addition, the plans included the centralisation of some surgical specialties across the city, in a pattern now familiar to those following NHS reform, to concentrate specialisms and excellence at certain sites.

In 2010, the South Gloucestershire Primary Care Trust presented its emerging themes proposals for the development of a health and social care centre at Frenchay with community in-patient facilities, but the trust did not really deal with the affordability of those proposals in any detail. Indeed, it was noted at the time that there was no new funding available for the project and that it would require reinvestment of existing resources.

A business case was subsequently developed by North Bristol NHS Trust in 2011 for Frenchay, resulting in proposals that were considered unaffordable in the context of the financial challenges faced by the local NHS. In addition, those proposals would have limited the scope for the development of new community-based services in the long term. The commissioners made it clear that further work was required to ensure that the model for the delivery of services was in line with best practice.

One of the frustrations about a situation that has developed over such a long period is that it is overtaken by new models of care, and this whole debate is overshadowed by the fact that the Keogh review of urgent and emergency care, which aims to establish the ideal model for delivering that care, is relevant. Moreover, there are emerging best practice NHS views about how we provide community care and how different models work. As I say, one of the frustrations about a situation developing over such a long period, and which has been subject to delay, is that it tends to be reinforced because new models of care emerge all the time, which require plans to be revisited. That has been one of the sources of frustration.

It was against that backdrop that a major review of rehabilitation services was launched, in conjunction with local commissioners. The review of rehabilitation and reablement services across Bristol, North Somerset and South Gloucestershire commenced in October 2012, with involvement from both NHS and local authority providers. Significant progress was made in agreeing a clear and consistent vision for that future model, which was largely a service-focused response built on the involvement of a number of local stakeholders. South Gloucestershire clinical commissioning group developed a detailed local model of care for rehabilitation in August 2013, building on the rehabilitation and reablement review.

The implementation of that model of care began in 2013 in a phased approach, and there have been a number of developments to date in relation to the review. For example, rehabilitation community beds

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were located at Elgar house on the Southmead site and at Thornbury hospital. I must stress, however, that these are interim arrangements until long-term plans for community beds at Frenchay and Thornbury are put in place. I have already mentioned the frustration about timings, and that frustration was expressed during the debate. However, it is the current position that these are interim arrangements.

Further developments include the new community rehabilitation and reablement beds that have been commissioned in local care homes, with new in-reach support services in place for individuals in these residential rehabilitation beds, and additional community reablement services have also been commissioned.

What is the current position? Over the past 10 years, many of the proposals in the Bristol health services plan have been implemented, together with a number of major additional developments. It was good to hear my hon. Friend the Member for Filton and Bradley Stoke speak about the new state-of-the-art hospital at Southmead, although there have been challenges in some areas. There is also a new community health care facility in Yate, which he also referred to, as well as a new NHS independent sector treatment centre in Emersons Green.

In addition to those developments, a £19.6 million refurbishment of Cossham hospital has been completed. The hospital reopened in 2013 with the area’s first midwife-led birth centre. My hon. Friend will be aware that Cossham hospital had originally been due to close, so was not part of the proposals in the Bristol health services plan. That is, if you like, a gain on what was originally proposed, and one that I know has been welcomed.

Over the past two years, local clinicians have continued to lead the major transformation programme for rehabilitation services. I am assured that providers, patients, members of the public and other stakeholders have been extensively involved in that programme. I very much hope that other stakeholders, including MPs, are involved. I often say in debates such as this one that it is absolutely essential that local NHS commissioners, including CCGs, work closely with MPs. It is often forgotten that MPs are a first point of contact for people who are concerned about the process of reform, whether they are frustrated by the timing of the process or worried about its relative opaqueness.

South Gloucestershire CCG has confirmed that it has made significant progress towards implementing that programme, which includes providing community beds in local care homes with in-reach support from NHS teams. As part of the next major transformation of rehabilitation services, in March, the CCG began procurement for services that are expected to lead to the redevelopment of the Frenchay and Thornbury hospital sites. As my hon. Friend said, the timetable published with these plans describes a procurement process that is expected to result in the award of a contract by March 2016. This is a good opportunity to provide an integrated health and social care development on the Frenchay site.

I understand the frustrations that are felt locally, including by my hon. Friends who are here today, about some of the timings involved. The CCG has confirmed that it understands the concerns felt by some members of the community. I will follow up this debate by writing to the CCG and asking it for more detail about the timings, because I am concerned to hear talk of

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2018 or 2019. At first glance, it is quite hard to get one’s head round that timetable, so I will follow up by asking for more detail, and I will report back. This is a complex project, involving a lot of partner organisations that are co-ordinating multiple developments across a number of sites. Nevertheless, we need to have a bit more detail about how the timetable might slip by one year and potentially by another year.

The CCG has confirmed that it is determined to deliver transformed services that meet future health needs in line with current best practice, but any plan needs to be financially affordable. As I have already said, we need to ensure that plans are not constantly overtaken by new models, although the model based on best practice is much more settled than previous models and is in line with recent NHS England thinking and the five-year forward view, which is a very helpful road map for the health service for the next five years and which everything else relates to.

Regarding the minor injury unit plans, as my hon. Friend knows, South Gloucestershire CCG has decided to revisit those plans to take account of local evidence about their impact on accident and emergency attendances. Those plans are looking at key themes emerging from Sir Bruce Keogh’s national review of urgent and emergency care. That work is ongoing, but it is reshaping the way that the NHS thinks about urgent and emergency care, and it influences all the models of care that are being considered, with patient care at its heart. I can understand why the CCG believes that enhancing primary care services would help to improve urgent care services for the whole population, but what is needed is clarity about that process and about how it will be assessed.

Last October, following a period of engagement with the public, proposals were put forward and it was agreed that they would be developed on a pilot basis with the GP practice-based injury services described by my hon. Friend. The CCG is working with local GPs and community providers to agree detailed plans, but in my follow-up letter to the CCG after this debate I will ask for more information about those plans and the process of assessment for that pilot, which will feed into any final decision that is made. That work will include further discussions with local GP practices, but I will stress in my communication to the CCG that it must involve detailed discussion with local MPs, particularly when those MPs have been so assiduous in following this process, not just through one Parliament but now into a second Parliament. It is absolutely vital that my hon. Friends are kept informed and involved.

Subject to successful completion of that work by the CCG, plans are expected to be presented for approval to the September meeting of its governing body. I stress that a formal decision in relation to the previous plans for a minor injuries unit at Cossham hospital will be made once the proposed pilot scheme has been evaluated. Subject to the details being agreed, the pilot scheme is expected to commence in late 2015 and it will run for a minimum of 12 months, with evaluation that will include consideration of feedback from patients. Again, I expect local MPs to be closely involved in that process.

A number of challenges have been made to me, and hon. Friends have asked me to follow up on them. I will look to see where I can do so. More generally, as we have discussed before in Westminster Hall and in the main Chamber, it is the responsibility of local NHS

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organisations to determine how local services are delivered. They are best placed to understand the needs of the people they serve, but what this process has drawn out is that over time those needs can change and evolve, and our understanding of how best to respond to them must change and evolve. Nevertheless, we need to ensure that we are at all times moving forward, because local people do not really understand why things seem to be endlessly put into review and re-examined.

NHS England has rightly placed more emphasis in recent times on how it can provide support to parts of the system that are struggling to make progress at a pace that we would all recognise as ideal. Part of my follow-up to this debate will be to ask whether NHS England can provide any extra support to help to ensure that there is a clear timetable, which is well understood and which everyone can talk to their local community about. I will do that in my follow-up, and I will write to all three of my hon. Friends after this debate. As ever, I commend them for their interest in this subject, and I hope that we can see considerable progress in the early years of this Parliament.

Question put and agreed to.

Resolved,

That this House has considered health provision in South Gloucestershire.

11.30 am

Sitting suspended.

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Public Sector Broadcasting (Diversity)

[Mr Gary Streeter in the Chair]

2.30 pm

Chi Onwurah (Newcastle upon Tyne Central) (Lab): I beg to move,

That this House has considered diversity in public sector broadcasting.

It is a pleasure to consider this matter under your excellent and expert chairmanship, Mr Streeter, and to lead this debate on an important subject. Public sector broadcasting is sometimes more broadly known as public service broadcasting, because although the BBC, Channel 4 and S4C are effectively publicly owned, ITV and Channel 5 both have public service obligations as part of their broadcast licences. Ofcom defines the purpose of public service broadcasting as:

“Informing our understanding of the world; stimulating knowledge and learning; reflecting UK cultural identity; representing diversity and alternative viewpoints.”

Public service broadcasters have a duty to represent the public.

The United Kingdom is a vibrant, diverse, complex and at times eccentric country, and it is essential that our public service broadcasters should reflect that—indeed, that is why we have public service broadcasting. Left to itself, the market would not; anyone who has watched “Fox News” cannot fail to agree with that.

I will touch on all aspects of diversity, as I believe there is still much to be done. I want to concentrate on an area that has had little coverage and few initiatives: class and region.

Jesse Norman (Hereford and South Herefordshire) (Con): I am grateful to the hon. Lady for introducing, in this of all weeks, this important topic to a public debate. I share her concern about the lack of representation in public service broadcasting generally, and in the public sector.

Will she permit me to clear up one misunderstanding that has arisen in relation to the Select Committee on Culture, Media and Sport, which I chair? As matters stand, my Committee has no women or black and minority ethnic members. That is not because of any planned structure or other institutional arrangement, but because no women or black and minority ethnic candidates stood for election. That is highly regrettable, from my point of view. I wish that they had done so and that there was a bigger pool in Parliament from which such candidates could have offered themselves. We are, as matters currently stand, working within the rules of the House. I thank the hon. Lady for allowing me to put that on the public record.

Chi Onwurah: I thank the hon. Gentleman for his intervention, which illustrates something of the challenge that we face. He said eloquently that he wished there was a larger pool of women and black and minority ethnic Members in the House from which people could have put themselves forward to his Committee. It is regrettable that there is not and that no women or black and minority ethnic Members put themselves forward; having an entirely male and pale Select Committee

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representing the House on such matters does not do justice to the House and does not reflect well on it or its reputation. I thank the hon. Gentleman for putting that on the record.

John Nicolson (East Dunbartonshire) (SNP): Lest it be considered that that Committee is entirely composed of majorities, we should remember that there is another minority: gay people. As a gay member of the Committee, I should like to put that on the record.

Chi Onwurah: That is something that I wish to focus on. The definition of “diversity” is broader than gender and ethnicity alone, although those are two important and very visible aspects.

Reflecting the reality of this country is important. Whether on screen or radio, writing scripts, researching programme guests, operating cameras or in the boardroom, all involved in the broadcasting value chain should strive to ensure that the content they produce, their leadership and their employees look and sound like the country of which they are part. There are two important reasons for this.

First, fairness is a value on which the British people pride themselves. A recent survey by British Social Attitudes found that 95% of people agree that

“in a fair society every person should have an equal opportunity to get ahead.”

Research by YouGov found that 78% of the British public thinks

“it should be the government’s job to ensure that rich and poor children should have the same chances.”

It is not fair that every household in the country pays the licence fee, but only certain types of households are represented on the BBC. It is not fair that such an important part of our national culture and conversation should exclude important parts of our nation.

Secondly, there is an economic and business case for diversity. Organisations that do not take full advantage of the wide range of creativity and talent on offer in this country are depriving themselves of potential. This month, Tim Hincks, president of Endemol Shine Group, which produces such well-known programmes as “Big Brother”, “Masterchef” and “Broadchurch”, said that the BBC was “hideously middle class” and that

“we’re hampering ourselves by not fishing in a bigger pool.”

We are losing the creativity that comes from people of different backgrounds mixing, and mixing it up.

Earlier this year, my hon. Friend the Member for Rhondda (Chris Bryant), the shadow Secretary of State for Culture, Media and Sport, had a rather public disagreement with James Blunt. I agree that

“it is really tough forging a career in the arts if you can’t afford the enormous fees for drama school, if you don’t know anybody who can give you a leg up, if your parents can’t subsidise you for a few years whilst you make your name and if you can’t afford to take on an unpaid internship.”

Like my hon. Friend, I want everyone to be able to take part in the arts—I do not want any no-go areas for young people from less privileged backgrounds. Indeed, it is often those who have had to struggle through the hardest of backgrounds who have some of the most interesting stories to share.

We are proud that this year’s Oscar for best male actor was won by the British Eddie Redmayne, who was discovered when a casting director saw him in a school

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show. His school was Eton. When I asked at a broadcasting event recently how often casting directors attended performances at schools like my old school, Kenton comp, people thought I must be joking. I was not.

One thing that makes this country great is our culture; we export it around the world and punch well above our weight. Jobs in our creative industries now represent one in every 12 in the UK. According to figures published today, which I am sure the Minister is aware of, arts and culture are now worth £7.7 billion in gross value added to the British economy. That increased by more than a third between 2010 and 2013. John Kampfner, chief executive of the Creative Industries Federation, said yesterday that the creative industries

“are central to our economy, our public life and our nation’s health.”

I agree. As our public service broadcasters are at the forefront of our creative industries, I hope and expect them to be at the forefront of promoting diversity.

The people of Britain deserve equal opportunities, regardless of their socioeconomic background, postcode or accent. As Owen Jones said in his recent book, “The Establishment”:

“Where institutions rely on too narrow a range of people from too narrow a range of backgrounds with too narrow a range of experiences they risk behaving in ways and focussing on issues that are of salience only to a minority but not the majority in society…Because the media disproportionately recruits from such a privileged layer of society, there are inevitable consequences for how journalists look at news stories, or how they decide what issues are priorities.”

I want to recognise and put on the record the progress made in many areas. I have been a regular Radio 4 listener since the age of 16, thanks to “The Hitchhiker’s Guide to the Galaxy”, which first drew me to that station. In my North Kenton council estate, and even as a student in Elephant and Castle and a struggling young professional, I often thought that the station was peopled by emissaries from a different galaxy: they had no visible means of financial support and had all gone to one of the schools that call themselves public while excluding 99% of the public.

I am pleased to say that received pronunciation is no longer the sole voice of the BBC. We have more women on the air, although they tend to be younger and better looking than their male counterparts; that could be the subject of an extended debate on its own. There are more people from minority backgrounds, although, to be frank, it would be impossible for there to be fewer. Channel 4’s coverage of the Paralympics achieved record viewing levels, and for the first time put people with disabilities into a prolonged primetime viewing spot in a positive way. I pay tribute to Channel 4 for that.

Kate Green (Stretford and Urmston) (Lab): My hon. Friend is right to highlight the participation and portrayal of disabled people in public sector media. Does she also agree that it is incumbent on broadcasters to think about how they portray disabled people and people from other minorities? Much of that portrayal can be disrespectful and humiliating, leaving people with a strong sense of alienation and under-representation.

Chi Onwurah: I pay tribute to the work that my hon. Friend does in this area. She is absolutely right. I will touch on the issue in more detail, but it is about how

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people are portrayed as well as the airtime and minutes. Broadcasters will often portray disabled people in a way that can appear patronising if there are no people with that disability in their ranks.

Ofcom’s latest review—this relates to the earlier intervention from the hon. Member for East Dunbartonshire (John Nicolson)—found that a majority of the lesbian, gay, bisexual and transgender community felt under-represented on screen. Fewer than a fifth said they were portrayed negatively to audiences. The figure is still too high, but it is improving. While we should all compliment the broadcasters on having made progress, the fact is that the country has changed, too. It is more diverse than ever, with less deference and higher expectations. Broadcasters have finally entered the 1970s in the representation of diversity. In the meantime, young viewers today are likely to live into the 22nd century, although that is perhaps less likely for you and me, Mr Streeter. Sir Lenny Henry said last year:

“The evolution of BAME involvement in British TV seems to lurch one step forward and two steps back.”

According to the House of Commons Library, people with disabilities still make up fewer than 1% of people appearing on television, despite being 20% of the audience.

One area where little progress has been made is the representation of working-class people, particularly those not in London. It was telling for me that most of the briefings I received for today’s debate from many organisations—including the BBC, for example—did not even mention socioeconomic background or the regions. Perhaps those organisations took one look at me or my name and made assumptions about where my interests might lie. Tim Hincks, who I quoted earlier, said that

“no measure of diversity can be truly meaningful without measuring…social background and social mobility.”

Ofcom does look at regional background. It recently found that London and the south-east are still the most highly represented regions in daily broadcasting. Viewers from across the UK were more likely to think that too many people from London and the south-east are shown on TV, compared with other regions, and I am inclined to agree. Despite two thirds of people agreeing that it was important, only 44% of English audiences scored public service broadcasters highly when it comes to portraying their region. I was quite upset when last year’s Great North Run Million—a spectacular event on the banks of the Tyne, with fireworks, Sting, Ant and Dec, Jimmy Nail and various other stars—was given no live national coverage, although I am glad to say that the recent BBC coverage of “Hadrian’s Wall of Sound” was a great tribute to our region and to my city.

Touching on the point that my hon. Friend the Member for Stretford and Urmston (Kate Green) made, negative stereotypes of people and regions are more likely to find their way on to the airwaves when there is a lack of those people or residents of those regions in the cast, crew and, most importantly, leadership of those organisations. Those stereotypes apply to socioeconomic background, gender and the regions in which we are born, as well as to those with a disability, BME people and lesbian, gay, bisexual and transgender people.

Specifically on regional background, two years ago the “BBC Breakfast” business presenter, Stephanie McGovern, who is from Teesside, said that she got a

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break only because of one editor taking a gamble on someone with an accent. She said that

“despite being a business journalist at the BBC for ten years, working behind the scenes on our high-profile news programmes, I was viewed by some in the organisation to be ‘too common for telly’.”

I might prefer the Geordie accent, but I still want to hear my friends and neighbours on Teesside as much as I do my friends from London, Wales and south Devon.

There are no doubt many similar stories. One example is that of Aaqil Ahmed, the head of religion and ethics at the BBC. Last year, he said that while he had no problem climbing the first few rungs of his career ladder, when it came to senior management,

“there are few people with similar cultural or socio-economic backgrounds to mine and that has in my opinion hindered me, not completely but enough for me to find it hard to navigate a way forward. There is a lack of diversity of socio-economic classes the higher up the food chain you get”.

I make it clear that I do not support diversity in broadcasting simply because I admire the Geordie accent, or the folk singing of the Unthanks, or the original writing of the Live Theatre, or the music of Hawthorn school’s symphony choir, or the original productions of Northern Stage, or the artistic expression of the Wilson Twins, or the comic timing of the Theatre Royal’s annual pantomime or all the great stories from young and old to be found in Elswick, Benwell and Scotswood, West Gosforth, Westgate, Wingrove, Kenton, Blakelaw or Fenham in my constituency. Nor is it simply that I want to see more northern and working-class culture on the national stage, although I do. I support diversity because there is an economic benefit associated not only with having a vibrant artistic culture, but with being known for having it.

Since becoming an MP, I have been appalled by the lack of knowledge of north-east culture among some of those tasked with selling the north-east abroad. Whether it is about retaining the talented graduates of our great universities or attracting inward investment, we need north-eastern working-class culture to be valued abroad and at home. The working-class environment in which I grew up had many stories to tell—it still does—but we seem to hear the same types of story from the same types of people. “Coronation Street” was revolutionary when it was launched and I pay tribute to ITV for it, but it is an indictment of the industry that, 50 years later, we are still talking about it as revolutionary in representing the working class.

We are not in this position because of some plot, or even because of incompetence. A great deal of effort has been made by the public service broadcasters, and others feeding into and from the same talent pool, to improve diversity. In the past 15 years, 29 initiatives have been aimed at increasing BME representation alone. The BBC has a fund for increasing BME representation and has asked to be judged on its progress in the coming years. Channel 4 has recently doubled spending, with its new Alpha Fund schemes to support new diverse writing talent from the north of England, and regional outreach programmes. It has also introduced commissioning diversity guidelines. ITV does not have figures or targets, but it says that it is committed to ensuring that commissioners

“play a full part in maximising the growth of diverse talent and increasing diversity on screen”.

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The trade body for independent producers, PACT—the Producers Alliance for Cinema and Television—has a diversity programme that is now in its third year, and it takes part in the pan-industry monitoring programme known as Project Diamond.

There is not a lack of effort but a lack of results, which means a lack of will at the highest echelons. True will to change would mean more resources but also proper targets and incentives through monitoring and mainstreaming the challenge—that is, making it part of the culture of an organisation, so that a wide range of executives, commissioners and producers are accountable. The problem may manifest itself to me and my constituents through a lack of northern or working-class stories and people on air, but it actually starts far higher up. Selection or recruitment bias is a well-known phenomenon in which people tend to hire people who look or sound like themselves. That might explain why, a couple of years ago, Radio 4 had an all-male panel discussing breast cancer the day after an all-male panel discussed teenage pregnancies—truly a low point.

How can public service broadcasters fulfil their purpose of representing diversity and alternative viewpoints if they exclude certain voices, or hear from them only in benefit tourism-type orgies of disapproval? How can we be sure to discuss issues that are important to people in Newcastle as well as in London? Why is more original independent programming not commissioned in the north-east, by independent north-east companies?

The Minister takes diversity very seriously, and I pay tribute to him for that. Indeed, I should perhaps have declared a familial interest, in that my brother is an independent TV producer who has been involved in one of the Minister’s review boards. I am sure that the Minister will mention the £100,000 that he recently gave to the Equality and Human Rights Commission to develop guidance on diversity in broadcasting. Nevertheless, the fact is that that guidance does not mention socioeconomic background once. Why is that?

Some 83% of new entrants to journalism do internships that are almost entirely unpaid and are predominantly based in London. No one from my council estate could have supported themselves on such an internship in London. I ensure that all my internships that last longer than a week are living-wage internships—the real living wage, not what the Chancellor announced in his Budget, which had the young as one of its principal targets and will not improve the ability of talented young people to enter broadcasting. Without action, we are unlikely see improvements to the current situation in which 54 of the top 100 media professionals and 26% of all BBC executives went to independent schools, compared with 7% of the public as a whole.

In 2013, I challenged Radio 4 “Woman’s Hour” over the number of female guests on the programme from an engineering and scientific background. I was struck by the fact that not only did the programme makers not know, but they seemed to think it was rather indecent that they should be expected to keep track of the voices to which they were giving a platform. If such things are not even monitored, how can we hope to improve them? In an era of big data—a policy area that, interestingly, is also part of the Minister’s brief—it is surprising that big media does not routinely collect those sorts of data across all channels and programmes. I am sure that there are many geeks who are willing to show them how to do it.

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There are many schemes, but if we have little idea of the scale of the challenge, no idea of how effective the schemes are and no targets or incentives to meet them, it is little surprise that the situation is not changing very quickly. I have previously written to Ofcom on the representation of regions. Although it monitors a variety of on and off-screen diversity data, it too does not seem to look at people’s regional and socioeconomic backgrounds. Why not?

I want to make it clear to the Minister that I understand and champion the independence of the BBC and all broadcasters from Government interference. Indeed, I should be clear that I do not think it is for the BBC to implement social policy. One of the characters in the excellent BBC comedy “W1A” suggested that if the BBC could not make itself more diverse, it should work to make the population at large less diverse. That was satire. However, by charging the BBC with implementing benefits for the over-75s, the Government are blurring the distinction between satire and reality.

I strongly support the BBC and broadcasters more generally being independent and having clear and transparent funding, but, as with any aspect of our society or economy, I have a duty to speak up for my constituents where public sector broadcasting might not be acting in their interests, just as I criticise the UK tech sector for its lack of diversity.

I have a few questions for the Minister. Does he share my concern that our creative industries are missing out on a huge pool of creative and managerial talent? Does he agree that, as well as gender and ethnicity, socioeconomic background and region are important? Does he further agree that much more progress must be made in those areas? Will he mandate or encourage the collection of data, so that we know the size of the challenge? Is he aware of the different initiatives that are being undertaken, and what is his assessment of them? For example, I welcome Channel 4’s commitment to increase from 3% to 9% its investment in productions from outside England by 2020, but neither Ofcom nor the BBC Trust publishes figures on the proportion of funding that goes to independent producers. Will he rectify that? What steps will he take to ensure that working-class kids have a voice in broadcasting? What steps will he take to ensure that film and radio are produced independently in the north-east? Finally, does he think that it would be possible to get a casting agent to go to a show at a northern state school?

2.59 pm

Hywel Williams (Arfon) (PC): I congratulate the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this important debate. I speak for Plaid Cymru, which values diversity in all aspects of broadcasting, including gender, race and locality. For my party, broadcasting means not only the visual medium, but audio too, because our concern is about English-language and Welsh-language broadcasting in Wales, which is a significant aspect of diversity. TV and radio should sound, as well as look, like the community that they serve.