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House of Lords

Monday, 16th June 2003.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Blackburn.

Credit Card Debt

Lord Steel of Aikwood: My Lords, I am not sure whether I should preface my Question with the words, Mr Presiding Officer, but perhaps I may ask it any case.

The Question was as follows:

    To ask Her Majesty's Government what view they take of the current extent of credit card indebtedness in the population.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the United Kingdom credit market remains one of the most competitive in the world. Although figures show that borrowing is increasing in real terms, the vast majority of consumers manage their credit successfully, using it as an enabler, and do not become over-indebted. However, in the light of the increase, the Government are constantly monitoring the situation, and several government departments are working together to ensure that those needing help have access to it.

Lord Steel of Aikwood: My Lords, I am grateful for the Minister's reply, but is he aware of the National Association of Citizens Advice Bureaux report, published last month, entitled, In Too Deep? It reported a 47 per cent increase in debt problems during the past five years, much of it credit card-related, with a quarter of young people aged 20 to 30 shown to be owing about 25,000 or more. Does he accept that that report states that among poorer sections of the population, credit card debt led to physical and mental illness and family breakdown? Even the better off are being lured by mail bombardment by credit card companies to take out more credit cards. Are the Government really monitoring that sufficiently closely?

Lord Sainsbury of Turville: My Lords, I am aware of the report. It is important to realise that in spite of that very large increase, there has been no increase—in fact a slight decline—in the number of people in arrears on their credit card payments. Nevertheless, we take the report seriously and will be consulting during the summer on ways in which consumers can be enabled better to understand the costs of borrowing.

Lord Saatchi: My Lords, the Minister said that consumers were not getting too indebted. Has he read the figures from the Bank of England, the British

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Bankers' Association, the Council of Mortgage Lenders, the Nationwide Building Society and the volume on housing of the 18 studies on the euro? They show that second mortgages now account for half of all mortgages; 4 per cent of total UK gross domestic product; and approaching 10 per cent of all consumer spending on credit cards. Does the Minister—or his colleagues—ever suffer a pang of guilt about consumers mortgaging themselves to the hilt just so the Chancellor can tick his consumer spending forecasts?

Lord Sainsbury of Turville: My Lords, the noble Lord should have listened to what I said. I did not say that people were getting over-indebted or less in debt. Clearly the consumer credit figures have risen extremely fast. What I said was that there is no evidence that more people were in arrears—in fact, the number is falling. That suggests that because of the current low interest rates, people are not getting into the difficulties that they did when interest rates were 15 per cent, for example.

Lord Ezra: My Lords, the Minister mentioned that the situation is being carefully monitored. What does monitoring mean? It is a comforting concept that people are watching over the situation. None the less, at what stage does monitoring reach the point at which action needs to be taken? Can he enlighten us on that?

Lord Sainsbury of Turville: Yes, my Lords. Monitoring means looking at the figures, which are important indicators of whether things are going wrong. If the number of people getting into arrears on their payments was beginning to rise sharply, one would clearly be concerned and action would be appropriate. Equally, the fact that the amount of indebtedness has risen means that we want to be especially careful that the terms on which people are borrowing are right. That is why we have taken a whole series of appropriate actions, including setting up the National Debtline pilot, in response to that substantial rise in the debt.

The Earl of Northesk: My Lords, thinking about the important indicator figures, can the Minister tell us what is the level of the savings ratio now compared with what it was in June 1997?

Lord Sainsbury of Turville: My Lords, I cannot; I shall write to the noble Earl with those figures.

EU Directive on Age Discrimination

2.41 p.m.

Baroness Greengross asked Her Majesty's Government:

    What consultation they plan to undertake regarding the implementation of the European Union directive on age discrimination.

Lord Sainsbury of Turville: My Lords, the Government are committed to introducing legislation

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under the European employment directive outlawing age discrimination in employment and vocational training by December 2006. The Government have already sought views on a number of general age issues in the consultation document, Towards Equality and Diversity, and we aim to publish a further consultation document on specific proposals before the summer recess.

Baroness Greengross: My Lords, while I thank the Minister for that reply, perhaps I may say that 2006 is not that far off either for Parliament or for business. Will we not need to see the proposed legislation by next year's Session, covering 2004–05, if employers are to be given a reasonable length of time to prepare? Can the Minister confirm that the practical impact of the directive will be that compulsory retirement ages are to be abolished?

Lord Sainsbury of Turville: My Lords, the timetable we are following means that we shall consult this summer on specific proposals. A final consultation on the draft regulations will take place in 2004, and we intend to have the legislation in place, but not in force, by the end of 2004 so that people will have plenty of time to prepare before the 2006 implementation date. It is important that sufficient time is made available for those who need to make preparations.

One of the issues we shall look at is that of the upper age limit on unfair dismissal, but there is no point in consulting on it if one has already decided on what action to take.

Lord Sheldon: My Lords, my noble friend's answer to that question is very important indeed. Will the proposals he has suggested deal with the upper age limit for vital services in health such as bypass operations, kidney dialysis, breast cancer screening and so forth? Will it also deal with the special cost ceiling for expenditure on social care for the elderly? These are important matters and I hope that he will be able to respond positively to them.

Lord Sainsbury of Turville: My Lords, the directive deals simply with issues of employment and training and therefore the matters raised by my noble friend would not be covered. However, I shall check on it and, if I am wrong, I shall let him know.

Lord Skelmersdale: Yes, my Lords, that is all very well, but in order for people to be employed near and beyond pension age, employers need access to insurance while potential employees need access to education and transport. Those I regard as just as important as a maximum or minimum age or goods

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and services. Will the forthcoming White Paper on the single equal treatment commission cover these very important subjects?

Lord Sainsbury of Turville: My Lords, as I said, these are simply regulations relating to the European directive. They will cover those matters and not other issues, which are of course important, but separate.

Lord Razzall: My Lords, does the Minister accept that he did not answer a fundamental question put by the noble Baroness, Lady Greengross: will the envisaged legislation include the commitment to abolish the compulsory retirement age? Does he recollect a commitment to that effect made in another place by Andrew Smith on 19th March 2002? Does he also accept that I am not asking these questions because I have just had a significant birthday?

Lord Sainsbury of Turville: My Lords, we were talking about consultation and this is one of the issues, as I said to the noble Baroness, Lady Greengross, on which we shall consult. We have of course the commitment referred to by the noble Lord.

Baroness Howe of Idlicote: My Lords, can the Minister reassure me that the sensible proposal published in the pensions Green Paper in December 2002 to provide financial incentives to delay the taking of the state pension will not be delayed pending the introduction of the directive? As well as outlawing age discrimination in employment, does the Minister agree that we need to provide greater incentives to people to work beyond the age of 65, as do your Lordships?

Lord Sainsbury of Turville: My Lords, the state pension is exempted from the scope of the directive and we intend to take advantage of Article 6(2), which allows occupational pension schemes to set ages of admission to or entitlement to retirement benefits, as well as the use of age criteria in actuarial calculations. As regards providing incentives for people to work longer, that concerns removing discrimination. I appreciate that Members of the House have a great interest in incentives for working longer, but that is not the subject of this legislation.

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