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I was grateful to my noble friend Lord Borrie for indicating that under the Consumer Credit Act we now have stronger powers of consumer protection, which enable us to act more effectively to create a fairer and more competitive credit market. The Competition Commission conducted an inquiry into the home credit sector in 2007 and concluded that excessive profit was being made. The commission made recommendations on improved data sharing and better price comparison information for consumers. Those proposals are being implemented. So we are making progress in this area. I do not for a moment underestimate the vulnerability of people to loan sharks and the necessity of forthright action.
As the most reverend Primate emphasised, there is a debate on the effect of capping interest rates in the world of home credit. There are difficulties in this area. The Government considered the case seriously, but research commissioned by the department has
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I want also within this framework to emphasise the importance of credit unions, an issue introduced by the most reverend Primate. We are taking a view on the difficulties with aspects of credit unions, about which I heard what the noble Lord, Lord Newby, said. I am grateful to those noble Lords who emphasised that the development of credit unions would greatly assist with these present problems. We are considering the whole question of the qualifying criteria for membership of a credit union, the common bond, the ability to pay interest on members’ savings and the removal of the prohibition on corporate members. We want to take constructive action that strengthens credit unions. I assure the most reverend Primate and the House that the Government believe that the development of credit unions has an important role to play with regard to these issues.
The most reverend Primate raised the issue of student loans, as did the noble Baroness, Lady Sharp, and one or two other noble Lords, as being indicative of a changed culture for young people. Young people indeed live in a changed culture. I enjoyed the reminiscences about the days in which some of us grew up. They were different times. I agree with the noble Baroness, Lady O’Cathain, that debt was to be avoided at all costs. It was believed that the shadow of even thinking about buying on the never-never should not darken doors. That also meant that people could become a little wealthier in their old age because they denied themselves when they were younger. However, they never did drive that car, because they had passed the stage at which they could pass the test before they could even purchase the car.
The modern generation looks differently on these matters and there is no easy or flip way to change that culture, even if that were desirable. I am not at all sure that it is desirable. It is right that individuals should have high expectations from society, although they should recognise that they also have an obligation to that society. Student loans play their part in that. They represent an investment in the person’s future, giving the necessary short-term advantages of support so that people can benefit through the development of their education opportunities and then repay society for those benefits. I do not look on student loans as being detrimental in those terms. I think that they fit in well with contemporary culture.
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My noble friend Lord Anderson was a little gloomier than the situation justifies. I do not agree that personal debt is out of control. Debt has been rising in recent times, but personal wealth is higher than ever. Total assets are worth more than £7.5 trillion and household net wealth has increased by around 72 per cent in real terms in the past decade. Therefore, people are borrowing against assets. That is not to say that I do not want to respond to the points made in the debate about those who are most vulnerable, but in broad terms I do not accept entirely what my noble friend said. He also asked about the delay in the publication of statistics. I have had that looked into. The month’s delay is just a small hiatus; there is nothing sinister to it. I assure him that the statistics will become available shortly.
The noble Baroness, Lady O’Cathain, asked about financial education and how it fits into the education system. I emphasise that the Government are committed to the necessity of improving the financial capability of students in schools. That means that we need to increase education in financial literacy, and I was grateful to the noble Lord, Lord Dearing, for indicating that some aspects of that could be done through mathematics. We are seeing the use of maths and the development of numeracy in improving the quality of young people’s financial literacy, but that does not alter the fact that we need to take on this issue in the wider population. The noble Baroness, Lady O’Cathain, asked whether this was a mandatory or statutory requirement but it is not. We are extremely wary about placing on the teaching profession mandatory, statutory requirements regarding the curriculum, but I emphasise that schools are all too well aware of the need to improve financial literacy and to have programmes showing that the objectives are met.
The issues raised by the noble Baroness, Lady Sharp of Guildford, somewhat reflected the debate that we had a month or so ago regarding a fairer society and whether our society was becoming grossly less equal and less fair than in the past. We do not believe that to be the case. With regard to the development of the global economy, we certainly recognise that, as the noble Lord, Lord Griffiths, indicated, there is a small percentage at the very top whose very high earnings can stretch the perspective dramatically. However, with regard to the wider society, overall this Government have pursued fair objectives in terms of the rewards and the taxation position. Of course, we will always have problems with those who have difficulty in meeting society’s demands. We recognise that some people need help in our society, and that has been reflected in the debate today. However, the Government have significantly concentrated resources in that area over the past decade, and that is why we point to the significant decrease in the level of child poverty since 1997.
In relation to child poverty, the noble Baroness, Lady Noakes, asked whether I could confirm that we were absolutely on target for 2010. I cannot confirm that but I can confirm that all the work that we have done on child poverty over the past decade compares
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However, I heard what the noble Lords, Lord Patten and Lord Northbourne, said. No one can deny that, as part of a good society, it is better that children have two parents at home and the advantages of the two-parent family. Every index, as well as our common sense, shows the value of that. However, it is not for the Government to differentiate between the ways in which households are constructed, although it is for the Government to deal with the consequences, particularly for children, when problems occur. That is the basis of our support. I cannot give the noble Lords the statistics that they wanted. I was pressed on this matter on the previous occasion and I have been pressed again today. I cannot differentiate between different kinds of households because that is not our concern; it is not the Government’s job to reach moral judgments over who should receive support in those terms. However, it is necessary that we have adequate support for family units in need, which we are concerned to do.
I bear in mind the strong representations made today which we will continually address. The noble Baroness mentioned individuals with regard to the abolition of the 10p rate. It is important that we address ourselves to people who are in difficulty, including single persons. It was always recognised that the introduction of the 10p rate in 1999 was a significant help to lower earners, but it was never regarded as anything other than a blunt measure because, by definition, reductions in the rate benefit others rather more. Once the tax credit system was in place with its more accurately targeted system for support, of course we would, in due course, seek to get rid of the differential rate.
I recognise that I am open to challenge on the immediate difficulties of the change to be effected and I would be the last to discount the problems of the past few days. However, I make it clear that the Government intend to recompense those who have lost out through the change. We have not finalised our proposals in that area yet. I have no doubt at all that we will be harassed and harried until we have finalised our proposals, but everyone who is aware of the issue knows that there is no easy flip solution to the matter. The noble Baroness’s party in the other place will, like everyone, have to show a degree of patience until we are in a position to recompense those who have effectively lost, which is what we intend to do.
My noble friend Lord Haskel asked whether tax credits have delivered sufficiently. For families earning less than £10,000, tax credit take-up is 96 per cent. We have problems with tax credit take-up among young, single persons, but let us not exaggerate the position. Tax credit take-up among certain target groups has improved significantly and we are on course to make
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I want to express my appreciation for the contribution of my noble friend Lord Watson of Invergowrie to the debate. Like the right reverend Prelate the Bishop of Newcastle, he comes from a different part of the country, able to identify the nature of poverty in society and the real difficulties that communities, one of which he used to represent, face as regards poverty. That is why I emphasise that we are prioritising access to appropriate savings, to insurance and to credit products as part of our financial inclusion strategy. If we are to tackle poverty, it is central to the Government’s position that people are able to act effectively on their own behalf, which means that we need to work extensively to improve the understanding and the protections which, in significant cases, they need.
I have already mentioned my gratitude to the noble Lord, Lord Griffiths of Fforestfach, for his contribution. I was well aware of the work that he did a short while ago on these important issues. We will make the best progress we can. They have informed government insights into the way in which we can make a more effective contribution to the management of debt by those who are not well resourced. I am grateful to him for that.
The noble Lord, Lord Best, raised the issue of housing and, as ever, he was constructive. The Government are grateful to him for his proposals. He will recognise that he did not cost at least one of those proposals and, as a representative of the Treasury Bench, I winced when he mentioned that second proposal, but I know what he is suggesting. We are facing clear difficulties in the housing market, although the House will recognise the priority that the Chancellor attached to this immediately—the day after the announcement of the increase in financial liquidity. He then met the Council of Mortgage Lenders and others to address these problems. I am grateful to the noble Lord for his proposals. They are not without cost or easy to implement, but no doubt he is right that we will need to look constructively to those strategies that will minimise repossession, which is a terrible cost not only to families and individuals but to wider society.
My noble friend Lord Desai both entertained the House and produced his usually challenging analysis of what needs to be done. I was going to say that I would take his proposals straight to the Prime Minister, but he is on such good terms with No. 10 this week that he can probably take that message along himself. I shall duly report how constructive my noble friend was in this debate.
The noble Lord, Lord Newby, commented on credit unions. I have covered that point. I was grateful to him for raising it. No doubt we have to make the creation and development of credit unions much easier than it has been in the past, which is a significant position taken by the Government. I credit the noble Baroness, Lady Noakes, on her opening remarks, in which she expressed some appreciation of the Government’s work on poverty in the past 10 years. I accept that her more critical remarks were in
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2.58 pm
The Archbishop of Canterbury: My Lords, I am grateful for the quality of today’s debate, and particularly grateful that noble Lords have of their charity forborne to point out one embarrassingly obvious error in my opening remarks, which I identified when consulting my notes. I referred to the percentage offered by payday lenders—cash down in return for a cheque—as 7 to 8 per cent rather than 70 to 80 per cent. That is a significant difference and I beg your Lordships’ pardon for misreading my notes at that point.
I am also grateful for the elegant New Testament exegesis provided by the noble Lord, Lord Desai, though I should point out that the moneychangers in the temple operated a highly controlled and successful monopoly, which is perhaps not precisely the analogy that many of us in the Chamber would wish to follow. It is not a wholly academic point because, as the noble Lord, Lord Griffiths of Fforestfach, observed in his helpful comments, the problem with many of the existing loan companies is that a pattern of near monopolistic control has developed, which is why it is perfectly correct to discuss this in the context of the Competition Commission. I would be more readily persuaded to abandon all hope of a cap on interest were I a little more confident than I currently am of that competition being assured, but I watch developments with interest.
A number of points have emerged clearly from several speakers, and I should not like to lose them at the end of this debate. Several of your Lordships have noted the significance of non-economic factors in poverty and the way out of it. Above all, these are family structures and security. The stability of the family as one of the factors that guards against spiralling poverty is something that noble Lords from every kind of conviction and background have reinforced today, and I am very happy to hear that.
Part of that concern about structured stability also relates to the vital point about savings first raised by the noble Baroness, Lady O’Cathain. Savings, as we have heard from several quarters, represent precisely that kind of planning for security, that kind of fundamental trust in the future, that much of our current climate so conspicuously lacks.
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Two points were not picked up at great length but are material to understanding better the whole context. The first is the point initially raised by the noble Baroness, Lady Greengross, about disability as a factor in poverty. I would hope that that is factored in to all that we say about the peculiar trap that poverty represents for people with long-term illness, occupationally related illness and chronic disability. Not unconnected with that is the point raised by the noble Lord, Lord Haskel, about the security required being a security that should be seen in the levels of public service provision, on which the poor are exceptionally dependent. That certainly relates dramatically to the point raised by the noble Lord, Lord Patten, about rural poverty.
I have two general observations before I sit down. One has to do with the word inequality, which has been bouncing back between the walls of the Chamber in the last hour or so. I do not think that anyone would wish to oversimplify here. As we have been reminded, inequality can be a descriptive term; it can be an evaluative term. It is important to know in which sense we are using it at any given time. When levels of economic inequality in society reach the stage described by the noble Baroness, Lady Sharp—the point where, for example, we see the migration of portions of the population into gated communities and deeper divisions appearing—the sense of trustful investment by the poorest in the whole of society is weakened. In other words, it is a problem of alienation, not simply of economic disparity. The challenge, therefore, is to restore some level of trust in the structures of society and its economic operations.
My final observation is a paradox, a paradox to which many noble Lords have referred during today's debate—that those who are most in need of dependable credit in our society seem to find it hardest to obtain it, and that those to whom it is most readily and irresponsibly offered by many agents are those to whom it should not be so readily available. A great deal of what we have been discussing today has essentially focused on how we disentangle the complex processes that have led to such a contradictory situation. I am encouraged by a great deal of what I have heard on all sides today. I am most grateful for the enthusiasm, skill and intelligence that have been expended on this crucial issue by your Lordships during this debate. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.
- House adjourned at 3.03 pm.
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