Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019

Wednesday 1st May 2019 Lords Chamber

Motion to Take Note

17:38

Moved by

[Lord Stevenson of Balmacara]

That this House takes note of the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 (SI 2019/383).

Relevant document: 21st Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)

[Lord Stevenson of Balmacara (Lab)]

My Lords, in moving the Motion standing in my name on the Order Paper, I stress that it is an attempt to bring forward an opportunity for those who are interested in this topic to debate it at length. In the absence of any other opportunities, and given the fact that there is space within our normally busy and packed schedule, I hope this will be welcomed by all Members of the House.

I declare my previous interests as a former chair of the StepChange charity and as a member of the Financial Inclusion Commission. However, I have no current interests which would otherwise need to be declared.

The main purpose of the debate is to draw attention to statutory instrument 2019/383, on financial services consumer protection. It deals with the naming of and consequential amendments to the body set up by the Financial Guidance and Claims Act 2018, which this House spent a considerable amount of time discussing and amending before it was completed.

As a result of the provisions of and powers in that Act, it was not at all unreasonable for the Government to suggest that the body previously known as the Single Financial Guidance Body should be renamed. Indeed, the naming has been done relatively quickly and seems to have gone down quite well. It is, of course, rather simple: the Money and Pensions Service. It does not try to confuse by any complicated and clever analysis of the work it is doing. One hesitates to quote, “What’s in a name?”, but I sometimes wonder whether in the simple name “Money and Pensions Service” lies a deeper worry that we are actually talking about two separate issues. That was a theme in all our debates on the Financial Guidance and Claims Bill. It may be inevitable that how people in this country operate and manage their money is quantitatively and in many other ways different from the way in which they save for and, we hope, live off their pension in the later years of their lives. The functions of the three organisations that were brought together to create one body—I am going to call the Money and Pensions Service “MAPS” in future as it is easier—are different. We should recognise that they are different. They will have different interests and concerns and there will be different pressures brought to bear on the body by those agencies.

The timescales over which those functions operate are clearly different. Debt or concerns about money are very often short term and operate at different times in people’s lives. Pensions have to be saved for over an extended period and are subject to much more concern about the impact they will have later in life. With people living longer, they need more concern and interest given to them. The impact that both issues have on the economy is different. Indeed, there was some logic in the Government’s original proposal to set up two bodies to look after issues that arise from debt and money more generally, and those that arise from pensions. The final decision was to combine them in one, and we are where we are. I do not think there is much point in going back over these issues. We should acknowledge that we need to give the new body time to settle in and should build in an appropriate review period in which decisions can be looked at. As I say, we are where we are.

Looking at the body itself, it is early days. It has established itself. It has developed a logo, as one would expect. I have no particular views about that. I noticed that at the official launch, the chief executive—it is hard to get a sense of this from reading the speech—made a slightly tentative poke at whether people thought it captured the spirit of what the body is trying to do. I could not hear echoes of laughter or concern in the room as a result; I am sure it went down well. After all, it is a very clean, rather curly object which I am happy to wave around. At least we have it: the body is established. It has its format, it has a board of significant people with real contributions to make in this area. It has a very distinguished chair, Sir Hector Sants, who not only comes from the debt charity StepChange—indeed, he was my successor there—but is also the former chief executive of the FSA. We are talking about a substantial body, at a time when it needs to draw together the issues that have been given to it by Parliament. It now has its senior staff in place, and they look to me to have considerable skills and expertise. I am sure they will do very well. A real commitment comes through in all the documents I have seen—they are largely two speeches, but there are some other papers—to consult about the future, to build on possibilities for the business plan, to engage with as many people as possible and to take advantage of the new body going forward. That has to be a good thing, and I welcome it and look forward to it.

Having said that, there would be little point in having this debate if we did not raise some issues for the Minister to respond to, so I advised her beforehand that I might ask a couple of somewhat difficult questions and raise issues that she might want to reflect on over time. I am going to focus mainly on the debt side of the new body—I think others will come in on the pension side. I hope that together we will get some sense of the overall issues.

We have to recognise that considerable problems in the economy are still arising from unmanageable debt. Recent figures from the StepChange yearbook, which has just been published, show that the total number of people in contact with the charity has increased significantly over the last 10 years—from 577,000 to 657,000. That is significant given the capacity of the body to deal with that number. We are talking about why people get themselves into unmanageable debt. It is mainly down to reduced income arising from unemployment, redundancy or injury. Therefore, there is no change there, and the individual contributions are very interesting.

17:45

More people have increasing levels of debt, which is bad news for society as a whole. Interestingly, a larger number of younger people are coming forward to seek advice. The statistics from the last 10 years show that almost two-thirds of StepChange clients are under 40, compared with a figure of just over half in 2014. Therefore, there is a change in the demography of the people who seek advice.

The gender mix is also changing. More women now seek advice—again, that is a change over the last 10 years. Now, 60% of those approaching StepChange are female and that is an interesting development. Housing is obviously a key contributor to all people’s domestic economies. It is interesting to note that over the last 10 years there has been a shift of just over 10% from owner-occupation to rented accommodation, and that might reflect further difficulties and vulnerabilities.

The north-east of England remains the area where most people have difficulty in coping with their finances. It has continuously ranked the highest since records have been kept. The main focus of pressure is, as always, the utilities, but increasingly council tax brings its own issues and problems, as well as hire purchase.

Therefore, we are seeing growth in unsecured debt, which is a bad thing for people who have difficulty in managing their money. The level dipped slightly between 2014 and 2016 but it has now begun to rise, and it rose again last year. Again, unfortunately, we are also seeing a small rise in the proportion of new clients with short-term, high-cost credit debt relating to money lenders and others. Some further attention needs to be given to that by the authorities, including government.

That is the context for the issues that I want to talk about. I hope that the new body will make a better fist than predecessor bodies of understanding what works, what can be supported and how to make sure that the message gets across to people who experience difficulty with their day-to-day budgets that there is no value in waiting and that they have to seek advice early. Getting people on to the systems that will be available will be crucial in dealing with that in the future. The new body will need to understand better than perhaps previous bodies have done how the funding operates and how to ensure that those who need advice get it.

I was very pleased to see that the chair of the MAT said that a key element of the strategy is to ensure that all those with problem debt are able to access free debt advice. If that were possible, I think we would all support it. I see no reason why that cannot happen, although obviously consultations, debates and discussions need to take place. Several large, important and independent charities—Citizens Advice, the Money Advice Trust and others—all need to be brought together with a coherent approach that allows for a general improvement in the ability to reach out to people in debt. Last year, 657,930 people approached StepChange, but we are talking about over 2 million people who may well need support, although not all those who approach the charities can be helped.

That is the main thrust of what needs to happen. The pieces that need to be added to that picture will perhaps not fall primarily to the MAT and will still be the responsibility of either government or other agencies. I would be grateful if the Minister could give us some advice on that.

The most important of the additional policies that we should look for in the near future is the question of a breathing space. The proposals for this were much explored when we were talking through the issues in the Bill; indeed, we had amendments at all stages of the Bill but were not quite able to get it to work in the way we wanted. We left the Government with the opportunity to come forward, and there is no question that HM Treasury’s proposals on this are pretty good. We are impressed by them. If they come in the form that is currently being discussed, they will offer a good level of protection to people in debt and will provide important incentives for them to seek advice, by providing freezes on enforcement action, interest and charges.

However, there are some issues that still need to be bottomed out. I will list them for the Minister, although I am sure that she will not have all the answers to them, even with inspiration from her usual co-pilot who has special lines into the Treasury—because this is a divided responsibility, not limited solely to her department. So, although the Government always speak with a single voice, it might on this occasion be difficult for them to come up with precise answers to my questions.

One important thing—the noble Lord the Minister will be amused by this—is that there is increasing understanding that some of the people affected by unmanageable debt owe money to the Government. I am afraid that it is becoming clear that the Government—both central and local government—are not the best people in dealing with those who are in debt to them. We hope that it will be possible for the Government to agree, for instance, that government debts should be included in the Breathing Space scheme. That would set up a system under which protection is offered to those who owe money—and I am sure that they accept that they do—to the Government. They would not be threatened, as they currently are rather too often, by the bailiffs and other systems that are routinely the recall mode of first choice by local government. There are difficulties with this, to which I will return. So government debts should be included in the scheme; I hope that the Government will do that. If debts to local and national government are not included, there is a real risk that schemes will fail, because there will be a lack of consistency in how different debts are being treated, which could leave people still facing unaffordable repayments and collections, and undermine the stability and protection that they need if they are to recover financially—which many people are able to do.

There is a need for broader, comprehensive protection for people in debt and who go on to the Breathing Space and debt management schemes. I hope that this will ensure that all the charges and interest accumulations that currently apply are stopped in a way that allows people to be supported. We need to make sure that the overall scheme fits into the broader schemes arranged by the MAT to make sure that those reached out to get the advice they need timeously and are able to take that forward.

Other changes are perhaps a bit more technical. I hope that the Government will look favourably at the suggestion that the breathing space period which is currently proposed as 60 days may need some extension in certain cases; there needs to be a mechanism under which that could operate, perhaps triggered by debt advisers. The Government are currently minded to have a public register of people who join the schemes. This is what happens in Scotland, but the evidence from there is that it can put a significant number of people off accessing those schemes—so I hope that the Government will think very carefully about whether to go ahead with that. A public register could also leave people at risk of being targeted by disreputable, exploitative or fraudulent entities. That is an issue we need to bear in mind in these internet-happy days.

The right gateway for accessing Breathing Space is through free-to-client debt advice of a type beginning to be sponsored and supported by the MAT, but we should not add extra burdens. The process should be as simple as possible, because all the experience we have is that, when people first make approaches for help with their debts, they are very easily put off—so if there is a complicated bureaucratic system behind all this, it will not work in practice.

In a sense, the Breathing Space issue that we broadly support and would like to see in place as soon as possible is moving in the right direction. There are some tweaks which the Government could easily put in at this stage, and I do hope that these points will be considered. But there are wider issues: the question of whether we have the statutory debt management plan system that is currently being advocated is important, and we must not lose sight of it. A statutory basis will be much better in relation to creditors, giving them confidence that they will not suffer themselves as a result of the debt. I hope that we can hold on to that as much as possible.

But it is not possible to analyse and support the Breathing Space and statutory debt management plan systems without also looking at the wider context for debt relief. The DRO—debt relief order—system operated by the insolvency services, and therefore outside the remit of the DWP, is a good way for people with small amounts of debt to resolve their problems, but it is far too expensive to operate at the moment. The costs fall entirely on the charities, which are not funded for that. There has to be better alignment between the costs of the system and the question of who is going to pay for it. The original problems arose from changes to the legal aid system. However, we are now some way down the track on that and need to think again about how it will happen if we are not to lose the very good DRO system.

It is also time to reflect again on the IVA system, which works reasonably well but still tends to prioritise the repayment to creditors in a way which is in many people’s minds rather too generous. If there is to be a review of the broader range of debt processes, we need to look again at the wider context. As I said at the start of this section, these issues are not the direct responsibility of the Minister and I understand if she needs to take time to respond—but they make a package which we hope will be sufficient.

The new Money and Pensions Service that replaces the Money Advice Service and brings into scope the previous schemes around pensions is a bold and imaginative solution to a problem that affects the way in which our economy operates. The dead weight of personal debt and the problems caused by bad pensions advice and poor investment create a drain on the economy that has been estimated as in excess of £8 billion per year. This is not small beer in any sense; it is something that we need to tackle for the good of the economy. But the individual problems caused by debt, and the problems caused to older people by lack of pensions advice and proper information when it is needed, is also something that we should have the power to change. I very much hope that the Government will be prepared to respond to this take-note Motion in a positive way so that we can make some progress. I beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, this statutory instrument is about a name change, which of course I support. I am glad to hear from the noble Lord, Lord Stevenson, of the distinguished new chair of the service, and the management team. I also commend the DWP—a role model for the Treasury on this, and I am delighted to hear that the Treasury and the DWP are working together—on estimating the costs involved. These are mainly the costs of communication. I have been glad to see the use of social media in this area; I encourage noble Lords to look up @MoneyPensionsUK. There needs to be much more of this, and a more comprehensive Q&A on the website on the issues that this body is set up to care about, communicate and deal with. Obviously, the willingness to listen is most welcome, but this is an area where good communication can help people keep out of trouble if they get it at the right time.

In our society, people do not know or learn enough about how to manage money or about the importance and value of pensions. Good, simple teaching and guidance are essential if debt is to be avoided and managed. People are slow to understand what a good deal pension saving represents because of the add-on that is provided by employers and the system. So a key need is to deal with finance, debt and pensions in the school curriculum—principally in the maths curriculum, as few people understand the basics of compound interest. Indeed, teaching should also be done by youth services, through which some of the most socially excluded end up being taught life skills. Training could also be given to social services to help those preparing for retirement, those leaving the military, ex-offenders and perhaps—to hark back to our discussion in Questions earlier today—those moving to universal credit.

Of course, charities can help, as the noble Lord, Lord Stevenson, explained. However, I would welcome any thoughts or information from the Minister on the curriculum and on training and how this might form part of a comprehensive approach to these issues, which I think represents a quiet and important revolution.

18:00

[Baroness Janke (LD)]

My Lords, I did not participate in this Bill but I share the sentiments expressed so far about the need for financial guidance, advice and education to help people come to better decisions. I support the remarks of the noble Baroness, Lady Neville-Rolfe, about the importance of including this as a regular part of the curriculum. As a teacher, I have spent some time trying to teach basic financial skills as part of personal and social education, but it is very difficult when there is not proper time allowed for this in the curriculum. I agree that it needs to be given much greater importance. That is even truer now when so many young people have easy access to the internet and easily become fair game to scams, complex bogus schemes and systems of advice which are really there to deceive and take their money. Therefore, I broadly welcome the scheme.

I was interested to hear the remarks of the noble Lord, Lord Stevenson, about debt and debt management and the importance of the latter not just to the economy but to individuals who may be going through a particularly dreadful period in their lives.

As I said, I did not work on the Bill, but I wanted to ask a few things about the Act’s progress. Section 3(7)(b)(i) commits the Minister to publishing,

“an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers”.

Has any analysis of that been done yet? If not, could something to do with the quality of advice and the qualification of some of the advisers be included in that? I do not know whether there was debate on that during the passage of the Bill. Section 4(1) says that the single financial guidance body must provide advice to a member of a pension scheme or an inheritor on what to do with the flexible benefits. Are there any early thoughts or a timetable on that?

I know that with regard to Section 22 there was an issue about whether the Government would limit or control the direct marketing of financial services. Again, has any progress been made on that? If not, is there a timeframe in view? My observation—I speak as a counsellor who has given advice on debt and other topics—is that the question of resources is very important. As part of the programme of austerity, financial and legal advice were two of the areas that were severely cut back. I would welcome assurance that the finance for this will be protected, as has previously been mentioned.

I also wonder about declarations of interest and vested interests. How can customers know whether their advisers have these, and what they are? We talked about lists online about people taking advice. There may be a provision already about who is registered to give advice.

There is also the issue of redress. The legislation talks about the FCA, but my experience is that redress can be very difficult for people who are not knowledgeable about these things. It can be very long and very inaccessible. I hope the Minister can enlighten me on that. Having said that, this seems a very good measure and I look forward to hearing more as the measures in the Act are introduced.

[The Archbishop of York]

My Lords, I want to support the main thrust of the speech from the noble Lord, Lord Stevenson, about debt. Julia Unwin, who was chief executive of the Joseph Rowntree Foundation, did a big research project on why people were going to Wonga. They went to Wonga because it asked no questions; people knew they could get their payday loan. Other lenders asked more questions and were far more intrusive and credit was not readily available. Noble Lords know that my archiepiscopal colleague, the most reverend Primate the Archbishop of Canterbury, said that he intended not only to reform Wonga but to do away with it, and we know what has happened to Wonga.

Credit unions have been set up, which the most reverend Primate and I support. However, people still find it hard to get credit easily and the organisations responsible have caused a lot of people to go deeper and deeper into debt. When he was Archbishop of Canterbury, William Temple suggested that interest rates should be set only by the Bank of England, and not by credit companies, because the Bank of England is accountable to Parliament, which can ask it questions. Noble Lords know what happened with subprime mortgages, with debt being put into little parcels and sent all over the globe until eventually there was no money anywhere. We all know what happened in 2008 with the credit crunch, which was caused purely by excessive debt.

I welcome the Financial Guidance and Claims Act 2018. The noble Baroness, Lady Neville-Rolfe, is right that education about the dangers of debt should start at a young age. Nevertheless, in the meantime, is there a way for those who genuinely find themselves in real trouble to get support and help in a similar way to how food banks work? A lot of people have found that their money is sometimes not enough to meet their needs and so they have gone to food banks. The good thing about food banks is that they do not give food all the time. People know when to collect it and when they last collected it. This has become a marvellous way of taking people out of great debt.

Will the issues raised in the Financial Guidance and Claims Act 2018 and by the noble Lord, Lord Stevenson, be taken seriously by all of us and particularly by the Government? It is their responsibility to provide the guidance required to ensure that Wonga—this payday lending stuff—will not be resurrected and that the people who genuinely need credit can get it in a sensible way. I am very glad that the Government are trying to say that we should be responsible citizens, not only for pensions but for the whole question of social care, with people beginning to put a little money aside for their social care.

It sounds a bit simplistic, but could we not create some sort of food bank-type arrangement? This would help ensure that people on low incomes do not find themselves borrowing from places that will demand more and more money. Noble Lords know what happened with people being given interest; banks also behaved very badly. In a wonderful economy such as this, could some thought be given to ensure that those who are really up against it do not get into greater and greater debt? They may find that their houses are repossessed or their goods taken away and this again throws them back to bad lenders. They find themselves in a cycle of bad debt, which goes through the family for years. If I took your Lordships around Middlesbrough, you would realise that unless you actually tackle debt, some children are condemned to it and, even if we educate them properly, this will not bite.

[Lord McKenzie of Luton (Lab)]

My Lords, with this take-note Motion my noble friend Lord Stevenson has made an important intervention and it is a timely reminder that we should be making progress on matters covered by the Act. Indeed, he has covered a lot of ground, so I can be brief—or briefish.

We are reminded that the decision to name the body the Money and Pensions Service through regulation was to minimise the risk that individuals and organisations might impersonate it prior to its launch. In the event, it seems that it would not have taken a team from Bletchley Park to get close to its actual name. Could the Minister say whether there have, in practice, been successful attempts to impersonate the body before today? To what extent is the juxtaposition of pensions and money guidance in the title considered sufficient to repel impersonators?

This is not just about a name. Getting the business infrastructure of the body in place should involve the making of transfer schemes under Schedules 1 and 2. Are these now complete? So far as its members are concerned, could the Minister confirm that the appropriate proportion of execs and non-execs has been secured for its governance? We do not have the benefit of an impact assessment, but we have an explanation of why not. Could we be told the key monetary amounts attached to these transfers?

We have been reminded of the Act’s key provisions, which were the establishment of a single financial guidance body with the objective, inter alia, of improving the ability of members of the public to make informed financial decisions. The strategic function of the body is the development and co-ordination of,

“a national strategy to improve … financial capability”,

and to improve,

“the provision of financial education to children and young people”.

A number of noble Lords focused on this aspect of the Act and its ambition. We debated this latter point at some length and the extent to which there was scope to use the national curriculum, which had less than full mandatory configuration. I think that we on the Financial Exclusion Committee were surprised by just what a small percentage of the total education infrastructure was subject to the mandatory national curriculum. I cannot remember the precise statistic, but it was less than half. Therefore, that mechanism could not be used effectively to undertake the education one would ideally want. Can the Minister say whether there has been any early planning to enhance the education of young people? It featured strongly in our debates.

There has already been delivery on some aspects of the Act, such as the banning of pensions cold calling, but for other key aspects it seems we have hardly got to first base. It may be a bit early, but can the Minister say anything about how effective the cold calling ban is proving? It is a vital power to stop the scammers. What are the key challenges in making it more effective?

The debt respite scheme, referred to extensively by my noble friend, is increasingly relevant to consumers. As we heard, StepChange, in its 2018 statistics yearbook covering personal debt, set out the scale of problem debt. I will not repeat it, but there was the staggering statistic that it had one new client every 48 seconds. As for the age profile, as we have heard, there is a continuing increase in the proportion of younger clients. Over half its clients or their partners are actually in work. Not surprisingly, a rising proportion of clients rent their homes. To focus on housing and its impact on spirals of debt is absolutely right. I recall from my time as a local councillor, going back a bit, when right to buy came in and people had a bright new shiny door for a little while, then they mortgaged the property again to have some improvements and then again to have an overseas holiday. They ended up homeless and back with the local authority. It is a very important area.

Council tax arrears feature at the top of the list of the bills that create household debt. There, we can put the blame squarely at the feet of the Government for changing the benefit rules and grinding down on local authority support for these matters.

18:15

Where are we on the debt respite scheme? I understand that the body, now the Money and Pensions Service, was established as a legal entity on 1 October 2018. It began delivering its functions on 1 January 2019. Under the Act:

“The Secretary of State must, within three months of the establishment of”,

the Money and Pensions Service,

“seek advice … on the establishment of a debt respite scheme”.

The advice can cover a range of matters. Perhaps the Minister could say when advice has been sought and what was covered. I had hoped that my noble friend Lord Stevenson would on hand to provide some input.

One area that exercised us when considering the Bill was the requirement to refer members of pension schemes, personal and occupational, for appropriate pensions advice. We had long debates about where the balance between advice and compulsion should end. I think we reached a compromise. This was in circumstances where a transfer of any right was in contemplation and/or benefits were about be provided by the scheme. Under the arrangements we ended up with, the FCA is required to make general rules for trustees or managers in this regard. Has any progress been made on this?

As for funding, which was raised by a couple of noble Lords, under Section 11 of the Act the Secretary of State may pay grants, make loans or other forms of financial assistance to meet expenditure to establish the Money and Pensions Service and to enable it to carry out its functions. Could the Minister say what has been provided by way of grants, loans or other forms of financial assistance so far? What has been notified to the FCA as required to be recovered? Finally, can the Minister say what to date is the position on delegation of functions to delivery partner organisations?

As might be apparent, we view this as an extremely important piece of legislation—I think we built on a consensus—and one on which we will at least have to have a watching brief.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I very much welcome this debate. It has been very good, albeit short, and has covered a number of important issues. It is really timely to reflect on where we have come to since the passing of the Financial Guidance and Claims Act. My memory has constantly been nudged while listing to noble Lords about many of the things we debated, often at length, particularly regarding education. I will do my best to respond to the questions that have been raised.

I will address some of the specific points in due course, but I start by thanking the noble Lord, Lord Stevenson, for moving this Motion. I will take this opportunity to provide your Lordships’ House with an overview of the newly named Money and Pensions Service, what it has done and what it plans to do.

As noble Lords will know, the Financial Guidance and Claims Act 2018 (Naming and Consequential Amendments) Regulations 2019 were laid before this House on 4 March. These regulations came into force on 6 April and renamed the single financial guidance body, provided for in the Financial Guidance and Claims Act 2018, as the Money and Pensions Service. These regulations also made amendments to existing legislation, so that references to the Money Advice Service or the Pensions Advisory Service were either removed or replaced with the Money and Pensions Service.

The launch of the Money and Pensions Service’s new name and brand on 8 April is a very positive development that has been welcomed by experts in this field and by industry. The Department for Work and Pensions is especially pleased that the new name for the single financial guidance body has now been set in legislation. This will ensure that both the body itself and its customers are protected by the criminal power in the Act, which makes it an offence to impersonate the body. That was our key purpose in keeping the name back until after the Act was introduced. We now have safely in place this powerful deterrent to protect customers against fraudulent activity. The new name—the Money and Pensions Service—has been well received. It has been positively noted that references to “advice” and “advisory” no longer feature in the name, which was a particular concern raised by noble Lords during the passage of the Act.

I am pleased to say that work has continued apace since the body was established as a legal entity in early October 2018 on the appointment of the chair, Sir Hector Sants, the chief executive, John Govett, and their executive and non-executive teams. On 1 January, the body began delivery to the public of pensions guidance, money guidance and debt advice. It also took on its consumer protection function, and has since laid out its plans for the development of a national strategy to improve financial capability, an important issue that all noble Lords have touched on this evening.

We were clear during the passage of the Act that we wanted to deliver a seamless transition from the Money Advice Service, the Pensions Advisory Service and Pension Wise to a single organisation, the Money and Pensions Service—which we should call MAPS, as the noble Lord, Lord Stevenson, suggested. I am pleased to confirm that we successfully achieved this with no detriment to the customer. It is, however, important to remember that the new service is going through a period of transition. It is essential that we do not underestimate the scale of transformation it is undertaking. The service needs time to focus its energy and resources on a successful transition, while at the same time building towards its long-term strategy. This was well put by its chief executive, John Govett, who set out that his priority for the year ahead is to, “bring the three” previous,

“organisations into one, and re-focus their efforts to increase the number of people supported by the Money and Pensions Service each year”.

This is a laudable and important goal, but it will take time to get right. I noted particularly that the noble Lord, Lord McKenzie, like myself, is always impatient, and rightly so. However, we need to ensure that there are no unintended consequences of moving too quickly. Exceeding expectations and then finding that the body has forgotten to put things into play to support people and protect their finances would be a mistake.

The service will work closely with the Government throughout, particularly the Department for Work and Pensions and Her Majesty’s Treasury. I say to my noble friend Lady Neville-Rolfe that, yes, I am pleased to report that we are working closely and well with our colleagues at Her Majesty’s Treasury. Part of getting it right is ensuring that the new service is responding in the right way to customers’ needs. That is why, at the Money and Pensions Service’s launch last month, it declared that its mission is to put the customer at the heart of everything it does. Its vision, as spelled out in its first business plan, is to ensure that everyone is,

“making the most of their money and pensions",

and that it is improving financial well being throughout people’s lifetimes and equipping, empowering and enabling individuals to make informed financial decisions with confidence.

I am pleased to inform noble Lords that as part of its transition to full service, MAPS has also announced that it will be undertaking a UK-wide programme of listening events. This is really important. During these events, the service will engage with a wide variety of individuals and organisations, including customers, levy payers, providers, consumer organisations, funders and commissioners and other stakeholders, who will help to frame the future strategy of the service. The insight from the listening phase will help to shape MAPS and its three-year corporate plan, which is due to be published in the autumn.

As well as these listening events, MAPS is starting to deliver on the commitment, set out in the Financial Guidance and Claims Act 2018, to gather evidence and develop trials for how to most effectively and more strongly nudge people to take pensions guidance prior to accessing their pension pot—something we debated at length during the passage of the Bill. This builds on the success of the Pension Wise service, which was set up in 2015 to help people understand the pension options available to them. In its first year, 61,000 Pension Wise guidance sessions were delivered. Last year, this had increased to 167,000 and this year MAPS aims to increase that number to 205,000. Building on this tremendous track record, we expect the new service to nudge people towards guidance earlier and to reach them before they start the pension access decision-making journey. This will ensure that consumers have what they need to make a more informed decision, including about taxes and benefits, and to avoid scams—an important issue that was raised by the noble Baroness, Lady Janke. To this end, we are working with MAPS to test with care what is practically feasible. I thank my noble friend Lady Neville-Rolfe for her suggestion of taking a longer look at websites and so on to ensure that we are giving the right advice in a simple form, because a lot of this is about prevention as well as support.

The Government are also swiftly implementing their manifesto commitment to deliver a breathing space scheme. Her Majesty’s Treasury is drawing on the expertise of MAPS in the design of such a scheme—something crucially important and close to the hearts of myself and the noble Lord, Lord Stevenson—including seeking formal advice on specific areas, as required in the Act. The Government will continue to work closely alongside the body as the scheme is delivered. This close work between MAPS and the Treasury will both support the implementation of the scheme and, when it is introduced, enable MAPS to help people in problem debt in the most effective way possible.

Since the passage of the Financial Guidance and Claims Act 2018, the Government have published a policy proposal on all aspects of the breathing space scheme for consultation, proposing strong protections for debtors. The consultation closed in January and a government response to it, to be published shortly, will confirm the details of the scheme. As I have already mentioned, primary responsibility for this policy rests with the Treasury, which will be publishing the response shortly. As I have already said, we are working closely with it.

I am pleased to say that MAPS will be establishing an industry delivery group, bringing together the pensions industry, consumer organisations and others to implement pensions dashboards, including a non-commercial version. This has not been touched on this evening, but the Government will be introducing legislation in this area when parliamentary time allows.

I will now endeavour to address the outstanding points raised during the debate. Regarding the name, yes, as the noble Lord, Lord Stevenson, suggests, we are in a sense talking about two separate issues—how people operate and manage their money, and how they save. Time frames are different for managing debt and for saving for pensions, but we trust in MAPS to manage these realities.

Key to this debate has been the issue of problem debt. The Government have taken steps to support people who have fallen into problem debt, including providing access to high-quality, free-to-use debt advice. Public funding for debt advice in England has risen to £55.8 million in 2019-20, which will provide help with debts to over 560,000 people in 2019-20—an increase of 85,000 compared to 2018-19. MAPS is an important addition to this. I note the concern expressed by the noble Lord, Lord Stevenson, that those in problem debt include increasing numbers of young people and women. Yes, housing is an issue but that is a government priority across all departments, and we are very focused on all aspects of housing and its funding. It is very important to us.

18:30

With regard to references to StepChange, the noble Lord, Lord Stevenson, will know that I made a visit recently, which reminded me how each person with a debt problem has a different problem. This is not easy or straightforward. There is a growth in unsecured debt and I want to put on record how remarkable charities such as StepChange are in the work that they do. We will do everything we can to support them because it is really important that we have people who want to take the time to care for and help others at times of crisis. For some people, it is a real crisis but it is important to raise awareness in support of those who need advice. That is one of the key things that we are working on.

We are taking the Breathing Space scheme forward. As I said, the Treasury is currently consulting on this and MAPS will feed into that. I agree that beyond brilliant organisations such as StepChange, MAPS can help people to access sound advice early—the earlier the better. The consultation proposed that Breathing Space would offer protection on as wide a range of an individual’s personal debts as possible. The Government are continuing to work with expert stakeholders on this and intend to confirm their approach in the response to the consultation. The Treasury is consulting on government debt and my department is currently considering this aspect—the degree to which we cover government debt—but, as the noble Lord said, this will take time. The Government recognise the need to move quickly on debt respite and implementing the scheme, and have committed to laying regulations on Breathing Space by the end of 2019. The statutory debt repayment plan will be implemented over a longer period than the introduction of Breathing Space. Given its complexity, we have to get this right; I say this in response particularly to the noble Lord, Lord McKenzie.

I have another point on Breathing Space. As set out during the passage of the Act by the Economic Secretary to the Treasury, the Government will be laying regulations by the end of this year. We are working well with the Treasury.

I want to add something on what was referenced by my noble friend Lady Neville-Rolfe and the most reverend Primate the Archbishop of York, who spoke so passionately about debt. I could not agree more with him on every point he raised. One great thing we are doing with pensions, for example, is auto-enrolment, which I am proud to say is making a huge difference in raising people’s awareness and their understanding of pensions. Over 10 million people have enrolled since 2015, which of course includes a lot of young people, so we are really pleased with that progress. It is helping people to understand the importance of saving for the longer term and there has been such a positive response.

Another very important point raised by my noble friend Lady Neville-Rolfe, the noble Baroness, Lady Janke, and the most reverend Primate the Archbishop of York was about education. I particularly remember that we debated this at great length during the passage of the Bill and it is so important. MAPS is committed to improving the level of financial capability for all. It will be working on its national strategy to improve financial education for children and young people. MAPS is in the process of consulting on the development of a national strategy in this regard. I am really pleased to report that because, as some of us—certainly myself—might say, if only I had better understood the issues in relation to pensions when I was younger, I might be in a better place in that regard now.

[Baroness Neville-Rolfe]

Before my noble friend moves on, would it be possible to look again at what is in the national curriculum that helps on finance, debt, pensions and the associated things that we are talking about? It is great news that the new body will be looking at a strategy but she knows that I am an impatient person. It would be good to know what is in the national curriculum and what might very easily be added, since it seems to me that a lot of these issues lend themselves very naturally to the mathematics curriculum.

[Baroness Buscombe]

I thank my noble friend for her point, which is so well made. One reason I am so pleased to have this debate is that it helps, in a sense, to put more pressure on those taking this forward to look a little harder and further at what more we can do to develop financial capability. Yes, as raised by the noble Baroness, Lady Janke, there is always an issue with regard to squeezing this into the curriculum but of course this makes absolute sense, as many noble Lords said during the passage of the Bill. Many thanks to my noble friend for pushing that point a little further. We need to ensure that we can start the process of education by informing people, when they are as young as possible, about planning for their future; that is, in terms of pensions but also in managing their money. Great work is done by charities, but I am sure it will also be done by MAPS.

The most reverend Primate the Archbishop of York made an important point about exploitative lenders. While this is a matter for the Treasury, I can say that MAPS has ambitious plans to help people make informed decisions about their money—an app has been suggested. We are looking for ways to include this in the issues to do with Breathing Space. As I said, the Government will take forward plans on this in due course.

I am very aware of the time but I will say quickly that MAPS is due to publish the national strategy in the autumn, alongside its corporate plan. I also want to say something quickly on pension scams, which have devastating consequences such as the loss of an entire pension fund. That can leave victims without the means to fund their retirement. The Government are committed to implementing a ban on pensions cold-calling and created the powers to do this through the FGC Act. I am delighted to say that the ban came into effect in January 2019, making it more difficult for scammers to initiate pension fraud. Although the ban will have a significant impact on tackling scams, the Government do not consider it as a job done and we will continue our efforts to understand, and take action to prevent, pension fraud.

I think I have covered almost everything. There may be one or two other points that I have not included but I thank noble Lords for their contributions to this debate. It has been important and I feel proud to stand here to talk about the progress being made. I thank again the noble Lord, Lord Stevenson, for giving me that opportunity. We are in a good place with setting up the right bodies and organisations to tackle some of these really important issues, which are close to all our hearts. I would like an opportunity in the not-too-distant future to tell noble Lords more.

[The Archbishop of York]

I know that the Minister will not want to go into areas covered by other departments, but will she at least commit to take seriously the question of the curriculum? Governments of all parties in the past have done many good things—a noble Lord formerly in education was here at one point. It is important that this should be part of the curriculum and not purely a vague idea of education, because that can go nowhere. Is the Minister giving a commitment that she will talk to those in education who would like to look afresh at the curriculum and that this, like many other important things, could be included in it?

[Lord McKenzie of Luton]

The issue seems not so much to be what is covered by the national curriculum as the extent to which schools have to comply with it. That is the challenge. As I understand it, free schools and others do not have to. That is the stumbling block that we hit last time. We need to unlock that.

[Baroness Buscombe]

I thank the most reverend Primate the Archbishop of York and the noble Lord, Lord McKenzie, for giving me a further springboard to have discussions on this with my ministerial colleagues in the Department for Education. It is something that we worked on during the passage of the Bill. We did not get as far as we would have liked. We will try again, but we will also keep talking to the Treasury about this and hope to make progress.

[Lord Stevenson of Balmacara]

My Lords, I thank all those who have contributed to this short debate. It has served its purpose and achieved what we wanted, which was a chance to reflect on the progress made since the passing of the Bill and an update on the heartening and encouraging work now going on—the listening posts, the three-year plan and the idea that out of this will come a national strategy. I cannot remember whether in the Bill we required that to be brought back to Parliament, but I am sure that an inventive Minister like the one who has just responded would be able to find a way of allowing us to have another discussion on that strategy when it is produced so that we might at least have some sense of engagement with it.

One question arises from that which does not need to be responded to today. On the programme of events that will accompany the emergence of MAPS as a fully fledged body, the breathing space can be achieved by regulation, but the statutory debt management plans require legislation, as might some of the work on pensions. I do not see many notifications of that in the forward programme, but that itself is also quite difficult to discern. When the Minister has some information, perhaps she might share it with us when we are developing that set of legislative processes, because it would give us opportunities to come back to some of the issues we have not touched on. There is an outstanding Goods Mortgages Bill which would be fantastically important in eliminating one more of the high-cost credit problems that we have; namely, that car book loans, established under Victorian legislation of 1858 and 1862, still exist and fall completely outside the current system under which the Financial Ombudsman and others can operate. They predate that and are about a thing called a bill of sale, which should be outlawed. If we cannot get that on to the statute book as part of this process, we are really failing.

I think the question of bailiffs will come up through the report of the Ministry of Justice on bailiff operation. There is a clear need for a statutory basis for bailiffs’ operations. A good code of practice and some form of redress system would contribute considerably to assisting those in trouble. Those are details to be followed up. I include in that the pensions dashboard, which the Minister did not touch on but which is also an important step forward.

The most reverend Primate the Archbishop of York was right to say that there is still too much high-cost credit around. The corollary of that is that there is still a problem about low-cost credit being available at the appropriate time and in the appropriate amount to those who, curiously, borrow the most in our society. The poorest in society borrow more than those further up the income scale because they have to. As they are paid on a short-term basis or are living on limited amounts of money, they have to borrow when big expenditure arises. The system does not provide for that—not even for basic bank accounts. We need to go back to that and think more about savings. Auto-enrolment is a huge success. A lot of thinking by the Treasury has contributed to it—under previous Governments as well as under the current one—and it is to be given great credit. When it was first proposed when I was in a think tank, I thought it was the daftest thing I had ever heard of—making people contribute to savings when there were so many other pressures on them—but it has been a huge success and I am very glad that it is there.

However, it is only part of the story. It is far easier to borrow money in this society than it is to save. Why is that? Why do we have perverse incentives about people being able to accumulate cash that would see them through? I did not cite the statistics in the StepChange yearbook, but it is still incredible that a huge number of people do not have enough money from their current income to see them through one month’s problems. We must do something to help them.

The most important strand is education. We delude ourselves if we think that by simply asserting that this is an important area that should be in the national curriculum we will achieve it. Both my noble friend Lord McKenzie and the noble Baroness, Lady Neville-Rolfe, have experience of trying to get this to work in previous Administrations and I wish the Minister well with it. Is there anything we can do to ensure not only that this is seen as a good idea but that it is taken up by those with the ability to deliver, particularly given my noble friend’s points about the new environment? The Government’s only statutory ability is in relation to the limited number of schools that are still a local authority concern, but they have no lien in terms of forcing through the curriculum for academies or those schools in private hands. There are situations where kids will not learn what we all know they need to learn. Exactly like the noble Baroness, I wish I had known at the time, when I could have done something about it, what I know now when I am in such straitened circumstances.

Motion agreed.