Nia Griffith
Main Page: Nia Griffith (Labour - Llanelli)Department Debates - View all Nia Griffith's debates with the HM Treasury
(10 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Nia Griffith (Llanelli) (Lab)
Will the hon. Gentleman explain how, with a tax take from people living in Wales being some £9 billion short of tax expenditure, an independent Wales would put right that hole in the economy?
Jonathan Edwards
I have been totally clear in my comments about the constitutional journey of my country: we are not in a position to fight for independence at this very moment, which is why Wales needs the economic powers to build up its economy to be in a position to do so. We are in a different situation to Scotland. We will not get anywhere if we continue with the policies of the Labour party, which aims to keep economic control in London and to keep our communities impoverished. It is in its vested interest to do so, which is why it is opposed to all the measures being put forward by the Silk commission.
Guto Bebb
I welcome that intervention from the hon. Gentleman, who clearly understands the importance of the retail sector. I was talking about comments made on radio and television by members of the Labour party. When I hear those comments I get annoyed as they refuse to acknowledge the fact that the sector provides the individuals in Tesco in Toxteth, or in various businesses in my constituency, with the opportunity to start a career, learn a skill and move on—and I would argue that people need a job to be able to move on to another job. It makes such a difference and those opportunities should not be dismissed by those who earn far too much to appreciate how important it is to earn a living, perhaps for the first time, and, in some cases, to be the first member of a family for a generation to take a job.
We need to be aware of the fact that the success we are seeing across the UK is being replicated in Wales. In a Welsh economy with relatively low levels of pay, it is even more important that we reduce the tax burden on those individuals. I have heard Opposition Members complain that although it is all very well to reduce people’s tax bills, by increasing the personal allowance tax credits have been reduced. That is not about what is right for the individuals; it represents the significant difference between the Government and Opposition. Government Members want to allow people to keep as much of their earnings as possible, because if a person goes out there and works we should tax them as little as possible. The Opposition were quite happy to tax people earning as little as £6,000 a year and recycle the money through an expensive, well-paid bureaucracy before paying it back to buy a client state. That was the dishonesty of the tax credit policy.
Nia Griffith
Will the hon. Gentleman explain why his party has introduced measures that have cut the taper on the tax credit system, making it much more severe and causing more difficulties for people? Does he not agree that the only way to reduce the tax credit bill, as tax credits top people up to a decent wage, is to ensure that wages go up through a strong minimum wage and incentivise employers to introduce a living wage?
Guto Bebb
As the hon. Lady knows, as I have already touched on the minimum wage, I believe that it is a complex issue that must be considered carefully. My view is that we should carefully consider moving towards a point where we do not need tax credits, as the imperative is to allow people to earn a living and pay as little tax as possible on their earnings. That should be the aspiration.
Nia Griffith
Is my hon. Friend aware that 18 Labour Members spoke in that debate, and not a single nationalist did so? I do not blame the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he was on paternity leave, but is it not shocking that the nationalists should dare to suggest that Labour is not equally concerned about poverty?
Mr Brown
I have a copy of the report of the debate, so I am well aware of its content and of which Members contributed to it.
We may find little common ground today, but we can at least agree with the nationalist parties on the need for an inquiry into the impact of the coalition’s cuts on poverty throughout the United Kingdom.
The motion opens with the words:
“That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses”.
It is those last four words—“according to some analyses”—that present the problem. If we look at the OECD figures, we can see that the most recent ones are out of date. Definitions are provided for these figures, and statistics are also provided, but because different surveys and methodologies have been used, it is a real problem to get fully behind the figures and to determine what they are saying. In other words, statistics can prove one thing to one individual but tell a different story to another.
The coalition’s austerity measures have undoubtedly resulted in the greatest burden falling on low and middle-income families, while the richest have been given significant tax cuts to ensure that they do not feel the cold draught of the current economic climate. That is why Labour Members have consistently called for action to tackle the cost of living crisis caused by this Government. Such action would include freezing energy prices, taking real action to end exploitative zero-hours contracts, and strengthening the minimum wage now.
My right hon. Friend the Member for Morley and Outwood (Ed Balls) recently said that if Labour forms the next Government,
“we will restore the 50p top rate of tax”.
I know that that causes anxiety for Government Members, but we believe that, in tough times like these, those with the broadest shoulders should bear the greatest burden.
Mr Weir
The hon. Gentleman makes his point. I just point out that in Scotland we have frozen council tax for several years. We have also taken action to pay extra money from our already constrained budget to get rid of the effects of the bedroom tax in Scotland. We cannot get rid of the tax itself because that is controlled by the Westminster Government; we can only mitigate the effects.
Another issue I have talked about in the past is the inequality between rural and urban areas and between different sections of society, particularly in relation to energy and the problems of those who are off the gas grid. Far too often when energy is discussed, we focus on the evils of the big six. It may be good to give them a kicking in passing, but there are also serious problems in the off-grid market. All of us who are off grid will have found that prices have rocketed, much higher than the price of energy from the big six companies and from the grid. Pensioners in particular face serious difficulties in paying their winter bills.
I have twice introduced Bills in this House and on two occasions, I think, I have tried to amend energy legislation to tackle the problem by suggesting that the winter fuel allowance should be paid earlier. I do not think it would be terribly difficult, but this Government, like the previous Government, seem to have a horror of doing that and making a real difference to the people affected by the problem.
Nia Griffith
I give credit to the hon. Gentleman for the introduction of those Bills, but does he not recognise that it is now the policy of the Labour party to pay the winter fuel payment in the summer so that customers can benefit from cheaper prices? Will he also support Labour’s policy of having a tougher regulator that can look at off-grid issues?
Mr Weir
I am glad that Labour has finally adopted that policy—better late than never. In the last Parliament, I had numerous discussions with Labour Ministers who would not adopt it. I would be interested in what powers a stronger regulator would have. I have often argued that the regulator should have powers over the off-grid sector. When I sat on the Business and Enterprise Committee, before the Department of Energy and Climate Change was formed, we produced a report that asked for that to happen. I have raised that issue repeatedly.
After an intervention by the hon. Member for Wealden (Charles Hendry) earlier in this debate, I raised the way in which the energy company obligation discriminates against off-grid gas consumers. The ECO is controlled by the big six energy companies and none of them include off-grid gas boilers in their schemes. I wrote to all of them and received various letters back that tried to obscure that fact, but there was no getting around it at the end of the day. I raised the matter at DECC questions last month. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) replied that he was meeting the suppliers to tackle the issue. If the Under-Secretary of State for Wales takes nothing else away from this debate, perhaps he could ask DECC Ministers whether any action has been taken. I am sure that it is a huge issue in his constituency, as it is in mine. Such action would not solve these problems completely, but it would help many off-grid customers.
I will end by saying a little about the Scottish Government’s energy assistance package, which has helped 150,000 people on low incomes to reduce their energy bills. It has been extended for two years, which should help a further 300,000 people. Originally, it was targeted at pensioners, but it has been extended to help other vulnerable people in these difficult times, such as the disabled—including those with severe disabilities—families with young or disabled children, the terminally ill and people who are on carer’s allowance. It is now a much greater scheme than the one that was introduced originally. The number of homes installing loft insulation has more than doubled from 40,000 in 2008-09 to 104,000 in 2011-12. That was praised by the Committee on Climate Change in its report, “Reducing emissions in Scotland”, which was published in March.
While the UK Government have slashed their schemes, the Scottish Government have continued to invest. We have invested £220 million since 2009, which has resulted in an estimated return in household income of more than £1 billion. A further £250 million will be invested over a three-year period to tackle fuel poverty. That is a great record. As I said earlier, the number of people in fuel poverty is falling in Scotland, unlike in the rest of the UK. Those are significant improvements, but we still have much to do.
We could achieve further improvements much more easily if we had the full powers afforded by independence. We would really get to grips with inequality if we did not have the dead hand of Westminster holding us back. It is interesting that the Labour party is quite happy to let the Tories stay in power, rather than have Scotland tackle its own problems.
Jacob Rees-Mogg
Once again, I am sorry to say that I disagree with the hon. Gentleman on that specific point. It is much preferable that the state should pay benefits to people who are working and being paid the economic rate for their job.
Nia Griffith
Will the hon. Gentleman speak to his right hon. Friend the Secretary of State for Work and Pensions about the specific issue of universal credit and its acting as a disincentive, particularly for the second earner in a family?
Jacob Rees-Mogg
The basic principle of universal credit, which is that everybody should be better off in employment than not in employment, is fundamentally right and reducing the withdrawal rates is possibly the most exciting thing that the Government are doing. If we go back to 1979—I promise you, Madam Deputy Speaker, that this will not be a history lesson—and look at the reductions in the tax rates from 98% to 80% and then to 60%, we see that on every occasion the incentive to work increased and revenue to the Government increased too. Some of the percentages for the withdrawal rates for benefits are in the 90s. If people would not work harder when taxed at 98%, surely they will not work harder when benefits are withdrawn at 90%-plus. The model follows that if the withdrawal rates are reduced, motivation to work will miraculously be improved and increased.
That benefits the whole of society and brings me to the fundamental flaw in the motion, which is that it takes the view that there is a bottomless pit of money to be spent and that we can go on spending like there is no tomorrow, ignoring the financial markets.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I was not sure whether the hon. Member for North East Somerset (Jacob Rees-Mogg) agreed or disagreed that inequalities are bad. I certainly believe—and I can present evidence—that inequalities between rich and poor are bad not just for the people who experience them, but for society as a whole. A large swathe of international academic evidence shows—most poignantly in “The Spirit Level”, published a few years ago—that the gap between rich and poor is bad for everyone in society. Inequalities affect life expectancy, mental health, social mobility, educational attainment and the extent of crime. So I start from the premise that inequalities are bad.
In my previous life in public health, I worked on socio-economic inequalities and their impact on health inequalities, which is what I want to discuss today. Again, I was not clear from what the hon. Gentleman said, but he talked about the separate position of the state and the responsibility of individuals within society. I believe—again, I think there is evidence to support this—that the Government set the tone for the culture of a society, in both their explicit and implicit policies, and how we divvy up spending reflects those policies.
As I said, considerable evidence shows that the systematic, socially produced differential distribution of resources and power—I mean income, wealth, knowledge, status and connections—is the key determinant of health inequalities. Mortality and morbidity increase as people’s social position declines. My constituency contains an affluent part, in Saddleworth, although there are pockets of deprivation, as in every community, and a poorer part, in Oldham East, and that differential is reflected in a 10-year difference in life expectancy, which is a situation that can be replicated across the country.
That social pattern of disease is universal. It is produced by social processes influenced by Government policies, both written and unwritten, rather than by biological differences. There is no law of nature that decrees that children born to poor families will die at twice the rate of children born to rich families. We should, however, take some comfort from the fact that those inequalities are socially produced and, as such, neither fixed nor inevitable. That means that we have some hope of doing something about them.
I am very concerned about the direction of Government policy, which, although largely driven by the Tory party, is to a large extent supported by the Liberal Democrats. The Health and Social Care Act 2012, for instance, completed its passage because it was propped up by them. One of the key objectives of the original policy was to reduce health inequalities, but there is absolutely no evidence that this privatisation Act will do anything of the kind. The Government have tried to suggest that increasing competition in the NHS will improve quality and reduce the number of inequalities, but I recently organised an inquiry in my capacity as chair of the parliamentary Labour party’s health committee, and eminent academics were saying exactly the opposite. One was
“shocked to see the move to wholesale competition and Any Qualified Provider as a primary driver in NHS reforms on the basis of”
very few observational studies conducted by the London School of Economics and others. Another said that
“clearly different drivers are motivating the private healthcare sector”.
In the US, there is both under and overtreatment, and huge disparities in health care. We know that the Government are already putting out to tender seven out of 10 contracts.
Before the Health and Social Care Bill became an Act, directors of public health and public health academics wrote that it would exacerbate inequality rather than reduce it, but the Government pressed on, and they continue to press on. The implications of the EU-US trade negotiations are of particular concern, because the Government have still not committed themselves to exempting the NHS from the free trade agreement. We will challenge them vigorously on that.
The recent debacle over NHS resources allocations is another example of the Government’s total lack of commitment to reducing health inequality. We saw the writing on the wall back in 2012, when the former Secretary of State for Health—the present Leader of the House, the right hon. Member for South Cambridgeshire (Mr Lansley)—reduced the health inequalities weighting from 15% to 10%, which would have a direct impact on areas where health was particularly poor. Following last year’s consultation about how NHS resources should be allocated, the Government were prompted to withdraw their previous policy and include an element that took account of deprivation in order to avoid another furore, but there are still major problems in connection with the allocation. A recent analysis undertaken by academics shows that the Labour Government’s health inequalities weighting saved lives: three lives per 100,000 in the population. I am extremely concerned about the new formula, and about its failure to take inequalities into account.
However, health policy is not the only problem. Other Members have already mentioned the Government’s economic policies. Although the personal allowance has been increased, the cut in tax credits means that 40% of the worst-off members of the population will be about £1,500 worse off. Those policies are doing nothing to reduce the economic inequalities that ultimately lead to health inequalities.
The Government are reducing access to education by trebling tuition fees and by scrapping education maintenance allowance, which was a key funding mechanism to enable young people from deprived areas to buy books and travel to college. They have now been denied that.
Nia Griffith
Will my hon. Friend join me in congratulating the Welsh Government on protecting education maintenance allowance for the poorest families, for the reasons that she has outlined?
Debbie Abrahams
I will indeed. I also want to pay tribute to Oldham college, which has introduced its own system to ensure that people from the poorest backgrounds can still attend college without being financially penalised.
The Government are restricting access to justice through their legal aid changes. Inequalities are also being created through job insecurity resulting from zero-hours contracts. The swathe of policies that the Government have introduced have done nothing to reduce inequalities. On the Government’s so-called welfare reforms, I absolutely detest the divide and rule narrative that has been deliberately introduced in an attempt to vilify people receiving social security as the new undeserving poor. The pejorative language of “shirkers” and “scroungers” has been really disingenuous, and the Government are distorting statistics to try to prop up their welfare reforms. That is absolutely shameful.
Collectively, the impact of public spending cuts is significantly greater in deprived areas. Academic studies also show the relationship between public spending and, for example, life expectancy at birth. The immediate impact of these socio-economic inequalities on health inequalities is already showing. Following the 2008 recession, there was an increase in male suicides, with an additional 437 suicides registered in the UK in 2011, roughly mirroring the increase in unemployment. It will take time for health conditions such as cancer and heart disease to develop. There is always a time lag between such conditions and their immediate precursors. We also know that the protective, positive factors that can mitigate these negatives are being eroded.
Nia Griffith (Llanelli) (Lab)
Fairness and equality are fundamental to Labour’s vision for society. Our roots are in the philosophy and movements that worked for a fairer society, such as the democratically controlled non-conformist chapels, friendly societies and trade unions. We believe in a community in which power, wealth and opportunity are in the hands of the many, not the few. We want to see a fair day’s pay for a fair day’s work. However, it is not just the less well off who benefit from a more equal society. As has been well documented, more equal societies deliver better outcomes not only for the less well off, but across the whole community —not only are the least well off less disadvantaged, but people feel more secure, safer and less threatened, and society is more cohesive.
Tackling inequality is about challenging those structures that perpetuate inequality and about creating the necessary structures to challenge and mitigate that inequality. It is about challenging and ending exploitation in its many guises. It is about responsible trade unions negotiating with managers to ensure a fair share of rewards for working people and, as we saw in 2008, safeguarding jobs and retaining skilled workers, even if that meant their accepting temporary reductions in pay or hours. Tackling inequality is about siding with ordinary people against the powerful, against whom they feel they have no redress. It is about empowering them and giving them the means to achieve that redress. It is about setting priorities to try to redress inequalities and developing the tools and structures to continue to tackle inequality.
Things do not stand still. We need to continue to tackle inequality. For example, we have said that we will impose a freeze on energy prices, but that is not enough. It is the immediate first step. We will then break up the energy market to make it work better for the consumer. In other words, we need an ongoing solution. We will also introduce a tougher regulator to ensure that the market works for people. It will have the power to tackle the off-grid issues that many hon. Members have mentioned today. With this Government there is absolutely no redress for the ordinary person. They are not standing up to the energy companies, which are making massive profits, but instead are just moving the green taxes on to general taxation.
The Government have imposed massive cuts to legal aid and introduced disproportionate charges for employment tribunals. Someone who is wrongly dismissed from a low-paid job will have to pay £500 up front to go to an employment tribunal, but because they were on low pay they might not have any savings. The Government are trying to tear up employment legislation and make people feel even more insecure than they do now.
The Government are using the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014 to attack trade unions that are standing up for workers’ rights. Despicably, they have been using the same Act to attack charities standing up for, and highlighting the needs of, vulnerable people. They are charging people an up-front fee to go to the Child Support Agency to get an estranged parent to pay their fair share of child maintenance.
Everywhere we look, the Government are making it harder for ordinary people to get what they are entitled to: harder to get a fair wage for a fair day’s work; harder to get energy supplies at a fair price; harder to make ends meet if they fall sick, lose their job or cannot find more hours to work; and harder to stay in their house, which might have been specially adapted, if they are hit by the bedroom tax—a cruel and ill-thought-out tax that Labour would reverse.
We all understand that the banking crisis has led to severe financial restraint, but there are still different options and priorities that Governments can adopt. They can choose to give tax cuts to millionaires, as this Government have done, or they could ask the better-off to bear a greater share of the burden. Under this Government, however, we have seen the very poor get even poorer.
Successive Governments have uprated benefits in line with inflation, mostly using the retail prices index until 2011. Since then we have seen the breaking of the link between inflation and the rates at which benefits rise. Do not forget that 68% of those affected by the Government’s benefits changes are in work. Universal credit will be subject to annual review, but not to mandatory uprating. There is a huge danger that it will fall behind inflation.
However, well before we get to universal credit, with its myriad problems, which are not helped by the sheer incompetence with which it is being introduced, the Government should look at the impact of the Welfare Benefits Up-rating Act 2013. Most working-age benefits have been limited to rises of 1% a year, yet the cost of basic items, such as food and energy, are rising by significantly more. Even Government estimates suggest that there might be 200,000 more children living in poverty, and the Child Poverty Action Group estimates that there could be 1 million more children living in poverty by 2020.
Let us look at some of the benefits that have been affected. The first is tax credits, which have a huge impact. We have called the cut to tax credits a strivers’ tax, because it affects the very people who are desperately trying to make ends meet, often working two or three jobs and patching together a few hours here and a few hours there. Then they are told that they have to find more hours, but they are simply not available—otherwise, they would be working them. Those are some of the issues that I think the Government need to address. In particular, they need to look at how they are hitting those who are in work and doing their best to try to make ends meet.
We all know the proverb, “Give a person a fish and you feed them for a day; give them a fishing rod and they can feed themselves for life.” In the same way, we need measures that can make an immediate difference to inequality. For example, Labour introduced pension credit as a fast and targeted means of taking the very poorest pensioners out of poverty. Many of them were women who had had little opportunity to earn much money outside the home.
We also need mechanisms and structures that can continue to make a difference. In 1998 Labour introduced the national minimum wage despite fierce opposition from the Conservatives—I welcome their late conversion— and complete indifference from the Welsh nationalists, who absented themselves from the vote. During our time in office, we raised the national minimum wage to above the rate of inflation, but what has happened under this Government? As I warned when speaking for the Opposition in the debate on this Government’s first statutory instrument on the subject, the national minimum wage has been weakened by galloping inflation. I am glad that the Chancellor is now talking about the need to raise it to £7, but the question is when, because as the national minimum wage moves forward, so does inflation. Any rise needs to be tied to a particular time and we need to know exactly what is planned.
We have clearly stated that we want to strengthen the national minimum wage and pursue firms that are trying to find ways of avoiding it by, for example, exceeding the limit for deductions for accommodation. We introduced the Gangmasters (Licensing) Act 2004 to tackle abusive exploitation of workers, and we want to extend such provisions to the construction and care sectors, yet many Government Members want to get rid of it, just as they got rid of the Agricultural Wages Board.
We want to incentivise wider adoption of the living wage, so we will bring in tax breaks for the first year to encourage employers to introduce it. We could make £3 billion-worth of savings simply by helping people to earn more and pay more tax, and then we would not need to pay out so much in tax credits. As the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), has said, and has been quoted today as saying, we will get the benefits bill down. We will do that by putting people back to work, by ensuring that the national minimum wage keeps up with inflation, and by bringing in measures to encourage employers to introduce the living wage. In those ways, we can save on tax credits, make sure that work pays, and bring the benefits bill down without hitting the poorest hardest.
Stephen Crabb
The hon. Lady talks about Labour’s promise to bring the welfare bill down. I remember that on the eve of the 1997 general election, the Labour leader, Tony Blair, promised to do exactly the same thing. What went wrong over the 13 years that Labour was in power?
Nia Griffith
We are saying now that we want to tackle the reasons why people are on such poverty wages. If we try to reduce the price of fuel, that helps people with the amount of money they have in their pocket. If we look at the amount that they earn, that helps them to get the right amount of money in their pocket without it having to be topped up so much by the tax system. There are ways forward and we have to tackle these issues. It would be very welcome if this Government were prepared to look a bit more at ways of doing so.
We will also tackle zero-hours contracts. In September, my right hon. Friend the Leader of the Opposition announced Labour’s plans to tackle zero-hours contracts where they exploit people. This would be achieved by banning employers from insisting that zero-hours workers be available even when there is no guarantee of any work, by stopping zero-hours contracts that require workers to work exclusively for one business, and by ending the misuse of zero-hours contracts where employees are, in practice, working regular hours over a sustained period.
Jonathan Edwards
As the hon. Lady is aware, Carmarthenshire county council—run, of course, by the Labour party—makes extensive use of zero-hours contracts across its portfolio of employment. Will she join me in strongly condemning its leadership for the manner in which it uses zero-hours contracts to exploit its workers?
Nia Griffith
As the hon. Gentleman points out, there is still a long way to go. There are still many things that we all need to put right. Carmarthenshire county council has decided that over the next two years the 1% pay increase should be weighted towards those on the lowest pay to try to bring them up to the living wage, thus penalising the people at the top, because that is a way of bringing in a measure of equality.
Yes, of course there is still a lot to do. We began with the Gangmasters (Licensing) Act and the agency workers directive, but there is still a lot more to be done on the whole issue of zero-hours contracts, including using procurement, in the same way as the Welsh Government, to tackle blacklisting. When someone is blacklisted—they can no longer get employment in particular industries because their name has been passed round from employer to employer—it can be a terrible blight for a family. As in Wales, through the power of procurement we will say that we do not want public bodies to use contractors that are blacklisting people. That will be a powerful provision to raise the living standards of all those being paid from the public purse, whether by councils directly or by contractors.
People are able to make choices and there are mitigating factors and different ways of tackling poverty. In Wales, for example, by 2015 the Welsh Government will have doubled the number of children and families benefiting from Flying Start, whereas in England 500 Sure Start centres have closed. The Jobs Growth Wales programme is ahead of target in enabling 4,000 young people a year to take on a job, mostly in the private sector. It has a very high success rate, with some 80% being offered permanent jobs at the end of their stay. The Welsh Government have also increased the funding of the pupil deprivation grant, giving it a £35 million boost to help those from the least well-off homes to achieve their potential.
Equality is also about making those with the broadest shoulders take the biggest load. That is why we introduced the 50p tax rate, and we would reintroduce it for those earning more than £150,000 per annum. It has now emerged, from figures produced by Her Majesty’s Revenue and Customs, that almost £10 billion more was raised by the 50p tax rate during the three years it was in place than was originally estimated by the Government in 2012. The shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has confirmed our support for a mansion tax. We have used the tool of a bankers’ bonus tax in the past and would do so again in order to provide thousands of job opportunities for young people. We would roll out a house-building programme of 200,000 houses a year to help bring down the price of housing. Labour’s Companies Act 2006 includes provisions the Government have refused to implement that would enable pensioners and investors to see how pension fund managers vote on remuneration packages, which would bring transparency to what is happening at the very top of the pay scales.
As prices continue to rise faster than wages, people are unable to cope with the expenses they face at the end of the month, which is making them ever more prey to exploitation by payday loan companies charging exorbitant interest rates and costs. That is why we have called for the Financial Conduct Authority to use its powers to implement, as soon as possible, a total cost cap on the amount that payday lenders can charge, in order to protect borrowers and ensure that Britain has a consumer credit market that works for everyone. Under pressure from Labour and other campaigners, such as Sharkstoppers and Debtbusters, the Government have now agreed to grant the newly created FCA the power to cap the total cost of credit through the Financial Services Act 2012 and to compel it to use that power through the Financial Services (Banking Reform) Act 2013.
As well as capping interest rates, we need to find alternative sources of loans to help people in difficult circumstances and to put further pressure on the payday loan companies and squeeze them out of the market. With some lenders making profits of as much as £1 million a week, my right hon. Friend the Leader of the Opposition has called for a levy on such profits in order to raise capital for alternative and affordable sources of credit such as the credit unions. That would give an additional £13 million to credit unions to offer more financial support to people who are in need of loans.
Guto Bebb
Like the hon. Lady, I am a great supporter of the credit union movement, so I was surprised to be informed by my local credit union last Friday that the funding from the Welsh Labour Government to the credit union movement in Wales will be reduced dramatically next year.
Nia Griffith
I am not aware of that, so I will not comment on it, but we certainly need to look at alternative forms of credit in order to stop people having to go to payday loan sharks. Given the explosion in the volume of payday loan company adverts in the past few years, we have also pledged to take action to exclude them from children’s programming in the same way as alcohol and gambling advertisements are excluded.
We very much support setting up a commission of inquiry to investigate the impact of the Government’s welfare reforms on the incidence of poverty. I, together with many Labour colleagues, spoke in favour of such a commission in the debate on 13 January, and I am wondering what the Government will do about that. I urge them to set up such an inquiry as soon as possible.