Global Economy
Tracey Crouch Excerpts(12 years, 9 months ago)
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Mr Osborne
The important difference between the hon. Gentleman's time in the Treasury and my time in the Treasury now is that we have the independent Office for Budget Responsibility making those announcements. It is not the Chancellor who makes those announcements from the Dispatch Box, for the very simple reason that by the end of the last Government, those Treasury pronouncements were so discredited that they were believed by absolutely no one. One of the important early decisions that we took to restore credibility in British public finances was the creation of the independent OBR, which makes those announcements.
Tracey Crouch (Chatham and Aylesford) (Con)
Will the Chancellor tell the House whether the UK economy is growing faster than the US economy this year, and if so, why?
Mr Osborne
In the first two quarters of this year the UK has grown more strongly than the United States, but that is not a source of comfort for the world, because we need a strong US economy as well, and we want to help to bring about the international framework that will enable that to happen.
Finance (No. 3) Bill
Tracey Crouch Excerpts(12 years, 10 months ago)
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Tracey Crouch (Chatham and Aylesford) (Con)
Having listened to the lengthy speech made by the hon. Member for Walthamstow (Stella Creasy) in the Public Bill Committee, and having checked Hansard to find that it was almost identical to the speech that she just made, I congratulate her on raising, yet again, both her profile and the issue of unscrupulous and high-cost lending. As she knows, she has a great deal of cross-party support on the underlying problem, but I fear that her new clause has little to do with identifying a workable solution, and I found her speech today disappointingly partisan.
I have been rather bemused by the hon. Lady’s recent Twitter stream, which refers to the campaign to persuade Members to vote for her Consumer Credit (Regulation and Advice) Bill. Perhaps she does not realise that we are voting today not on her Bill—although many of us may agree with its principles—but on amendments to the Finance Bill. For reasons that I shall give later, her new clause is fundamentally flawed.
The problem of vulnerable consumers being preyed on by high-cost credit lenders is not new. It did not suddenly appear following last year’s general election. It is a problem about which Members in all parts of the House have felt strongly for some time. My constituency contains areas of severe deprivation, and I deal regularly with case work relating to debt. I am active locally in trying to ensure that those with debt understand that there are good people to turn to, such as local credit unions and citizens advice bureaux, and that they need not rely on high-cost credit lenders.
Through the local media I have highlighted my own earlier debt problems, incurred when I worked as a researcher here in the House of Commons in the mid-1990s. I have received messages from local people saying that it was brave and courageous of me to be so honest, but I do not think that it was anything of the sort. I saw it merely as a way of removing some of the stigma from debt, and demonstrating not only that anyone from any background can get into debt, but that there are good people out there who can help to put those in debt back on the right track.
Increasing debt is an issue that should concern Members in all parts of the House. It, too, is not a new issue. I remember talking about the nation’s personal debt topping £1 trillion before I entered the House. For some time my local citizens advice bureau has been advising clients with debts totalling £1 million per week, including priority and non-priority debts, but the figure is now nearing £3 million per week. Unfortunately, Medway has a high repossession rate: on average, about 70 repossession hearings take place each week. In these worrying times, what we do not need are unscrupulous credit lending and, indeed, debt management companies taking advantage of those who are in financial trouble and at their most vulnerable.
The new clause proposes taxation measures as a means of clamping down on, or even stamping out, the industry. I fear, however, that the Opposition have not thought it through in any great detail. For a start, they have not addressed its unintended consequences. It is likely that any additional tax on the companies in the industry, just six of which control about 90% of the market, would simply be passed on to the consumer in the form of even higher rates. What is being proposed as a solution to the problem could exacerbate it by increasing the cost to the consumer and creating an even larger debt.
Sheila Gilmore (Edinburgh East) (Lab)
The new clause asks for a review and a report. It does not suggest that the proposed measures should be implemented immediately. I fail to see the detriment that the hon. Lady seems to have identified.
Tracey Crouch
The hon. Lady obviously did not listen to the Minister’s response to a point made earlier. As he said, a review is currently taking place. The new clause proposes
“a review of all taxation measures contained in this Act”.
I think that, on this occasion, the hon. Lady is wrong.
Andrew Percy
Surely any tax review is likely to come up with a suggestion for raising taxes. It is unlikely to propose that taxes should be cut. If that is on offer, however, I certainly do not intend to vote for a measure that would cut the taxes of the people whom we are discussing.
Tracey Crouch
My hon. Friend makes a good point. Whether or not the tax goes up following a review—and the hon. Member for Walthamstow will probably say that it will go up—the result will be passed on to the consumer.
Organisations such as Citizens Advice recognise that the problem of debt is not confined to the high-cost credit industry. It is also caused by other practices, such as irresponsible lending, the imposition of high contingent charges, and the mis-selling of debt management services. I am not a supporter of the high-cost credit industry, but a tax on one part of the sector would not only be anti-competitive, but would not address problems in other parts of the consumer credit market.
The simple truth is that the industry needs better, if not more, regulation. Although the House may not often hear Conservatives say that we need more regulation, a number of Government Members believe that in this context, and particularly in the context of debt management, it is the appropriate solution. We have met the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), and have told him that.
Duncan Hames (Chippenham) (LD)
The hon. Lady is right to refer to the need for regulation. What troubles her more, the profitability of high-cost lenders or the techniques that they use to entrap their customers? Does that not provide a clue to where we should focus any Government interventions?
Tracey Crouch
That is a good point. In fact, what troubles me most is the impact on consumers. As we have been told by Members in all parts of the House, these companies prey on people who are incredibly vulnerable, and we need to ensure that the industry behaves much more responsibly.
A response to the Government’s call for evidence on consumer credit is due shortly, and I look forward to the findings of the review. I have always had some sympathy for the proposal of a rate cap. However, it is interesting to note that Citizens Advice does not share the hon. Lady’s view, and nor does the money-saving expert Martin Lewis.
Stella Creasy
It is true that Citizens Advice opposes a cap on interest rates, but I think the hon. Lady will find that both it and Martin Lewis have been very positive about the proposal for a cap on the total cost of credit, which the new clause would allow to be investigated. I hope that the hon. Lady will correct the record accordingly.
Tracey Crouch
The total cost of credit involves more than just the high-cost lending industry, but the hon. Lady spent most of her speech talking about individual high-cost credit lending companies such as Wonga. We must find a focus, and the fact is that wider issues of consumer credit are involved. I hope that the review will come up with a solution on which we can all agree.
The Government are considering specific product regulation as part of their draft Financial Services Reform Bill. Under the proposals to establish the financial conduct authority, a new model of conduct regulation will be established that will use early and proactive intervention to ensure that consumers are protected. That is a far more pragmatic solution than the blunt instrument of taxation, which, as I noted earlier, could have the adverse and opposite effect of creating a greater problem.
Oliver Heald (North East Hertfordshire) (Con)
Does my hon. Friend share my concern about the fact that it is often very convenient, and made very easy, for a person to take out a loan? A door-to-door salesman may appear and try to build a relationship with someone. Part of the battle is to provide responsible institutions such as credit unions, and to ensure that people know how to contact them. I think that there should be far more advertising and signposting so that people know how to get in touch with their local credit unions.
Tracey Crouch
I met the members of Kent savers credit union on Saturday, and look forward to meeting members of the Medway credit union in the autumn. I am a keen supporter of credit unions, and I think that all of us here are responsible for ensuring that our constituents are aware of alternatives such as lending and debt management advice. Citizens advice bureaux also offer a fantastic service. We should take it on ourselves to ensure that the message reaches our constituents.
The House should know that there is a cross-party consensus on this issue, and that the consumer credit market—particularly the high-cost credit industry—is an area of concern. In Committee, new clause 11 was billed by the hon. Member for Walthamstow as a measure in line with nudge economics. While there are some taxes that have arguably altered behaviour, such as those on cigarettes, it is highly unlikely that a tax that could be passed directly to the consumer will halt the growth or the unscrupulous practices of the industry. It would be far better to concentrate on regulation rather than taxation, and it is for that reason that I urge Members to vote against the new clause.
Chris Leslie
I am sorry that the Financial Secretary has taken that attitude to the new clause, which is pretty innocuous in calling for a review. We have not put specific proposals in it, because we thought that in the spirit of cross-party working it would be useful to set up provisions to allow the Treasury and the OFT, working together in harmony, to work through the options and possible policy devices. Asking for a review on an extremely serious issue such as this is a bit like motherhood and apple pie; it really should not be objected to.
Tracey Crouch
Will the hon. Gentleman acknowledge that a review is already under way, and that all these issues are being considered as we speak? The new clause would serve only to delay the outcome of that review.
Chris Leslie
I must correct the hon. Lady. I know that there is a review of sorts going on, but it relates to credit card lending and high bank charges on lending. The letter that my hon. Friend the Member for Walthamstow (Stella Creasy) received in May from the Under-Secretary said that the high-cost credit market
“was not specifically included in the call for evidence”
for the current review. That was what the letter of 25 May said—from the same Minister, incidentally, who refused to meet my hon. Friend.
The Financial Secretary is far too relaxed about this issue, and the Government are not exercised enough about it.
Independent Financial Advisers (Regulation)
Tracey Crouch Excerpts(13 years, 5 months ago)
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Mark Garnier
Absolutely. The other group of people who will lose out because of the removal of these grey-haired sage IFAs will be the younger ones. Who will mentor the young, aspiring and highly qualified but short on experience new trainee? The FSA has no answer.
Let me turn now to fees and commissions. The FSA is further proposing that from January 2013 consumers will no longer be able to choose how their adviser is remunerated.
Tracey Crouch (Chatham and Aylesford) (Con)
Does my hon. Friend know of any survey that has been conducted of whether consumers have any appetite to pay fees for their financial advice?
Mark Garnier
My hon. Friend will not be at all surprised to hear that there are a number of surveys. Which? Undertook a survey that showed that 85% of people would prefer to pay fees, yet a survey by Harris Interactive showed that only 6% of the public said they would be happy to pay fees as opposed to commissions. That is a big problem, I think.
In future, customers will need to agree a fee with their adviser. That means that no longer will a client pay for advice via a commission charged on a transaction.
Mr McCann
I agree entirely. The measure will impact on small businesses, not the big part of the sector, and that is why the Financial Secretary should have been mindful of the commitments people have to make to gain qualifications in the sector. One IFA, in particular, heard the Minister’s comments and blogged:
“I’ve just spent 70 hours revision to pass RO1. Nobody has paid me for my lost time. Nobody has asked me 1 of the 100 questions in the exam for the last 22 years. This guy”—
the Financial Secretary—
“needs to get in the real world.”
That leads me to my main contention: the proposals and timetable to increase the qualifications needed to participate in this sector of the economy are not sensible. Exams and qualifications in the sector are not new, but the proposal to introduce new rules that effectively force people to re-sit exams without taking account of their experience or, most importantly, clean regulatory record is patently unfair. Moreover, the sector will not be able to absorb the cost of revalidation; instead, as other contributors have said, it will be passed on to the customer in the shape of higher fees.
Others have also mentioned that many professional groups in the United Kingdom are not asked to revalidate, so I seriously wonder why we are trying to isolate this particular sector. Why, as other hon. Members have asked, do we want to take away that valuable experience from that important part of the economy?
Our time is limited, and there is a limit of six minutes on each contribution, but I too want to mention one individual who has contacted me in the lead-up to the debate. He is an old friend of mine, a next-door neighbour, and it is important that we bring our experiences to the House when we discuss such issues. Jim Hunter sells financial products, and he contacted me, but he did not complain about the need for transparency, fairness or greater clarity. In fact, having done business with Jim, I know that he had all those ingredients many years ago. Indeed, I am sure that many people who have contacted hon. Members are in exactly the same boat.
Jim was talking to a colleague recently at a meeting. The gentleman is 60 years old, with more than 30 years’ experience in the industry, and if he sat the proposed exams he would be 63 before he finished them. Jim explained that that person would be lost to the industry and have to retire before his time, because he would not study at that time of his life. There are many people like that, trying to make a living for themselves in difficult times, and that ability to earn a living in this important part of our economy will effectively be taken away from them without any real benefit to the economy itself.
Tracey Crouch
Does the hon. Gentleman agree that, although the RDR was introduced with every good intention, further work should be suspended until there has been a full cost-benefit analysis of its impact on the IFA community and, indeed, on consumers?
Draft EU Budget 2011
Tracey Crouch Excerpts(13 years, 7 months ago)
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Tracey Crouch (Chatham and Aylesford) (Con)
I want to begin my short contribution by stating firmly that I am not anti-European. Much to the horror of many of my colleagues, I am also not a member of the “Better Off Out” campaign. I hasten to add, before my hon. Friends have a heart attack, that I am also not an overt pro-European. I simply recognise that our membership of the EU needs to work in our national interest and provide value for the British taxpayer.
In my constituency and across the country, our membership of the EU vexes people. Typically, they are resentful of its bureaucracy, centralised structure and perceived unaccountability. They cannot understand why so much of our country’s decision-making process has been shifted to Brussels, when it should be here. With that in mind, I welcome the Foreign Secretary’s recent announcement that a sovereignty Bill would be introduced, allowing authority to remain in our Parliament.
On the topic of today’s debate, the draft EU budget will rightly be subject to close scrutiny. At a time when our country and Europe as a whole are enduring one of the harshest economic climates for a generation, the European Commission has proposed a 5.8% increase in the draft EU budget, demanding an increase in net contributions of staggering amounts from its member states. The UK alone can expect to pay nearly £2 billion more in the coming year. How many schools, hospitals, doctors, teachers and nurses could £2 billion pay for? In the light of the scaling back of departmental budgets in this country most, if not all, will find it difficult to reconcile the two.
In order to put the draft budget and its proposed increase in context, we must be clear about what preceded it and our current spending commitments. It is widely accepted and entirely accurate that the previous Government mismanaged the negotiations of the previous EU budget in 2005, leaving us as a country contributing a significant amount of money with a poor rate of return. Our contributions exceed those of France by some 20%, despite our economy being only a fraction larger than that of France. Our rebate, so generously relinquished by the previous Government, is left greatly reduced. We still have a common agricultural policy commanding a significant portion of the EU budget, yet British farmers receive a disproportionately small amount of the overall funding.
To ask the British taxpayer to fund a further increase to an already over-inflated and questionable contribution would seem a clear affront. In addition, it poses an interesting and important question. At a time when we are asking British taxpayers to tighten their belts in the national interest and driving down costs where necessary, is it fair to ask for belts to be loosened again for an excessive EU budget? In my constituency, Chatham and Aylesford, with two of the most deprived wards in the UK, it will be painfully ironic to many that as necessary cuts and trimming of our public services are carried out in the coming months, we are locked into spending commitments elsewhere that are not always in the nation’s interest.
I share the Government’s drive to get value for taxpayer money in public services and across Whitehall after years of waste and inefficiency, which is why we must ask ourselves whether the EU is prepared to do the same. I admire the Government’s commitment to keeping their own administrative costs to a bare minimum, but in the original draft EU budget published in April I was horrified to see a proposed increase of nearly 4.5% in EU administrative costs alone. I hope this will be looked at throughout the review. It clearly highlights the mindset of those in Europe and raises serious questions about whether they share our Government’s commitment to achieving value for taxpayers’ money.
I welcome the Government’s stance in seeking to freeze cash payments to the EU and agree that this would be the most desirable outcome. The UK’s membership of the EU should be like any club transaction—you get what you pay for. That clearly was not the approach adopted by the previous Government, and once again the taxpayer has been left to foot the bill.
However, in the unprecedented economic climate that we have endured and are faced with, the EU is in the unique position to promote and contribute to the economic recovery. The EU’s mandate ought to be centred on filling a transnational role, tackling issues affecting Europe as a whole such as climate change and energy security, and naturally its budget should reflect that. It is regrettable that the new Parliament is restricted to voting on the basis of the previous Government’s ill-advised negotiations. Not only did the previous Government bankrupt this country, but through the EU budget their legacy lives on.
Our Government is not alone in opposing the rise in the EU budget. Denmark, Austria, the Czech Republic, Finland, Sweden and the Netherlands all share our concerns. I therefore urge the Government to seek to form a consensus with other member states who share our concern, throughout the review of the budget. With UK Departments and services under severe financial pressure, and constituents throughout the country facing unprecedented strains on the pound in their pocket, I cannot see how we can justify increasing our contribution to the EU when it, in return, refuses to make similar spending reductions.
Equitable Life (Payments) Bill
Tracey Crouch Excerpts(13 years, 8 months ago)
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Tracey Crouch (Chatham and Aylesford) (Con)
As requested, I shall keep my contribution short. First, I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on her excellent maiden speech, which was made during an extremely important debate for her and other Members’ constituents.
I have listened to the debate with considerable interest and should say at the very outset that I congratulate the Minister, who has done more for Equitable Life victims in his first 10 weeks at the Treasury than the last Government did in 10 years. The Equitable Life saga is comparable to an epic Shakespearean tragedy; the only difference is that even in Shakespearean tragedies there is an element of comedy. There is nothing funny about the Equitable Life story—it is a sad, tragic and complex affair, littered with incompetence and failure, but most of all with personal loss and hardship.
My constituency is no different from any other represented in the House; many people there are affected by the society’s failure. I am told that there were 470 Equitable Life policyholders in Chatham and Aylesford at the time of the collapse. That figure, however, accounts only for those constituents who held Equitable Life policies solely; it does not incorporate those who made additional voluntary contributions to their pensions. The revised figure, including those who made additional voluntary contributions, could be up to three times greater.
Unsurprisingly, I, like many Members here, have been contacted by policyholders, some of whom have lost tens of thousands of pounds and are now suffering financially as a consequence. The overwhelming feeling among policyholders in my constituency is one of injustice. They feel let down enormously by the last Government, who showed very little interest in trying to compensate their losses at a time when, to be frank, full compensation could have been afforded. Now, with the coffers bare, it is up to the coalition Government to try to provide fair and transparent payments.
Although I feel for the Minister, who is in charge of conjuring up money that does not exist, it is the victims in my constituency for whom I reserve my sympathy. They are the ones who have lost their savings.
Tracey Crouch
If my hon. Friend does not mind, I shall press on, as time is short.
Those victims put their faith in a financial institution to look after their money and in a regulatory system to protect it, but both failed them and they now face a very different retirement from what they had planned. I have always felt that there was an assumption that every person who had invested in Equitable Life was wealthy and that therefore their loss did not matter so much. That is simply not true. I have had letters and e-mails from people who were never rich, but had just sensibly put money aside, as Governments want them to, on a guarantee that in the end turned out not to be worth the paper that it was written on.
Sadly, it is estimated that nationally 7% of Equitable Life policyholders have passed away since the collapse. Applied to my constituency, that statistic equates to 33 policyholders. Thirty-three does not sound like a large number, but it is important to remember that as a direct result of the previous Government’s wilful inaction, 33 people have not lived to receive compensation for their loss. I welcome the Minister’s previous comments on the provision of justice for the deceased and I urge him to ensure that it, too, is fair and transparent, for the sake of the surviving family members.
The Bill is, I appreciate, one that enables the technical provisions that, fundamentally, will provide compensation to those who lost money in the collapse of Equitable Life. It does not provide a figure for compensation. To be honest, I do not like that, although I understand it. However, I want to take this opportunity to urge the Minister to be as generous and creative as he can possibly be on this matter. The country might be bankrupt right now, and full compensation is impossible. But in the future, when the economy has returned to full health, further payouts could be authorised. I am not asking him to decide today on future payouts; I merely want him not to close the door on the suggestion.
I congratulate the Minister on his progress. I will be supporting the Bill in the House tonight. I simply ask him to remember the human cost of this tragedy and to do all he can to ensure that fair and transparent compensation is exactly that.
Banking Reform
Tracey Crouch Excerpts(13 years, 10 months ago)
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Tracey Crouch (Chatham and Aylesford) (Con)
I welcome the Minister’s statement on these much-needed reforms. Will he tell the House how the reforms set out today will affect the insurance sector, which shares the same regulatory regime as the banks but clearly operates very differently?
Mr Hoban
My hon. Friend makes a good point about the role of insurance. In this crisis, we must ensure that we distinguish between what has happened to the banking sector and the relative success of the insurance sector in withstanding the storms of this crisis. It is an important sector to the UK economy and a huge wealth generator. We need to ensure that the insurance sector, when it comes within the remit of the PRA, has the right sort of prudential regulation that recognises its strengths and challenges. It will of course be regulated as regards its relationship with consumers by the CPMA.