Financial Guidance and Claims Bill [Lords] — House of Commons, 2018-01-22
Topic: Labor
Richard Michael John Ogilvie Graham (Conservative, Centre-right): It is a pleasure to contribute to the debate. It is also a pleasure to follow the hon. Member for Bristol North West (Darren Jones), who spoke movingly about the importance of respite and the period for the repayment of debts. However, I regret the party-political tone of some elements of his speech. In my constituency in the city of Gloucester, which is not very far from his, 6,000 jobs in business were lost under the last Labour Government. Youth unemployment rose spectacularly, and living standards almost collapsed. The hon. Gentleman talked about a Government who look after the fortunes of the many and not the few. He should come and meet the 8,000 new apprentices in Gloucester, where youth unemployment has fallen by 85% over the last eight years. The hon. Gentleman also accused my right hon. Friend the Secretary of State of describing people who went to food banks as suffering from ineptitude, and I believe that his remarks were completely out of order. I hope that, when he has had a chance to study the record, he will in due course at the very least withdraw that extremely personal comment, which was alarmingly in tune with something that the shadow Chancellor appeared to give air to when he referred warmly to those on his side of the House who wanted to "lynch" the new Secretary of State. I believe that all those remarks are totally out of keeping with the tone that we expect in the House Let me now turn to a matter on which there is cross-party consensus, namely the Bill’s Second Reading. The Bill has two parts, and I shall comment on each in turn. The first is clearly designed to rationalise three separate bodies offering Government-sponsored guidance services into a new single entity, the single financial guidance body—not the snappiest, most memorable name, but it marks an important moment in the consolidation of guidance I have direct experience of two of the three bodies that are being merged. The creation of Pension Wise was a very well-intentioned move by the Government, but there is no doubt that take-up has been much too low, and a different approach is therefore required. When I saw a Pension Wise adviser nearly two years ago, I was impressed by the quality of her advice. I do not think that that was a one-off experience, and I believe that those who have had the chance to access Pension Wise would agree I have also seen and heard the Pensions Advisory Service in action. The quality of its service and advice is powerful, and its model—like that of Citizens Advice—is one of recruiting volunteers with relevant sector experience. This represents good value for money for the taxpayer as well as giving the volunteers a great sense of purpose in giving something back. That is the secret of so much volunteering. I hope the Minister will reassure us today that that aspect of the Pensions Advisory Service model will be continued in the bigger world of the SFGB and, ideally, expanded The financial sector is a popular bogeyman, especially among Opposition Members, but I hope that those on both sides will join me in recognising and appreciating those who have given their time and knowledge voluntarily to the SFGB’s three predecessors, and in wishing the Economic Secretary to the Treasury, my hon. Friend the Member for Salisbury (John Glen), who is in his place, success in working with Her Majesty’s Treasury to set up the new body. The Pensions and Lifetime Savings Association has described this as absolutely integral to the success of pensions freedoms The Bill allows for a focus on the weak and vulnerable—something in which I know the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), strongly believes. I hope that he will say more about his definition of those terms and about how the SFGB will focus on them. Part of that will involve identification; part of it is about access I want to sound a note of caution on one aspect of the Bill, and my approach here is slightly different from that of the hon. Member for Bristol North West. I do not believe that we should be too constrictive about the guidance that will be given. Indeed, I differ gently from the otherwise excellent speech of my hon. Friend the Member for East Renfrewshire (Paul Masterton) on this point as well. We are at risk of assuming that people who wish to take money from their pension pots will spend it on things that might not benefit them or their families. At a time when levels of household debt are high, with a total of £1.9 trillion, there is a question mark over how their funds should be used. The levels are not as high as they were under the last Labour Government, when levels of household income indebtedness rose from 93% to 158%, but they are still too high The early evidence seen by the previous Work and Pensions Committee suggested that withdrawals were mostly being used to reduce family debts, which for most people makes good financial sense. Perhaps the Minister will update us on whether that trend is still broadly true. It was the reason why the Select Committee took the view in 2016 that we broadly supported the pension reforms, and it is also relevant to the FCA’s review of retirement outcomes, which will happen in the first half of this year, and to the proposed ban on cold calling There is another point to make on the savings levels of pensions. Under this Government, following the coalition’s introduction of auto-enrolment, which had cross-party support, the percentage of those working who are now saving for their retirement has risen to 78%. That is a huge step forward, but the Minister will also know that 13% of adults still have no savings. That statistic raises the question of how we can stimulate lower earners—those earning under £10,000 a year—to enter an auto-enrolment scheme, perhaps through enhanced incentives. I recognise that that is not an issue for this Bill; it is a matter for the White Paper that has been promised in the spring. It is, however, an issue relating to debt, pensions and savings and therefore part of the same general concern that we are discussing this evening. It is therefore related to the discussion on part 1 of the Bill, and anything the Minister can say to indicate that it is being closely considered will be welcome The second part of the Bill deals with enabling the Government to ban pension cold calling, which we all welcome. I know that the Opposition and the new Select Committee have reservations about the speed of Government action, and I hope that the Minister will reassure us that we will not have to wait until the autumn of 2020 for a decision on the introduction of such a ban. If, after three consultations and the upcoming FCA report, the Government decide that this is the right thing to do, surely we will be able to move faster. Dealing with claims management companies can be an emotional experience for many of our constituents. The proposal is to shift responsibility for them from the Ministry of Justice to the FCA and give the authority the power to impose a cap on the fees that CMCs can charge. I hope that it will vigorously implement that new power, and I suspect that that hope is widely shared The latter part of the second part of the Bill has been covered in some detail by several Members. It covers having a repayment plan and a period of respite to deal with accumulated debts. We know from the experience of our constituents that good debt advisers can help with these issues, and that their negotiations with creditors on extending repayment periods have made a huge difference to many people. So why not look at this more institutionally, in just the way that the Bill allows? That will be an excellent step forward, and I look forward to hearing more from the Minister on how that will be taken forward The Bill has been widely welcomed by charities and the financial sector, and it has cross-party support. That is a strong position to start from, and I strongly welcome the reforms. I hope that my hon. Friend the Under-Secretary of State for Work and Pensions will be able to shed some light on the questions that I have raised on the role of volunteers in the single financial guidance body; the identification of and approach to the weak and vulnerable; an analysis of what pension withdrawals are being used for; how we might expand the reach of auto-enrolment to increase the savings level in the nation; the introduction of a pensions dashboard, which he mentioned tantalisingly briefly; and an early decision on how and when to ban cold calling. These are all extremely important issues, and I believe that they offer the Government an opportunity to go yet further in helping many of our constituents, through the Bill’s twin aims of reducing scams and improving guidance in order to enable better financial decisions to be made.