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Affordable Credit

Volume 448: debated on Monday 10 July 2006

In addition to the help that the Department gives via the social fund, we are now delivering the £36 million growth fund, which will increase the amount of affordable credit available via credit unions and community development financial institutions. That will help tens of thousands of people to avoid having recourse to doorstep lenders and loan sharks.

I thank the Minister for his reply. In my constituency, people do have problems with expensive credit deals, loan sharks and a credit union under severe pressure. What assistance can West Lancashire residents actually expect from the growth fund to promote affordable credit and assistance with credit unions?

The first growth fund contracts have been signed in the last few weeks and terms have been agreed with a further 20 organisations, including five in the north-west. Negotiations continue with all other organisations that were successful at the evaluation stage, including a further 12 in the north-west. I think that my hon. Friend can her tell constituents that the situation should improve, once the growth fund contracts begin to come into operation. They will lead to many more affordable loans being available to them, so they should be able to avoid the extortionate interest rates levied by the doorstep lenders and the loan sharks.

Does the Minister agree that one of the biggest problems is that arising from inaccurate information contained in many of the adverts that promote credit and other cards? Quite often, the technical terms disguise the actual annual credit and interest figure.

The hon. Gentleman knows that I have got previous on this—I campaigned very hard on the subject in my previous capacity, when I served on the Treasury Select Committee—and he will know that the Government have responded to some of the issues that the Committee raised and some changes were made under the Consumer Credit Act 2006, which has improved the situation. In my personal view, although this is no longer my ministerial responsibility, a great deal more is still to be done.

The recent Joseph Rowntree Foundation report on child poverty highlighted the importance of the availability of affordable credit. The three credit unions in Plymouth make their services known largely by word of mouth, and there are real concerns that they are not reaching all the people who are at greatest risk from loan sharks. Does the Minister intend any of the growth fund moneys to be specifically directed at publicising the services available and offered by credit unions nationally?

I can help my hon. Friend. What we are doing through the growth fund, of course, is receiving bids that come from credit unions and groups of credit unions, including some in her own part of the world. Many of them are including publicity campaigns in the bids that they put to us and in the contracts that we are negotiating with them. She is quite right to identify the problem, and I hope that the money we are investing with the growth fund will go a long way to improve the situation.