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Household Debt

Volume 646: debated on Tuesday 11 September 2018

The Government are taking a proactive approach to supporting boroughs and enabling them to manage their money well and help those in problem debt. We reformed consumer credit regulation in 2014, and I am now working on setting up a single financial guidance body to help those who are in difficulties.

One in eight workers is living in poverty, and the average worker is earning £25 a week less than they were 10 years ago. Many of my constituents who are working all the hours they can find still have to come to my office for food bank referrals and debt advice. Does the Minister accept that the rhetoric is talking down the people who are working as much as they can but still living in poverty?

No, I am sorry; I would not accept that. I accept that this Government are committed to doing all they can for hard-working people. That is why we have raised the national living wage, which means £600 for those who are working full time. I am sure that the hon. Lady would also want to welcome the wage data that have come out today.

According to the Money Advice Service, the proportion of people in Greenwich and Woolwich who are over-indebted is higher than both the UK and the London averages. I know from my advice surgery that a significant amount of that is down to the behaviour of rip-off lenders. What more will the Government do to clamp down on predatory lending?

The primary responsibility for rogue lending lies with the Financial Conduct Authority, and its report at the end of May brought in a number of measures, including a cap on rent to own. I accept that more can be done, and that is why I am working hard with my colleague, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), on the financial inclusion forum to look at the expansion of alternative affordable forms of credit for the poorest in our society.

May I urge the Minister to take firm action against people who exploit the most vulnerable in our society? I refer particularly to loan sharks, payday lenders, rent-to-own outfits such as BrightHouse, rip-off bank overdraft fees and exploitative doorstep lenders. Will he be firm, to ensure that we protect the most vulnerable?

I am happy to give my hon. Friend that assurance. I have deep conversations on this matter with the Financial Conduct Authority regularly. I also met representatives of Scotcash and the credit unions over the recess to see what alternative supplies of affordable credit are available.

Under Labour, household debt rose in every year bar one, but the Office for National Statistics now shows that, since 2010, the number of children in workless households has fallen by a staggering 637,000. Does that not demonstrate the huge contrast between the economic achievements of this Government and the track record of the Labour party?

I thank my hon. Friend for reminding us of those facts. During the Labour Government, there was also an increase in the welfare budget of 65%, or £84 billion in real terms. We have to spend money wisely, and my hon. Friend’s observations are welcome.

British families are currently spending considerably more than their disposable income and, as a consequence, debt levels in relation to income are rising back to crisis levels. At the same time, France and Germany have big savings surpluses. Which is the most sustainable of the two options?

What is sustainable is that real household disposable income is up by 4.6% since 2010. I acknowledge that there are those who are experiencing challenges, and that is why I have set out the measures the Government are taking and are determined to take to assist those in a vulnerable position.[Official Report, 9 October 2018, Vol. 647, c. 1MC.]

The way to combat poverty and generate prosperity is to create jobs and raise wages. In that context, is it not welcome that a combination of the massive increase in the minimum wage and the rise in the personal allowance since 2010 have increased the net wages of someone working on the minimum wage by 39% when CPI during that period has been only 19%?

My hon. Friend is on top of the figures, as always, and sets out the positive story that this Government have to tell, but there is no room for complacency. This Government are committed to getting as many people back into work as possible, and we welcome the current record figures.

18. Kingston upon Hull has the third highest levels of household debt in England and Wales while Kingston upon Thames has the second lowest. Why does the Minister think that is? What is he going to do about it? (906795)

There are different profiles of debt across the country, which is why the Government are committed to making interventions through the Financial Inclusion Forum to expand affordable credit and to assist those who are in difficulty. There is no room for complacency, and the Government are committed to assisting where necessary.

Does the Minister share my view that one of the best ways of helping hard-working families is to enable them to keep more of the money they earn by keeping taxes low? Will he confirm that this Government will continue to keep taxes as low as possible for working people?

This Government may say that they are taking action on household debt, but the fact is that they rely on that excessive debt for economic growth. The Office for Budget Responsibility says that nine tenths of all GDP growth last year is attributable to household consumption, which is being fuelled by unsustainable levels of debt. Instead, we should raise investment, both public and private, which in the UK is well below the average for a developed country. We have plans to do that, but will we see any such proposals from the Government in the forthcoming Budget?

The Chancellor has set out in successive Budgets our commitment to invest in this economy with the national productivity plan. We must recognise that we need affordable investment, and we have found out over the past 24 hours that the Opposition’s plans are confused. If £500 billion is just a down payment and the start of the investment, where will it end? Is that affordable?

Let us have some facts. The OBR predicts that unsecured household debt will reach 47% of income by 2021. The last peak was 45% in 2007. Families are using credit to pay for essential items. The people who are going to food banks are often in work, because work is not paying. What is the Treasury going to do? Will Ministers admit that austerity has created this mess?

The Government are creating the conditions for growth and raising the national living wage. When I visited Glasgow just a few weeks ago, it was encouraging to see the constructive way that the 1st Class Credit Union and Sharon MacPherson of Scotcash are working with the poorest to help them when they are in difficulty.

I am really pleased that the Chancellor said that he will consider visiting a local pub. Will he consider coming to the Community Food Initiatives North East food bank in my constituency, which has today called for more food because its shelves are empty? If he was to come and visit a food bank such as CFINE’s, he would find out at first hand the effect that Tory UK Government policies are having on individuals up and down the country. The Minister cannot stand there and say that employment is up when the reality is that people are poorer than ever.

I will take no lectures from the hon. Lady about food banks. The Trussell Trust was founded in my constituency. I have a dialogue with the charity, which has done a great deal to assist many people up and down the country, and I am proud of its work.