Skip to main content

Westminster Hall

Volume 704: debated on Tuesday 23 November 2021

Westminster Hall

Tuesday 23 November 2021

[Mr Laurence Robertson in the Chair]

Black Friday: Financial Products

Before we begin, I remind Members that they are expected to wear face coverings when not speaking, in line with current Government guidance and that of the House of Commons Commission. Members are asked by the House to have a covid lateral flow test twice a week if coming on to the parliamentary estate, either at home or at the testing centre in the House. Will Members please also give each other and members of staff sufficient space when seated and when entering and leaving the room? I would also like to remind the Committee that today there was a mass for Sir David Amess, who was a distinguished member of the Panel of Chairs; he is much missed. I call Stella Creasy.

I beg to move,

That this House has considered promotion and regulation of financial products on Black Friday.

It is a pleasure to serve under your chairmanship today, Mr Robertson. May I associate myself with your comments? I had the honour and pleasure of taking part in debates chaired by Sir David. He was always a fair and very fun Chair to have around; we shall miss him terribly.

I want to be clear from the start that I do not think that anybody in this room is green—green in the sense of being the Grinch. This is not a debate about whether people should be able to spend money, which is a personal decision. As we come up to Christmas, it is important to recognise that for many families this year will be an extra special one, given what we have been through over the past two years. I recognise that it is very easy, when we talk about consumer credit, to sound like the Grinch, as though we are saying it is all so complicated and difficult and that nobody should spend any money. Let me be clear that it is not my intention to come without good Christmas cheer.

Indeed, I note that many retailers are taking advantage to promote the idea that this is the year that one should really indulge and go all out. Tesco tells us, “Don’t stop me now,” when it comes to shopping. Argos tells us, “Baubles to last year,” and Debenham’s says, “Christmas like never before.” Aldi tells us not to be a Scrooge—at least, I think that is what they are telling us with the Christmas carrot. Sports Direct is more direct than ever, telling consumers to “Go all out!”

My point is more simple. We want families to be able to celebrate with their families and not be worried. One thing we know that causes the most worry to families is money. We are a nation that has not done as well in the G7 as some others, but we are second highest among the G7 countries for household debt. That is one competition we do not want to win as a nation—but we do. We have always been more comfortable with borrowing and credit than other nations.

My point in calling the debate on Black Friday and the run-up to Christmas is to recognise that this is a time when for many families getting into debt seems the right thing to do, because it is about being able to treat loved ones. When we have had so little time with our loved ones and been so apart—I hope we can be together this year—being able to do that feels even more important. As a result, the risks that families face are even higher.

I recognise that the Minister cares passionately about the subject and has done a lot of work on it. My call is about how we will help those families have a good Christmas, so that the new year is not a time of further worry and distress caused by debt. The honest truth is that as much as people talk about the pandemic as a time when some families have paid down debt and saved money, since they have not been able to go on expensive foreign holidays, for many others it has been a time of further financial distress. I used the word “further” critically, because we are a nation that has a problem with household debt, and has had that for some time prior to the pandemic.

Prior to the pandemic, Experian found that 40% of people would not be able to pay their mortgage or rent if it increased by £50 or more a month. Just an extra £50 and they were sunk. A total of 10% of this nation was constantly overdrawn, and that figure has remained pretty stable for many years. As many as 2.8 million people have persistent credit card debt, which means that they are paying more in interest fees and charges than in paying off the debt.

For some people in this nation, saving is a habit, while for others it will always be an ambition. Some 34% of adults have never had any savings or have savings of less than £1,000. There were many people in this country who were struggling financially before the pandemic. What the pandemic has done for that group of people—people for whom a foreign holiday was never a possibility —is throw into sharp relief just how difficult their finances were. Many of those are in precarious jobs, such as in retail or hospitality, and they were hit even harder when the pandemic came.

I thank my hon. Friend for giving way. I place on record her excellent background in holding to account Wonga and a number of other loan sharks through other Parliaments, as well as work on other topics she is well known for. This issue is particularly important right now, as we come out of coronavirus. Is my hon. Friend aware that Citizens Advice found that 40% of buy now, pay later customers have been unable to pay for essentials such as food, rent or bills? This is a particularly difficult time as people come back into work, with the insecurity of work underlined in many of our workplaces, and bills—particularly fuel bills—going through the roof.

My hon. Friend is absolutely right. If both Scrooge and the Grinch are misunderstood, I very much believe that buy now, pay later companies could become the true villains of Christmas rather than them —[Interruption.] It might be tenuous, Minister, but it is a link.

I recognise that during the pandemic, debt has become a lot worse for many people; when I say a lot worse, I mean it is less likely that they will ever be able to get out of it. Many people live with debt, and while sometimes it is a debt they can manage, an awful lot of people are drowning, not waving.

Data from StepChange is clear that as a consequence of the coronavirus lockdown period, 2.8 million people have fallen into arrears: most frequently on utilities, as my hon. Friend the Member for Hornsey and Wood Green (Catherine West) said. That is on fuel and water, on keeping the basics of the house going. Some 820,000 people have fallen into arrears on their council tax—a debt to the public sector—and about 500,000 people have fallen into arrears on their rent. We have seen a massive explosion in the number of people who will never own their own homes and will always be in the rental sector, particularly in areas where the cost of living is particularly high. My constituency has the 10th highest level of child poverty in the country, and that is because of the cost of living and the cost of renting in my local community. We know that those people, who have struggled to stay in our area, were particularly hit by the restrictions on their working practices in lockdown and have now found that they simply cannot afford the roof over their heads.

Little wonder that nearly 4 million of us have borrowed to make ends meet during the lockdown period, with 1.7 million often using a credit card, 1.6 million using an overdraft and nearly 1 million using a high-cost credit product. That borrowing is not, perhaps, the stereotype of borrowing in order to buy goods—going back to my original point about people wanting to treat a family member. Instead, people have borrowed during lockdown to keep things going: to keep food on the table; to keep their car working, so that when they can go to work, they can get to work; and, perhaps, to pay for heating, especially in the cold weather.

It is striking that there has been a 267% increase in the number of consumer county court judgments issued. Those numbers were depressed by the covid forbearance measures. I recognise that schemes such as the furlough scheme and the self-employment income support scheme helped to mitigate the impact of that. My point when talking about consumer debt and consumer credit is that we are coming out of a period when many people were vulnerable anyway because of long-standing household debts, and that those debts have been made a lot worse. Add into the mix the fact that we expect those people to spend money and help to get our economy back on track. It does not take a rocket scientist to recognise that at the heart of that mix is something very potent that could lead to real poverty and destitution for many people.

I congratulate my hon. Friend on all the work that she has done on this issue, as mentioned by my hon. Friend the Member for Hornsey and Wood Green (Catherine West). Let me pick up on the point my hon. Friend the Member for Walthamstow (Stella Creasy) is making very powerfully about people who get into debt and feel pressured into buying things for their family and friends, especially because this is the first time for a while that they can celebrate Christmas properly with family. Recent research by Citizens Advice, which I have seen, found that 39% of people who have opted to buy now, pay later online did so without realising that they were signing up to a high-interest loan. That lack of transparency is very concerning to me. Does she agree that with pressure on our constituents to make purchases online before the products are likely to rise in cost before Christmas, the Government should set out what they will do in the coming days and weeks to make sure that people know exactly what they are signing up for when they take out a buy now, pay later product?

My hon. Friend makes her point incredibly well and she will not be surprised to learn that, yes, I absolutely agree with her. Indeed, it is striking that just before the pandemic hit we had the first year in this country when more purchases were made online than in bricks-and-mortar shops, and of course during the pandemic people’s switch to shopping online has become even starker. The state of our high streets is a debate for another time, but we have all seen that change and I do not think that it will go backwards. People’s comfort with shopping online had already been set in place before the pandemic hit; now, for most people, that is the first place that they look, rather than the last.

In 2020, 9 million people were forced to increase their borrowing to cope with the pandemic. That is a phenomenal statistic. The press and media have been full of people paying down their debts, and the silent minority of people for whom debt has increased have not been heard. Today’s debate is about that group of people, and what support and advice we are giving them, because, as my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) said, being able to treat our family members, especially when we have been through such tough times, becomes even more important for everyone. That means that we must ensure that everybody can access credit in a fair and affordable way.

My argument with the Minister today—he will know it, because we have been having it for many years—is about what more we can do to ensure that there is a fair and level playing field, that consumers are armed with the best information and that companies cannot exploit the situation in which there are so many people in our communities who are drowning in debt and will never get out of it. They will always live with a level of debt that might be exacerbated so that one single thing can tip them over into a financial crisis, as opposed to just a financial meltdown, which is what they might be in right now without realising it. Indeed, many of us may have had the experience of talking to people in our constituencies who say, “Well, I don’t have any debt”, and then we ask them if they have a credit card and they say, “Yes, of course”, as if a credit card is not debt.

My hon. Friends the Members for Hornsey and Wood Green and for Hampstead and Kilburn are right to prefigure the particular type of debt that I am concerned about. The Minister knows that I am concerned about it and I know that he agrees with me that there is a problem with this type of credit, which needs to be regulated. My point today about the buy now, pay later industry is that there are echoes of previous examples in our communities where new, or relatively new, forms of credit that might have seemed niche when they first came to the UK market explode very quickly, become commonplace among millions of people and, without proper regulation or scrutiny, cause many more people to get into debt as a result. We saw that with the payday lending industry, which exploded in the UK in the early 2010s, and the honest truth is that it took politicians from all sides too long to recognise just how much damage could be done by a high-interest loan.

Those in the buy now, pay later industry will say that they are not a payday loan. Indeed, they are not—they are not capped, for a start, which is one of the things that helps to protect people from getting into debt through a payday loan. Buy now, pay later companies will say that they do not charge interest to consumers, so we should not view them in the same way as payday lenders—that this is apples and oranges. But both types of high-cost credit—they are high-cost credit, because they come with late fees if people do not pay them back on time—share a similar marketing tactic, which is about forming a habit. It is about getting people to see them as the main way to make ends meet; the main way for people to deal with having too much month at the end of their money.

Whereas the payday lender said, “We’ll give you a short-term loan and you’ll pay it back very quickly, and you’ll never notice, and it will just tide you over”, the buy now, pay later companies say, “Spread the cost. It will make it much more manageable, and you will be able to get the things that you need at the time that you want to.” Let me be very clear that for some people, there may well be a perfectly reasonable use of buy now, pay later, in the same way that for some people there is a perfectly reasonable use of a payday loan. The problem is that for many people buy now, pay later is a form of credit that they cannot afford, because they cannot afford the goods in the first place.

Experian data shows us that 30% of people using buy now, pay later say they use it for items that they otherwise could not afford, and in an environment where inflation might top 4%, where wages have struggled to keep up and where we have a cost-of-living crisis, that is pouring fuel on to the fire for many people and the debt problems that they face.

For those who may not be familiar with buy now, pay later, it is a simple premise. The payments are spread over a number of weeks or months with these companies, and there are variations of the same model. What does that mean for a consumer in practice? A £100 pair of trainers will, perhaps, suddenly become £25 at the point of sale, because the £75 will be paid off at later points throughout the year to recoup the cost. Crucially, the consumer is not officially paying the fees, because the retailer pays to use the service, although one innovation we have noticed in the market in the last year alone has been the move to be able to allow the company to have a direct relationship with the consumers. What they call a one-time card can be created and purchased from a website without the retailer ever being involved. That in itself is problematic, because it prompts the question of how they are deciding what someone can afford to pay.

Let us stick with the original business model. How these companies make their money is very simple. When a £100 pair of trainers suddenly looks as if it only costs £25, people think, “Well, I might buy the trousers and jacket to go with it, because I thought I was going to spend £100 today, and I’m only spending £25”. On average, consumers spend 20% to 30% more when they can spread the payments. For the retailers, it is worth paying the fees of these companies, because people will spend more and they will get more purchases from them.

Many retailers are very up front about that. It is a massive part of their forthcoming business strategy, particularly in relation to Black Friday and Christmas, to encourage consumers to use buy now, pay later because they will end up spending more than they would have done if they had used another form of credit. I reiterate: for some people, that may be perfectly reasonable. They are spending future money, but they have that future money, so it is an acceptable way to do it. They can splash out this Christmas knowing that pay packets in January, February and March will cover the cost. However, a large group of people is spending money that they simply do not have and getting into debt. As my hon. Friends the Members for Hornsey and Wood Green and for Hampstead and Kilburn have pointed out, because this is a new form of credit, many people do not realise it is a form of credit and what can happen if they do not pay back. The late fees, the credit checking, the credit reference agencies and the debt collection agencies are all part of the mix and experience of using these companies.

In the pandemic, spending on buy now, pay later has gone up 60% to 70%. For some age groups in this country now, buy now, pay later is used more than credit cards. It is a revolution in how we use credit in this country and it has gone relatively unnoticed, except by those who cannot afford to pay and have ended up with a big hole.

My hon. Friend is making an excellent argument. Does she agree that the quality of financial education in the UK is not what it should be? The 60% to 70% increase in debt from these sort of products would primarily affect a younger age group to begin with, because of their propensity to use the internet. Does she agree that much more needs to be done on financial education, hopefully led by the Treasury and spread across the appropriate level of education online?

My hon. Friend makes an important point about financial education. I am pleased to see it is now part of the curriculum. She is also right that a cohort of people who did not have financial education are absolutely at the forefront of using this form of credit. Half of all online shoppers aged 24 to 35 have used buy now, pay later. What is challenging is how often they are using it.

If people think that this is about a one-off purchase of a pair of shoes, a dress for a special occasion, or Christmas presents, looking at the one in 20 consumers who use it more than once a week should make us worry about what it is about their finances that means they need to spread payments because they cannot afford to make a payment in a week. Some 35% of consumers aged 18 to 35 report using buy now, pay later more than once a week.

Buy now, pay later is a game-changer in how debt is being created, generated, and maintained in our economy, but it is going under the radar. Little wonder that two-thirds of merchants are using this form of credit. It is now in over 20,000 major brands in the UK including Marks & Spencer, Pennies, Halfords, Asos, PrettyLittleThing, and I SAW IT FIRST.

Klarna was valued at £46 billion as a business in the last investment round—I believe that is more than several of our public services—and claims to have 13 million customers in the UK. That is across every single one of our constituencies, but disproportionately in the poorer constituencies where people are struggling, and people are being targeted.

Citizens Advice reports that 41% of buy now, pay later users have struggled to make a repayment, one in 10 have been chased by debt collectors, rising to one in eight for young people and 25% have fallen behind on another household bill in order to pay a buy now, pay later bill. It does not take a rocket scientist to work out that if there are debt collection agencies at the door, a person is probably going to pay them before their council tax, but we know the consequences that can have.

Time and time again, studies show that people do not realise what they are signing up for. Forty per cent. say that they used it without realising; 42% did not realise what they were signing up for; 26% regretted it. One in four people regretted using buy now, pay later because of the problems it created. As a consequence, many are generating late repayment fees.

The Financial Conduct Authority agrees. In January, the Woolard review called for the industry to be regulated as a matter of urgency. That regulation is critical. One of the things that most consumers do not realise is that, unlike any other form of credit, including a payday loan, there is no regulation of the buy now, pay later companies. In layman’s terms, if someone gets into difficulty, they can only appeal to the companies themselves to treat them fairly—and good luck with that. They cannot appeal to the Financial Ombudsman Service as can be done with a payday loan or a credit card.

There are many particular problems that need to be sorted out by regulation. First, there is conflict of interest. Many of these companies will tell you that they do credit checks. After all, they say, they do not want to lend to people who cannot afford to repay them. However, their definition of repayment is open to interpretation, just as it is for payday lenders. One of the things that worries me when I talk to the companies, which I have done substantially, is that they will let someone miss a payment, make a payment, and then continue to lend to them. They will let someone express behaviour showing that they have a problem with debt, and then carry on lending to them. As the companies rely on merchant fees, it is not about the consumer for them. It is all about the retailer, all about what they can get out of the retailer, and the retailer wants that 20% to 30% more in interest.

It is also about overspending. As I have said, there is 40% more spending—of course that means that consumers will spend more than they can afford. However, it also means that they can get multiple buy now, pay later loans, just as we saw with payday lenders—people going from company to company. Many people are not just going to Klarna, but also to Laybuy, Clearpay, and the buy now, pay later schemes that retailers have themselves. It is meaningless to suggest that they are doing soft credit checks, because they would not know who else had lent to an individual. They would not know if that person had £500 worth of debt with Klarna as well as £50 debt with Laybuy to inform whether they should be able to take out another £200 of debt with Clearpay.

Crucially, the fact that they are not required to report means that there is no clear assessment for affordability; they decide what a person can pay, rather than applying consistent affordability criteria. That is a particular concern of mine as we have seen this industry evolve so quickly over the past year, and we have seen banks start to offer buy now, pay later. The very people who manage our money are deciding how much of it we can pay out and how much they can then charge fees on. It could be argued that that is like an overdraft, but at least with an overdraft we know that it is one, and consumers can be aware of that. I would wager that people are much more aware of the risks of an overdraft than they are of buy now, pay later.

Little wonder that there was a call earlier this year for urgent regulation. That is why today I am asking the Minister what he is going to do, because we have not yet had that regulation. It is welcome that the consultation on what that regulation should be has been published, but it was only published this month. We have had eight or nine months now of those companies knowing that regulation is coming, but with no clarity as to what that regulation might be, or, crucially, when it might be enacted. Little wonder that many consumer groups are very worried.

A Which? investigation in October found that of 111 major retailers of fashion, baby and child and homewares, 62 offered at least one buy, now lay later scheme, and the majority did not provide any information about late fees. This afternoon I was looking at various websites to see what information these companies provide about the risks of the debt that people could get into—the sort of information that we would expect as standard from regulated companies. Very few provide that information.

We are still seeing the influx of advertising from these companies—we cannot avoid it—pressing and pushing buy now, pay later. Now it is linked to Black Friday, which is a relatively recent concept in the UK, but we are very keen on it and account for 10% of all global Black Friday searches. We are a nation who want to know whether we are going to get a good deal and when it will happen. It is a toxic mix, and one that we must address urgently.

It is right to consult on what the regulations should be, and I hope the Minister will confirm that it is crucial to regulate these companies as we regulate others. First, it is a form of credit, so why should these firms not have the special affordability rules that we ask of other companies? Secondly, if we start picking off various types of credit and offering them different types of regulation, we will quickly undo the regulation that we have and see a race to the bottom, rather than the standards that we all want for our constituents. He must also recognise that the length of time that it has taken to get to regulation has offered these companies an open goal, and it is one that they have taken through the evolution of offering immediate credit cards themselves direct to consumers to make purchases—Amazon may say that it does not accept Klarna, but people can use the Klarna app to buy from Amazon—and in the types of products that can be bought using buy now, pay later. Betting sites now offer buy now, pay later options. Food sites offer buy now, pay later. Zilch can be used to buy a Domino’s pizza.

Think about that for a moment. Spreading the cost of a pizza over months tells us something about the cost of living crisis and how desperate people must be if they have to spread payments for a pizza. This is not about buying fancy tellies any more; we are back in the territory that we got into with payday lending, where people use this form of credit to make ends meet because they have got too much month at the end of their money.

The Minister will say that a consultation is ongoing, but it closes after Christmas, so it is too late for Christmas this year. In this environment, it would be helpful to hear that he recognises the risk of Christmas. We know that one pound in every four spent last Christmas was on buy now, pay later, and it will be a lot more this year, so the risk of people getting into the difficulties that the CAB and Which? outlined so well is even higher. What will he do to warn people that such credit is unregulated, so they do not have the consumer protection that they might expect from other forms of credit? What is he doing to hold to account those retailers telling us to go out, spend money and treat our dearest and loved ones while creating websites on which it is practically impossible not to get into using buy now, pay later as the default option? What is he doing to ensure that advertising is clear about the risks of the debt that people could get into? When people look at the JD Sports site, which has six different options for buy now, pay later, they need to understand that all those options come with a higher risk than other forms of credit because they are not regulated.

The Minister will say that the Government want to make good legislation, and I agree, but he must take responsibility for the length of time it is taking to regulate these companies, because they have evolved and are exploiting people at the same speed at which the payday lending industry moved to exploit people. The problem with leaving these legal loan sharks to prey on our communities is that we will all pay the cost at a later date. We will all pay the cost when Government is slow and FinTech is quick, yet that is the situation that we are in.

Will the Minister join me in calling on responsible retailers to rejig their websites so that buy now, pay later is not the default option but one that comes with a severe financial health warning? Will he join me in asking major transport agencies not to take these companies’ adverts until their costs are clear and they admit that when they say, “No late repayment fees; no charges,” that will not necessarily be true? Will he set out a clear timetable for when he expects that the regulations will come in and these companies will have to abide by common rules on affordability and credit checking and treat our constituents fairly?

I am really worried about this Christmas and how many people will get into debt trying to do the completely understandable thing of not being the Grinch. However, I am even more worried about the message that we are sending. Just as Wonga came along and then came Klarna, so another FinTech will come in the future. Every single time we pause—every single time we as a nation say, “Well, there might be unintended consequences if we don’t act”—we are offering up our indebted constituents as guinea pigs for these industries, and I know that is not what the Minister wants to do. We have to be as quick as them, if not quicker, in recognising the risk and stamping down on it.

I hope the Minister understands where I am coming from and why I believe it is so important that Parliament sends the message that Black Friday should be a time when we are all very aware of our finances as well as the deals that we are offered. We should be warning everybody about buy now, pay later. I hope the Minister will agree that we have to get much quicker at dealing with these risks, for the benefit of all our constituents.

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Walthamstow (Stella Creasy) on securing the debate, and I congratulate Pip on taking the sensible decision to fall asleep during his mother’s speech. He had a nice long sleep, as we can all observe, which was perhaps a sensible decision by him. None the less, we heard a powerful contribution from the hon. Lady, most of which I strongly agree with. She clearly set out for us some of the challenges that we now face.

I of course welcome the fact that the Government are looking to regulate the buy now, pay later sector through the Financial Conduct Authority. I am pleased to see so many buy now, pay later companies falling over themselves, begging to be regulated—“Regulate us, please!”—but they might not be quite so happy when we get to see the detail. That will be the test of the buy now, pay later sector: not its good intentions now, but what it makes of the regulations at the end of the process.

I am concerned that the consultation fails to capture the true nature of the consumer detriment, focusing only on the absolute value of the goods but failing to capture how the market is changing with this type of credit. That is strange, given the wider policy environment. It was the Woolard review that first took us down the path of regulating buy now, pay later, but it had much more to say about improving access to lower-cost, short-term credit for the more financially vulnerable. Both issues need addressing in parallel, not separately, and I see no evidence—I might be wrong—that the Government are adequately progressing the wider agenda of the Woolard review on improving access to low-cost, short-term credit.

I know that some people out there believe that the BNPL type of product should be banished out of existence and is a fundamental evil that drives demand for fast fashion. It is a very easy target to strike. However, I represent a relatively deprived part of the country and believe that my constituents should not be denied access to the short-term, low-cost credit that more affluent constituents take for granted. That should not be one more example of the poverty premium that people face in their daily lives. At the moment, the least well-off are disproportionately penalised by the poverty premium, which sees them subjected to higher insurance premiums and offered a much smaller range of affordable credit products, if any at all exist for their particular financial circumstances.

That is my first reservation about the consultation: it views the consumer detriment as relatively small because of the low value of the goods overall. We know that, on average, low-income families have only £95 in savings, so even a single late payment fee can have a devastating impact on a household’s financial circumstances. We need to view these financial transactions in the same way as we see credit cards, loans or mortgages. The last time I had to remortgage, a few years ago, it was a six-hour epic, as every single line of my expenditure was gone through in great detail and I had to justify virtually everything that I spent.

It is the percentage of someone’s disposable income, not the overall amount, that matters when making such decisions, and assessing affordability must be based on maximum transparency between the buy now, pay later provider and the customer, but also between providers. As the hon. Lady said, people cannot rack up multiple debts with Klarna, Laybuy, Clearpay and all the other new companies that are coming on the market. We need to move the focus to the behaviour of the borrower over the lifetime of their financial activities, looking at all their borrowing rather than having just a single test for their credit risk or a single affordability assessment in isolation. It cannot just be a credit check that, if they fail, makes their ability to obtain credit in the future that bit harder, because that is the opposite of putting them on a pathway to more affordable credit. People might be able to afford a loan at a particular point in time but then be hit by a family bereavement that changes their financial situation. Allowing lenders to see a wider picture of spending habits requires much speedier progress on open banking than we have seen so far.

I am also interested in examining the future of the sector. The consultation on regulation cannot just meet the market as we see it at the moment; it must meet the market that we will see in years to come. Consider the issue of rent to own, on which both I and the hon. Member for Walthamstow attended debates well before 2015. That sector went on a long journey, from the relatively innocuous ubiquity of Radio Rentals, which many of our parents used to buy their first TVs back in the late ’70s, to the more problematic practices of BrightHouse and PerfectHome in the 21st century. We know where that journey ended. I still walk past the boarded-up BrightHouse shop on Abingdon Street in the centre of Blackpool, which I named the most dangerous place in Blackpool because it was sucking people in and trapping them in long loans of high-cost credit.

We are already hearing that buy now, pay later is being used not just for pizza but for the weekly food shop. That should really give us pause for thought. Higher-value goods are now being bought through buy now, pay later. It is not just fashion, which we automatically link with Klarna and the advertising that we see. I read in the paper just this week about a new market entrant, humm, from Australia, that specialises in much larger consumer goods—something that makes me go “humm” when I wonder whether that is desirable.

We must also think more about the retailers, as the hon. Member for Walthamstow said. They are as much the beneficiaries of this market as are the buy now, pay later providers themselves. The whole business model works only if it increases sales for the retailers; otherwise, why would they bother paying the buy now, pay later provider a percentage fee? That fee is what justifies this form of market.

If that becomes our default payment mechanism in a cashless society—which I am afraid that, as we debate here, we seem to be sleepwalking into—we may need to look again at how we monitor the internet shopping experience and the customer journey through a website. Will regulations that were framed around the idea of purchasing clothing work for goods that could cost thousands—much larger consumer goods and consumer electronics? Where do the retailers sit in all of this? There is a real commercial dynamic at work here.

I was speaking to ASOS just last night, at a reception in the Churchill Room. They said that they had worked with Alice Tapper of GoFundMe, a noted campaigner whom I am sure the hon. Member for Walthamstow has spoken with at length. She has worked with ASOS to redesign its website to ensure that it is a friction-filled—not frictionless—journey for the consumer, so that there are multiple occasions when consumers are asked to pause and consider what they are about to purchase, and so that buy now, pay later is not the default, pre-ticked option on the checkout form. Those are all very simple measures, but they are not measures that the Treasury can effect. They come under the Advertising Standards Authority and other types of regulation. The consultation on regulation will not solve everything; there are other agencies that have to take other steps.

None the less, there are better solutions out there, and the Government are committed to them—not least no-interest loans. I am at risk of reading out a paragraph from my previous speech, when the Minister was here and I did not get an answer, so let me have another go, if he is listening. I am obsessed with reforming local welfare assistance schemes so that people can access the white goods that they need. The Government have a very good idea: no-interest loans. Providing those should not be rocket science. The original idea came from Australia—the same place from where humm is now arriving on our shores, and where Good Shepherd Australia has been operating micro-finance for many years. Surely, to introduce them here must be cut-and-paste. Indeed, some of their regulations on buy now, pay later are a model of what we are planning to do here. Rather than building a programme from scratch, why not try to move faster by looking at what works in other jurisdictions? This matters, because the cost of replacing white goods is terrible for so many families, who fall into debt as a consequence. We need only listen to the Liverpool-based End Furniture Poverty campaign and look at the pilot schemes that Fair4All Finance is launching to tackle the concept of appliance poverty.

The hon. Member for Walthamstow also mentioned FinTech, perhaps in the sense that it is almost a risk that you never know what it will come up with next. Equally, I think that FinTech is actually part of the potential solution. There are companies out there and emerging—Auden Financial is one that I happen to know quite well—that are looking to use FinTech to provide the low-cost, short-term, ethical credit that I think has to be the end goal. We all talk in this place about FinTech. We all swoon, almost, at the wonderful thought of what a fantastic business it is. I am not sure that we as politicians always understand it terribly well, but we need to keep asking how we can work with that sector so that it does good and not bad.

There will always be disruptors, and I want to disrupt the business of high-cost, short-term credit; that is what I want to disrupt. There is a gap in the market for a new provider to come along and do things differently. No one should be denied the opportunity to own things. Everyone should have the ability to choose how they spend their money and to choose how they access a form of credit that is regarded as affordable to them and does not place them in greater difficulty. At the moment we are not in that position, but there are multiple ideas out there. Restricting access to buy now, pay later, properly regulating it, and treating it like any other form of credit and not least in a way comparable to how we treat consumer detriment from credit cards, has to be one step along the path. There is a much wider agenda that the Treasury needs to embark on to embrace the whole Woolard review, not just one small paragraph.

I commend what the Minister is doing. Like the hon. Member for Walthamstow, I know that he is on the side of the angels. But it is the job of those on the Back Benches to say, “Go further; go faster. Do it yesterday.”

It is a pleasure to serve with you in the Chair, Mr Robertson. I thank the hon. Member for Walthamstow (Stella Creasy) very much for introducing the debate, and I congratulate her on having not only a genuinely good track record of action on consumer protection, but much better behaved infants than I have ever had, which is not to be sniffed at.

I associate myself with many of the remarks and proposals that the hon. Member and others have made, including about understanding that individuals and families are ready for a meaningful Christmas, and acknowledging that many are able to make, and are facilitated in making, difficult choices and balancing things this year and every year. However, we also have to acknowledge that Black Friday and the associated financing is not a generous offer and an attempt by retailers and financiers to make Christmas dreams come true. It is, in many ways, exploitation of those natural human instincts to try to provide for family. Black Friday is no longer just one day in November; it is a month-long—and often longer—bombardment of advertisements, deals and “ways to pay” that go far beyond traditional methods.

Research published today by Which? indicates that some 99% of Black Friday deals that it assessed were in fact available cheaper elsewhere in the calendar year. At the heart of this is driving people to make more purchases. We could spend this debate talking about the negative impacts of Black Friday alone on people, on the planet and on smaller retailers, which perhaps do not have the same marketing infrastructure as larger ones, but probably the most acute impact, as the hon. Member for Walthamstow outlined, is the results and the risks of predatory lending.

Citizens Advice has likened buy now, pay later to quicksand—easy to slip into and very, very difficult to get out of. As I said, at the heart of the concept is encouraging people to spend money that they do not have by putting the hard landing of any purchase on the long finger. The hon. Member for Walthamstow is correct to highlight the habit-forming tactics that mainstream this means of purchase and steepen the slippery slope by which many people slide into debt. She highlights the very interesting statistic that it increases sales by up to 30%. Evidence bears out the concerns that Members have expressed, with 75% of buy now, pay later users being under the age of 36—this tactic is clearly marketed particularly at Gen Z—and four out of 10 of them struggling to repay. That matches what we already know about the financial security of many in that demographic, who are already in or at risk from the gig economy, with its inadequate and unsustainable or unfixed incomes.

The services we are discussing are, in many cases, clearly harmful to the individual consumer, but also to the planet. Members outlined that the vast majority of buy now, pay later purchases relate to clothing, which drives the acutely unsustainable fast fashion market in which literally tonnes of clothing, often produced in dubious labour conditions, quickly ends up in landfill after a tiny number of wears—the product is often designed to be worn a small number of times. There is a wider impact. Fashion website Boohoo offers shoppers five different ways to pay for a £30 dress, which again underlines that this is not about facilitating a special Christmas purchase or a big purchase, such as a TV, that a household needs; this is about driving a pattern of spending that locks people into unsustainable purchasing habits.

As one investor in a buy now, pay later start-up explained:

“It increases the basket size and it also reduces dropped baskets”.

Some of that is marketing; it is what business does. It is the logical extension and development of the economy we have. However, as in many other areas of the market and the economy, we have an obligation to try to protect people from technologies and marketing techniques that are far beyond what any of us are used to.

This is a big and emerging problem and, like a lot that relates to technology and online, the market may be moving faster than regulation can, but it is not an unsolvable problem. The hon. Member for Walthamstow outlined many ways, alongside FCA regulation, to intervene and slow this down, including obligations on retailers to adequately display and explain the background of the products they serve. For example, in Sweden, the home of Klarna, it is already illegal to market buy now, pay later ahead of other types of up-front payment.

It is welcome that the Government acknowledge this issue and that regulation is required. It is important that we have forums such as this one to correct the view that this is not a widespread consumer problem, because it is. We know very well the depth of the debt problem. After all, credit is debt—that is what it is. As others have explained, people will always want to use credit, but in many cases it will be for a long-term purchase that will have benefits in life. In the vast majority of buy now, pay later cases, that does not apply. I support the motion and all efforts to regulate and protect.

We come to the Front-Bench spokespeople. I would like to leave two or three minutes at the end for the mover of the motion to wind up the debate.

I begin by paying tribute to the hon. Member for Walthamstow (Stella Creasy) for bringing the debate and for all her work in this area. As the Christmas shopping season gets fully under way, it is right that we debate debt, how consumers require protection in a fully regulated credit market, and the responsibility of Government to ensure that that is the case. The high cost of some credit options, especially buy now, pay later deals, is already causing untold misery for millions of consumers. So far this year, shoppers have racked up more than £4 billion of outstanding debt, averaging £538 for each user. Research shows that 10% of shoppers plan to use buy now, pay later options this Christmas. I am sure that option can be helpful for some people, to spread the cost of significant purchases, but it can also facilitate the building of unsustainable debt.

In order to protect consumers, the sector needs to be properly regulated. An exemption in the law as its stands means that these payment plans are not treated in the same way as traditional credit agreements, so they are not regulated by the Financial Conduct Authority. Therefore, as the Woolard review found earlier this year, many consumers do not see buy now, pay later options as a form of credit, so they do not consider arrangements as carefully as they might otherwise do. It is worth noting that the sector was comparatively small, but the value of transactions nearly quadrupled between January and December last year, to £2.7 billion. It is easy to understand why the Woolard review concluded that there is an urgent need to regulate all these products.

The Government’s consultation into the regulation of the buy now, pay later market will close in January. It must result in robust regulation of the sector, which must be brought into line with the regulation of other areas of the credit market, with interest at least no higher than that for pay-day loans, credit cards or overdrafts. It should also require credit checks similar to those for other credit products. It is appropriate to think about such things as we approach Black Friday and Cyber Monday, which is the commercial answer online to in-store shopping.

Recent research by the consumer organisation Which? is very worrying. It reveals that a strikingly high number of shoppers feel rushed into making Black Friday purchases. Many live to regret it, using credit or borrowing to make purchases that they could otherwise not afford. That must be seen against the background of the way that Black Friday is marketed, using the threat of regret, with banners such as “Hurry!”, “Don’t miss out!” and “Last chance!” plastered around these so-called deals. Shoppers who buy on credit pay extra for their purchases, regardless of how good the deal might look, once the extra cost of credit is factored in, which can build from month to month.

It is also worth noting that the seductive techniques used to encourage shoppers to splurge on Black Friday belie the fact that Black Friday deals are not always the best of the year. In fact, many products can be found cheaper in the months before and after November. According to Which?, that is all hidden behind the marketing used for Black Friday.

As we approach Christmas and talk about debt, there are some who say—and I have heard them—that people should live within their means. It is easy for those who are relatively well off to lecture those who do not have very much about living within their means. It is completely understandable that people, despite being financially pressured, still want to buy presents for their children at Christmas—of course they do. If they do, the Government have a duty to ensure that all consumers are buying in a fully regulated credit market, with all the protection they need, should they find themselves overwhelmed with debt. The Government have a duty to ensure that all aspects of the credit market are fully regulated and fit for purpose.

I need to say at this juncture that many families are not forced into debt because of Christmas shopping, but because their everyday household budgets are being squeezed more tightly every single day. We must not assume that unsustainable debt is down to non-essential purchases. Many households are falling into debt in order to pay for essentials, such as the gas bill or groceries. That applies not just to those who are unemployed but to that shameful phenomenon: the working poor. Those are people who go out to work every day to provide for their families but simply do not earn enough to make ends meet and pay for essentials, having been met with a cut of more than £1,000 a year in universal credit.

We are sitting on a debt time bomb, and it is not due to profligacy; it is because so many people have suffered an income shock through no fault of their own. Sadly, for those people, the idea of levelling up sounds very hollow as they face the destructive misery of debt, which every day threatens to engulf them. The cost of living is rising, and that is throwing many people into hardship, including many people who were always able to manage in the past. The UK household debt crisis is not going away; it is actually getting worse.

The Government must therefore ensure that the buy now, pay later market, which we have heard so much about today, including the difficulties with it, is subject to the robust regulation that consumers have a right to expect. That process must be expedited so that next year, at the next Black Friday, anyone who turns to any kind of credit can do so with much more protection and confidence than they are currently able to. Some people have estimated that the sector may not be properly regulated until as late as 2023. That prospect is deeply concerning, so I hope that the Minister will today commit to expediting regulation as soon as possible and as a matter of priority, so that we can save yet more people from experiencing the severe misery of debt without the protection that they should be entitled to expect.

It is a pleasure to serve under your chairmanship, Mr Robertson, and I begin by endorsing the remarks you made at the beginning of the debate. I attended the funeral mass this morning for Sir David Amess, and you are absolutely right that he is a colleague who will be greatly missed right across the House.

I thank my hon. Friend the Member for Walthamstow (Stella Creasy) for securing this debate. I also thank our youngest member, who has attended the debate and been as good as gold throughout; we will see how we get on for the next 20 minutes.

My hon. Friend has been a formidable campaigner for consumer rights and against high debt charges, particularly for those on modest incomes. We are focused this afternoon on the buy now, pay later sector, which has grown hugely in recent years. The Government consultation on the issue says that the use of that payment mechanism tripled last year, and that during the pandemic more than one in 10 consumers paid for goods in this way. We have heard other numbers in the debate that suggest that the true figure may be even higher. Whatever the exact figure is, I think we can all agree that the sector is growing fast.

During the pandemic and the lockdowns, we saw an accelerated trend towards online shopping, and indeed online everything else, which helped to spur the growth of buy now, pay later products. As for the overall financial impact of the pandemic, it is really a tale of two Britains. For those in good work, who were still being paid full pay, the impact was often the ability to save more money. Right across the country, and across the rest of the developed world, bank deposits increased markedly for that reason. People were still earning, but much normal spending was curtailed, so they had more money to save.

That is the story of one Britain, but there is another Britain in which earnings were cut as work was lost, and where incomes declined and debt grew. For many people in that group, their costs increased because they were stuck at home with the heating on, their food bills went up because children were off school, and they could not earn what they had earned before. Those were families who had never had much disposable income in the first place, and who were often struggling with and juggling significant amounts of debt. Many of those people fell between different Government help schemes and were left under huge financial pressure. It is really important to understand that while overall savings grew, that was not true for everyone, and for many people debt grew instead.

However buy now, pay later products are marketed, they are another form of consumer debt, pure and simple. The explosive growth in this type of debt in recent years, and the risks identified in the report that Chris Woolard wrote last year, mean that it is right that these products are properly regulated. That is in the interests of consumers, who have a right to know exactly how the products work and what the potential penalties for non-payment will be. Otherwise, regulation will fall behind innovation in the market and become hopelessly out of date.

The business model for buy now, pay later is a merchant fee for each purchase. The growth model is that more goods will be sold because payments can be spread over a period of time. Interest is not normally charged on the staggered payments, but that is not the end of the story, because the companies also raise revenue through late payment fees or penalties when consumers fail to meet payments. For some buy now, pay later providers, those late payment fees and penalties are a significant proportion of their overall revenue. We must remember that, in the end, this is a debt like any other, which attracts penalties if it is not paid in accordance with the agreed timescale.

Chris Woolard’s review concluded that the buy now, pay later market

“poses potential harms to consumers and needs to be brought within regulation to both protect consumers and ensure it is sustainable.”

To their credit, the Government acted fast at first, taking an initial power last March during proceedings on the Financial Services Act 2021. Then, after a long period, Ministers issued the consultation on detailed regulations only last month. That consultation is still open and does not close until January. Why was there a delay of seven months or so between the initial legislation and the publication of the consultation? Why is the tone of that consultation quite unenthusiastic about regulating, seeking to minimise the scope of the regulation? It gives the appearance that the Government have been dragged into this. This is a fast-growing market. New accounts are being opened every day, and there is no reason to delay. This delay will mean that significant time has elapsed between the initial decision and the Government’s approval of the Woolard report and introduction of the regulations.

My hon. Friend the Member for Walthamstow has spoken about the potential for the next few weeks to result in significantly more consumer debt, with both Black Friday and Christmas approaching. I endorse what she said: nobody here wants to dampen anyone’s enthusiasm for a bargain—although I caution people to check whether it really is a bargain—and of course, we want everyone to enjoy the festive season. In my house, it is pretty big business. We have lights on the inside, we have lights on the outside and, whether I like it or not, we have an awful lot of Michael Bublé. But it is no secret that the festive season can be an expensive time for people and that, for some, December spending can result in a January hangover. That makes this debate both timely and important.

Innovations such as buy now, pay later were not envisaged when the Consumer Credit Act 1974 was passed, and that is why this gap must be filled. When it comes to updating the regulation system, the Government need to act and get on with it. What might the new regulations cover? The slightly reluctantly worded consultation gave some clues, but there are obvious areas, and I want to name a few. The first is information to the borrower. Does the borrower understand that this is a debt, and that they may be subject to penalty charges and increased costs if payments are not kept up? As we have heard, that is often not made clear.

What is to stop consumers setting up multiple buy now, pay later products with multiple companies? How will one know about the other? Does the consumer’s bank know about the other products? What if the consumer is already heavily indebted to their bank? That featured in the Woolard review, which implied that about one in 10 buy now, pay later account holders might already be quite significantly indebted to their bank.

What should the rules be on advertising and promotion? As the Minister knows, the weakness of the FCA’s financial promotion rules has already been a factor in the case of London Capital & Finance, which we debated in relation to other legislation recently. How will the regulations ensure that advertisements and promotions convey sufficient information about the nature of the credit agreement being entered into and the risk of incurring debt and penalties? Will consumers be told, for example, that non-payment could result in their debt being transferred to a debt collection agency? That is quite important, and might give people pause for thought when they take out such a product. Also, how do we treat consumers who get into difficulty? Right now, there is a mix of late payment fees and the use of debt collection agencies. Will the regulator codify that properly, given the proportion of revenues that some companies are raising from that activity?

Finally, returning to the timescale, can the Minister ensure that once the consultation closes, there will be no further delays and the FCA will be able to act as soon as possible, whatever the outcomes of that consultation? Given that the Woolard review reported near the beginning of this year, we certainly do not want to roll all the way through next year with no regulation in place. This is a very fast-growing new form of consumer debt. Regulation has not kept up: it must do so, or else it will ossify and become out of date. Time has already been lost this year, and I will close by urging the Minister—I know he wants to help on this issue—to get on with it, so that in relation to these products, consumers have the protection and information that they have a right to expect.

It is a pleasure to serve under your chairmanship, Mr Robertson. I associate myself with the remarks of a number of Members this afternoon concerning the death of Sir David Amess. He was a true blessing to this Parliament and a great character whom we all loved, and he will be sadly missed.

I have listened carefully to the various contributions this afternoon. As ever, this has been a very well-informed debate that I welcome very much. I pay particular tribute, as I have done previously, to the hon. Member for Walthamstow (Stella Creasy) for securing a debate on this important matter. I will be sure to give her some time to have another go at me in the last few minutes of the debate. She set the scene very well, explaining the context that we face in the run-up to Christmas: the inducements to consumption and the apparent savings for consumers; the evolution in new forms of credit; the need for regulation, which I fully accept at the outset; the risks around the use of buy now, pay later becoming habit-forming; the behavioural shifts we are seeing in the market; and the need to really think about the context of borrowers’ behaviour as we bring forward this regulation. As ever, we were treated to some sophisticated analysis of the wider consumer credit challenges, and the issues with making more affordable credit available, from my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard). I will address those points later.

It is important that we start this afternoon by understanding the Government’s position: we recognise that there is a potential risk to consumers from unregulated buy now, pay later products. I listened very carefully to the criticisms of the timeline, and over the next few minutes I will address the challenges we have encountered and present some of the solutions that we think may exist. It is extremely helpful for all parties to be represented in this debate; given the level of engagement from players in the market, there is a clear desire to address this significant area of concern in Parliament. There has been a massive explosion in this area, and it is important that we respond appropriately.

It is important to understand the nature of the risks. We should acknowledge that the use of buy now, pay later is growing rapidly: in fact, the number of transactions from the main providers using buy now, pay later more than tripled in 2020. That said, buy now, pay later is still estimated to have amounted to only 2% to 3% of the consumer credit market last year, and a recent study by the consultancy Bain & Company found that about 5% of online transaction volumes involved the use of buy now, pay later. I am very sensitive to the distribution of that additional use and the people who are increasingly reliant on buy now, pay later—that is something we must take account of—but it makes up a smaller proportion of the market than is sometimes believed. In addition, we have not seen substantial evidence of the risks that some have predicted materialising.

I will set the scene of the current state of regulation, because it certainly does not mean that the Government are turning a blind eye. A degree of regulation already provides protections for users of interest-free buy now, pay later products. The Consumer Protection from Unfair Trading Regulations 2008 make it a criminal offence for traders to give consumers misleading information. Firms are required to provide consumers with the information necessary to make informed decisions and not omit or hide material information that the average consumer needs. The FCA and the Competition and Markets Authority are designated enforcement bodies for these regulations. The Consumer Rights Act 2015 requires that the contract terms of buy now, pay later providers must be transparent and not contain unfair terms. When promoting buy now, pay later products, firms must also comply with the rules set out in the UK advertising codes, and offending firms can be referred to trading standards and Ofcom.

Last year, the Advertising Standards Authority published formal guidance about buy now, pay later, setting out its expectations of both providers and retailers when they offer these services. The ASA also banned harmful buy now, pay later adverts, stating that future advertising must not irresponsibly encourage the use of a product, particularly

“by linking it with lifting or boosting mood”.

That is something that the hon. Member for Walthamstow has highlighted and campaigned on. Some buy now, pay later agreements are also already subject to some aspects of the financial promotions regime. The FCA uses its existing powers to protect buy now, pay later users, for example by scrutinising marketing materials of authorised firms and the way these products are promoted. The FCA has wider consumer protection powers that it can apply to unauthorised firms where it sees poor practice.

Effective Government oversight of financial services is not just about imposing rules; it is also about engaging with industry. In the case of the buy now, pay later sector, that is something we have done extensively—as have Members here today. We have seen that reflected in the actions of the largest firms, with many voluntarily introducing credit-worthiness checks and making information more transparent at checkout. However, I fully concede that that is not universal, and not every firm has moved in the right direction.

Looking ahead, the fact that we have seen some progress does not mean that we are complacent. As Members have noted, the Woolard review into the unsecured credit market, which was published in February this year, identified a number of potential risks. They include how buy now, pay later is promoted to consumers and presented as a payment option. Consumers are sometimes left with an absence of information about the product and the features of the credit agreement, and there are no requirements to undertake affordability and credit-worthiness checks. As has been pointed out, that is particularly important when multiple transactions are taken up with different buy now, pay later providers.

Following the publication of the Woolard review the Government announced, with support from the Opposition —I am grateful for their support—our intention to regulate these products. On 21 October, we published a consultation document that sets out the proposed approach to regulation, and that consultation is open until 6 January. Prior to the publication of the consultation, I had a lot of engagement with my officials. One of them is sitting here today, and I have spoken to a number of them this afternoon and numerous times before that. It is through a desire to get this right that we have taken time over it. There is no desire to go slow. I recognise that there is an urgency to this, and we have to move forward as quickly as we can. During the consultation period, the Government are engaging with representatives from consumer groups and industry—indeed, there is a workshop going on this afternoon—to ensure that the final approach to regulation strikes the right balance on consumer protections. Debates such as this help to inform that approach.

We want to expand the evidence base about the risk to consumers, and Members from across the Chamber have made a lot of points about that this afternoon. As I have said, the Government recognise the potential risks, and that has been supported in recent studies by consumer groups, such as Which?, Citizens Advice and others. However, the Government’s view is that as an interest-free product, buy now, pay later is inherently lower risk than products that charge interest. Used properly, it can be a way for consumers to manage their finances, as my hon. Friend the Member for Blackpool North and Cleveleys mentioned, and to spread the cost of purchases—particularly when managing periods of higher household expenditure, such as Christmas, when Michael Bublé CDs are being purchased in the household of the right hon. Member for Wolverhampton South East (Mr McFadden). We should not forget that interest-free buy now, pay later offers, specifically around Black Friday, can allow consumers to take advantage of offers and discounts that they might not otherwise be able to benefit from.

Looking ahead, and in the context of the ongoing consultation, our overall objective is to ensure that buy now, pay later products can continue to be offered in a way that allows consumers to take advantage of the flexibility of the offer, while ensuring that the potential risks are managed. That means designing regulation that is proportionate to the level of risk and takes into account the way that the products are used.

For example, the Government believe that is it reasonable that buy now, pay later products use a bespoke approach to consumer disclosures, as well as to the form that the credit agreement must take. That is reflected in the proposals in the consultation, which I would characterise as not reluctant, but detailed, reflecting the fact that different issues come up with the evolution in the market and in the provision of different services. We cannot apply a single, one-size-fits-all approach. I see that the hon. Member for Walthamstow is adjusting her face mask, so I think she wants to intervene.

I thank the Minister for letting me intervene. He will understand that I am a little troubled because when the Woolard review said in February that there was an urgent need for regulation, we all agreed that urgency, as well as regulation, was a critical part of that conversation. Does he accept that in the absence of such regulation, one thing that we now need to tell people —it is on his list—is that they cannot go to the Financial Ombudsman Service if they feel they have been mis-sold a product? At the very least, in the intervening time before any regulation comes forward, the Government have a duty to ask retailers and companies to make that clear to people—a buyer beware warning. Does he at least accept that the Government should be doing that this Christmas?

I fully accept the point that the hon. Lady makes, in that at the moment, those protections do not exist, and that is why we have to regulate appropriately and proportionately.

I want to say a bit more about what I think we should be doing. It is reasonable that buy now, pay later products use a bespoke approach to consumer disclosures, as well as to the form the credit agreement must take, and that is reflected in the consultation proposals. However, we need to think about the way that these products are used in the context of an online journey, the warnings that are inherently there during that journey and the fact that they are frequently used for much smaller sums than the traditional credit agreements for which these rules were originally developed.

When we think about how this facility is used, part of the challenge is the way additional payment smoothing mechanisms can inadvertently be sucked in. I do not want dental payment plans—essentially, for expenditure that is smoothed over 12 months—to incur an obligation to do some form of affordability check. Such issues make this more complex than it may have at first seemed.

I am determined that we get this right, that we recognise the distinct consumer risks that exist and that we bring forward regulation that deals with them. The Government’s view is that buy now, buy later information should not be long and detailed so that it becomes just another long set of terms and conditions, because frankly there is a significant risk that people would just make a cursory observation of such a list and tick the box. Instead, the information should be presented in a form that allows consumers to engage meaningfully, and I hope the hon. Member for Walthamstow would support that.

The Government also consider in the consultation whether the financial promotions regime, which already applies to a broad range of financial products, should be amended to ensure that all buy now, pay later promotions fall into that regime, further strengthening consumer protection. That would mean that all promotions made by merchants, such as a retailer, would have to be approved by an FCA-authorised firm. It is also important that consumers are lent to affordably. That is why the Government anticipate that the proportionate regulation of buy now, pay later would include the application of the FCA’s current rules on credit worthiness.

The Government recognise that these products are lower risk than other interest-bearing agreements and can help consumers to manage their finances. A study by Bain suggests that in 2020 consumers using buy now, pay later instead of credit cards in the UK saved £103 million in interest. I say that not to commend it over credit cards, but to recognise the segmentation of the credit market and the different behaviours and options that exist out there. That is why we believe it is right that regulation is balanced and proportionate, ensuring that customers are given the appropriate protections, without unduly limiting the availability and cost of useful financial products.

As hon. Members have mentioned, there is already precedent for imposing different regulatory requirements on different credit products, depending on the risk they pose. The Government and the FCA have previously implemented bespoke regulation for higher-risk products, such as the price cap rules for payday lenders and rent to own. Obviously, it would be difficult to apply that symmetrically in this context, but I sincerely welcome the hon. Lady’s comments later. Likewise, a more proportionate approach is right for buy now, pay later products, which we assess to be of a lower risk.

As new products enter the market, it is critical that the Government carefully consider not only how credit products are regulated, but where the boundaries of regulation should be. I note the concern that buy now, pay later may increasingly be used as a more mainstream form of credit, as has been mentioned this afternoon, and that even some banks are beginning to offer it.

Many different types of financial arrangement already make use of the same exemption, as I mentioned earlier, which currently allows interest-free buy now, pay later to operate outside consumer credit regulation—and has done so for decades. That includes arrangements used over many years by UK retailers to support the purchase of higher value items such as home furnishings and white goods, but also those arrangements which allow monthly payments for memberships to sports clubs, dental plans, other associations and certain invoicing arrangements.

In regulating buy now, pay later, we need to think carefully about all the arrangements that these changes could affect and avoid bringing activities into regulation which do not present the same risks to consumers. What is in play here is the cumulative application of the buy now, pay later product to a vulnerable group of consumers, and we need to make sure that that is where we focus the outcome. The Government must also ensure that their approach is future proof and cannot be gamed by firms operating on the margins of regulation. That is why we are engaging with consumer groups in detail to ensure that we get this right and capture the emerging products that are beginning to form.

I will give the hon. Lady several minutes to come back, but I want to mention personal debt more broadly, because it is a critical topic that comes into this discussion. I think everyone here has a desire to tackle problem debt and, as this afternoon has shown, we share an understanding of the complexity of the issue.

We need comprehensive solutions, which is why we are maintaining record levels of funding for free debt advice in England. The Money and Pensions Service this year has a budget of £96.4 million. We have launched the breathing space scheme, which gives a 60-day freedom from fees and payment requests. We are also expanding the availability of affordable credit, providing £96 million of dormant assets funding to Fair4All Finance.

My hon. Friend the Member for Blackpool North and Cleveleys talked about the Australian experience and the opportunity to cut and paste no-interest loan schemes. We have moved ahead with that, and I anticipate that it will move more quickly now. However, I want to be absolutely clear that it works in the UK context and can be scaled up quickly. I would rather it was on solid foundations, but I feel his frustration in my heart too.

I will sum up by reiterating that the Government’s view is that interest-free buy now, pay later has a legitimate role to play in the market, but its rapid growth throws up challenges. I think that consumers recognise that; they find it useful and easy to use. However, we are committed to getting regulation right and protecting consumers. The asymmetry of protections mentioned here needs to be addressed, but we want to do that without limiting the availability and cost of genuinely useful financial products.

We understand that there are concerns, which I have heard this afternoon, about the speed of the regulation. I will do this as quickly as I can, with my officials. We will report back to the House as quickly as possible, but I would welcome colleagues’ continued engagement in the weeks ahead. I recognise the risks that exist in the run-up to Christmas, and I acknowledge the legitimate warnings that the hon. Member for Walthamstow has raised.

We have had a very important debate today. I pay tribute to my hon. Friends the Members for Hampstead and Kilburn (Tulip Siddiq) and for Hornsey and Wood Green (Catherine West), the hon. Members for Blackpool North and Cleveleys (Paul Maynard) and for Belfast South (Claire Hanna), the SNP spokesperson—the hon. Member for North Ayrshire and Arran (Patricia Gibson)—my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), speaking from my own Front Bench, and the Minister, for their contributions. I also acknowledge the work of my hon. Friend the Member for Makerfield (Yvonne Fovargue), who has been a fantastic champion on debt issues, but sadly could not be with us this afternoon.

I also pay tribute to the work of Alice Tapper from Go Fund Yourself, who has been a fantastic campaigner in raising concerns on this issue, as well as to Damon Gibbons from the Centre for Responsible Credit, Martin Lewis, of course—where would we be without Money Saving Expert?—Citizens Advice, Which?, and Step Change, all of whom have tried to sound the alarm about buy now, pay later, in particular.

Today, I want to give the Minister probably the best Christmas present of all, which is oddly enough not a subscription to Michael Bublé on Spotify, but the opportunity to prove me wrong. I want to be wrong about this industry. I want to see the parallels with the same problems that we had with the payday lending industry and be mistaken about this.

However, my concern is that Government are slow and FinTech is fast. Everything the Minister has said today has raised that concern for me. He recognises, rightly, that we need to regulate this industry, yet our ability to do so is hampered by the “what ifs”, which these companies do not recognise and, indeed, thrive in. They are predatory. They are preying on our constituents and evolving at a rate of knots. I am not surprised that they suddenly say that they are in favour of regulation, in the same way that turkeys would say that Christmas is overrated—if we are looking for our festive analogies.

I urge the Minister not to falter. We must move as quick as we can, if not quicker. I agree very much with the hon. Member for Blackpool North and Cleveleys; the role of Back Benchers is to say “Go faster; do it yesterday”. I also asked the Minister what we would do in the intervening period, because we have predators, such as Klarna, Laybuy or Clearpay in our communities. When Clearpay wrote to me to boast that it had 4,000 customers in my constituency, I felt physically sick, because for how many of those people is this actually a solution, and how many is it drawing into debt?

The Minister says that he recognises that we need to regulate and that the lack of the financial ombudsman is a real challenge for consumers, who genuinely would not know that they are not protected when they use buy now, pay later. The question of affordability is not about the product so much as the person. That is what concerns me when we start talking about different ideas of affordability for different products; it is still the same constituent who will end up in our surgeries, about to lose their home because they cannot pay their rent, not able to feed their kids, worrying about their debts, not able to sleep at night.

Regulation is always complicated, but there is a simple truth at the heart of this: the speed at which this industry will evolve and prey on our constituents is disproportionately linked to the slow pace of change in our financial regulation industry. That was the lesson of Wonga. This Christmas, we must learn the lesson of these companies.

While we wait for that regulation, I again repeat the call to the Minister. Use the Government education channels. Use the publicity channels. Warn people that this is not regulated. At least tell them, “Buyer beware”—that they do not have the same protection that they might with other forms of credit this Christmas—not just to check the details of those Black Friday deals carefully, but to check the kind of credit they are using. It is so easy on websites now to slip into buy now, pay later.

I promise the Minister that, this time next year, if he can prove me wrong, he will have the best Christmas ever, but I fear I may yet again be the Cassandra of the credit industry. That is not a position I want to be in, because all our constituents deserve better: not the Grinch, not the Scrooge, but a 2022 where they can look their family in the eye, knowing how they will pay for the food on their table and the roof above their head. That is what good consumer credit is about.

Motion lapsed (Standing Order No. 10(6)).

Hertfordshire Green Belt: National Planning Policy

I beg to move,

That this House has considered Hertfordshire Greenbelt and the National Planning Policy Framework.

It is a pleasure to serve under your chairmanship, Mr Robertson. I especially welcome the opportunity to again bring threats to Hertfordshire’s green belt to the Minister’s attention. The importance of the green belt in my constituency and across Hertfordshire more broadly cannot be overstated. More than half of Hertfordshire is designated as being within the London metropolitan green belt.

Nationally, we have a housing crisis and an ecological crisis. When it comes to planning in the green belt, the answer is sustainable housing that responds to housing need, but that is not what the Government’s planning system delivers. It is developer-led, not community-led, it does not deliver the social homes that we need and it does not protect our green belt. Nationwide, of almost 18,000 homes built on the green belt, barely 10% were affordable. In my constituency, St Albans City and District Council is being asked to build more than 14,600 homes over the next 15 years. It can build 5,000 on brownfield land, so the remaining 9,000 will have to be built on the green belt. The neighbouring authority of Hertsmere wants to build 6,000 homes right on our border, removing the green belt altogether between two villages and creating a new monster-sized settlement, and the Conservative Government still want us to house a strategic rail freight interchange the size of 490 football pitches, which is also likely to attract thousands of lorries. Could this ever be described as sustainable development? No, it could not.

At the heart of the problem is the Government’s national planning policy framework. The Government have a standard methodology that produces top-down housing targets. Ministers have tried to tell me, in response to my many parliamentary questions on this matter, that their standard method for calculating housing does not produce targets per se, but is merely a starting point from which councils can start to work. I would be grateful if the Minister confirmed how many councils have submitted a successful local plan with a housing target that has been revised down from the standard method.

Those at the very top of Government tell us that the green belt will be protected. At the recent Conservative party conference, the Prime Minister himself promised that the homes we need will be built on brownfield sites and “not on green fields”. Indeed, the Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for Harborough (Neil O’Brien), told the hon. Member for Watford (Dean Russell), who is present, in his debate last month that the national planning policy framework gives the necessary protections to green belt land when local authorities come to draw up their local plans, but I am afraid that that is simply not the case.

I give the example of Roundhouse Farm, near Colney Heath in my constituency. I understand, given the quasi-judicial role of the Secretary of State, that it is not appropriate for Ministers to comment on appeals under consideration, but this one has been concluded. St Albans District Council and Welwyn Hatfield District Council jointly refused permission for a development of 100 houses at Roundhouse Farm near Colney Heath, which is on the Hertfordshire green belt. Both councils, having regard to the national planning policy framework, considered that it would be damaging to the green belt to allow an inappropriate development such as that to proceed. The Minister’s planning inspector disagreed, and yet another chunk of precious green-belt land was given over to development. The inspector gave more weight to the calculation of housing need under the Government’s standard method than to the protection of the green belt.

In setting out the reasons for overturning the decision, the planning inspector said:

“I am aware of the Written Ministerial Statement of December 2015 which indicates that unmet need is unlikely to clearly outweigh harm to Green Belt and any other harm so as to establish very special circumstances. However”—

this is the critical line—

“I note that this provision has not been incorporated within the Framework which has subsequently been updated and similar guidance within the Planning Practice Guidance has been removed. I can therefore see no reason to give this anything other than little weight as a material consideration.”

That is to say that he gave little weight to the green belt. The inspector’s appeal decision went on to say:

“I afford very substantial weight to the provision of market housing which would make a positive contribution to the supply of market housing in both local authority areas.”

If the Government genuinely believe that there are sufficient protections for the green belt in the national planning policy framework, I would be grateful if the Minister explained to me and my constituents how that decision came to be overturned by the Secretary of State on the recommendation of the planning inspector. I would be grateful to know whether the Minister accepts the planning inspector’s conclusion that the provision to protect the green belt has not been incorporated within the national planning policy framework, and that similar protections within the planning practice guidance have been removed. If the Minister does accept those findings from the planning inspector, I would be grateful to hear whether the Government intend to rectify the situation.

Following the shock decision, I asked the Secretary of State to intervene and urgently issue guidance to the planning inspector on determining appeals. This would mean attaching greater weight to the objective of protecting green belt than to the standard housing need method of calculation. When I asked this question, I got the following reply from the Government:

“The Government is firmly committed to protecting and enhancing Green Belt land for future generations as set out in our manifesto. That is why, for decision-taking, local authorities should regard the construction of buildings in the Green Belt as inappropriate and refuse planning permission, unless there are exceptional circumstances as determined by the local authority.”

However, the two local authorities in this case did precisely that but had their refusal overturned anyway. I would be grateful to understand whether the Minister now accepts that the national planning policy framework is simply not fit for the purpose of protecting our precious green-belt land. It must be updated without further delay, and new guidance should be issued to the planning inspector. I have outlined just one example of local authorities doing everything within their power to protect our natural environment and having their decisions overturned by the same Government who profess to be its protector, but I am sure there are countless others.

Let me turn briefly to the standard method and the green belt weighting. At some stage, every council in Hertfordshire will have to make a judgment call. Either they have to come up with a local plan that meets central targets and they have to wave goodbye to the green belt, or they have to try to call the Government’s bluff, claim exceptional circumstances to protect the green belt, and wait and see what the planning inspector says. However, the problem is that the planning inspector may well take their powers away altogether. Council leaders accept that that would almost certainly leave communities in a weaker position than they are in now, and any canny developer would immediately put in an application for the sites that we most want to protect. The situation is deeply unsatisfactory.

As we have discovered, the Government’s repeated claim that the standard method of calculation does not produce centrally imposed targets just does not stand up to scrutiny. In fact, the planning inspector’s day-to-day interpretation of the national planning policy framework shows that that is exactly how the targets are being treated. I ask the Minister again: will he commit to urgently issue guidance to the planning inspector that has principles for protecting the green belt? Will he ensure that those principles are given more weight when deciding appeals and examining local plans, and that they are given more weight than the arbitrary numbers that are being reached through the standard method of calculation? I ask him to do so urgently, as yet another Hertfordshire district has just put out its draft local plan for consultation.

Hertsmere Borough Council proposes bulldozing over a substantial swathe of the green-belt land that sits between two villages in my constituency. The shocking proposal for Bowmans Cross would see the effective conjoining of London Colney and Colney Heath. The plan would mean that 6,000 houses fall slap bang in the middle of fields and natural habitats that currently surround and separate the two communities. The impact of that monster development would not be felt by the residents in Hertsmere; it would be felt by my constituents in St Albans. None the less, I cannot help but have some sympathy for yet another Conservative-led council that has felt the pressure from its Conservative Government to meet their huge top-down housing targets.

I am more than aware of the critical shortage of housing supply in the country. Liberal Democrats are absolutely committed to providing the truly affordable new homes that are so desperately needed, and in St Albans I am proud that the Liberal Democrat-run district council is driving ahead to build those social homes. However, across Hertfordshire, Liberal Democrat-run and Conservative-run councils alike are all in the same position. Conservative-led Broxbourne has given up 15% of its district’s total green-belt land. That is more green-belt land sacrificed than in any other council in England. Research by the Campaign to Protect Rural England recently found that, in addition to the 17,500 homes that have already been approved or are being built on Hertfordshire’s green belt, more than 50,000 extra have been proposed.

To be clear, I am not asking for the Government to stop building; I am asking for the Government to strike the right balance and create a planning framework that delivers sustainable development. It is in the Government’s gift to do that by updating the national planning policy framework and the guidance as I have described. I hope that the Government will take this up without any further delay.

It is a great pleasure to serve under your chairmanship, Mr Robertson, I think for the first time. I congratulate the hon. Member for St Albans (Daisy Cooper) on bringing forward this important matter for debate. I am conscious that it is of concern and interest to her, as well as to other Members across Hertfordshire, including my hon. Friend the Member for Watford (Dean Russell) who is an industrious campaigner on behalf of his constituents, as of course is the hon. Lady for hers. They both strongly challenge what I believe can be challenging councils.

It is worth pointing out that the planning system to which the hon. Member for St Albans refers as the Government’s planning system is, in fact, England’s planning system, as it has existed since 1948 under successive Governments. It has grown in complexity and opacity during that period. Successive Governments have tried to make it clearer and more sensible, including the coalition Government of which the hon. Lady’s party was a part with the Conservatives. That Government contributed to the creation of the national planning policy framework some 10 years ago. It is England’s planning system, not the Government’s.

However, the hon. Lady is right to raise the issue of the green belt. Our commitment to the green belt is absolutely steadfast: the Prime Minister made that clear in his Conservative party conference speech last month. It is a manifesto commitment on which the Government were elected, to protect the green belt and associated countryside for future generations. The green belt in our country presently accounts for 12.4% of the land mass. In fact, it is larger now than when records began in 1997, taking into account that national parkland as categorised has been disregarded. In the hon. Lady’s constituency, it is somewhere in excess of 81% of the land mass.

We believe that the green belt is vital for preventing urban sprawl from towns and cities—it helps stop the advance of developments on to precious countryside—and national planning policies deliver strict protections for the green belt along with strong safeguards against development and changes to boundaries. Any proposals to release land from the green belt are subject to consultation with local people followed by a rigorous and independent examination of the revised local plan by a qualified planning inspector. Additionally, if a local authority finds that it cannot avoid releasing land from the green belt, it should offset that loss with environmental and access standards to land remaining in the green belt. As well as protecting the green belt, we must also look to other sites, such as brownfield land, that can be used to deliver new and beautiful homes of all types for people.

The national planning policy framework sets out national planning policy for England. It must be taken into account by local authorities in preparing their development plans. It is also a material consideration in all planning decisions. We believe that the NPPF ensures the protection of green-belt land by defining how most new buildings are inappropriate for the green belt and should be refused planning permission unless there are very special circumstances. Local authorities, through their planning policies and decisions, should show consideration of all relevant policies in the NPPF, including protection of the natural environment, irreplaceable habitats and valued landscapes.

Let me reiterate that green-belt land can change only in exceptional circumstances and that must be done in accordance with the NPPF and the local plan process, in consultation with local people, followed by rigorous examination of the revised plan. That is why the NPPF provides for two tests in safeguarding the green belt. The first prevents local authorities from changing a green-belt boundary unless there are exceptional circumstances and they have shown that they have examined every other option—using brownfield land, optimising the density of development and discussing whether neighbouring authorities can take some of the necessary development. The second test requires that most new buildings in the green belt are inappropriate and should be refused planning permission unless there are very special circumstances, as determined by the local authority.

As we improve the planning system, our existing policy for protecting the green belt will be upheld. Local authorities will be able to protect green-belt land using new digital local plans. I will take away the specific items raised by the hon. Lady and respond to her more fully. I stress that as we approach revisions to our planning framework and to the NPPF, we want to make sure that they work for the green belt as well as for brownfield sites, given the importance of developing those. I will say more about that in a moment.

Let me also point out that the Environment Act 2021, which received Royal Assent earlier this month, brings a mandatory biodiversity net gain requirement as a condition of most new development. That will make it quicker and simpler to assess environmental effects as well as speed up the decision making on and delivery of a development while continuing to protect and enhance the environment.

The hon. Lady mentioned local housing need and recognised the importance of providing housing for the people of our country who want and need it. We have a target of building 300,000 new homes each year by 2025. The Liberal Democrats, I believe, wish to out-do us, and to build 380,000 new homes each year in our country. I welcome their ambition. We want to help people rent or own their own homes. We know that we need to deliver more homes. To get more homes built in the places where people and communities need them, a crucial first step is determining the right number of homes in the right places. That is why, in 2018, we introduced the standard method for assessing local housing need, which makes the process of identifying the number of homes needed in an area as simple, quick and transparent as possible.

As the hon. Member for St Albans rightly says, that formula is a starting point; it is not an end point. It is for local authorities, working with the Planning Inspectorate, to determine the right number of homes based on the constraints or ambitions that they may have. I refer her to a letter that I circulated to Members of Parliament on, I think, 16 December of last year, which made it absolutely clear that local authorities are able to cite, to the Planning Inspectorate, constraints as reasons why the numbers into their plans are different from the local housing need number, which is the default calculation. As I have said, it is for local authorities to demonstrate and determine what the number should be. The constraints are outlined in footnotes 7 and 38, from memory, of the NPPF. In the local housing need calculations, we have also made it clear that none of the authorities outside of the 20 largest metropolitan authorities in England will see any changes to their local housing need numbers.

The challenge for all authorities, however, is to get an up-to-date plan in place. We might say that, in the land of no plan, the local housing need number is king. If there is no set number in an up-to-date local plan, it is quite possible for developers to submit speculative development applications to local authorities. The local authorities may choose to turn them down, but if they have no number in their plan, the local housing need number is the default that the Planning Inspectorate will look at. It is entirely possible that the Planning Inspectorate will overturn refusals sent down by local authorities that do not have up-to-date plans or targets, and will instead look at the local housing need target. It is incumbent on local authorities that wish to protect their communities and avoid speculative development to get up-to-date plans in place.

The hon. Member for St Albans asked me about the number of authorities that have revised their targets. A number have. Stoke, for example, has revised its target up, because it is an ambitious authority. Many others have been able to revise their numbers in other ways. However, having no up-to-date plan at all leaves communities open to speculative development. Of the authorities in our country, 91% have plans made to the 2004 standard. Of the 9% that remain, the hon. Lady’s own local authority is one. St Albans has not had an up-to-date plan since 1994. I would encourage her to encourage her authority to put that plan in place, to protect her community from speculative development.

We believe the green belt is of huge importance to our constituents and to our country. We want to make sure we do more to support it by building on brownfield sites, which we will look to achieve through our planning reforms. We have already made £5 billion, or as near as damn it, available to Homes England to support builders, particularly small and medium-sized enterprises, to develop brownfield-site opportunities. We made £400 million available to mayoral combined authorities last year to identify brownfield sites for regeneration in their geographies. We have only recently announced a further £58 million for 53 local authorities to identify small sites for regeneration that will contribute to their local numbers without the need to impinge on green spaces.

One reason why we have introduced permitted development rights is to encourage the development of unused or underused commercial premises, which can now be demolished more easily and be rebuilt as residential premises. Since 2016 that has seen the construction on brownfield and town-centre sites of some 70,000 additional residences that might not otherwise have been built, to the benefit of local communities, to the benefit of those high streets and to the benefit of the green belt and greener spaces that have not had to have greater strain placed upon them.

I assure the hon. Member for St Albans that we are committed to protecting and enhancing land for future generations and that we are committed to protecting the green belt, as we set out in our manifesto. We will continue to uphold those strong protections, and I look forward to further debates, whether in this Chamber or in the main Chamber, to demonstrate that our policies are biting.

Question put and agreed to.

Sitting suspended.

Multi-academy Trusts: Ofsted

I beg to move,

That this House has considered the Ofsted inspection of multi-academy trusts.

There is much excitement, as we are expecting to hear the Division bell. I will speak slowly at the beginning of my speech, and say that it is a pleasure to serve under your chairmanship once again in a Westminster Hall debate, Mr Robertson. I am grateful to the Minister and welcome him to his new role. I spent time with him on the campaign trail, as well as working with him when he was in the Northern Ireland Office. I am delighted to see the new Parliamentary Private Secretary, my hon. Friend the Member for Wantage (David Johnston), with whom I served on the Education Committee for over a year and a half. He brings a lot of experience to the Department of Education. I also welcome the shadow Minister, the hon. Member for Hove (Peter Kyle)—I thoroughly enjoy exchanging a few heckles with him across the Floor of the House, but I also know the passion he has in this area and I am pleased to see him in the Chamber.

Sitting suspended for Divisions in the House.

On resuming

Thank you, Mr Robertson, for calling me to speak again, and I thank everyone else in Westminster Hall for coming back swiftly after the Divisions. I will not repeat all the love-ins that I gave before the Divisions; instead, I will go straight on to saying why we are having this very important debate.

When the people of Stoke-on-Trent North, Kidsgrove and Talke lent me their votes in 2019, it was because they wanted change after 70 years of Labour neglect. A Conservative-led council, Conservative MPs and a Conservative Government are finally levelling up our fantastic city and unleashing the boundless opportunity that it has to offer, while Labour Members are still trying to find Stoke-on-Trent on their Ordnance Survey maps.

As a former teacher, I believe that the most important way to continue levelling up our city is to transform education across Stoke-on-Trent North, Kidsgrove and Talke. It is unacceptable that children from Stoke-on-Trent simply cannot access the same standard of education that is on offer elsewhere in the country. Where we are today, in Westminster, there are eight secondary schools rated outstanding, with a further 16 outstanding schools in Camden, Kensington and Chelsea, and Southwood. By contrast, there is only one outstanding secondary school in Stoke-on-Trent, with another outstanding school shared between the neighbouring local authorities of Newcastle-under-Lyme, Staffordshire Moorlands and Stafford.

Such examples show why I firmly believe that if levelling up means anything, it means that each and every child, no matter where they live in our United Kingdom, has the chance to attend the best schools, where they can receive the education they need to attend first-class universities or gain skills via an apprenticeship or vocational training. As a former teacher who taught in academies for eight years, I think that academies are one of the keys to spreading educational opportunity around the country. Multi-academy trusts back great teachers and, most importantly, they enable our children to reach their potential.

As the “Lost Learning” report that I co-authored earlier this year with Onward and the New Schools Network year argued, we should

“much more aggressively use multi-academy trusts as the engine of school improvement, by…holding them to account for their ability to turnaround underperforming schools”.

Since 2010, the Conservative Government have invested in multi-academy trusts, and throughout my teaching career I saw at first hand how that investment acted as a vehicle for school improvement by advancing the education that our children receive.

That has been reflected in the Ofsted rating of schools. Between 2010 and 2020, the proportion of schools that Ofsted rated as good or outstanding rose from 66% to 86%, while 2018 figures showed that at converter academies open for one year, 65% of pupils reached the expected standards in reading, writing and maths—that figure rises to 71% in converter academies open for seven years or more.

Coupled with the drive for academisation, the free school agenda has been at the heart of the Government’s impressive record on education since 2010. At free schools, 10% more disadvantaged pupils achieve a pass between grades 5 and 9 in their English and maths GCSEs than their peers at other types of state school.

I firmly believe that free schools and academies are key to our mission to level up around the country, and therefore it is only right that pupils in Stoke-on-Trent North, Kidsgrove and Talke should benefit from a free school opening up in the community. I look forward to the Minister announcing that wave 15 is finally coming down the track, so that we can bid for a disruptor free school. I have very much enjoyed talking to Star Academies and to Michaela Community School, which has the fantastic Katharine Birbalsingh, to see if she will endeavour to come to Stoke-on-Trent and shake the apple tree.

On top of their role in driving up school standards, multi-academy trusts are vital in turning around failing schools. To take a local example, the inspirational Learning Academies Trust has transformed the fortunes of two schools in Stoke-on-Trent North, Kidsgrove and Talke. Norton-le-Moors Primary Academy became part of the Learning Academies Trust in 2015, following an Ofsted inspection that rated it as inadequate. After the takeover, it received its first good grade from Ofsted in 2017, and in 2019, 13% of pupils, which is higher than the national average, were achieving beyond the expected standards for reading, writing and maths. I will give a big shout-out to Jack, who was a runner-up in my Christmas card competition. It was a pleasure to visit him with Councillor Dave Evans and award him the prize of the card, as well as Port Vale football match tickets—Stoke’s first team, of course, unlike that team further south, Stoke City.

We also have Whitfield Valley Primary Academy in Fegg Hayes, which joined the Inspirational Learning Academies Trust in 2016. It is now not only rated good by Ofsted but has achieved an above-average progress score in maths, as well as above-average scores in reading and writing.

To look at another example, the Shaw Education Trust recently took over Kidsgrove Primary and Secondary Schools, following inadequate Ofsted ratings under the former multi-academy trust, the University of Chester Academies Trust. That shameful trust has been slammed by Ofsted for failing in its school improvement strategies and below-average standards in some of its schools. In May 2018, it received a formal warning from the Education and Skills Funding Agency to get its finances in order, after racking up a £3 million deficit. The trust confirmed that it was considering cutting 24 support staff and 19 teaching roles across its schools.

Since then, thanks to the Shaw Education Trust, Kidsgrove Primary and Secondary have partnered in launching a new digital strategy, allowing pupils to be taught with up-to-date technology. That follows my “Silicon Stoke” agenda, a new prospectus setting out the ambition for a digital transformation of the city of Stoke-on-Trent, enabling it to become a smart city, attracting new national and international businesses, and being at the heart of the UK video games sector.

“Silicon Stoke” ensures that Stoke-on-Trent takes up opportunities through digital connectivity, and the Shaw Education Trust has ensured that our primary and secondary students at Kidsgrove and Talke are kept up to speed with the new digital age through the digital strategy. Since July this year, all classrooms in Kidsgrove Primary, for example, have been equipped with the latest Promethean boards for teacher and pupil use, and since September, there has been a measure for all students across both schools to receive an iPad, to support school and home learning.

I thank my hon. Friend and neighbour for giving way. I thank him for referencing the Shaw Education Trust, which also has schools in my constituency, such as the Orme Academy. Does he agree that one of the benefits of multi-academy trusts is that they can spread best practice from one area to another, and thus raise standards for everybody across my borough and his city?

I am grateful to my hon. Friend and neighbour, with whom I share Kidsgrove, Talke and Newchapel, since they are within the Newcastle-under-Lyme borough. As we have just heard, the Shaw Education Trust has spread good practice and is sharing expertise, not just across that borough but also within the Stoke-on-Trent City Council area. In fact, the current city director of Stoke-on-Trent City Council, Jon Rouse, was formerly the head of the Shaw Education Trust. I am sure that he is keen to ensure that he declares that he has no interest any more in that trust, having become city director. Ultimately, we could see what he was doing in the Greater Manchester area and how Shaw Education Trust has gone on to do many great things.

My hon. Friend has been a doughty champion for all the schools in his community. Not a day has gone by recently without me seeing a photo of him in a school in his constituency. I know he was recently at Silverdale in the Knutton area, visiting some of the fantastic schools there, alongside local county councillor Derrick Huckfield, who is also doing a fantastic job in that area.

Multi-academy trusts have proven, across Stoke-on-Trent, north Kidsgrove and Talke, that they can level up education by driving up standards and giving our children the education that they deserve. We are committed to driving up school standards across the city. The new education challenge board, approved by the Secretary of State and the Minister for School Standards, is chaired by Sir Mark Grundy, a highly respected educational leader. It will bring together city council leaders, the Department for Education, local academies, Ofsted and the regional schools commissioner. Working collaboratively, the new education challenge board will provide oversight of educational performance across Stoke-on-Trent, helping to turn schools around through first-class teaching and leadership, by drawing on the expertise of the trusts already succeeding within the city.

Unfortunately, not all the trusts are performing in the same way. That matters, because 42% of schools are now academies, and 84% of those academies are part of multi-academy trusts. Since they have control over such a significant number of our schools, families must have confidence in trusts, regardless of where they are in the country. Parents and teachers work incredibly hard to provide children with the best education they can, while listening to various scandals of multi-academy trusts abusing their budgets with excessive spending.

To pick just a few examples, 40 chains have spent more than £1 million on executive expenses, paying thousands for first-class travel. The Aspirations Academy Trust, based near Heathrow airport, has spent nearly £90,000 for its America-based co-founders to fly across the Atlantic; the Paradigm Trust in London has covered the cost of broadband at its boss’s French holiday home; and the Academy Transformation Trust in Sutton Coldfield has even paid to lease a new XJ Premium Luxury V6 Jaguar for a chief executive earning £180,000 a year.

I want to make it clear that I am a huge supporter of academisation, and I believe that we should be going full throttle to turn all schools into academies. Through my experience as a teacher, I have seen at first hand how brilliantly they can turn failing schools around, but we must restore the faith of parents, teachers and, most importantly, the pupils, and we must ensure that trusts are working on behalf of students and not, insultingly, taking advantage of the big budgets to which they have access. It is absolutely right that we move from the local education authority model, but we do not want to create less accountable and transparent LEAs by not having multi-academy trusts properly inspected.

That is the heart of the issue. With no formal procedure in place for inspecting the boards of trustees of multi-academy trusts, how can parents and teachers know that their trusts are performing with the best interests of the school and students at heart? If Ofsted were able to consider the achievement of pupils across schools covered by a multi-academy trust, the success of a multi-academy trust in reversing educational underperformance, and the quality of leadership, financial management and governance of a multi-academy trust, we could ensure that multi-academy trusts played a full role and, crucially, allow those that are doing truly excellent work to be recognised.

I commend my hon. Friend on securing the debate. I wonder whether he will touch briefly on the issue of the regional schools commissioners. As he has rightly outlined, there is concern that multi-academy trusts lack transparency in their governance structures and are difficult to hold to account, but there is also concern about how we as Members of Parliament can access the commissioners, interact with them and help to raise concerns through the system. Will he draw that to the attention of the Minister and give his own thoughts on that particular challenge?

I am very lucky to have had a really healthy working relationship with the west midlands regional schools commissioner, who is a former headteacher at the Mill Hill Primary Academy in Stoke-on-Trent North. However, I have serious concerns, and the purpose and role of regional schools commissioners is an issue that was raised in the Education Committee. When those posts were originally set up, it was absolutely the right thing to do, both to have accountability and so that parents, Members of Parliament and teachers in the schools could raise any concerns. In my opinion, regional schools commissioners should be brokering deals, such as new deals for multi-academy trusts to come into a local area, holding to account boards of trustees that they think are underperforming, and feeding that information back to the Department for Education.

At this moment in time, I do not think that regional schools commissioners are utilised well enough, and there has to be a discussion at some stage about whether they are the right model to bring this change about in the long term, and whether they could be given more powers. Hopefully, we will ensure that regional schools commissioners are not just civil servants, whom I am sure are very noble and worthy people, but that they have spent years in the classroom at all levels of governance and management and can bring their experience with them. That is when a regional schools commissioner can really work. At the moment, they are simply not fit for purpose. I know that the Education Committee raised this issue, and I am sure the Minister will look at it.

We have had a great 10 years of Govian and Gibbian reforms. We will now have the Zahawi-Walker reforms over the next 10 years, and I am sure there will be a White Paper in which we will start to see the next 10 years of mission for education. I hope the role of regional schools commissioner can be explored by the Minister, and I look forward to hearing his thoughts on that. If he cannot tell us today, I am sure he can write to us to let us know how he sees that going forward.

Teachers are accountable for the education they provide to pupils, with Ofsted inspecting schools, including individual academies, and children’s social services. To restore faith between teachers and trusts, multi-academy trusts and their leadership teams must be accountable in the same way as teachers. Ofsted’s chair, Dame Christine Ryan, has agreed with the need to inspect schools’ governing bodies, noting in the Education Committee meeting in September this year:

“I always felt it was absolutely essential to carry out inspection activities on the governing area and its interactions with the schools that it owned.”

Hospital trusts are subject to inspection by the Care Quality Commission, so why can Ofsted not inspect multi-academy trusts in the same way?

We have been moving in the right direction. In 2018, Ofsted trialled inspecting individual academies under the same multi-academy trust before visiting the trust’s head office to evaluate its effectiveness. Although that certainly highlighted the requirement to inspect multi-academy trusts, inspections remain focused on individual schools, meaning that wider issues at the heart of the trusts that run them can go undetected. Inspections that cover only individual schools are the crux of the multi-academy trusts’ accountability problem. Education Committee meetings with Ofsted chief inspector Amanda Spielman in June 2021 were revealing, as she said:

“We still operate what in some respects is historic inspection legislation that constrains us to look at the level of the individual school”.

That clearly limits our ability to hold those responsible to account. The chief inspector noted in November 2020 that

“accountability needs to be able to look at the multiple levels in the system to ask the right questions at the right level”.

To ensure that multi-academy trusts truly use their power for the benefit of our schools, accountability must reflect the top-heavy leadership style of many trusts, and thus hold those responsible to account.

Ultimately, multi-academy trusts can, and do, turn schools around, just as the Inspirational Learning Academies Trust has done across schools in Stoke-on-Trent North, Kidsgrove and Talke. By holding trusts to account through regular inspection—they do not fear being held to account because they are proud of their work—we can ensure that schools, staff and students alike are performing to their full potential. The inspection of multi-academy trusts will allow us to recognise those that perform well, and incentivise the best multi-academy trusts with generous funding to take on struggling schools. By keeping trusts responsible for their performance, we can seek to harness their power, especially in parts of the country where school outcomes are weak. With my personal experience in the teaching profession, I believe that multi-academy trusts are the proven route to ensuring that every child, no matter where they live, can attend a school where they will reach their potential, and open doors to the career routes they wish to pursue.

When I was elected, I promised to level up communities like Stoke-on-Trent North, Kidsgrove and Talke, and providing a quality education for every child is vital to doing this. Multi-academy trusts have had a crucial role in the great improvements in school standards in the last decade; it is our responsibility to identify the best of them and use their power to prove to every child, up and down our United Kingdom, that they are not forgotten and opportunity sits right on their doorstep.

This debate comes off the back of my introduction of a ten-minute rule Bill, for which I was delighted to receive cross-party support from members of the Labour party and from the Liberal Democrats. It shows the strength of feeling on this issue. I was lucky enough to secure the signature of my hon. Friend the Member for Wantage before he was promoted to become Parliamentary Private Secretary at the Department for Education. He knows how great this is, and I am sure that he will use his position within the Department for Education to lobby the Minister. Ultimately, I think this shows the strength of feeling that this is the right way to have fairness, accountability, transparency and to ensure that multi-academy trusts are a positive driver for improving education outcomes across England.

It is a pleasure to serve under your chairmanship for the very first time, Mr Robertson, unlike the hon. Member for Stoke-on-Trent North (Jonathan Gullis), who seems to be a regular in your sessions. I am also very grateful to the hon. Gentleman for securing the debate, and for the persistence with which he is championing this cause. It is extraordinary; he had so much time in which to speak in this debate, and yet he did so at such a ferocious pace. For the benefit of our friends in Hansard, I will speak more slowly so that they can rest their weary quills for the next few minutes.

There are 7,680 schools in this country that are now part of multi-academy trusts. Even if each of those schools had just 500 pupils, that would mean several thousand young people whose futures are in the hands of multi-academy trusts. Regardless of ideology, that should give us pause for thought. Due to the reforms of recent years, multi-academy trusts now have a level of influence over the school system that few could have predicted, even when the first trusts emerged. In fact, most other authorities with responsibilities for young people are subject to extremely stringent inspection regimes—even if they are responsible for far fewer children than many multi-academy trusts. That is why we must do all we can to ensure that, whatever regulatory framework we develop for MATs, it reflects the level of influence that these trusts now exert.

For too long, education policy has been dominated by discussion of school structures. I noticed that in his speech, the hon. Member for Stoke-on-Trent North fell into the same trap, if he does not mind my saying so. As someone who has helped set up two academies, I know their strengths—that they can be a phenomenal tool for delivering improvement—but also their limitations. To suggest that they would have the same impact in every situation stretches the single tool that academisation presents as an opportunity for the education system. Other tools are available to Ministers, principals of schools, school leaders, MATs and local education authorities, and we need to use all the different tools that are at our disposal, not disproportionately favour one for reasons that are simply ideological.

For too long, education policy has been dominated by discussions about school structures—that was, after all, the key plank of the reforms implemented by the Conservative-led coalition after the 2010 general election. Obsessions over school structures have held our schools back, because they have hidden new and emerging challenges in our school system such as the complete failure to root out sexual harassment in our education system. Though it has been found by Ofsted to be routine in all schools, there have been particularly high-profile cases of poor practice in “outstanding” schools that are part of well-established trusts. That is not an argument against trusts or against collaboration, but it is a clear example of how focusing on structures can obscure the real issues that are existing, emerging and developing within our school system. Our focus should not be on radical changes in school structures: it should be on what delivers improvement in the 2020s and beyond, not in a bygone era.

To his credit, I believe that the hon. Member for Stoke-on-Trent North is focusing on this issue with a sincere desire to drive improvement, going forward. The Labour party and I are very grateful for that, which is why we have offered what I hope the hon. Gentleman will perceive as constructive support since he introduced his ten-minute rule Bill and beyond. He has drawn national attention to the proliferation of multi-academy trusts under this Government, and has pushed for a specific loophole around inspections to be closed.

As has been noted, Ofsted has carried out summary inspections on multi-academy trusts since 2019. Recent updates to the guidance on those inspections should help to broaden their remit and increase their volume. However, Ofsted itself has highlighted the need to go further: its chief inspector, Amanda Spielman, has highlighted the “peculiarity” of not inspecting MATs on their governance, efficiency and use of resources. Appearing before the Select Committee on Education, she also referred to a suite of

“historic inspection legislation that constrains us to look at the level of the individual school”.

We in the Labour party completely agree that inspections of multi-academy trusts should take place. We also agree that those inspections should include a proper assessment of leadership, governance and safeguarding arrangements, so we look forward to hearing the Minister’s response today.

As a former chair of governors involved in setting up two turnaround academies, I know how important leadership is to the success of schools. What is more, we never feared being held to account. Inspections are important: in fact, we relished the chance to show what we could do and learn how to perform better. I was there at 7.30 in the morning as chair of governors, alongside the principal, to await the team of inspectors. We welcomed them to our school and we saw their inspection as a tool for improvement, even though we all felt the heat—the anticipation—and did so with great nerves, because we wanted to show off what was great about our school.

When I got the reports in from those inspections, I found them to contain incredibly helpful insights into the performance of schools, which often reinforced the direction of travel within a school and highlighted those things that we did not quite notice. Even on school inspections, classroom visits and walkarounds, it is very hard for people who are not trained educationists to see with their own eyes precisely what is happening in every corner of a school, rather than just going on the data that is presented to them by that school. Inspections are a really important part of improvement, whatever the organisation. So, I have no doubt that genuinely forward-looking MATs will take the same approach to a more rigorous form of inspection for their own organisations than the current regime offers—a form of inspection that champions innovation and gives the insight and analysis of performance to help MATs improve in practice, just as a good inspection should seek to improve individual schools as well.

Adopting a new form of inspection to challenge and support MAT leaders is one thing, but driving up performance and leaders will take far more than a new inspection regime, especially given how badly both they and pupils have been let down during the pandemic. According to research conducted by Teacher Tapp, only 2.5% of school leaders felt supported by the Department for Education throughout the pandemic. Think about that for one second: 97.5% of teachers—over 400,000—trying to respond to a once in a lifetime disruption to education without anyone backing them up. The sense of isolation they felt was profound.

Changes to inspection regimes will go so far, but will not remedy the worst failures of this Conservative Government. What is worse, the Department’s muddled and inconsistent advice was often actively harming our school leaders’ ability to respond. One teacher said of the guidance that she received:

“I physically look at it and I can’t even bring myself to open it right now, because you just get saturated with it”.

Threatened with legal action if they closed—only to be forced to close the very next day—schools and trust leaders have lacked proper leadership throughout the pandemic. They are now lacking properly resourced catch-up support and tough action to clamp down on anti-vaxxers outside school gates.

I want to put it on the record that I completely agree with the hon. Gentleman regarding the disgraceful action of anti-vaxxers standing outside schools filming young people coming in and out of that school, as well as parents. It is absolutely abhorrent and there is absolutely no place for it. This Government have to come down hard on those people.

School, for some of the most vulnerable people in our communities, is the safest place for them. As a former head of year, I used to have a lot of children who hung around after school—despite the fact they told me it was the worst place to be—because it was where they felt safest. The fact that we have these disgusting individuals targeting young people is abhorrent. I am sure that the hon. Gentleman will also call for action. I want to make sure this is on the record for the Minister: we have to go in hard; we have to make our young people and teachers feel safe.

This is something that I have been deeply concerned about since the start of the autumn term in September. On 19 July in the Chamber, when I raised concerns about the vaccine roll-out among children aged 12-plus and argued that it should be rolled out over the summer months, so as to use the mass vaccination existing infrastructure, so that schools could be protected come autumn and stabilised, but also so that they did not become targets for anti-vax protests, the then Vaccines Minister, the right hon. Member for Stratford-on-Avon (Nadhim Zahawi), told me that children were protected by a “wall of vaccinated adults” and therefore it was not a priority. He was wrong. Now he is Secretary of State for Education and we are picking up the pieces.

The principal of a school told me recently that he feels his job is no longer primarily that of leading an institution for schooling, but of running a logistics centre: twice-weekly testing in school, organising the logistics behind a vaccine roll-out in school, dealing with local outbreaks, and dealing with the need to control the flow of students. He said the first, second, third and often fourth items on the agenda of his daily senior management team meetings were about logistical challenges, not teaching and learning. That is the price of not seeing this coming down the road. It was predicted and predictable and was not dealt with.

The Labour party has tried to be constructive about this. Last month the Leader of the Opposition proposed a solution—to update the legislation around public spaces protection orders. They are unwieldy at the moment and could take several weeks to implement. However we believe that, with a very simple amendment to the Anti-social Behaviour Act 2003, the process could be streamlined so that an order could be brought into force in just one hour, with one phone conference between a school principal, the local authority and the local police force. They could bring into the order the powers to keep anti-vax protesters away from school gates for the duration of the vaccine roll-out programme. We offered that suggestion, but sadly the Government have not responded. The Secretary of State for Education said in response to my oral question just two weeks ago that he was in conversation with the Home Secretary, and that all powers would be implemented. Again, nothing happened. I cannot see that that conversation actually took place in a meaningful way.

However, there is another opportunity, and it is great that I have been given the opportunity to put it on the record. Tomorrow, in the House of Lords, Lord Coaker will table an amendment to the Police, Crime, Sentencing and Courts Bill that would amend the 2003 Act to give schools the powers that I have just described to instigate exclusion zones for anti-vax protesters within one hour, and they could do so pre-emptively; if one school is facing disruptive anti-vax protests in which children are being bullied, harassed and intimidated, in all likelihood the same will emerge down the road when the protest moves to another school, so schools need those powers to prevent that protest from happening. The Government have an opportunity to give them those powers. We would get this through in a heartbeat. The Labour Opposition in the House of Lords stand ready to table that amendment tomorrow.

I will have my say on another issue, because I feel as strongly as the hon. Member for Stoke-on-Trent North, and we have another 25 minutes of debate, so I am sure I can get this on the record before I sum up the debate. In my constituency, anti-vax protesters have gone on to a school bus to tell children that they will become infertile if they take the vaccine. Outside schools in my constituency, there have been so many harassing, bullying and intimidatory protesters that schoolchildren have had to detour out into the busy main road in order to go through the driveway into the school. A child was grabbed by the collar and told that he could endanger the lives of his teachers and his parents.

I bring those experiences and my anger about that kind of behaviour because, let us be clear, these people are not just anti-vax. Six months ago, they were anti-face masks. A year or two ago, they were anti-covid altogether, believing it was all fake news. If they were alive 350 years ago, they would have been calling for Galileo to be burned at the stake for saying the earth revolves around the sun. We went through the scientific revolution, we went through the Enlightenment, in this country so that we could not base policy on superstition. We did so by bringing the best of scientific understanding to the heart of Government. Let us not allow these people to determine how public health unfolds in this country. I thank the hon. Gentleman for that intervention and for giving me the opportunity to put that on the record. I feel very strongly about it.

People leading schools and teaching in classrooms through the pandemic lack resources for catch-up support and tough action to clamp down on anti-vaxxers outside school gates. In contrast to the Government, the Labour party is on the side of pupils, teachers and leaders. Our goal is a well-functioning school system, backed with resources, direction and inspection, that prepares students for the world of work and the world of tomorrow that they will encounter. Under the new leadership of my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), we have updated our positions on key issues in schools policy to meet the new challenges that schools and trusts face. The Government have not. We innovate; I am afraid that the Government stagnate.

What is the Minister’s assessment of the strength of the current inspection regime for MATs? What plans does he have to expand Ofsted’s inspection powers with regard to MATs, and does he intend to support any greater powers with the required resources? What other steps is he taking to support schools that wish to exit their trust if that is in the best interests of pupils? Will he commit to a new era of strong leadership from the Department for Education? This is a fantastic opportunity, as we hopefully see the finish line of the pandemic in sight, and with a new ministerial team, to commit to new, strong leadership—one that trust leaders, school leaders, teachers and students can at last trust, replacing the years of drift and decline.

As I made clear at the start, ensuring robust standards for all MATs is crucial. It would matter if they educated just one child; it certainly matters when they educate so many thousands. A young child has only one shot at their education; the state must do all it can to make that shot a success.

It is a great pleasure to serve under your chairmanship, Mr Robertson. It is also a great pleasure to follow the hon. Member for Hove (Peter Kyle); it was great to hear him speak so passionately about the value of school inspection. I know he has had his differences with his party’s Front Bench in the past. Obviously, given the manifesto for school inspection that Labour fought the last election on, that is a pretty major difference. I welcome many of the points he made and, although it is not the subject of the debate, I share the absolute condemnation of bullying and intimidation by anti-vaxxers. It is, of course, totally unacceptable.

I congratulate my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis)—also the Member for Kidsgrove and Talke—on securing the debate. I know that its subject reflects his immense commitment and, indeed, successful frontline experience in improving educational outcomes for pupils. As we would expect, he has spoken with great passion and eloquence about the transformative potential of the academy system and the need to harness that so that pupils across the country, and particularly in his Stoke constituency, can benefit.

I am also pleased that, through the Stoke plan, there is a place-based pilot aiming to level up education in the city and identify strategies to build up MAT capacity in the area, and that my colleague, Baroness Barran, and the Secretary of State were recently able to attend the inaugural meeting of the education challenge board in the area. I am glad to hear of the positive developments that my hon. Friend the Member for Stoke-on-Trent North reported at both the Inspiration Trust and the Shaw Education Trust, as well as the support they have given my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell).

My hon. Friend the Member for Stoke-on-Trent North has rightly emphasised the importance of having the right accountability arrangements in place to support continuous improvement in educational quality and, ultimately, to change the lives of children for the better. I thank him for that. We have also heard a number of valuable contributions from colleagues who are now elsewhere and, indeed, from the Opposition spokesman.

I am also conscious of the contributions of the Education Committee, its role in scrutinising current accountability arrangements and its interest in promoting Ofsted’s inspection role over a number of years through its reports and discussions, which underlies the relevance and importance of today’s debate across the House. I also acknowledge the desire of Her Majesty’s chief inspector and the Ofsted chair to go further.

I absolutely agree that accountability arrangements should develop over time to reflect the delivery of education and the decision making that goes on. It is clear that that delivery is taking place within an evolving landscape in which academies and MATs are playing an increasing role. A little more than a decade ago, there were just 203 academies. I am pleased to report that there are now more than 9,700 open academies, free schools, studio schools and university technical colleges, with around 1,200 academy trusts running more than one academy.

Today, more than 55% of pupils in state-funded education study in academies, but that of course means that almost half do not. The dual system of educational delivery in this country persists. We are on a journey to change that but we have not yet reached our destination: a world-class school-led system in which every school is part of a family of schools in a strong multi-academy trust.

Our commitment to reaching that destination is fuelled by the evidence of the benefits we already see in strong MATs. My hon. Friend the Member for Stoke-on-Trent North has alluded to some of them today: the flexible deployment of teachers and leaders to where they are needed most; the opportunities for teachers to gain experience across school settings; the sharing of resources and mobilisation of the best available evidence of what works; the use of economies of scale to improve outcomes; and great resilience, which has been particularly important during the pandemic. The list goes on. Put simply, a group of schools in a trust, working together with a single aim, can make a profound difference. I agree with my hon. Friend and the hon. Member for Hove that not all trusts are as strong as they could be, which is why accountability is a crucial part of the equation.

Ofsted already plays a role through its routine school inspection programme, which, as Members will know, was paused temporarily in response to the pandemic. The programme not only resumed in September, but has now accelerated so that all schools, including outstanding schools that were previously exempt from routine inspection, will have at least one inspection between last term and summer 2025—a year earlier than previously committed to—to provide swifter assurance for parents and more timely recognition of schools’ work as they strive to support pupils’ recovery.

Ofsted school inspection provides robust assessment of the quality of education and the strength of leadership and management in each and every academy. It is important to recognise that through the lens of the individual school Ofsted gazes at and captures the impact of MATs. After all, when an academy is part of a MAT, the board of trustees is the governance body and the role played by trustees in relation to the school is evaluated by the inspectors as part of their judgment of the effectiveness of leadership and management at the school. In a school with good leadership and management, inspectors will expect trustees and local governing boards to ensure that the school has a clear vision and strategy, manages its resources well and holds leaders to account for the quality of education provided to pupils.

The bottom-up accountability for MATs provided by Ofsted’s school-level inspection is supplemented by a programme of MAT summary evaluations, which provides more of a top-down view and insight into the role and impact of the MAT itself. Those evaluations draw on the inspections of individual academies in a trust, along with direct engagement with trust leaders to review how well a trust is delivering a high quality of education and raising standards for all pupils. To be clear, it is early days for the programme, which began in December 2018 and which builds on the previous batched inspection approach, and it has involved 12 MATs to date. As with routine inspections, the evaluations have rightly been paused in the light of the pandemic, but will now move forward under the recently revised Ofsted arrangements. The Ofsted updates are intended to bring evaluations more in line with Ofsted’s education inspection framework, with its focus on the quality of education and curriculum. The evaluation includes consideration of key information about the MAT and aims to recognise where it is having a positive impact, as well as giving the MAT helpful recommendations on aspects that could be improved.

I want to come back to the MAT summary evaluation programme, but before that I want to provide a wider context to the arrangements for MAT accountability. Academy trusts’ status as companies, charities and public-sector bodies means they are subject to significant scrutiny, beyond the necessarily periodic Ofsted inspections and evaluations. The Department, as regulator, requires a level of transparency from trusts, and its regional schools commissioners and their teams, together with the Education and Skills Funding Agency, provide robust educational financial oversight of all academy trusts. Trusts themselves must publish annual reports and audited accounts. That is in addition to the Department publishing a wide range of information, such as tables setting out measures of educational performance and financial benchmarking data. Both the regional schools commissioners and the ESFA hold trusts to account where schools are underperforming or where there are weaknesses in safeguarding, which we have heard about in today’s debate, governance or financial management. That can include commissioning support or issuing a pre-warning notice, a termination warning notice or a notice to improve, all of which are published if necessary. The funding agreement can be terminated and a new sponsor identified to take on responsibility for the academy.

On managing MAT expansion, we have increased the rigour around how regional schools commissioners decide on which academy trusts can grow, with oversight from the national schools commissioner. Before approving a decision about growth, RSCs will consider evidence about the educational and financial capacity of an academy trust. In doing so, they should consider the circumstances and maturity of the academy trust, reducing the likelihood that trusts grow in an unsustainable way as, I acknowledge, they have been known to in the past. To support that approach, regional schools commissioners regularly engage with trusts to ensure strong processes are in place to maintain and improve educational performance and to inform decisions about the suitability of a trust to support new schools.

I hear the concerns that my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter) raised and my hon. Friend the Member for Stoke-on-Trent North endorsed about the role of regional schools commissioners. Their role has evolved and I suspect that that will continue to happen. There is an increasing focus on financial management, supported by the ESFA. Regional schools commissioners and the ESFA need to work together to test both financial regularity and value for money in all trusts. I am happy to engage further on the issue with hon. Friends.

Financial accountability is founded on a clear framework communicated and regulated by the ESFA through trust funding arrangements and the academy trust handbook. As mentioned earlier, academy trusts must publish annual reports, audited by a registered statutory auditor. As part of their annual reports and accounts, trusts must also publish details of their objectives, achievements and future plans, including what they have done to promote value for money in support of those projects. The oversight arrangements go beyond the requirements for local authority maintained schools and provide the Department as regulator with confidence that the oversight is professional and consistent, as the auditors themselves have to confirm standards set by an independent regulator. It is right that we consider adapting and implementing the current academy transparency measures across the maintained sector to strengthen accountability for maintained schools and ensure we have strong and balanced arrangements across all schools. We are taking action as part of the Department’s 2020 transparency consultation response.

On the issue of financial mismanagement—my hon. Friend the Member for Stoke-on-Trent North has raised cases of that in the past—a number of steps have already been taken to strengthen academies’ financial accountability and transparency. That includes the introduction, in April 2019, of requirements for academies to declare to the ESFA, up front, any related party transactions, and in turn to seek approval for any transaction—or cumulative total of transactions—exceeding £20,000.

To be clear, the vast majority of academy trusts are delivering strong financial management and governance. The latest published data shows that in 2018-19, 99.3% of academy trust accounts received unqualified opinions. However, where there is any risk to public funds, the ESFA will intervene. That can include issuing a notice to improve, seeking to impose sanctions on individuals engaged in misconduct or, where appropriate, in the most serious cases, terminating funding agreements.

With the combination of Ofsted school inspection and Ofsted MAT summary evaluations, together with regulatory oversight through regional schools commissioners and the ESFA and transparency on educational outcomes through MAT performance tables, I hope hon. Members will agree that significant accountability safeguards are already in place for MATs. However, that does not mean that we should stand still. We need to keep arrangements under review and seek to build further assurance, where appropriate, while ensuring a balanced system, particularly when they are compared with local authority-maintained schools. I would like to see Ofsted’s MAT summary evaluation programme expanded in the short term, the MATs visited diversifying, and the model continuing to develop. I know that Her Majesty’s chief inspector is keen for that to happen. We will absolutely keep reviewing actively where and how we might go further.

Beyond that, I come back to my original theme: our plan is to move, over time, away from the current dual system approach to a more unified one in which all schools are in strong MATs. As part of that we will be taking a careful and detailed look at how better to hold MATs to account, including Ofsted’s role in that, to ensure MATs are delivering for children. The schools White Paper, which we expect to publish in early 2022, will articulate a long-term vision of how our education system can deliver on the Government’s priorities of building back better after the pandemic and levelling up across the country.

Whatever the future accountability arrangements are, they will need to be developed on the basis of ensuring proportionality and coherence, as well as transparency; it is in no one’s interest for us to micromanage MATs, to stifle their innovation or stamp over their autonomy. Those are the very things that mean the strongest MATs can make such an impact.

We also need to examine accountability at school and MAT level together, to ensure that arrangements do not overlap, confuse or create unnecessary additional burdens that get in the way. Importantly, we need to keep engaging closely with the sector, with organisations, agencies and individuals with a close interest and expertise—I very much include my hon. Friend the Member for Stoke-on-Trent North in that—to work through the issues and be confident that the system delivers. We need to get the right accountability balance, and we will not make changes until we are sure that we have it.

The hon. Member for Hove challenged me with a number of question, and I appreciate that I have not been able to answer them all directly today. However, I can confirm that this is an area that we will keep under active consideration. As we move forward with our school system reforms, we will need an accountability system that empowers trusts and ensures that they are meeting the needs of our young people, and I expect Ofsted will play an important role in that. I again congratulate my hon. Friend the Member for Stoke-on-Trent North again on bringing forward this important debate.

I am delighted to hear about the schools White Paper—the Zahawi-Walker legacy document —that will be launched next year. I will absolutely be pushing for my ten-minute rule Bill to play a key part in that. I am obviously happy to always try to be flexible and fair, but I think—we heard it from the hon. Member for Hove (Peter Kyle)—that this is something that brings everyone, across the House, together. We want the very best for our young people and therefore want the very best education to be accessed.

I could not agree more with the hon. Member for Hove; none of the multi-academy trusts I have spoken to fear this idea, because they believe firmly in what they do. I think the overwhelming majority of multi-academy trusts do their best, work hard, spend their money correctly and invest in the schools within their trusts, and I think they have no problem with it. The only ones that will be worried about are those that do not want to face the scrutiny. That gives the DFE the power to get rid of them—disband these ones—and broker new deals with good existing multi-academy trusts to then come in and take over.

I like to be a bit punchy every now and again, and the hon. Member for Hove is fantastic when he gets going about the Government’s record, so I could not help but remind myself of a few facts. At the end of the day, when the Conservative party came to power in 2010, about a year before I entered the teaching profession, the legacy left by the Labour party was that the Confederation of British Industry stated that employers had lost confidence in Britain’s exams, the Wolf Review found some courses

“fail to promote progression into either stable, paid employment or higher level education”,

and some 350,000 young people had been let down by courses that had little or no labour market value. In 2008, the Sutton Trust found that only 40 pupils out of the 80,000 eligible for free school meals went on to Oxbridge, and in May 2010, the Office for Fair Access said that by the mid-2000s the most advantaged 20% were

“seven times more likely than the most disadvantaged 40% to attend the most selective institutions.”

We only have to look at Labour-run Wales where education standards are falling down the league tables. It is an abomination and Mr Drakeford should be ashamed of himself. He should be held to account for his dismal record in failing to deliver for the people of Wales.

I welcome the hon. Gentleman’s words, and his challenge and scrutiny of Labour’s record. I make the simple point to him that when Labour came to power in 1997, just over 40% of students were getting five GCSEs including maths and English. By the time we finished in power, it was almost 80%. On a range of different measures, outcomes were more than doubled. If he criticises the legacy that Labour left, can he picture what we inherited last time his party left office?

Order. We are actually on a wind-up speech about multi-academy trusts. The hon. Member for Stoke-on-Trent North has 30 seconds to respond to the intervention, but he must then wind up.

Apologies, Mr Robertson. The hon. Gentleman asked me to picture 1997 and put my head back in that time; I was seven years old when Tony Blair came to power, so it is hard for me to fathom and picture that. Obviously, I had to suffer through the Labour doldrums in that education system, but I am grateful that I had a fantastic school and an inspirational teacher there, who was, by the way, a Labour councillor in Tamworth and who is a role model for me.

Finally, on the subject of the “not education union”, Dr Mary Bousted and Kevin Courtney need to resign with immediate effect. They are an abomination to the profession. I will come up to their offices, pack their stuff and send it to their houses. The National Education Union is a disgrace.

Going back to the most important point in the debate, Ofsted want there to be inspections of multi-academy trusts and there is cross-party consensus on that. As we have heard from Members, multi-academy trusts that are really well run are not afraid of this. I hope in the White Paper, the Zahawi-Walker legacy document, we will see some fantastic innovation to turbocharge these schools and multi-academy trusts, and ensure that kids in Stoke-on-Trent North, Kidsgrove and Talke are no longer forgotten and left behind.

Question put and agreed to.

Resolved,

That this House has considered the Ofsted inspection of multi-academy trusts.

Sitting adjourned.