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House

of Lords

Wednesday, 26 November 2014.

3 pm

Prayers—read by the Lord Bishop of Birmingham.

Employment: Gender Equality

Question

3.06 pm

Asked by Baroness Hughes of Stretford

To ask Her Majesty’s Government what action they are taking to address the United Kingdom gender gap, in the light of the World Economic Forum Global Gender Gap Report 2014.

Baroness Garden of Frognal (LD): My Lords, there are more women in employment than ever before, with 713,000 more women employed than in 2010. The Government continue to bring forward measures further to improve equality between men and women in the workplace. A new system of shared parental leave will be implemented from April 2015, and almost 2 million families could benefit from a new tax-free child care scheme from autumn 2015, worth up to £2,000 per child.

Baroness Hughes of Stretford (Lab): I thank the Minister for her Answer, but it does not seem to relate to the reality of the situation. In 2006, after a lot of progress, the UK was ranked ninth in the world on the global gender gap rankings. This year we are 26th, and we have fallen out of the top 20 for the first time in decades, largely as a result of women’s pay falling dramatically and the decrease in their labour market participation. Is the Minister concerned that her policies appear to be hitting women differentially, much harder than men? Why are the Government taking us backwards on equal pay?

Baroness Garden of Frognal: The Government are not taking us backwards on equal pay. The UK has indeed dropped from 15th to 26th in the World Economic Forum global equality ranking, but this is due not so much to what is going on in the UK as to the fact that other countries are improving their pay differential. We have the statistics to show that there are more women in employment. The gender pay gap has narrowed and is now at the lowest level since records began in 1997—but the other countries include places such as, say, Tanzania, where men and women are both on subsistence lifestyles and pay, and the gender pay gap is very small, whereas in our country we have a wider differential.

Baroness Hussein-Ece (LD): My Lords, does my noble friend agree that in closing the gender equality gap the Government should lead by example? Can she tell me how many government departments have signed up to the 30% Club—which, as she will know, is a group aiming to improve representation in the FTSE

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100 companies at all levels for women? Also, has the number of women ambassadors and high commissioners gone up under this Government?

Baroness Garden of Frognal: My noble friend refers to the 30% Club, which, as she is well aware, aims to reach private sector firms. None the less, several government departments and agencies, including the DCMS, the Treasury, DECC and the Department for Transport, are members, so government departments are taking part in it, although it is essentially for the private sector. As to the number of women leading overseas missions, there are now 39, which is 20%. That is an increase from 32 in 2010, and more than one-third of these women are in countries affected by conflict, or in missions dealing with international organisations such as the EU and NATO.

Baroness Thornton (Lab): My Lords, I wish the Government would refrain from claiming that there are more women in employment than ever before. There are, of course—because, demographically, there are more women. This is not a credit to the Government, particularly. Since the Government introduced tribunal fees, equal pay claims are down by 84%. So why do they not accept that tribunal fees were a mistake, and listen to our calls to scrap this unfair system and ensure that affordability is not a barrier to justice?

Baroness Garden of Frognal: My Lords, I hate to take issue with the noble Baroness, but, in fact, the gender pay gap is at the lowest level since records began. It is now 19.1%, and more women are employed than ever before: there are now 14.4 million in the workforce.

Lord Tebbit (Con): My Lords, does my noble friend not think it strange that, when these gender gap questions come up, there is always a call for more women ambassadors, generals and air marshals or such like; there is never a call for more women to be plumbers, electricians and so on. Can my noble friend also explain why the Government do so much to give incentives and help to women to leave their children at home and go out to work rather than to stay at home and look after their children?

Baroness Garden of Frognal: Well, my Lords, the Government are giving incentives to women to be plumbers and engineers. Only around 7% of engineers in this country are women, and there is a whole host of programmes to try to encourage girls and young women to go into STEM subjects. We need more women plumbers, too. Women who become plumbers find that they can be very successful because quite a lot of customers rather like having a woman coming to help them out.

A noble Lord: Plumbing the depths.

Baroness McIntosh of Hudnall (Lab): True. My Lords, first, would the Minister care to remind her noble friend Lord Tebbit that part of the reason why so many women need to work is that their mortgages and rents are so high? Will she also please address the

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question that was put to her by the noble Baroness, Lady Hussein-Ece, and tell us about ambassadors and high commissioners?

Baroness Garden of Frognal: I apologise; I thought that I had answered that. We now have 39 women who are leading UK missions overseas.

Baroness Manzoor (LD): My Lords, women are not a homogeneous group. Black and ethnic minority women are totally overrepresented in low-paying jobs. Can the Minister say how this is being addressed by the Government?

Baroness Garden of Frognal: Indeed, there are certainly problems with particular groups. One such group is the care sector, where women are disproportionately represented and pay is disproportionately low. Certainly, women from ethnic communities would come into the Government’s consideration in trying to encourage all women to improve their qualifications and training, and to aspire to do jobs which really challenge and test them.

Baroness Thornton: My Lords, the noble Baroness did not address the question that I asked her, which was about tribunal fees. Equal pay claims are down by 84%. Why will the Government not accept that that was a mistake and scrap that system?

Baroness Garden of Frognal: I think that this is all part of the general agenda to try to get equality through the system. However, I think that I will have to write to the noble Baroness on that particular point.

Mental Health Services

Question

3.13 pm

Asked by The Earl of Listowel

To ask Her Majesty’s Government what plans they have to improve mental health services for infants, children and young people in local authority care, and for care leavers.

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, in August 2014 the Government established the children and young people’s mental health and well-being task force, which is looking at how to improve access to services that are more responsive to children and young people’s needs. It has a particular focus on the needs of the most vulnerable children, including care leavers and those in local authority care.

The Earl of Listowel (CB): I thank the noble Earl for his Answer and for the work of the task force, which is most welcome. Is he considering encouraging the systemic approach to supporting foster carers and staff in children’s homes, whereby clinicians support groups of staff in children’s homes and foster carers? This can be a very effective way of making use of scarce CAMHS resource. Will he also look at undertaking

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another, very thorough, survey of the mental health of looked-after children? The last very thorough examination of their mental health was carried out in 2002, and it would seem that it is time to look again at their mental health issues.

Earl Howe: My Lords, on the noble Earl’s second point, yes, a survey is most certainly being actively considered. On his first point, he is absolutely right. One of the task force’s focuses will be to consider and make recommendations on how we can provide more joined-up, more accessible services built around the needs of children and young people, looking at sometimes innovative solutions about how to get there and how to improve access to health and support across different sectors, including in schools, through voluntary organisations and online. I am very encouraged by the task force’s terms of reference.

Baroness Tyler of Enfield (LD): Given that some 60% of children and young people in care are currently reported to have emotional and mental health problems, can the Minister say what plans the Government have to set access standards for these children as part of their wider drive to increase access to mental health services, to ensure that these very vulnerable people get the support that they need?

Earl Howe: My noble friend is absolutely right: there is a high prevalence of mental health issues in those leaving care. The Government are dedicated to supporting NHS England’s work to develop a service specification for the transition from CAMHS that is aimed at CCG-commissioned services. CCGs and local authorities will be able to use the specification to build on the best measurable services to take into account the developmental needs of the young person. A separate specification for transition from CAMHS to adult services is also in development.

Lord Bradley (Lab): My Lords, does the Minister agree with me and the recent Health Select Committee report into child and adolescent mental health services that it is wholly unacceptable that so many children and young people suffering a mental health crisis face detention under Section 136 of the Mental Health Act in police cells rather than an appropriate place of safety? What action are the Government taking to eradicate this practice immediately?

Earl Howe: My Lords, it is unacceptable for a child in a mental health crisis to be taken to a police cell. The mental health crisis care concordat, launched in February this year, reinforces the duty on the NHS to make sure that people aged under 18 are treated in an environment that is suitable for their age, according to their needs. It also makes it clear for the first time that adult places of safety should be used for children if necessary so long as their use is safe and appropriate. We have seen a reduction in the use of police cells across the country but there is still further work to do.

Lord Crisp (CB): My Lords, I understand that child and adolescent mental health services are under pressure anyway, and therefore that puts greater pressure on those who are hardest to reach. Perhaps I may therefore ask the noble Earl two specific questions. First, what is

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being done to ensure that private children’s homes have as good access to CAMHS services as local authority homes? Secondly, when a looked-after child is placed out of an authority or experiences a change in placement, what measures are in place to ensure that he or she receives priority in the new waiting list?

Earl Howe: My Lords, both of those issues will be looked at by the task force. There have been concerns on both fronts that the noble Lord raises about access to services, and we are clear that the task force must come up with recommendations in those areas.

Lord Laming (CB): My Lords, does the Minister agree that when the state assumes the parenting of a child or young person it takes on an enormous responsibility and a moral commitment to be a good parent to that child? Will the noble Earl assure the House that every effort is made for these children to be given access to all the services, including often some of the basic, ordinary health services that we assume there will be access to?

Earl Howe: My Lords, I fully agree with the noble Lord. He may like to know that my department is currently working with the Department for Education to revise the statutory guidance on promoting the health and well-being of looked-after children. We plan to consult on this later this month and to publish the final guidance early next year. It will make it clear that the CCGs and local authorities are responsible for providing services for looked-after children to give equal importance—parity of esteem—to their mental and physical health and to follow the concordat that I referred to.

Baroness Hussein-Ece (LD): My Lords, my noble friend will be aware that early diagnosis in terms of getting support for children is very important, but very often these children are excluded from school—they end up in pupil referral units and are just generally not in school when they really need help. Is he satisfied that local authorities are doing what they can to make sure that these children who are excluded are getting mental health support?

Earl Howe: My noble friend raises a very important point. My department has invested £3 million in MindEd, which provides clear guidance on children and young people’s mental health for any adult working with children, young people and their families so that, for example, school teachers and those working with children in schools can recognise when a child needs help and can make sure that they get that help early.

Lord Ramsbotham (CB): My Lords, can the Minister confirm whether there is a sufficiency of trained mental health nurses and specialists to carry out all the tasks that this welcome task force will undoubtedly identify?

Earl Howe: There are concerns about the sufficiency of mental health nurses and professionals, particularly in certain areas of the country. Workforce issues therefore will be under the spotlight for the task force.

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Income and Wealth Inequality

Question

3.21 pm

Asked by Lord Dubs

To ask Her Majesty’s Government what assessment they have made of the current levels of income and wealth inequality in the United Kingdom.

Lord Newby (LD): My Lords, according to the latest ONS statistics, income inequality in the UK is lower than when this Government came into office. Recent ONS data have also found that wealth inequality has remained unchanged since this measure began in 2006.

Lord Dubs (Lab): My Lords, there may be some dispute about those figures, but for the moment let us go along with them. Is the Minister aware that today, or yesterday, the Institute of Directors, hardly a hotbed of left-wing views, denounced a pay package for a senior executive as being “excessive and inflammatory”? The chief executives of our leading companies have seen their average pay go up from £4.1 million to £4.7 million. That is at a time when the largest network of food banks says that increased demand for food bank services has gone up by 38%. Is that not a gross condemnation of our society?

Lord Newby: My Lords, I completely agree with the noble Lord that many directors have had pay increases which bear no relation to either pay increases that other people have had or the performance of their company, and that is why this Government have introduced a raft of measures to make firms more accountable to their shareholders for the pay packages that directors get. However, I remind the noble Lord that those people who are in the top 1% of wage earners and whose pay has gone up now contribute some 28% of the total income tax collected.

Lord Marlesford (Con): My Lords, does my noble friend recollect that the late Lord Bauer, a pathfinding economist in many areas, suggested that in this context a more objective word than “inequality” is “difference”?

Lord Newby: I am not sure that I do recollect altogether. It is important to look at inequalities as well as differences because there is an additional dimension in the word “inequality” to the neutral word “difference”.

Lord Stern of Brentford (CB): My Lords, will the noble Lord, who is my former student and was a very good student, join me in recognising that after three or four decades of being roughly constant, income inequality in the UK shot up during the 1980s, and the Gini coefficient went from around 0.25 to about 0.35 in household disposable income and has stayed there through different Administrations over the last 20 years? We moved from being one of the more equal countries to one of the more unequal countries in the OECD. Does he recognise also that the share of gross income of the top 1% has more than doubled in the last

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30 years, moving from around 6% to around 13%? Are he and the Government comfortable with those levels of inequality?

Lord Newby: My Lords, I cannot but agree with my former tutor. I fear that I did not hear the last part of his question altogether, but it is very important, first, that we shine a greater light on the amount that people have been earning at the top end so that they can be subject to appropriate scrutiny, and, secondly, that people at the top end are taxed more effectively than they have sometimes been in the past. In both those respects, the Government have made some progress.

Baroness Armstrong of Hill Top (Lab): My Lords, has the Minister read the recent report of the Social Mobility and Child Poverty Commission? Its central conclusion is that, because of the rise in the number of working poor, unless very different policies are pursued, by 2020 the challenge will be that we will be a much more divided nation between north and south and between rich and poor. What are the Government going to do in order to have those different policies to ensure that we are not a singularly divided nation?

Lord Newby: My Lords, the commission has put great priority, in all its reports, on the importance of work in households. One of the telling statistics, for me, about what has happened in recent years is that there are now 390,000 fewer children in workless households than there were in 2010 and that the proportion of children in workless households is now at its lowest level since records began. We know that the family environment is extremely important to how children think about the workplace and to their chances of getting jobs.

Lord Razzall (LD): My Lords, in the context of this important discussion on relative income and wealth inequality, do the Government have a view on the opinion of the Institute for Fiscal Studies, expressed yesterday, that since 2010 the position of pensioners has increased significantly relative to those in work, however palatable that might be to your Lordships’ House?

Lord Newby: My Lords, as for how resources are allocated, and where people feel more could be done or less, it is a bit like squeezing air round a balloon. It is interesting that I do not think that there has been a single question in your Lordships’ House on one aspect of the Government’s policy—the level of support the Government have given to pensioners.

Lord Davies of Oldham (Lab): My Lords, if the Minister is right that inequality has not increased then the Government are clearly failing in their objectives, because they certainly set out to reduce income tax on the more highly paid. We all know the excesses of chief executives getting 21% increases in pay when very many other people are seeing reductions, let alone increases, and cannot keep up with inflation. Is he aware that there are 1.4 million people on zero-hours contracts and that the average family in this country is £30 a week worse off under this Government?

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Lord Newby: My Lords, I just think that the noble Lord’s figures are wrong. On inequality, I would like to quote Chris Giles from last week’s Financial Times, since noble Lords opposite clearly find it difficult to accept what I am saying about it.

“Since 2008, the earnings distribution has been flat as a pancake. And because the coalition government has protected people dependent on social security more than the working population, inequality of net incomes has edged down”.

Lord Bilimoria (CB): My Lords, does the Minister agree, following the noble Lord, Lord Stern, that the Gini coefficient has gone up significantly over the last three decades? There is no question about that, regardless of who has been in government. Does he agree that the living standards of people in this country are far higher than three decades ago, when Britain was the sick man of Europe?

Lord Newby: My Lords, I absolutely agree with the noble Lord. Noble Lords will be aware that real incomes are starting to rise again and are projected to do so over the next three or four years by all reputable forecasters.

Divorce: Effect on Children

Question

3.29 pm

Asked by Baroness Deech

To ask Her Majesty’s Government what is their assessment of the survey findings reported by Resolution on the adverse effects of divorce on children.

The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, the Government agree with Resolution that parents need to minimise conflict when separating or divorcing to reduce adverse impacts on children. We encourage the use of mediation rather than litigation to resolve disputes about children and finances. Court processes now require consideration of mediation in such cases.

Baroness Deech (CB): Does the Minister appreciate that mediation cannot work if the law is as uncertain as it is, especially now that legal aid has been removed and more than 50% of the money cases involve at least one litigant in person? Will he undertake to do an impact assessment on the removal of legal aid from the family courts, which has resulted in the strain that Resolution has pointed out? Will the Government commit to reforming the law on financial remedies on divorce to save money and remove some of that strain from the families and the children?

Lord Faulks: The noble Baroness is, of course, taking through this House her own Private Member’s Bill, which makes various recommendations for giving greater clarity to the arrangements on divorce. The Government are considering that, together with the Law Commission’s report on prenuptial agreements and financial arrangements after divorce. Certainty is of course desirable, but at the same time flexibility may be necessary to deal with difficult cases. The Government have already made it clear that they do

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not propose to bring forward legislation in this Session. The next Parliament will have an opportunity to consider not only the Law Commission’s thorough consultation but all the good work that the noble Baroness is doing in respect of her Bill.

Lord Beecham (Lab): My Lords, what assessment have the Government made of the Family Matters project, currently being piloted in Oxford, Crewe and Newcastle, which addresses the problems faced by families and children in these circumstances? What guidance and resources are they giving to schools and the National Health Service to detect and support children who are suffering from the effects of marital or relationship breakdown?

Lord Faulks: I am afraid that I am not briefed on the precise matters that the noble Lord has referred me to. Of course, the Resolution report referred to by the noble Baroness emphasises the various problems that are occasioned to children on divorce; they are well known, but they are helpfully emphasised in that report, and the Government are considering its consequences very carefully.

Lord Mackay of Clashfern (Con): Would it not be helpful to divorcing couples to have a framework of the resources that should be allocated, with power in the court—if it went to court—to depart from that at the judge’s discretion? We could have a framework from which the parties would start as a way of settling their dispute, rather than coming into a situation where there were no rules at all and the question was completely open. Surely, it would help to restrict the question a bit if a framework existed.

Lord Faulks: The noble and learned Lord is quite right. That is a matter that is being considered, with the idea that there should be non-binding guidelines that would enable parties to have at least an idea of what the likely outcome would be on divorce. In fact, mediation is often successful. Experienced practitioners are able to predict—not with certainty but with some confidence—the outcome of cases and then advise their clients accordingly.

Lord Morris of Aberavon (Lab): My Lords, is the Minister aware of the significant concerns relating to the noble Baroness’s question about the absence of legal aid and the problems arising therefrom?

Lord Faulks: Legal aid is no longer available, as from April 2013. Whether divorces are always helped by lawyers is, of course, open to question. The Government are not convinced that lawyers are desirable at every stage of the process. Indeed, they feel that mediation is a much more satisfactory way of resolving disputes, whereas cases often result in benefits only to the lawyers rather than to the parties involved. Legal aid is available, within scope, for mediation. Following a recent development in April 2014, mediation is available to both sides, even though one side only is eligible for the initial MIAM session and for the first session after that. We believe that mediation is a much more satisfactory way of sorting these matters out.

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Baroness Shackleton of Belgravia (Con): My Lords, I speak as one of the evil lawyers who practise in this area of the law. Does the Minister recognise that children’s disputes are very difficult to settle when financial disputes are rampaging through the courts? It is very difficult to settle financial disputes, particularly in non-wealthy families. The wealthy of course have the privilege of spending as much money as they like on lawyers, and where the law remains uncertain, the judge’s discretion is so large. Can the Minister assure us that the Government will address the issue of certainty, which the Bill of the noble Baroness, Lady Deech, seeks to address? It is a political matter and not one to be left to the judges.

Lord Faulks: My noble friend is well qualified to tell the House about the difficulties in settling matters, including those concerning children, where there are other, financial aspects that remain uncertain. She will be aware that the Ministry of Justice and the Department for Education recently published A Brighter Future for Family Justice, which covers the implementation of the Children and Families Act. That encourages mediation and the creation of child arrangements orders as opposed to the old contact orders and residence orders, and presumes the involvement of each parent in the life of the child. I am sure that the House will agree that, whatever the difficulties in financial arrangements, the interests of the children must come first.

Pension Schemes Bill

First Reading

3.36 pm

The Bill was brought from the Commons, read a first time and ordered to be printed.

Consumer Rights Bill

Report (3rd Day)

3.37 pm

Amendment 47

Moved by The Lord Bishop of Birmingham

47: After Clause 86, insert the following new Clause—

“High-cost short-term consumer credit market regulations

(1) Within six months of the passing of this Act, the Secretary of State must by regulations made by statutory instrument direct a designated body to prohibit public communications, including promotional material and any promotional activities, which concern a high cost consumer credit service from targeting people below the age of 18, including by regulating the content and timing of such communications with a view to protecting children and other vulnerable persons from harm or exploitation.

(2) In subsection (1), “designated body” means a body specified by the Secretary of State in regulations made under that subsection.

(3) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

The Lord Bishop of Birmingham: My Lords, I am speaking today to the amendment to the Consumer Rights Bill in the name of the Bishop of Truro. He sends his deep regrets that he cannot be in his place

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today. I extend my and his thanks to the noble Lords, Lord Mitchell and Lord Alton, and the noble Baroness, Lady Bakewell, for supporting the amendment in Committee. Peers from all sides of the House spoke in favour of the amendment.

In recent years, we have seen a massive increase in the use of payday loans and therefore in the advertising of them. As we know, in Birmingham and other parts of the country, access to affordable credit is extremely difficult for vulnerable families. In September this year, the Children’s Society published a report on the effect of advertising and telemarketing of payday loans. The report had a number of findings on which noble Lords spoke in Committee and I would like to remind your Lordships of four of those.

More than half of children aged 10 to 17 are seeing payday loan advertisements “often” or “all the time”. A third of teenagers would describe payday loan adverts as fun, tempting or exciting. These teenagers are significantly more likely than their counterparts to say that they would consider taking out a payday loan in the future. Three-quarters of parents back a ban on payday loan advertisements before the watershed. Parents aged 18 to 24 are twice as likely as those aged 25 to 34 to have taken out a payday loan. This amendment proposes the watershed as the sensible cut-off point to protect children best. The 9 pm watershed is a well known, well rehearsed and established tool for parents, who are able to have some control over how much television their children watch. Even if in the real world we are all aware that some children will watch television after this point, banning adverts of this kind before the watershed would prevent them seeing the majority of them.

In the government response to the amendment in Committee, the noble Baroness the Minister described how new rules on payday loans advertisements with regard to signposting and risk warnings would be significant enough to protect vulnerable families. The rules are welcome but regrettably, warnings, although important in protecting adults, do not always protect children from detrimental impact on their long-term attitudes to debt and money management. In that debate, the noble Baroness also outlined the recent changes to the curriculum which made financial education a statutory requirement. That is another welcome change to help combat the inappropriate marketing practices of lenders. Now we need to make sure that that work is not being undone when children go home from school and sit in front of the television.

The amendment has gained support both in the House and outside. Major organisations have added their names in support of this change. Organisations such as StepChange, the Money Advice Trust and MoneySavingExpert have all seen the point of using the watershed cut-off. I hope that the Government will respect that widespread support and take the opportunity not only to give your Lordships a firm commitment to look at the issues in depth but to consider changing the regulations on scheduling of payday loan adverts.

Lord Alton of Liverpool (CB): My Lords, in returning to this issue, which I spoke to at Second Reading and in Committee, I first thank the noble Baronesses, Lady

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Neville-Rolfe and Lady Jolly, for the time that they and their officials have given to it. The meeting that they held with me, the right reverend Prelate the Bishop of Birmingham and the noble Lord, Lord Mitchell, earlier today was certainly helpful.

As the right reverend Prelate just said, this issue has not just exercised Members on all sides of your Lordships’ House at all stages of the Bill but it has also engaged the public outside. I am glad to speak today to Amendment 47, to which I have added my name as a cosignatory. Our amendments are a composite of the amendments which the right reverend Prelate the Bishop of Truro and I moved in Committee and build on that momentum. I hope that they become part of the Bill. However, I recognise that although legislative moments come and are the most important point for parliamentarians to insist on provisions, it is not always possible to achieve legislative outcomes. If that is the case today, I hope that when the Minister comes to reply to the debate, she will be able to say, if the Government agree, as I think they do, with the principles contained in the amendments, how they will be rigorous in ensuring that the advertising industry, the licensing authorities and, above all, the payday loan industry will act in accordance with the amendments, and how we as a House will have the opportunity in due course to hold all those bodies to account.

Lord Higgins (Con): I am looking in vain for some reference to the watershed to which the right reverend Prelate referred. I cannot see where it is in Amendment 47.

Lord Alton of Liverpool: The issue that the noble Lord rightly raises would be covered in the regulations to be laid before the House under proposed new subsection (1). There is a difference between being able to advertise to and target young people, which is the main thrust of the amendment, and the second part, which is about whether there can be regulation after the watershed. It is true that the advertising industry and payday loan lenders recognise that there is an issue about targeting young people, but up until this point, we have not heard enough from them about what they would do about advertising that might appear after the watershed. If I may, I shall return to that in a moment or two.

Lord Higgins: I am very much in favour of the amendment, but the right reverend Prelate referred to the watershed as if it were in the amendment. Am I right in thinking that in fact it does not appear in the amendment, only in a statutory instrument intended under the amendment?

3.45 pm

Lord Alton of Liverpool: It is certainly true that it could appear in an instrument or regulations. However, subsection (1) of the proposed new clause refers to the content as well as the timing with regard to people below the age of 18. What that part of the amendment recognises is that some young people are bound to be watching television after the watershed and that would certainly need to be addressed.

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Payday loan advertising is a significant factor which contributes to the social context in which people make their financial decisions. People are endlessly blitzed by messages encouraging them to spend and to borrow, whereas there is minimal knowledge about money advice and debt help services. Our failure to develop a nationwide network of credit unions has always been a major disappointment to me and a contributory factor to the ability of these payday loan lenders to walk into that space.

With the prevalence of payday loan advertising increasing by more than 20 times from 2009 to 2012, according to Ofcom research published in December 2013, far outstripping the advertising of sound financial management or general financial education—although there is commendable and wonderful work, as the right reverend Prelate referred to, by organisations such as Christians Against Poverty, StepChange, the Children’s Society and CARE—it is hardly surprising that payday loans are increasingly being seen as a normal and responsible means of personal financial organisation. What today’s children see, hear and understand from what they are taught today, and from the advertisements that they see, will impact hugely on their future.

What is particularly concerning about the normalisation of payday loans as a means of borrowing is that it particularly manifests itself among young people, specifically, in younger parents. According to Playday not Payday, a report produced earlier this year by the Children’s Society, 39% of parents aged 18 to 24 are likely to have used payday loans at some point, compared to 18% of 25 to 34 year-olds and just 8% of 35 to 44 year-old parents. It is interesting that the same report concluded that 30% of 18 to 24 year-old parents describe payday loans as an acceptable means of managing day-to-day expenses. Perhaps we can take some encouragement in that 9% of 18 to 24 year-old parents recognise that although they have used payday loans, they do not see them as an acceptable means of managing day-to-day expenses—but that is scant encouragement.

This week, Ofcom, the regulator and competition authority for the United Kingdom’s communications industry, published results concerning children from its Digital Day 2014 research. The study found that just over three-quarters—78%—of children aged 11 to 15 and 90% of six to 11 year-olds watched live TV every day over the course of a week. With so many children consuming so much television, it is important that we ensure that they consume what is appropriate.

In our earlier debates on the Bill it was said that there is a logical inconsistency in the current approach to the advertising of payday loans. I agree with that. We properly accept certain limitations on advertising, even in a free-market economy, where it is recognised that normalising potentially harmful behaviours should be avoided, as is the case, for example, with alcohol or gambling advertisements. Payday loans should be treated in the same way. I have yet to hear a cogent argument against that.

Critics of closing the loophole note that payday loan advertising is not targeted at children and that restricting adverts until after the 9 pm watershed—the

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point made by the noble Lord, Lord Higgins, earlier on—is therefore unnecessary. I must say that I find that argument unconvincing, although I note that the noble Lord is not one of those who advance it. An advert can appeal to someone without being targeted at them. Although payday loans may not be advertised specifically around children’s programming, children do not only see programmes designed for them. They see a range of content.

In a poll conducted by YouGov and commissioned by the Children’s Society, 74% of parents across the country backed a ban on payday loan adverts from airing on TV and radio before the 9 pm watershed. We should listen to them. Parents also tell us that they feel under pressure from their children with regard to payday loans. Research conducted by the award-winning MoneySavingExpert.com website revealed that more than one in three parents with children under the age of 10 have heard their children repeat slogans from payday loan TV advertisements. In the same poll, 14% of parents said that when they refused to purchase something for their under-10 year-olds, they were nagged to take out a payday loan for it. All of us who have children know all too well the almost irresistible gut-wrenching pull of the plea of a child—especially on a sleep-deprived parent. We may reminisce with rose-tinted spectacles about this now, but the reality is that for some families this is what is called “pester power”. It is the beginning of a slippery slope, often towards indebtedness and poverty.

If there are steps we can take to avoid families slipping unnoticed into indebtedness, we must surely take them. These amendments do not represent a magic bullet. I do not think that the right reverend Prelate, the noble Lord, Lord Mitchell, or the noble Baroness, Lady Bakewell, would argue that. I accept that there is no single solution or quick fix. Whole-person financial care is vital. Financial education is crucial to prepare children for financial independence. Equipping children and young people to make financially capable choices will also help to break the sort of cycles of deprivation that many of us have seen, especially in urban areas—places like the city of Liverpool, which I represented for 18 years in another place. But preventing seductive, alluring, irresponsible advertisements can also play its part.

These amendments will therefore make a difference. They will ensure that children are less familiar with high-cost consumer credit products such as payday loans. They will ensure that adults are protected from overt pressure in the form of overbearing and intrusive unsolicited marketing. They will help families and insulate children from the subtle pressure and normalisation of payday loans as an appropriate form of financial management.

For all those reasons, I am very happy to support the amendment so ably moved by the right reverend Prelate the Bishop of Birmingham.

Lord Mitchell (Lab): My Lords, two years ago, the payday loan sector in this country was completely unregulated. Payday lenders from around the world opened up in the UK. For them, it was the new frontier: you could get away with anything—and they did. These companies enjoyed very rapid growth, to

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the extent that Wonga, as just one example, was considering a public listing that would have valued it at more than £1 billion. These people would stop at nothing. Their success, of course, was built upon the misfortune of the millions of people who had no other option but to take out these loans, and of the tens of thousands who suffered, and continue to suffer, acute distress as the value of their loans ratcheted up at 5,000% per annum.

However, things have changed—and very much for the better. It took a superhuman effort, and we encountered a great deal of initial resistance from the Government. But today legislation is in place which has already started to contain the activities of the payday lending companies. In five weeks’ time, the Financial Conduct Authority will introduce interest rate caps that will remove many of the excesses. I congratulate the Financial Conduct Authority for grabbing this bull by the horns, and making life very tough for the cowboys who had reigned supreme. It is estimated by the FCA that in 2015 most of the lending companies will leave the industry and that only four serious payday lending companies will remain in business. It is not often in politics that one can say, “Job well done”. But it is job well done—or at least, nearly done.

This afternoon we are addressing some of the outstanding abuses that the payday lending companies still employ—none more so than the part of their advertising that is targeted at children. Yet again, the government are holding out against legislative action, and yet again they claim that sufficient powers already exist for the FCA, Ofcom and the Advertising Standards Authority to restrict such advertisements; even though there is overwhelming evidence to show that children are influenced, and continue to be influenced, by these advertisements.

In Committee, the noble Baroness, Lady Jolly, made an argument that, in my view, missed the point. She based it on the fact that advertisements are not targeted directly at children. She said that Wonga, as one example, has specific policies not to advertise on children’s TV. I will resist the temptation to comment on the value of any of Wonga’s ethical stands.

Lord Lennie (Lab): Does my noble friend agree that Wonga’s policy of sponsoring my beloved Newcastle United, with their shirt-front logo, is one of the most pernicious and insidious ways in which Wonga and other payday loan companies seek to brand their company among young people watching their heroes on football pitches and on live TV—with repeats on Sunday mornings and so on—and that that area should also be covered by legislation?

Lord Mitchell: I absolutely agree, my Lords, but one step at a time. Not just Newcastle United but Blackpool have a kit with “Wonga” on the front. I am told that one can even buy babygros from Blackpool with “Wonga” on them. It is just awful.

I was about to say that I will resist the temptation to comment on the value of Wonga’s ethical stance on anything; noble Lords will know what I am alluding to.

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Perhaps I may be so bold as to say that the Government have been totally been taken in by these payday lending companies’ public relations campaigns and lobbying efforts. These people are not stupid. They do not advertise on children’s TV programmes because they know that this is unacceptable, even for them. Instead, they advertise on TV when children just happen to be watching. The average British family watches more than four hours of television per day; some programmes are children’s programmes and some are not, but one thing we know for sure is that the kids all know the jingles. They laugh at the puppets and are well aware that money is easily available and fun. The children know this, yet the ASA has trivialised their exposure to this marketing. The payday lending companies are very sophisticated; their marketing is brilliant. They have spent tens of millions of pounds trying to persuade us all, very successfully, that payday lending is a good thing—that it is cool, fun and gives you a wonderful lifestyle, free from worry.

However, as we know, because we have seen it at first hand, unaffordable debt is a blight on our society. We have seen vulnerable and desperate people succumb to the seduction of payday lending advertising. As the noble Lord, Lord Alton, has said, “pester power” has now entered the lexicon of advertising—using children to nag and persuade their parents to take out payday loans. Who could resist their appeal, particularly with Christmas coming up?

The Children’s Society, in its excellent survey on the debt trap, has come up with a series of statistics that have already been mentioned in this debate and which I will not mention again. However, they are pretty damning and show that payday lending advertisements are seen by children. As I say, the payday lending companies at this very moment are spending millions of pounds on daytime advertising and are directing much of it at our children. In introducing the amendment, we aim to restrict this pernicious advertising.

Lord Higgins: My Lords—

Lord Trefgarne (Con): I should say to the noble Lord that this is Report. He has spoken twice already. He needs the permission of the House if he wishes to make a further remark.

Lord Higgins: I understand the point that the noble Lord is making but hope that the House will agree that while I intervened to clarify a point that was confusing, I might reasonably make a speech on the substance of the issue.

Noble Lords: Hear, hear.

4 pm

Lord Higgins: My Lords, I have not spoken previously on the Bill, but I spoke at considerable length on the banking Bill—now an Act. In the concluding stages we discussed payday loans at considerable length. I was anxious, right at the end of the proceedings, that we should not simply encourage the Government to impose a limit on the charges paid on payday loans but also on the rate of interest. This was resisted by the Government at the time. Therefore, I am as happy

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as the noble Lord who has just spoken that the Financial Conduct Authority has, in fact, come out with a series of proposals that considerably improve the environment in which we are discussing payday loans and this amendment. In particular, it has imposed an initial cost of 0.8% per day rate of interest, a fixed default fee which is capped at £15, and a total cost cap of 100%. All these are very welcome.

None the less, in the context of this amendment, the situation is far from satisfactory. I looked at the supporting papers, which the Financial Conduct Authority is putting forward. It calculates the APR equivalent to what I just said as 1,270%. I think we have to consider very carefully whether it is right in saying that the limits it has set will be in danger of eliminating short-term loans if one compares that APR with the cost of capital to the companies which we are discussing.

I will speak a little on the amendment because, as I indicated earlier, I am very sympathetic to some of the arguments that have been put forward. My problem is with the drafting of the amendment. As I sought to point out earlier, although the right reverend Prelate suggests that the amendment is to deal with the watershed, it does not refer—I think I am right in saying—to the watershed as such. My problem is that I suspect that the Government will be reluctant to accept the amendment in its present form. Perhaps my noble friend, in replying to the debate, will indicate whether that is so or whether they are sufficiently sympathetic to the objectives of the amendment that they will come back at Third Reading, or will encourage us to come back at Third Reading, with a more specific form of amendment than that which we are asked to debate, and that many Members have suggested we ought to vote on today. I think that there are some problems. It is not entirely clear, for example, how one is going to demonstrate that a particular advertisement is deliberately targeted at the people we are trying to protect by this amendment.

Overall, I hope my noble friend can reply sympathetically and that we can come back, if not today then at a later stage, with an amendment which is acceptable and which will achieve the objectives that I think are right. It is quite wrong that these adverts should be targeted—as I believe they are, but it is difficult to prove—at children. The Children’s Society rightly points out the extraordinary extent to which the adverts appear to be having an impact on young children, who in turn will be having an impact on the attitude of their parents. Therefore, I think that this is something on which clearly we need to take action—but it is not very simple, and we need to get the legislation right.

Lord Stoneham of Droxford (LD): My Lords, I support what my noble friend Lord Higgins has been saying on the precise nature of this amendment, but I will also share the underlying feelings on this issue that have been expressed by the right reverend Prelate and by the noble Lord, Lord Mitchell, who has played such an important role in getting fundamental changes in the conduct of payday lending. I think it is also fair to say that the Government have listened. The Government also have worked through the Financial Conduct Authority to make sure that these payday loan companies are now in retreat.

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As somebody who has worked in the media, I am always very cautious about structural intervention in advertising, because there are always arguments for restricting advertising in certain circumstances. I think that this issue is not just about young people but about all vulnerable people being taken in by this advertising. We have seen the complications. It is not just children’s television or even daytime television; it is the use of branding to appeal to a particular audience. It is a very complex issue. Two bodies deal in this area: the Advertising Standards Authority and the Financial Conduct Authority. Both those bodies should now look at this and come forward with their recommendations before we consider detailed legislation. I hope very much that the Minister will agree to initiate that.

Baroness Drake (Lab): My Lords, I support Amendment 47. The findings of the different charitable organisations about the prevalence and impact of payday loans are rather chilling and depressing. I will not deploy all the statistics referred to by noble Lords today and in Committee other than to re-stress that Ofcom’s findings show that 80% of payday loan adverts are shown before the watershed. The Children’s Society has found that 55% of children aged 13 to 17 recognise the name of at least three payday lenders—I would have been distressed if my children had known that information at that age—and that parents aged 18 to 24 years increasingly see payday loans as a normal means of money management: almost 40% of them have used payday loans at some point. That is all illustrative of a serious problem.

As many noble Lords have articulated, the characteristics often revealed by people who take out payday loans are all too familiar. A high proportion of borrowers experience financial distress, many come from less well off socioeconomic groups, and few have assets. A significant number of borrowers have two or more loans, which exposes them to unsustainable and spiralling debt. Many borrowers get these payday loans to cover basic needs, including the needs of their children, yet many are in acute repayment difficulties. According to the CMA, more than one-third of loans were not repaid on time or at all, which often brings considerable consumer harm relative to the amounts that were borrowed in the first instance.

Successfully addressing the problem of high-cost credit requires a multifaceted approach and, as my noble friend Lord Mitchell acknowledged, much action has already been taken by organisations such as the FCA. However, taking steps to protect children from exposure to advertising for high-cost loans, which is both ill suited for the children and corrosive in its impact upon parents and families as a whole, is an essential ingredient of that multifaceted approach.

Children exposed to particularly suggestive loan adverts pressurise their parents to take out those loans to buy things. Yet we know that families trapped in problem debt are more than twice as likely to argue about money problems, which leads to stress on family relationships and causes emotional distress to the children. Many noble Lords have referred to pester power, which arises from children’s exposure to payday loan advertising. However, the potency of that power is so great because people love their children. If you

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are on a low or modest income, it is very hard to say no to your children if they are missing out on social activity or feel disadvantaged in comparison to their school friends. How much harder it is at Christmas to say no to the children you love, when you have no money and your children do not understand why they cannot have something in their stocking when you just need to respond to those funny furry grannies who are offering you some money.

Pester power has a powerful emotional pull on parents, and the advertising has such a powerful impact on the children. This advertising masks a business model that is based on exercising great persuasive power on low-income households and their children. There is a continuing need to address the behaviour of firms in this high-cost consumer credit market. These companies have substantial funds for marketing and advertising. That allows them to have great persuasive power over vulnerable people and their children. The prevalence of the advertising has an impact on many people’s choices. In the short term, there are the effects of pester power and increased debt; in the longer term, people see credit as the normative solution to managing their finances.

Even on the FCA’s own analysis, after the cap is introduced the proportion of borrowers who experience financial distress as a direct result of taking out payday loans is expected to remain as high as 40%. Notwithstanding the positive actions taken to date by bodies such as the FCA and the Advertising Standards Authority, there is still a clear and compelling need to send a strong and clear message by placing in statute the responsibility of high-cost lenders to run their advertising appropriately. If the advertising of alcohol and gambling can be heavily regulated to help prevent the normalisation of alcohol abuse, why on earth would one not want to take the fullest action to prevent the normalisation of the potentially harmful behaviour of taking out loans that are unaffordable and get you and your family into debt?

As the noble Lord, Lord Alton, referenced, the sheer quantity of adverts for payday loans seen by and impacting on children, young people and their parents made me shudder when I saw the figures. In 2012, 596 million adverts were seen by children compared to 3 million in 2008. If that is not an aggressive business plan, I do not know what is. That is 200 times more adverts over four years. Some organisations will quote aggregate statistics to seek to state more modestly the level of payday loan advertising, but we should remember that the charitable organisations are so concerned about this because they see and measure the concentration of risk from these adverts on vulnerable families. Never mind the aggregate figures: my children and I are not vulnerable to payday loans, because I have a good income. It is the concentration of risk from these adverts on these children and these families that poses the great risk. We need to remember that what may be a small amount taken out in a loan that is borrowed for a pressing purpose becomes a much bigger debt if the loan is not repaid.

The current advertisements, which other noble Lords have referred to, contain jolly characters. They can appear funny or appealing; they have catchy jingles. In

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fact, they have lots of characteristics but usually not the obvious characteristic, which is to make absolutely clear that they are presenting a very serious form of credit with high risk. An advert can have a cuddly granny, but it will not spell out the risk to your family if you pester your parents to take out such a loan.

Of course, children watch programmes and adverts in other ways and at other times. People are changing their viewing habits and watching programmes on laptops, tablets and iPads. That, too, needs to be addressed. Protection for children needs to be modernised, but that is not an argument against the watershed period remaining sacrosanct for as long as possible and keeping those adverts away from children before the watershed. This really is a compelling amendment.

Baroness Benjamin (LD): My Lords, I rise very briefly to support the amendment, as in the past I have spoken in support of this issue in the House. I am also supportive of the Children’s Society “The Debt Trap” campaign, which seeks to protect children from payday loan adverts by banning payday loan advertising before the 9 pm watershed.

As we have heard, Children’s Society research reveals that too many children are frequently seeing irresponsible payday loan adverts, which in the long term can have an influence on their financial education and attitudes towards debt. I believe that children should learn about borrowing and money in a responsible way—and also about the consequences that borrowing can bring—not from the irresponsible way in which payday loan adverts on television are performed. They can often be very funny animations with seductive, very popular, “can’t wait to see again” adverts.

It is crucial that we protect children from unsuitable advertising before the watershed, in the same way that we have legal restrictions to protect children from gambling, alcohol and junk food advertising. I believe that that will put a stop to the damage that debt does to children’s lives and beyond—long into their adult lives. I very much look forward to a positive response from my noble friend the Minister on this very important amendment.

4.15 pm

Baroness Crawley (Lab): My Lords, I spoke on this subject in Committee. I will briefly speak to support the amendment before us and in particular acknowledge the work of my noble friend Lord Mitchell, who has done a tremendous amount in this vexed area of payday loans.

I said in Committee that I believe that the language of children’s protection has to be modernised. As the noble Baroness just said, we rightly rail against violence, pornography and other aspects of our society when there is abuse of its exposure to children and young people. However, the insidious manipulation of children, when it comes to payday lending and the payday lending industry, can no longer be overlooked or seen as a lesser evil than those of violence and pornography. We all know that the misuse of money can lead to terrible family misery. We harm children, often for the rest of their lives, if we make the notion popular for them that procuring money cheaply can be dressed up and sound like fun, or can be a solution to family pain.

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When speaking about advertising rules, the Advertising Standards Authority states:

“The protection of young people is at the heart of the rules; they already prohibit payday loan ads from encouraging under-18s to either take out a loan or pester others to do so for them”.

It goes on:

“The rules also require that ads must be socially responsible, which we can apply to any ad that appears to target children directly”.

However, as other noble Lords have said, the ASA overstates its case. It is hard to see how anyone can recognise the term “socially responsible” when it comes to payday loans at, as the most reverend Primate the Archbishop of Canterbury said, “usurious rates”. The European Union directive on this—the audiovisual media services directive—states that content which might “seriously impair” minors should not be included in any programme. It goes on to state that content which is “likely to impair” minors must be restricted,

“by selecting the time of the broadcast or by any technical measure”

necessary. I suggest to the Minister, the noble Baroness, Lady Jolly, that including the amendment before us in the Bill would be an appropriate measure, as the European directive states.

I read recently that the world’s top 10 PR companies, including UK ones, have pledged not to represent clients that deny manmade climate change. That was a huge step for these companies to take. What a powerful signal it would send if those same PR companies and their advertisers took a similar course of action when it comes to their industry producing payday loan adverts.

Lord Stevenson of Balmacara (Lab): My Lords, I thank all noble Lords for speaking in the debate, and give special thanks to the right reverend Prelate the Bishop of Birmingham for taking on the amendment tabled by the right reverend Prelate the Bishop of Truro. He spoke extremely well—in borrowed shoes, perhaps, but he obviously felt the same as the right reverend Prelate did in his introductory remarks earlier. I declare my interest as the retiring chair of StepChange, the debt charity, which has a lot of experience in this area.

As we found in Committee, there is clearly an all-party consensus for action. It all boils down to the question of why, if it is right to have advertising restrictions on certain items viewed as harmful or inappropriate for children such as violence, junk food, gambling and alcohol, it is not right to do the same to prevent the harm caused by payday loans. We have clear evidence that there is significant pressure from parents and many campaign groups to place payday loans in the same category as the items that are already restricted, and we need to listen to that.

It is up to the Government to defend their position and explain why on earth they feel that they can resist this amendment. When it was debated in Grand Committee the noble Baroness, Lady Jolly, said:

“The Government share the concerns of noble Lords that this market has caused serious problems for consumers, with unscrupulous lenders taking advantage of vulnerable consumers”.

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I could not have put it better myself. She added that the Government were,

“committed to tackling abuse in the payday market wherever it occurs, including in the marketing of these loans. The Government strongly agree with noble Lords that it is unacceptable for payday lenders deliberately to target vulnerable consumers with their advertising material”.

Game over, it seems to me. So far, so good—but it went downhill from there. The Minister’s argument boiled down to the tired old saw that regulation, not legislation was the right answer, and that,

“a robust set of measures are now in place to protect the vulnerable from such practices”.—[

Official Report,

3/11/14, col. GC 618.]

But they do not.

What do we want? We want legislation now. What are we being offered? Wishy-washy regulations that do not stop children seeing payday lenders’ advertisements, causing irreparable harm. The Government accept that these products, like alcohol and gambling, which I have already mentioned, are unsuitable for children. They agree that advertisements for those should not be targeted at children, but they are happy to let this go forward for payday lenders. This is not good policy-making.

The Government have a chance today to give the noble Lord, Lord Mitchell, an early Christmas present and allow him to say that the job on payday lenders has been well done. This is a good thing to do. The time for reviews and evidence gathering is surely over, and I hope that the right reverend Prelate will not be dissuaded from testing the opinion of the House at the end of this debate. The noble Lord, Lord Higgins, may be right that that wording of the amendment is not exact enough, but that, of course, can be tidied up at Third Reading. We should not desist from testing the principle here simply because of difficulties with the wording. Sometimes you just have to do the right thing—and I hope we will.

Baroness Jolly (LD): My Lords, I am grateful to noble Lords for raising the important issue of the payday lending industry again. I repeat what I said in Committee—that the strong feeling in the House on this matter is clear, and the Government share the concern that payday lenders’ advertising can encourage irresponsible borrowing and cause consumers real harm.

The Government have worked hard on this issue to listen to as many views as possible, both within this House and beyond. As was noted earlier, I have met and spoken to the right reverend Prelate the Bishop of Truro several times, and just this morning the Minister and I met the right reverend Prelate the Bishop of Birmingham—who is an excellent understudy in this matter—and other noble Lords, to discuss their concerns.

It is worth reiterating all the action the Government have taken to protect consumers in this industry, because in Committee we were a very select bunch whereas on Report there is a wider audience. First, the Government have fundamentally reformed the regulation of the payday market. The Financial Conduct Authority’s new, more robust regulatory system is already having a significant impact: the FCA has found that the volume of payday loans has fallen by 35% since it took over regulation in April; that has happened in just seven months.

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The Government have also legislated to require the FCA to introduce a cap on the cost of payday loans, to protect consumers from unfair costs. This cap, which will be in place from the turn of the year, will ensure that no customer ever has to pay back more than double the amount they have borrowed. The FCA has estimated that as a result of the cap, perhaps as few as three or four firms will be able to continue in the market. The Government remain committed to tackling abuse in the payday loan market wherever it occurs, including in the marketing of these loans.

Noble Lords raised specific concerns about the potential for payday loan advertising to target children. Members of the Consumer Finance Association, the main payday loan trade body, and Wonga, which is represented separately, all have explicit policies not to advertise on children’s TV. Ofcom has found that payday loan adverts comprise a relatively small 0.6% of TV adverts seen by children aged between four and 15, which is just over one a week. This is across all channels and time slots. Ofcom has also found that over a quarter of TV watched by four to 15 year-olds is after 9 pm, after the watershed. Therefore the key to protecting children must be to ensure that all adverts seen at any time of day—and this is the point that the noble Lord was making earlier—have appropriate content and are not targeted at children in any way.

Let me be clear. There are already robust content rules in place to protect children from payday loan advertisements. The Advertising Standards Authority enforces the rules set out in the UK Code of Broadcast Advertising, or the BCAP code. The BCAP code requires that all adverts are socially responsible and ensure that young people are protected from harm.

Baroness Crawley: I am grateful to the noble Baroness and I apologise for interrupting. If Wonga and other payday loan companies are saying that they do not directly target children, why do they use the creative powers of advertising that are particularly attractive to children, such as the granny and grandpa puppets in one of the ads?

Baroness Jolly: I am not sure that those ads are attractive solely to children. The point is that they perhaps attract us all. I am not sure. I have not seen a Wonga advert for a very long time but I understood that the old grannies disappeared some considerable time ago. I will come back to the noble Baroness on that issue.

I want to proceed because I have a few things I would like to say. The rules specifically prohibit payday loan adverts from encouraging under-18s to either take out a loan or pester others to do so for them. The noble Baroness, Lady Drake, brought up the point about pester power. Existing ASA rules prohibit the payday loan adverts from encouraging under-18s to take out loans. BCAP is undertaking a review to ensure that these rules are effective, and I will come back to that in a moment.

The social responsibility requirement prohibits lenders from deliberately targeting vulnerable people more generally. That was referred to earlier as well. The ASA has powers to ban adverts which do not meet its

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rules and has a strong track record of so doing. Since May 2014 it has banned 12 payday loan adverts as being inappropriate. In addition to the ASA’s role, the FCA has introduced tough new rules for payday loan adverts, including mandatory risk warnings and a requirement to signpost to free debt advice. To ensure that protections remain effective, the Broadcast Committee of Advertising Practice is currently reviewing how its content rules relating to the protection of children are applied to payday loan advertising on TV.

The Government recognise the strong feeling on the issue in the House, as well as the important research that has been published since the inception of the BCAP review, including that produced by the Children’s Society. Here I pay credit to the society for its tireless work and for bringing this issue very much into our inboxes and to our attention. As a result, I can today announce that Treasury Ministers have asked BCAP to broaden the remit of its review, to ensure that it also considers the appropriateness of its scheduling rules, as well as those around content. Treasury Ministers are writing to BCAP formally to set out this request and this letter will be placed in the Library of the House. BCAP has agreed to this and will expand its review with a view to publication of its findings, in full, in the new year.

During the review, BCAP will of course be very keen to engage with noble Lords on their concerns. When meeting noble Lords at lunchtime today we talked about what might happen within the House. A debate on BCAP’s findings would be more that welcome in the House. I am happy to take the request for a debate back to the business managers. I hope noble Lords will understand that I cannot commit to a timetable for a debate before discussing it with colleagues and with the usual channels.

4.30 pm

Lord Alton of Liverpool: My Lords, I am grateful to the noble Baroness, not least because of the discussion that some of us were able to take part in earlier about this very issue. However, a debate and a review, of course, are no substitute for legislation, as she will agree. Will she at least commit, not about debates or reviews but about what the Government can commit to themselves, which is legislation if the review does not bring forward the necessary mechanisms to control this disease which has been described by so many noble Lords today as affecting so many people?

Baroness Jolly: My Lords, I do not dispute for one minute that we would all like to see this problem go away. Regrettably, these decisions are made by Treasury Ministers and this is well above my pay grade.

A noble Lord: But you are a Minister.

Baroness Jolly: I am, indeed, a Minister. However, there are things to which this lowly Minister will not commit. I want to press on. I have a few paragraphs to go.

This rule-making process is consistent with the way that BCAP makes its rules around adverts for gambling and alcohol. The noble Baroness, Lady Drake, made

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the point that this must be the same as for adverts for gambling and alcohol; and this is the same way that BCAP copes with such adverts.

I repeat that the Government are determined that children are protected from inappropriate advertising by payday lenders. The Government have introduced a wide range of reforms to clean up the payday sector and these are already having a significant impact in protecting consumers. The Government welcome the extended BCAP review to ensure that evidence informs both the content and, indeed, the scheduling rules around payday adverts and continues to deliver a forceful regulatory approach. I hope that noble Lords also welcome these developments and recognise the Government’s efforts to find agreement on this matter. I hope that the right reverend Prelate will see fit to withdraw the amendment.

The Lord Bishop of Birmingham: My Lords, I am grateful for the full, well informed and passionate debate that we have had on this subject. There has been considerable progress. With the noble Lord, Lord Higgins, I was here during the passage of the Financial Services (Banking Reform) Act last year and this area was given a lot of attention. We expected change and change has begun to happen. There is certainly a mood in the House today that further change should take place, change that must happen quickly. Children grow up very quickly and one or two influences at a certain age can make a dramatic difference, not only to them but to the behaviour of their parents, as has been so well illustrated today.

I am grateful to the noble Lord, Lord Alton, for reminding us that we need not only rigour but action in order to pursue proper behaviour by this area of commerce, just as we expect proper responsibility from all our citizens in managing their money, even in extremely difficult circumstances. I am very grateful to the noble Lord for asking the Minister to enable us in this House to hold this business accountable in public, so that further action can not only be monitored but be insisted upon.

I am grateful to the noble Lord, Lord Higgins, for challenging me on my use of the English language and on using back-street “slanguage”, when the language of the Treasury and the legal department—but also the advertising industry, which understands perfectly well when we say “content and timing of … communications”—is what is meant. The noble Lord, Lord Stoneham, brought some of that insight. We have regulators, of whom we expect great things: the Advertising Standards Authority, the Financial Conduct Authority and, of course, the Broadcast Committee of Advertising Practice.

Advertising of this kind, as was said by the noble Baroness, Lady Drake, is unsuitable for children and is corrosive to the family. The approach to this very difficult issue, success though there has been, is multifaceted. A degree of negotiation and persuasion, as well as authoritative legislation, is needed in these powerful institutions that are driven, really, by our consumer society.

I am grateful to all noble Lords who have taken part today and I thank the Minister for taking this issue not only seriously but further by agreeing that

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the Treasury will write to the Broadcast Committee of Advertising Practice, by broadening the scope of the accountability it must take and by insisting that the content and the timing of adverts must not only be improved but satisfy the points made in this House. The watershed is vital, as is the issue of content. There is a long way to go but I look forward to working with my noble colleagues in this House, with the Minister and with the Children’s Society and the other charities that have been mentioned in ensuring that what has been passionately argued today takes place. I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, and so it was not granted.

4.36 pm

Division on Amendment 47

Contents 200; Not-Contents 216.

Amendment 47 disagreed.

Division No.  1

CONTENTS

Adams of Craigielea, B.

Adebowale, L.

Alton of Liverpool, L.

Anderson of Swansea, L.

Armstrong of Hill Top, B.

Armstrong of Ilminster, L.

Bach, L.

Bassam of Brighton, L. [Teller]

Beecham, L.

Berkeley of Knighton, L.

Best, L.

Bichard, L.

Blair of Boughton, L.

Boateng, L.

Boothroyd, B.

Boyce, L.

Bradley, L.

Bragg, L.

Brookman, L.

Brown of Eaton-under-Heywood, L.

Browne of Belmont, L.

Butler of Brockwell, L.

Campbell-Savours, L.

Carter of Coles, L.

Cashman, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Cohen of Pimlico, B.

Collins of Highbury, L.

Cox, B.

Craig of Radley, L.

Crawley, B.

Cromwell, L.

Davies of Coity, L.

Davies of Oldham, L.

Deech, B.

Donaghy, B.

Drake, B.

Dubs, L.

Eames, L.

Elystan-Morgan, L.

Evans of Temple Guiting, L.

Falkland, V.

Farrington of Ribbleton, B.

Faulkner of Worcester, L.

Fellowes, L.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Gale, B.

Giddens, L.

Glenarthur, L.

Golding, B.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Greenway, L.

Grey-Thompson, B.

Griffiths of Burry Port, L.

Grocott, L.

Hannay of Chiswick, L.

Hanworth, V.

Harries of Pentregarth, L.

Harris of Haringey, L.

Hart of Chilton, L.

Haskel, L.

Hastings of Scarisbrick, L.

Hattersley, L.

Haworth, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hennessy of Nympsfield, L.

Hollick, L.

Hollins, B.

Hollis of Heigham, B.

Howarth of Breckland, B.

Howarth of Newport, L.

Howe of Idlicote, B.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Stretford, B.

Hughes of Woodside, L.

Hunt of Kings Heath, L.

Hutton of Furness, L.

Irvine of Lairg, L.

Jay of Paddington, B.

Jones, L.

Jones of Moulsecoomb, B.

Jones of Whitchurch, B.

26 Nov 2014 : Column 907

Jordan, L.

Judd, L.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kidron, B.

King of Bow, B.

Kingsmill, B.

Kinnock, L.

Kinnock of Holyhead, B.

Kirkhill, L.

Laming, L.

Lawrence of Clarendon, B.

Lawson of Blaby, L.

Lea of Crondall, L.

Lennie, L.

Levy, L.

Liddell of Coatdyke, B.

Liddle, L.

Lister of Burtersett, B.

Listowel, E.

Luce, L.

Lytton, E.

McAvoy, L.

McConnell of Glenscorrodale, L.

McDonagh, B.

Macdonald of Tradeston, L.

McFall of Alcluith, L.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Mallalieu, B.

Mandelson, L.

Marlesford, L.

Masham of Ilton, B.

Maxton, L.

Meacher, B.

Mendelsohn, L.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan of Ely, B.

Morris of Aberavon, L.

Morris of Handsworth, L.

Murphy, B.

Noon, L.

Northbourne, L.

Nye, B.

O'Loan, B.

O'Neill of Bengarve, B.

O'Neill of Clackmannan, L.

Ouseley, L.

Parekh, L.

Patel of Bradford, L.

Pendry, L.

Pitkeathley, B.

Prashar, B.

Prescott, L.

Prosser, B.

Quin, B.

Ramsay of Cartvale, B.

Reid of Cardowan, L.

Rendell of Babergh, B.

Richard, L.

Robertson of Port Ellen, L.

Rooker, L.

Rosser, L.

Royall of Blaisdon, B.

St John of Bletso, L.

Scotland of Asthal, B.

Sherlock, B.

Simon, V.

Singh of Wimbledon, L.

Slim, V.

Smith of Basildon, B.

Smith of Leigh, L.

Snape, L.

Soley, L.

Stevenson of Balmacara, L.

Stone of Blackheath, L.

Swinfen, L.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Temple-Morris, L.

Thornton, B.

Tonge, B.

Trees, L.

Triesman, L.

Truscott, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Uddin, B.

Wall of New Barnet, B.

Walpole, L.

Walton of Detchant, L.

Warnock, B.

Warwick of Undercliffe, B.

Watson of Invergowrie, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

Williams of Elvel, L.

Wilson of Tillyorn, L.

Wood of Anfield, L.

Woolmer of Leeds, L.

Worthington, B.

Young of Hornsey, B.

NOT CONTENTS

Addington, L.

Ahmad of Wimbledon, L.

Allan of Hallam, L.

Anelay of St Johns, B.

Arran, E.

Ashcroft, L.

Ashdown of Norton-sub-Hamdon, L.

Ashton of Hyde, L.

Astor, V.

Astor of Hever, L.

Attlee, E.

Baker of Dorking, L.

Balfe, L.

Barker, B.

Bates, L.

Berridge, B.

Black of Brentwood, L.

Blencathra, L.

Borwick, L.

Bottomley of Nettlestone, B.

Bourne of Aberystwyth, L.

Bowness, L.

Brabazon of Tara, L.

Brinton, B.

Brougham and Vaux, L.

Browning, B.

Butler-Sloss, B.

Callanan, L.

Carlile of Berriew, L.

Carrington of Fulham, L.

Cathcart, E.

Chidgey, L.

Chisholm of Owlpen, B.

Clement-Jones, L.

Colwyn, L.

Cooper of Windrush, L.

Cope of Berkeley, L.

Cormack, L.

Cotter, L.

26 Nov 2014 : Column 908

Courtown, E.

Crathorne, L.

Crickhowell, L.

De Mauley, L.

Deighton, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dundee, E.

Dykes, L.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Evans of Bowes Park, B.

Falkner of Margravine, B.

Faulks, L.

Fellowes of West Stafford, L.

Finkelstein, L.

Fookes, B.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

Glasgow, E.

Glentoran, L.

Goddard of Stockport, L.

Gold, L.

Goodhart, L.

Goodlad, L.

Greaves, L.

Grender, B.

Griffiths of Fforestfach, L.

Hamilton of Epsom, L.

Hamwee, B.

Henley, L.

Heyhoe Flint, B.

Higgins, L.

Hodgson of Abinger, B.

Holmes of Richmond, L.

Home, E.

Horam, L.

Howard of Rising, L.

Howe, E.

Howell of Guildford, L.

Humphreys, B.

Hunt of Wirral, L.

Hussain, L.

Hussein-Ece, B.

Inglewood, L.

Janke, B.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jones of Cheltenham, L.

Jopling, L.

Kilclooney, L.

King of Bridgwater, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Kramer, B.

Lang of Monkton, L.

Lee of Trafford, L.

Leigh of Hurley, L.

Lester of Herne Hill, L.

Lexden, L.

Linklater of Butterstone, B.

Liverpool, E.

Livingston of Parkhead, L.

Loomba, L.

Lothian, M.

Lucas, L.

Ludford, B.

Luke, L.

Lyell, L.

McColl of Dulwich, L.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Magan of Castletown, L.

Manzoor, B.

Mar and Kellie, E.

Marks of Henley-on-Thames, L.

Mawson, L.

Miller of Chilthorne Domer, B.

Mobarik, B.

Montrose, D.

Morris of Bolton, B.

Moynihan, L.

Naseby, L.

Neville-Rolfe, B.

Newby, L. [Teller]

Newlove, B.

Nicholson of Winterbourne, B.

Noakes, B.

Northover, B.

Norton of Louth, L.

O'Cathain, B.

Oxford and Asquith, E.

Paddick, L.

Palmer, L.

Palmer of Childs Hill, L.

Palumbo, L.

Patten of Barnes, L.

Perry of Southwark, B.

Phillips of Sudbury, L.

Popat, L.

Purvis of Tweed, L.

Randerson, B.

Redesdale, L.

Rennard, L.

Ridley, V.

Risby, L.

Roberts of Llandudno, L.

Rose of Monewden, L.

Rotherwick, L.

Scott of Needham Market, B.

Scriven, L.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Sharkey, L.

Sharp of Guildford, B.

Sheikh, L.

Sherbourne of Didsbury, L.

Shields, B.

Shipley, L.

Shrewsbury, E.

Shutt of Greetland, L.

Smith of Newnham, B.

Spicer, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stirrup, L.

Stoneham of Droxford, L.

Storey, L.

Stowell of Beeston, B.

Strathclyde, L.

Suttie, B.

Taylor of Holbeach, L. [Teller]

Tebbit, L.

26 Nov 2014 : Column 909

Teverson, L.

Thomas of Gresford, L.

Thomas of Swynnerton, L.

Thomas of Winchester, B.

Tope, L.

Tordoff, L.

Trefgarne, L.

Trimble, L.

True, L.

Tyler, L.

Tyler of Enfield, B.

Ullswater, V.

Verma, B.

Wade of Chorlton, L.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Warsi, B.

Wasserman, L.

Watson of Richmond, L.

Wheatcroft, B.

Whitby, L.

Wilcox, B.

Williams of Trafford, B.

Wrigglesworth, L.

Younger of Leckie, V.

4.49 pm

Amendment 48

Moved by The Lord Bishop of Birmingham

48: After Clause 86, insert the following new Clause—

“High-cost short-term credit: unsolicited marketing

(1) Within six months of the passing of this Act, the Secretary of State must make regulations made by statutory instrument to prevent the sale of high-cost short-term credit through unsolicited marketing calls.

(2) A statutory instrument containing regulations under subsection (1) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

The Lord Bishop of Birmingham: My Lords, I move Amendment 48 in the borrowed shoes of the right reverend Prelate the Bishop of Truro, which are reasonably comfortable—or were, until about 10 minutes ago. The amendment is in his name and that of my noble friend Lord Alton.

The subject is telemarketing, which is in the same vein as payday loans. The discussion of this amendment in Committee made some strong progress with the issue, and I was pleased to see how many of your Lordships spoke in support of it right across the House. I am sure that many noble Lords will have been irritated by cold calling down the telephone. The Department for Culture, Media and Sport’s current consultation on nuisance calls is an important contribution, and an opportunity to tackle the issue of cold calling as a whole, but this amendment is focused on the specific problems caused by cold calling for high-cost credit.

As the right reverend Prelate the Bishop of Truro said in the previous debate in September, the report Playday not Payday, whichhas already been mentioned by my noble friend Lord Alton, looked into the devastating effect of payday loans on children and particularly at the use of telemarketing. It found that only 7% of those parents who had never taken out a loan were receiving such calls, whereas 42% of those who had taken out loans previously were receiving calls. Again, younger parents, aged 18 to 24, are most likely to have taken out a payday loan, so the bulk of these calls are going to young parents who are already financially vulnerable. This concerns me greatly. According to a poll of clients of StepChange, the debt charity, one-third of them have received an unsolicited marketing call offering them a payday loan. Although unsolicited calling may have some benefit for consumers in some industries, there is no question but that they are unsuitable for high-cost credit.

26 Nov 2014 : Column 910

In Committee, we discussed how a gap in the regulations is allowing payday loan companies to use unsolicited marketing to offer people payday loans through phone calls and texts. For mortgage products, however, this type of unsolicited marketing is banned by the Mortgage Conduct of Business rules. The Financial Conduct Authority, whose efforts have already been mentioned and which regulates payday lenders, is very clear on this issue. It says:

“Cold calling can expose consumers to high pressure sales tactics which mean that they can end up with an inappropriate or over-expensive product or service. Our investment and mortgage financial promotion rules therefore ban cold calling … unless certain conditions are met”.

The noble Baroness agreed in Committee to look into this issue, and I look forward to hearing her response. With the Financial Conduct Authority now taking over regulation of payday loans, it makes perfect sense to protect people from high-pressure selling of what can, even after the new cap on costs, turn out to be very expensive products.

Lord Alton of Liverpool: My Lords, I second the amendment and support the right reverend Prelate the Bishop of Birmingham in moving it. My name is on the Marshalled List in support of the right reverend Prelate the Bishop of Truro, who tabled the amendment. I will keep my remarks brief because we exhausted many of the arguments in the previous amendment.

One figure that struck me very much is the £8.3 billion estimate of the social costs of debt problems. Putting aside such staggering figures, which are quite hard sometimes to understand, I think about the families I have met over the years who have seen their family life, community life and whole neighbourhoods broken as a consequence of indebtedness and the debt culture. The time that your Lordships spent when this Parliament was first convened considering the crisis we were facing because of the national debt is being replicated in the area of personal debt. Sometimes we overlook the latter because we are concentrating so much, rightly, on the former. However, many families are deeply immersed in debt, which is incredibly destructive of their family life. I suspect that one of the major factors in the breakdown of family life is people taking out all sorts of commitments and debts that they did not fully understand, when they entered into them, they would not be able to honour and meet. It ultimately leads to friction, disagreement, inability to pay and, then, catastrophic results. Anyone who read the front-page report in the Times newspaper this week about the effects of the breakdown of family life in this country on outcomes, particularly for young people, should surely be troubled by these things.

All of us will have experienced high-pressured, targeting salesmanship. It is incredibly frustrating to pick up the telephone and find people trying to sell you yet something else that you do not need, but many of us can easily be susceptible to it. This is a good amendment and one that I hope the Government will feel able to accept today. I am very happy to support the right reverend Prelate.

Baroness Hayter of Kentish Town (Lab): My Lords, if noble Lords in this House are already quite fed up with these calls, how much more so it must be for

26 Nov 2014 : Column 911

those at home all day, or those without mobile phones, who are almost afraid to answer their landline for fear that it is going to be someone out to con them.

I will broaden this beyond callers offering high-cost credit to all those others who keep phoning us: claims management companies making offers about non-existent car crashes or mis-sold PPI and those making the blatant illegal fishing calls trying to obtain credit card details under the guise of doing marketing. We know that seven in 10 landline customers receive live marketing calls, which add up to 7.8 billion calls a year. These are unwanted calls. The Information Commissioner’s Office receives about 160,000 complaints a year about unsolicited calls and texts. MPs tell us that it fills their postbag. It is the number one complaint for Ofcom, which gets over 3,000 complaints a month. Furthermore, Ofcom’s own research shows—perhaps this is no surprise—that it is vulnerable people who are especially at risk, with a quarter of them getting as many as 10 calls a week that they know to be scams. I am even more worried by those who do not think that they are getting scam calls, because they probably are getting them but think that they are genuine, which really is frightening.

We are wondering how much longer we have to wait for action, but these two amendments are a useful first step. It has taken some time to launch the consultation for the Information Commissioner’s Office to be able to lower the bar before it can take action. Our amendment would allow us to look at who is actually doing the calling and try to stop it at that stage. The first thing that has to happen is for people to know who is calling them. If people can see the telephone number, that will help them to know whether to lift the phone. However, more importantly, in terms of helping to stamp out the practice, having the telephone number would enable complaints to be made and action to be taken. At the moment, more than half of nuisance calls arrive without caller line identification, so you do not know who is phoning you. A large number of those calls, maybe a quarter, may be from abroad. Even if the caller line identification simply said it was an international number, you would probably know that it is one that you do not want to pick up—unless you happen to have a child going round the world and phoning you up from time to time for money, which I gather happens quite a lot. Other calls say simply “number withheld”, which is what we want to put an end to.

Amendment 50A, tabled by my noble friend Lord Stevenson and me, would mandate caller line identification for non-domestic callers, with telephone operators making the facility to read that free to subscribers. When I was young, we used to have to buy a telephone answering machine, but that is now built into our telephones; so should this be, so that we can see who is phoning us. The Culture, Media and Sport Select Committee in the other place supported prohibiting the withholding of numbers for marketing calls and so did the all-party group. In moving a debate on a 10-minute rule Bill in the other House, Alun Cairns said that he supposed that this,

“could be compared to someone knocking at the door wearing a mask or a balaclava. Would we answer the door”,

26 Nov 2014 : Column 912

in those circumstances? He then said:

“Of course we would not. Why, then, do we allow the same thing to happen over the telephone?”.—[Official Report, Commons, 28/2/13; col. 158WH.]

5 pm

In Committee, the noble Baroness, Lady Neville-Rolfe, said that mandatory caller line identification is not permissible under EU law. Needless to say, we have done a bit of research since then: the German telecommunications law makes it illegal to restrict or withhold the line identity when people are calling for marketing purposes; France also prohibits hidden numbers in telephone canvassing; and in Italy—the translation is a bit dodgy for this but I think we have it right—data processing operators must ensure caller line identification when they call subscribers. So there is no reason why we cannot do it here. Jo Connell, chair of the Communications Consumer Panel, strongly supports our amendment. As she says, caller line identification helps report nuisance calls to regulators as well as enabling people to block or filter calls. I look forward to what the Minister is going to say on this, as it may lift our hearts a little.

Lord Maxton (Lab): My Lords, I am looking for one small piece of clarification on this. I fully support these amendments, as someone who suffers from cold calling. Despite having set up a service that is supposed to stop it, I still suffer from it, both on my mobile phone and on my landline at home. However, there is a particular issue with this place. When someone phones out from here, it comes up as an unrecognisable number. It does not give a telephone number, so of course my wife now waits until the phone has rung about five or six times before she answers it because she is worried that it might be a nuisance call. It may be that this would be covered under proposed new Regulation 10A(5) in my noble friend’s amendment, which says:

“Where OFCOM determines that there are reasonable grounds to exempt a non-domestic caller or group of non-domestic callers”,

then it would give an exemption. However, there is a small problem with this place—there may be other places or other public bodies in a similar position—as it would be wrong to identify that the number comes from the Houses of Parliament. That is obviously for security reasons, but I hope that I can get some sort of assurance on that.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con): My Lords, I thank the right reverend Prelate the Bishop of Birmingham for presenting the right reverend Prelate the Bishop of Truro’s amendment with such clarity, oratory and, if I may say so, brevity. I also thank the noble Lord, Lord Alton, for his telling contribution and the noble Baroness, Lady Hayter, for her contribution to our debates on unsolicited calls and nuisance calls and for the examples that she has given, which I will not seek to repeat.

Amendment 48 combines two matters which concern us all deeply: payday lenders and nuisance calls. It brings those matters together and I have listened to many eloquent speeches on it, so I hope noble Lords will not mind if I take the time to reassure the House that the Government share their concern, including

26 Nov 2014 : Column 913

the impact of cold calling on the vulnerable and on family life. In terms of payday loans, it is worth reiterating that the Government have introduced a wide range of reforms. That includes the Broadcast Committee of Advertising Practice’s review, which will be enhanced following the discussion that we had on the earlier amendment.

The Government’s action also includes the transfer of regulation to the Financial Conduct Authority earlier this year. That independent regulator is already having a dramatic impact on the payday loan market, with tough rules such as the limit on rollovers and more rigorous affordability assessments, and far closer supervision.

The regulator also has a wide-ranging enforcement toolkit to take action where wrongdoing is found. Recent high-profile redress schemes, such as the recent cases involving Wonga, show that payday lenders will not be able to get away with failing to comply with the FCA’s rules. The FCA’s tougher regulatory approach has had an impact, with the volume of payday loans shrinking by over a third since April.

However, the FCA is not standing still; it has a clear plan of action to continue to tidy up this sector. Noble Lords have already mentioned several of the actions. From next week, all payday lenders will be required to start applying for full FCA authorisation, in which the FCA will rigorously assess firms’ compliance and the appropriateness of their business models. Firms which do not meet the FCA’s threshold conditions will not be allowed to operate. As my noble friend Lady Jolly has already described, the FCA’s cap on the cost of payday loans comes into force on 2 January—my birthday—and it will have a dramatic impact.

On the specific issue of payday lenders’ and brokers’ use of unsolicited marketing calls, the FCA shares the concerns of all of us. Payday loan firms are subject to the existing rules under the Information Commissioner’s Office, as well as the measures in the Government’s Nuisance Calls Action Plan. The FCA also has rules in place that require payday loan firms to ensure that calls are made only at an appropriate time of day and to make clear at the outset the identity of the firm and the purpose of the communication.

However, today I can announce new measures. As part of the FCA’s clear and ongoing plan to tackle sources of consumer detriment in the payday loan market, next year it will consult on payday loan firms’ unsolicited marketing calls. This consultation will be undertaken in the early summer, following the closure of the authorisation “landing slot” for payday loan firms. The FCA has written to me committing to this, and I am happy to place its letter in the Library of the House. The consultation will specifically include looking at whether these calls should be banned. The FCA will also take a close look at payday loan firms’ use of other unsolicited communications, including text messages and e-mails.

To conclude on this amendment, the industry is already seeing dramatic changes. We look forward to the continuation of the FCA’s work in the months ahead and to hearing the results of the consultation that I have just announced. As the right reverend Prelate said, it is important to act quickly and to be persuasive in this complex area.

26 Nov 2014 : Column 914

I turn to Amendment 50A. As noble Lords are aware, concerns about unsolicited marketing calls relate not just to payday lending. I doubt that there are any of us who do not suffer regularly from the frustration of receiving nuisance calls, whether they are about PPI insurance or whether it is someone trying to sell you solar panels or double glazing. Some of these calls can be genuinely alarming, particularly for the elderly—people such as my father, aged 93—making them very reluctant to answer the phone.

It is worth reminding the House that there are strict rules in place governing the activities of direct marketing companies. Callers must not call people who have registered with the Telephone Preference Service register. They need to obtain prior consent for automated marketing calls, e-mails and fax messages. Consent to such calls is a point picked up in the amendment. I reassure the noble Baroness that if prior consent is not sought, there are tough penalties—I do not think that everybody knows that the Information Commissioner’s Office can issue a monetary penalty of up to £500,000. However, some firms are ignoring these requirements, leading to many unwanted calls. That is one reason why we are working closely with regulators, consumer groups, communications providers and parliamentarians to find ways to stop this law-breaking. This is starting—but only just starting—to make a difference.

It may help if I briefly set out some of the action that the Government have taken under our Nuisance Calls Action Plan, published in March. We have made it easier for consumers to find out how to complain on regulators’ websites. Also, we have ensured that nuisance calls are treated as a priority by the Information Commissioner’s Office and Ofcom. They are taking enforcement action, including issuing significant penalties to organisations found to be breaking the rules.

We are also tackling issues that have been hampering enforcement. In July this year, we amended the Privacy and Electronic Communications Regulations to allow Ofcom to disclose information to the Information Commissioner about organisations breaching the regulations. We are currently consulting on proposals to make it easier for the Information Commissioner to take enforcement action against organisations breaching those regulations. Enforcement in this area is patently hugely important and must be improved.

Currently, there is a requirement to show that substantial damage or substantial distress has been caused. We are proposing, as the noble Baroness said, to lower—or preferably remove—the legal threshold which the Information Commissioner needs to show when taking action. Which?has done great work in this area and is leading a task force considering consent and onward sales that are believed to be the cause of nuisance calls being made to consumers. It will report to the Government next month.

A further important aspect of the issue is, as the noble Baroness, Lady Hayter, has said, identifying who is making unwanted calls when the caller line identification is withheld. This is one of the main issues behind the noble Baroness’s amendment, which seeks to require non-domestic callers to present CLI for all calls. The noble Baroness knows that I very much share this objective. As she says, it

26 Nov 2014 : Column 915

is very difficult to complain to Ofcom or to your provider about a caller if you cannot see who is making the call.

Since this issue was raised in Committee, we have been looking very carefully at whether we can take further legislative action on caller line identification that is consistent with EU law—specifically the e-privacy directive, which allows direct marketing firms to withhold their number. Within some strict limits we do have the ability to derogate from the directive and restrict these rights. We have to demonstrate that this change is a necessary, appropriate and proportionate measure to prevent, detect and prosecute the unauthorised use of electronic communications systems, such as for callers making unsolicited direct marketing calls.

We are aware that Germany has already legislated within this derogation. I note what the noble Baroness said about France and Italy. I am therefore pleased to say that we are now satisfied that we can seek a derogation from the e-privacy directive to impose a requirement to provide CLI on any person making unsolicited calls for direct marketing purposes. The Government will therefore commit today to bring forward secondary legislation to amend the Privacy and Electronic Communications Regulations in the coming months, following an appropriate consultation.

While we will require caller line identification to be provided for marketing calls by committing to such legislation, we do not think it would be right to require caller line identification display services to be free of charge as proposed in the amendment. This service does cost providers money and we think it is a commercial decision as to whether they offer it separately or as part of a package. I am happy to say that TalkTalk already provides free caller line identification display and BT customers can obtain this service for free if they have signed up for a 12-month contract. So consumers can already opt for a free service. I expect others will offer this in view of the legislation we now plan on caller line identification.

As I hope I have shown, the Government take the issue of nuisance calls very seriously, and I have outlined the areas where we are taking action to tackle the problem of payday loans and more generally. We have responded to the specific concern raised in Committee—a very fruitful discussion, I should say, and I thank all those involved, especially the noble Baroness, Lady Hayter—about requiring mandatory caller line identification for marketing calls by committing to bring forward new legislation.

I hope the robust package of protections I have outlined today, and the FCA’s continued commitment to root out the bad practices we have all been discussing, reassures noble Lords, and that the right reverend Prelate will withdraw his amendment.

5.15 pm

The Lord Bishop of Birmingham: My Lords, I thank the Minister for her remarks, and particularly for obtaining agreement from the Financial Conduct Authority that in its next stage of consultation it will attend to the presenting issue of telesales in connection with payday loans. I expect that it will attend to that

26 Nov 2014 : Column 916

with its usual rigour and in a timely fashion. We heard today that this will be no later than the summer of next year. We have also heard that this will cover not only telephone calls but texts and emails as well.

I am most grateful to those who have contributed to the debate, especially the noble Lord, Lord Alton. I have also been very interested to hear the remarks of the noble Baroness, Lady Hayter, on the wider issue of nuisance calls. She referred to the “bank of mum and dad”, which highlights the underlying issue—the fact that while some people can go to the bank of mum and dad, even if they have to make a nuisance international phone call to do it, the people we are really trying to protect are those who have no other recourse than to go for unaffordable money at exorbitant rates.

In closing, I congratulate the noble Baroness on her forthcoming birthday. I hope that on 2 January, in addition to the present suitable for a public servant, she receives other presents that require no one to take out a loan to provide them. I beg leave to withdraw the amendment.

Amendment 48 withdrawn.

Amendment 49

Moved by Lord Clement-Jones

49: After Clause 86, insert the following new Clause—

“Communications services: change of service provider

In section 3 of the Communications Act 2003 (general duties of OFCOM), after subsection (2)(f) insert—

“(g) the maintenance of processes that promote the consumer interest and competition, to include a switching regime that is led by the receiving provider”.”

Lord Clement-Jones (LD): This amendment, which was Amendment 103 in Grand Committee, received solid support from both sides of the House. Like the previous amendment I moved relating to Ofcom’s powers, it needs and deserves a better answer. To that extent it is a probing amendment, but I hope that I shall be using a fairly sharp stick to probe with.

The DCMS seems utterly determined not to give Ofcom any Christmas presents this year. The amendment addresses one of the fundamental rights of consumers—the ability to switch suppliers. It would introduce gaining provider-led switching across the communications sector. This is an opportunity to act in the interests of consumers and competition. Not only is this the Government’s own policy, as set out in Connectivity, Content and Consumers—a document issued last July—but it is supported by every party in this House.

Legislative change is also supported by Ofcom. In a letter written on 13 November to my noble friend Lady Jolly, Ed Richards, the chief executive, made it clear that without the support of legislation it would be difficult, if not impossible, to drive through this vital consumer change. The current evidence threshold to make the case is high and inevitably leads to expensive litigation. The amendment would enable Ofcom to address switching issues more quickly and directly.

In the light of the replies in Grand Committee to my noble friend Lord Stoneham, who ably put forward the argument there, I have retabled the amendment to give the Government a second opportunity to demonstrate

26 Nov 2014 : Column 917

that they stand firmly behind consumers and against vested interests and proponents of anti-competitive practices. Whoever replies to the amendment on behalf of the Government will need to address the issues raised so ably by my noble friend Lord Stoneham, such as the consumer harm created by the current complicated regime—witness the 1.2 million mobile customers who are double-billed or experience a total loss of service—and the hassle and confusion for consumers, which ultimately deter them from switching provider. The car insurance market, for instance, has a switching level of 38%, compared with 9% in the mobile and broadband market, and just 3% in digital television. There are also the poor retention practices caused by the current system, which forces customers to contact their original supplier and often leads providers to operate barriers to switching.

The Consumer Rights Bill offers a window to act in the interest of consumers, especially the vulnerable and those who do not know how to game the system. As discussed in Grand Committee, this would bring mobile communications in line with banking and introduce GPL systems across the sector, not only making switching easier for the consumer, but ensuring a more competitive market that works to drive down prices. My noble friend Lady Jolly insisted in Grand Committee that more work needs to be done to consult before the Government could accept a change to Ofcom’s duties such as this, but surely the need for change could not be plainer. That has been evident since 2007.

This is supported further by the recent evidence given to the House of Lords Communications Committee by Ed Richards, the CEO of Ofcom. He said:

“We have to pursue the consumer interest, but if we believe that the consumer interest lies in moving to gaining provider led, we have to demonstrate that at every level. If we had legislation that said Ofcom should start with the presumption that gaining provider led is the right answer, that changes the onus of responsibility quite significantly. In the litigation and the appeals, and the process of stopping us moving in that direction, which people will understandably enter into, that would make, in my judgment, quite a significant difference. If you start by making the case and bringing the evidence to bear with a presumption from Parliament that easy switching based on gaining provider led is where we are guided to begin, then I think the burden of responsibility on us to demonstrate that it is in the consumer interest is significantly easier”.

I thought, as did many of us, that Mr Richards made a very strong case before the committee. The amendment is also supported by the leading consumer rights group Which?. In its A Government for All Consumers, it rates simpler switching as the key policy priority for telecoms. In the Government’s previous response to this amendment it was stated that the Connected Continent package being discussed by the EU may deliver reform. However, Ed Richards’ letter to my noble friend has confirmed that progress is unlikely any time soon in that respect. What is the alternative—years of litigation on every change to GPL switching? It seems extraordinary that the basic case is that we have to wait until the whole EU does anything under the Connected Continent package before acting ourselves in the UK. I beg to move.

Lord Stoneham of Droxford: My Lords, I shall speak briefly in support of my noble friend Lord Clement-Jones. As I said in Committee, this is a very

26 Nov 2014 : Column 918

important change which is needed in this sector and follows what has already been done in banking and utilities. The current practice is anti-competitive because it reserves competitive offers for new and switching customers at the expense of existing customers. I accept that there are problems about how we can actually make the change. Ofcom clearly wants to do it. The complication arises because, as we know, the landline and broadband change applying to BT Openreach, which also affects Sky, TalkTalk, Post Office and EE broadband, is already in place, and now we want the final stage so that all the mobile operators are covered. There is also the issue of bundling as regards the connection with TV, satellite and so on. Ofcom is currently carrying out a consultation on that. We need to hear from the Government when that consultation is likely to be concluded, whether the Government fully support Ofcom in pushing that forward and whether Ofcom now has the power, in the Government’s view, to initiate it once the consultation is over.

Lord Stevenson of Balmacara: My Lords, Amendment 49, which we support, would amend Section 3 of the Communications Act 2003, requiring Ofcom to promote competition and consumers’ interests by introducing a gaining provider led—or GPL—switching regime to the communications market.

It is obviously clear from what we have already heard and what we heard in Grand Committee that simple switching processes are vital to the health and future of all markets. While banking and energy customers are able to switch by contacting their new provider of choice, in mobile, pay TV and broadband customers have to contact their original provider before switching. The current losing provider led process is complicated and slow, works against consumers and distorts fair and open competition.

What is this mystery all about? As outlined by previous speakers, we have a situation where the Minister assured noble Lords, when she responded to this debate in Committee, that the Government have considerable sympathy for GPL switching in the UK. She said:

“In the Connectivity, Content and Consumers paper published last year, we emphasised that we want that across the board”.—[Official Report, 5/11/14; col. GC 692.]

That seems to be a supportive statement. Given that GPL switching already operates for fixed-line voice and broadband services delivered over the BT Openreach network, it is incomprehensible that it does not yet operate for mobile services or for pay TV. In Grand Committee, the Minister said that Ofcom had the power to mandate GPL switching for all communications services. However, as we have just heard, that does not seem to be Ofcom’s view. Indeed, so much does it disagree with what the Minister has said, it had to write to correct her after the debate in Grand Committee. It is worth quoting:

“We have said consistently that legislative reform to support GPL switching would enable us to address switching issues more quickly and directly, and make it easier for consumers to take advantage of the competitive UK communications market. Therefore we were pleased both with the government’s full support for Gaining Provider Led switching”—

in the July 2013 paper—

“and with the subsequent amendment tabled by Lord Clement-Jones … which would give effect to this aspiration by giving Ofcom a clear duty to mandate GPL switching”.

26 Nov 2014 : Column 919

It is clear that Ofcom not only feels it does not have the power, but would welcome the certainty provided by legislation in the Bill. I suspect that that has more to do with the fact that this is a very litigious market within which a number of providers will probably seek judicial review on other issues if there is any doubt at all over whether the powers exist. It seems not so much a Christmas present but a necessary condition for the improvement of our markets that we should go ahead with this. I do not understand why the Government are reluctant to do so. I hope that they will be able to clear this up by supporting the amendment.

Baroness Neville-Rolfe: My Lords, as someone who has switched provider recently, I have seen at first hand how important it is to make the switching process easier for consumers. I empathise with people who are troubled by this, but I believe that we are close to solving the issue. Obviously the consumer is at the heart of our efforts and I am as keen as other noble Lords to make progress. I hope that I have some good news.

I am aware that Ed Richards has written to support the principle behind the amendment and I have also heard what he said to the parliamentary committee. As a result of that correspondence, we have had subsequent discussions with Ofcom. It has confirmed that it already has sufficient powers to deal with mobile services, on the same basis as it already deals with fixed line and broadband, which I will mention. We will want to see the conclusions of Ofcom’s current call for inputs before deciding what legislation is required for pay TV and bundles, but pay TV is not the issue that we are debating.

While I understand the concerns behind my noble friend’s amendment, I believe that it is not necessary, given Ofcom’s existing functions under the Communications Act 2003. Ofcom announced in December that RPL switching would be mandated for all providers delivering broadband and fixed telephony over the existing copper network. Work has started and full implementation of it will be completed by June 2015. Because many consumers now subscribe to telephony as part of a bundle of services, it does not make sense to focus on telephony alone. In July, Ofcom published a call for inputs to understand better the processes used to switch providers of bundled voice, broadband and pay TV. It will also hold discussions with the industry and consumer organisations, and, to respond to my noble friend Lord Stoneham’s question about the timetable, it will publish a document setting out the results in the first half of 2015. Ofcom will consult further and as appropriate on mobile and bundled services with a view to mandating RPL switching.

I share my noble friend’s concerns about RPL switching, but a short-term partial solution is not the answer. I can assure him that we are fully engaged on this matter with Ofcom and we will continue to be so. Given that progress, and everything that Ofcom is achieving with its existing powers and the ongoing work to move towards a system of RPL switching across the board, I ask my noble friend to withdraw his amendment.

26 Nov 2014 : Column 920

5.30 pm

Lord Clement-Jones: I thank my noble friend for that reply. The one thing that I suppose I really should be grateful for is that—although one would have thought that it was natural in the course of events in Grand Committee and on Report—discussions have clearly taken place between the DCMS and Ofcom, finally, so that there seems to be at least some sort of a meeting of minds. Instead of the chief executive of Ofcom having to write as he did just after Grand Committee to clarify Ofcom’s legal situation and general position on this, discussions have taken place. We are somewhat unsighted by the fact that we do not have chapter and verse as to exactly what Ofcom said in these circumstances. However, it seems extraordinary that, whereas in the letter and in communications before the Communications Committee the CEO of Ofcom said that Ofcom did not have sufficient powers, he now seems to have agreed with the DCMS to roll over and say that it does have them.

I am sure that all sorts of arcane discussions are taking place. I think that there is a big distinction between powers formally to mandate GPL—subject to a merits test, which means that litigation therefore ensues at length about the merits of that decision—and an amendment such as this which makes a presumption that GPL is in the interests of consumers. I am not going to unpick that today; I said that this is a probing amendment. However, I still believe that further answers are required. I very much hope that the Minister will be able to write after this debate to clarify some of the points that I have raised. I hope that that will get us to a more satisfactory way of thinking about this.

Baroness Neville-Rolfe: My Lords, before my noble friend sits down, I am happy to say that I will write.

Lord Clement-Jones: I thank my noble friend for that undertaking. I hope that, at the same time, she will include a pretty firm timetable that has been agreed between the DCMS and Ofcom. On that basis, I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, so it was not granted.

5.32 pm

Division on Amendment 49

Contents 171; Not-Contents 226.

Amendment 49 disagreed.

Division No.  2

CONTENTS

Adams of Craigielea, B.

Adonis, L.

Alton of Liverpool, L.

Andrews, B.

Armstrong of Hill Top, B.

Bach, L.

Bassam of Brighton, L. [Teller]

Beecham, L.

Blair of Boughton, L.

Boateng, L.

Boothroyd, B.

Bradley, L.

Brooke of Alverthorpe, L.

Brookman, L.

26 Nov 2014 : Column 921

Brown of Eaton-under-Heywood, L.

Browne of Belmont, L.

Campbell-Savours, L.

Carter of Coles, L.

Cashman, L.

Christopher, L.

Clancarty, E.

Clark of Windermere, L.

Clarke of Hampstead, L.

Clinton-Davis, L.

Cohen of Pimlico, B.

Collins of Highbury, L.

Cox, B.

Craig of Radley, L.

Craigavon, V.

Crawley, B.

Davies of Coity, L.

Davies of Oldham, L.

Deech, B.

Donaghy, B.

Drake, B.

Dubs, L.

Elystan-Morgan, L.

Evans of Temple Guiting, L.

Falkland, V.

Farrington of Ribbleton, B.

Fellowes, L.

Foster of Bishop Auckland, L.

Foulkes of Cumnock, L.

Freyberg, L.

Gale, B.

Giddens, L.

Golding, B.

Gordon of Strathblane, L.

Goudie, B.

Gould of Potternewton, B.

Grey-Thompson, B.

Griffiths of Burry Port, L.

Grocott, L.

Hanworth, V.

Harris of Haringey, L.

Hart of Chilton, L.

Haskel, L.

Haworth, L.

Hayter of Kentish Town, B.

Healy of Primrose Hill, B.

Hollick, L.

Hollis of Heigham, B.

Howarth of Newport, L.

Howe of Aberavon, L.

Howe of Idlicote, B.

Howells of St Davids, B.

Howie of Troon, L.

Hoyle, L.

Hughes of Stretford, B.

Hughes of Woodside, L.

Hunt of Kings Heath, L.

Hylton, L.

Irvine of Lairg, L.

Jay of Paddington, B.

Jones, L.

Jones of Moulsecoomb, B.

Jones of Whitchurch, B.

Judd, L.

Kennedy of Cradley, B.

Kennedy of Southwark, L.

Kestenbaum, L.

Kilclooney, L.

King of Bow, B.

Kinnock, L.

Kinnock of Holyhead, B.

Kirkhill, L.

Knight of Weymouth, L.

Laming, L.

Lawrence of Clarendon, B.

Lea of Crondall, L.

Lennie, L.

Liddle, L.

Lister of Burtersett, B.

Lytton, E.

McAvoy, L.

McConnell of Glenscorrodale, L.

McDonagh, B.

McFall of Alcluith, L.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Mallalieu, B.

Mandelson, L.

Masham of Ilton, B.

Mawson, L.

Maxton, L.

Meacher, B.

Mendelsohn, L.

Mitchell, L.

Monks, L.

Moonie, L.

Morgan of Ely, B.

Morris of Aberavon, L.

Morris of Handsworth, L.

Noon, L.

Nye, B.

O'Neill of Bengarve, B.

O'Neill of Clackmannan, L.

Palmer, L.

Pannick, L.

Patel of Blackburn, L.

Patel of Bradford, L.

Pendry, L.

Pitkeathley, B.

Prescott, L.

Prosser, B.

Quin, B.

Ramsay of Cartvale, B.

Rea, L.

Reid of Cardowan, L.

Rendell of Babergh, B.

Richard, L.

Robertson of Port Ellen, L.

Rooker, L.

Rosser, L.

Royall of Blaisdon, B.

Scotland of Asthal, B.

Sherlock, B.

Simon, V.

Smith of Basildon, B.

Smith of Finsbury, L.

Smith of Leigh, L.

Snape, L.

Soley, L.

Stevenson of Balmacara, L.

Stoddart of Swindon, L.

Stone of Blackheath, L.

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

Taylor of Bolton, B.

Taylor of Warwick, L.

Temple-Morris, L.

Thornton, B.

Tonge, B.

Truscott, L.

Tunnicliffe, L. [Teller]

Turnberg, L.

Turner of Camden, B.

Uddin, B.

Wall of New Barnet, B.

Walpole, L.

Warnock, B.

Warwick of Undercliffe, B.

Watson of Invergowrie, L.

Wheeler, B.

Whitaker, B.

Whitty, L.

Wigley, L.

26 Nov 2014 : Column 922

Williams of Elvel, L.

Wood of Anfield, L.

Woolmer of Leeds, L.

Worthington, B.

NOT CONTENTS

Addington, L.

Ahmad of Wimbledon, L.

Allan of Hallam, L.

Anelay of St Johns, B.

Armstrong of Ilminster, L.

Arran, E.

Ashdown of Norton-sub-Hamdon, L.

Ashton of Hyde, L.

Astor, V.

Astor of Hever, L.

Attlee, E.

Bakewell of Hardington Mandeville, B.

Balfe, L.

Barker, B.

Bates, L.

Berkeley of Knighton, L.

Berridge, B.

Bichard, L.

Black of Brentwood, L.

Blencathra, L.

Borwick, L.

Bottomley of Nettlestone, B.

Bourne of Aberystwyth, L.

Bowness, L.

Brabazon of Tara, L.

Brinton, B.

Brougham and Vaux, L.

Browning, B.

Burnett, L.

Campbell of Surbiton, B.

Carlile of Berriew, L.

Carrington of Fulham, L.

Cathcart, E.

Chidgey, L.

Chisholm of Owlpen, B.

Colville of Culross, V.

Colwyn, L.

Cooper of Windrush, L.

Cope of Berkeley, L.

Cormack, L.

Cotter, L.

Courtown, E.

Crathorne, L.

Crickhowell, L.

De Mauley, L.

Dear, L.

Deighton, L.

Denham, L.

Dholakia, L.

Dixon-Smith, L.

Dobbs, L.

Doocey, B.

Dundee, E.

Dykes, L.

Eames, L.

Eaton, B.

Eccles, V.

Eccles of Moulton, B.

Empey, L.

Evans of Bowes Park, B.

Falkner of Margravine, B.

Faulks, L.

Fellowes of West Stafford, L.

Fookes, B.

Forsyth of Drumlean, L.

Fowler, L.

Framlingham, L.

Freeman, L.

Freud, L.

Garden of Frognal, B.

Gardiner of Kimble, L.

Gardner of Parkes, B.

Garel-Jones, L.

Geddes, L.

Glasgow, E.

Glenarthur, L.

Glentoran, L.

Goddard of Stockport, L.

Gold, L.

Goodhart, L.

Goodlad, L.

Greaves, L.

Greenway, L.

Grender, B.

Griffiths of Fforestfach, L.

Hamilton of Epsom, L.

Hamwee, B.

Hanham, B.

Hannay of Chiswick, L.

Harries of Pentregarth, L.

Harris of Richmond, B.

Henley, L.

Heyhoe Flint, B.

Higgins, L.

Hodgson of Abinger, B.

Holmes of Richmond, L.

Home, E.

Horam, L.

Howard of Rising, L.

Howarth of Breckland, B.

Howe, E.

Howell of Guildford, L.

Humphreys, B.

Hunt of Wirral, L.

Hussain, L.

Hussein-Ece, B.

Inglewood, L.

James of Blackheath, L.

Janke, B.

Jenkin of Kennington, B.

Jenkin of Roding, L.

Jolly, B.

Jones of Cheltenham, L.

Jopling, L.

King of Bridgwater, L.

Kirkham, L.

Kirkwood of Kirkhope, L.

Knight of Collingtree, B.

Laird, L.

Lang of Monkton, L.

Lawson of Blaby, L.

Lee of Trafford, L.

Leigh of Hurley, L.

Lexden, L.

Lingfield, L.

Linklater of Butterstone, B.

Liverpool, E.

Livingston of Parkhead, L.

Loomba, L.

Luce, L.

Ludford, B.

Luke, L.

Lyell, L.

McColl of Dulwich, L.

MacGregor of Pulham Market, L.

Mackay of Clashfern, L.

Maclennan of Rogart, L.

McNally, L.

Maddock, B.

Magan of Castletown, L.

Manzoor, B.

Mar and Kellie, E.

Marland, L.

26 Nov 2014 : Column 923

Marlesford, L.

Miller of Chilthorne Domer, B.

Mobarik, B.

Montrose, D.

Morris of Bolton, B.

Moynihan, L.

Naseby, L.

Neville-Rolfe, B.

Newby, L. [Teller]

Newlove, B.

Noakes, B.

Northover, B.

Norton of Louth, L.

O'Cathain, B.

Oppenheim-Barnes, B.

Paddick, L.

Palmer of Childs Hill, L.

Patten of Barnes, L.

Paul, L.

Perry of Southwark, B.

Phillips of Sudbury, L.

Popat, L.

Purvis of Tweed, L.

Randerson, B.

Redesdale, L.

Rennard, L.

Risby, L.

Roberts of Llandudno, L.

Rogan, L.

Rose of Monewden, L.

Rotherwick, L.

Scriven, L.

Seccombe, B.

Selborne, E.

Selkirk of Douglas, L.

Selsdon, L.

Shackleton of Belgravia, B.

Sharkey, L.

Sharp of Guildford, B.

Sheikh, L.

Shephard of Northwold, B.

Sherbourne of Didsbury, L.

Shields, B.

Shipley, L.

Shutt of Greetland, L.

Smith of Newnham, B.

Spicer, L.

Stedman-Scott, B.

Steel of Aikwood, L.

Stirrup, L.

Stoneham of Droxford, L.

Storey, L.

Stowell of Beeston, B.

Strasburger, L.

Strathclyde, L.

Suttie, B.

Taylor of Holbeach, L. [Teller]

Tebbit, L.

Teverson, L.

Thomas of Gresford, L.

Thomas of Swynnerton, L.

Thomas of Winchester, B.

Tope, L.

Tordoff, L.

Trees, L.

Trefgarne, L.

Trimble, L.

True, L.

Tyler, L.

Tyler of Enfield, B.

Ullswater, V.

Verma, B.

Wakeham, L.

Wallace of Saltaire, L.

Wallace of Tankerness, L.

Warsi, B.

Wasserman, L.

Wheatcroft, B.

Whitby, L.

Wilcox, B.

Williams of Trafford, B.

Wrigglesworth, L.

Younger of Leckie, V.

5.47 pm

Amendment 50

Moved by Baroness Oppenheim-Barnes

50: After Clause 86, insert the following new Clause—

“Obligations on suppliers of utilities

(1) This section applies to suppliers of electricity, gas, water, sewage systems, telephony (including mobile telephony), internet connections and analogous utilities (“utilities suppliers”) and consumers of those utilities.

(2) At the consumer’s request, which can be done by any means at any time, including at the time of signature of the contract, forthcoming bills shall be sent to that consumer in paper format free of charge instead of the digital version proposed by the utilities suppliers.

(3) If the request is introduced when the contract has already started, it will be taken into account within 10 working days after the date of request.

(4) This section applies equally to those who wish to pay by cheque.

(5) In this section, “cheque” has the meaning given in the Bills of Exchange Act 1882.”

Baroness Oppenheim-Barnes (Con): My Lords, I beg to move the amendment standing in my name on the Order Paper, which I will read because the details will reoccur during what I have to say. The amendment would place an obligation on “suppliers

26 Nov 2014 : Column 924

of utilities”. I specify utilities because their suppliers are the worst offenders and the easiest to deal with. The amendment,

“applies to suppliers of electricity, gas, water, sewage systems, telephony (including mobile telephony), internet connections and analogous utilities (‘utilities suppliers’) and consumers of those utilities … At the consumer’s request, which can be done by any means at any time, including at the time of signature of the contract, forthcoming bills shall be sent to that consumer in paper format free of charge instead of the digital version proposed by the utilities suppliers”,

currently. The amendment continues:

“If the request is introduced when the contract has already started, it will be taken into account within 10 working days after the date of request … This section applies equally to those who wish to pay by cheque … In this section, ‘cheque’ has the meaning given in the Bills of Exchange Act 1882”.

The most important information to give your Lordships’ House on the need for this amendment is about the people whom it concerns. For the most part, they will be elderly with very limited means. They may have access to digital versions of their bills but, for a variety of reasons, do not or cannot learn how to use it. Many of the elderly people at whom this amendment is directed will have carers and want to hold a piece of paper in their hand. They want to see a bill. They want to see that it has been paid. They want to see how much it has cost them. These people, the vulnerable people, are those with whom I am mostly concerned. However, they are not by any means the only people who are desperate to get these important pieces of information, without having to pay for it, from the utilities, which are, on the whole, the worst offenders. This is very important to a lot of people. Many people can use all sorts of complicated, digital machinery but still want a piece of paper in their hands. I am in both categories. I have a personal interest because I am one of the old fogeys who do not do it, but I also object to paying for getting my piece of paper.

It would be interesting to list the legislation that other countries have passed in this respect. In France, where there is strong support for digital bills, there is a new piece of legislation. Article 3 of its decree stipulates that, at the consumer’s request, which can be done by any means at any time, including at the time the contract was signed, upcoming bills shall be sent to him or her free of charge, instead of the digital version proposed by the operator. If the request is introduced when the contract has already started, it will be taken into account within 10 working days after the request. That is now the law in France. A similar provision has been introduced by the Spanish courts and is now the law in Spain.

There have been exchanges on other issues related to the consumer rights directive, to which I shall refer. Once again, we have a Consumer Rights Bill before your Lordships’ House, and it would seem strange if we did not consider this to be the right place to put that legislation. We have to implement that directive within a limited period; we have roughly six months left in which to do so, and this is therefore an important occasion at which to impress upon the Government the urgency of the matter.

The directive does not refer in particular to the type of case that I am discussing but to information that has to be provided on paper, unless one agrees to take

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it by some other durable medium, such as e-mail et cetera. It is clear that it relates to contracts. I have clearly put in the amendment that these are contracts which are taking place with the various utilities. It is also convenient to include that provision because it will be in the hands of the regulators, which I believe can be relied upon entirely to represent consumers if this proposal is passed into legislation.

Among the replies in opposition to the amendment is, first, the claim that it applies only to contracts. However, I have carefully made it clear that these contracts are as described in my amendment. Under the directive, delivery of key information—I should make it clear that this is not what has been enacted in France or Spain—should be given on paper unless one agrees to receive it via some other durable medium such as e-mail. Therefore, it is clearly in the directive. It is not related specifically to the type of contracts I am talking about but nevertheless it means them as well.

One of the arguments that has been expressed against the amendment is that consumers who may have financial difficulties—and they are by no means all of the consumers who are interested in this but they are obviously the key ones—often benefit from contracts which are at the lower end of the scale of contracts available in that particular area. I suppose that is some help to them but it still does not cover the costs. Therefore, we come back to the point where these huge utilities say that it is going to be very costly for them to deliver by paper and that they are giving them contracts that are probably better than others in some respects but they really cannot afford to put a stamp on an envelope. The cost, because they have delivery contracts, is 22 pence.

These big industries cannot afford either to give notice that increases are taking place before they have taken place. However, they can afford to put the information online ready to press a button to send it to all the people who have opted for digital communications. When they press that button, they could easily press a button to send the information that their other consumers require on paper. The opposite argument to theirs is that many people who opt for digital communications forget to look. I understand that this happens to a very large proportion of those who receive information digitally. When they forget to look they have to go to a call centre quickly. Dealing with late payment calls to the call centre costs these industries about £5.30. However, we have not heard them striking those out of the contract yet.

Therefore, I feel that this is a very modest amendment. It is well within the Government’s capabilities to introduce it. An equivalent measure has been introduced in other countries. I cannot think of a good reason why it should not be here. No big organisation in the areas I have specified is going to be making a huge loss, or in fact making any loss at all. Often the cost is about £2. In my experience it is as much as £6 and it does not apply to all these regulated companies. Many of them already supply paper bills without charging. I see no reason why we should not accept this part of the directive into our Bill, which is after all the Consumer Rights Bill. For once I think Europe is doing the right thing before us. I am one of the people who voted

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against joining originally but I do not think Mr Farage will be very happy with what I have just said. Therefore, I will listen with great interest to my noble friend.


6 pm

Lord Clarke of Hampstead (Lab): My Lords, when this amendment was discussed in Grand Committee, I raised the question of the universal postal service. However, before I mention that, perhaps I may say that I fully support the terms of this amendment and, in particular, the need for people who are not technology-orientated to be able to use their normal method of payment and to receive their bills on paper in the way they always have done without missing out on offers of discounts.

I return to the point made in Grand Committee about the effect on consumers of the universal postal service if something is not done very quickly. When we discussed this matter in Committee, the Minister was kind enough to say that she would write. She did so and was able to reassure me that it was still the Government’s intention to maintain the universal service, as agreed in the Postal Services Act 2011. The problem is that the Ofcom review of the downstream access arrangements, which allow Royal Mail’s competitors to get in on the act and get their mail delivered on the cheap, at a cost to Royal Mail, is due to take place next year.

As I said, I am very grateful to the Minister for the information she supplied following the Committee stage, but will she use her best endeavours to get Ofcom to bring forward the review to allow a proper examination of the tariffs charged under the downstream access arrangements in order that we may save a good universal postal service for the consumer? That depends on whether the Post Office, and Royal Mail in particular, are able to maintain sustainability. A proper pricing method needs to be introduced and Royal Mail really cannot wait. I declare my interest as a former postman. I do not think that we can let Royal Mail stew for several more months. We need the review to start very quickly and we need to introduce proper pricing for this service. I support the amendment.

Lord Stoneham of Droxford: My Lords, I have considerable sympathy for my noble friend’s amendment and also for what was said by the noble Lord, Lord Clarke, on maintaining the universal postal service. However, I think that other issues are involved here.

If somebody wants a paper bill, they should have the right to receive it, and I would have thought that the appropriate organisation to safeguard that would be the regulator of the appropriate utility. We need that for two reasons. The first is for identification. We know that people use utility bills for identification in credit checks and so on. Secondly, it is needed by people who do not have access to the internet.

However, progress is progress, and if it is cheaper to send out bills via the internet or by e-mail, consumers who opt for that should have the benefit of a discount, because the difference in cost is significant. I am afraid that we want to encourage that. At a time when everybody is very concerned about living standards and the cost of living, we should obviously support

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anything that reduces utility bills. Similarly, if it is cheaper for people to pay their bills by direct debit or by credit card rather than by cheque, the consumer should have the benefit of doing that. That is not to say that if somebody still wants a paper bill they cannot have it.

The problem with the amendment is that there will be misunderstandings. If the utility companies offer a discount, people will accuse them of charging them more for sending out a paper bill. However, the cost of doing so is higher, and I am afraid that the consumer should pay that if that is what they opt for. Of course, they should still have the right to receive a paper bill if they want it, but those who opt to pay by a cheaper method should clearly benefit. That is progress.

As I said in Committee, 50 years ago my father paid all his bills with cash, although he eventually moved to using a chequebook. My father is not alive but my mother-in-law, who is 93, has gone though exactly the same arrangement. She now gets us to pay by direct debit because that is easier and cheaper for her, and she should be allowed to benefit from that.

That is why I think that the amendment is misguided. There should be some protection, but I also think that consumers who opt for the cheaper method of payment should get the benefit of that.

Baroness O'Cathain (Con): My Lords, I support my noble friend’s amendment. I have heard what has been said about people who opt for paying their bills online, or whatever, and get a discount; that would be fine if everybody in the country had online access, knew how to work computers and knew exactly what they were doing. The reality is not like that. The most disadvantaged in our country do not have online access, including the elderly and those who live alone. The digital divide is increasing as we speak and it is very difficult—I am sorry, but on things such as utility bills, it is.

Secondly, if any noble Lord has tried to go online to pay a utility bill, particularly electricity and gas together, it is a nightmare. It is not exactly an easy option, and then a page comes up saying, “Do you want to chat?” and, of course, you cannot chat at all, it all has to be typed. I mean, what about people who have problems with their eyesight? It is tiny print. I have done it, but, my goodness, I swore at it. It took me about an hour to set up the thing. I can see people older than me—if there are such—struggling with this. It is not good. I think, for all sorts of reason, that until we have broadband in every house and a computer at everyone’s bedside, so to speak, we should carry on. Otherwise we will increase the digital divide and increase the disparity between those who have and those who have not.

Lord Tebbit (Con): My Lords, I, too, support my noble friend in this. I cannot understand why the utilities feel that they might incur huge costs in sending out paper bills. After all, they tell us how easy it is to use, how much better it is to use. Well, then, their customers will be convinced and they will do it that way. Of course, some will not, because, as my noble friends have said, not everybody at the moment has access to the internet. There are a number of elderly people, in particular, who find it difficult to manage it.

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Yes, they will move on in due course; why can we not decently wait for them to do so, and be replaced by all these vibrant, young people who can manage such things?