My Lords, in an idle moment, a moment of complete frivolity, I looked up GOV.UK to check facts—I thought that would be a useful contribution to the debate. The date we have all been searching for is 1837: the General Register Office is part of Her Majesty’s Passport Office and contains records dating back to 1837. I thought that would be useful.
I beg to move Amendment 117A in my name. This stems from my period of service as chairman of a wonderful charity called StepChange, which deals with individual debt owed by ordinary people. In the time I was there—I resigned about two years ago—we had about 600,000 people a year contacting the telephone helpline or going online to try to seek solutions to their debt problems, so it is a very significant problem in British society and something we must take a great deal of care about. Most people who came to us were struggling with multiple debts; in other words, they owed money to a variety of different sources, ranging from local authorities, mobile phone companies, debt collection agencies, Revenue & Customs, payday lenders, utility companies and catalogue lenders—there is a very large number of them.
A median client would be aged about 45, female and owing about £20,000 to eight different creditors, so it is a significant problem that people get into. Within that, with a tremendous requirement now for debt advice, with lots of people struggling with debt, one worrying trend has been how bad central and
local government have been in dealing with people, particularly those with multiple debts. A recent survey of about 1,000 StepChange clients found widespread aggressive enforcement from local authorities even when people were asking their authority for help. Clients were more than twice as likely to be threatened with court action or bailiffs than to be offered an affordable payment option. This is despite guidance being issued by central government about how debts should be treated.
Of course, what happens when people face strong demands, very often from central or local government, is that they tend to go to people who can lend them money quickly, probably from an existing credit line, almost certainly, until recently—but even today it is still happening—taking out a payday loan. They try to borrow more to try to pay back original debts and get themselves into a worse situation than they were before. The same survey asked clients to rate what their creditors had done to them and whether they treated them fairly or unfairly. I am afraid to say that public sector creditors came out very badly, occupying three of the top six places in the unfair treatment table. It is interesting to note that HMRC, for instance, scored no better than payday lenders, which the Government, through the FCA, have spent a lot of time trying to sort out over recent years.
That is the background of our concern. We welcome the provisions in the Bill to think again about how debts owed to the public sector are collected. In that light, these amendments are put forward for suggestion, they are probing amendments at this stage, and I hope that they will elicit a response, because it is not just StepChange, the debt charity, that has been concerned about this. Citizens Advice has also raised concern about public sector debt collection practices, finding that public sector creditors are,
“mostly out of step with financial services and utilities companies when it comes to setting affordable repayment rates, and that our clients can suffer detriment when public bodies have uncoordinated and inconsistent approaches to debt collections ... central government debt collection lags behind the higher standards expected of other creditors”.
This is focused on individuals who have problems with their debts, but of course there is a wider cost to society as a whole which, through relationship breakdown, homelessness and difficulties with maintaining concentration at work, et cetera, has been estimated at about £8 billion a year. The Bill contains clauses that relate to this and they seem to suggest that central government as a whole—but in this case HMRC—are thinking about how the data-sharing powers that are coming should be used to allow them to collect several debts at once, but also to do it in a slightly different way. I hope that is the case. We are back with our old friend, the code of practice, because what is said in the code of practice will determine whether this will work.
I have, then, four things I invite Ministers to respond to. First, Clause 45 is limited to departments that seek data-sharing powers and says only that they should “have regard to” the code of practice. This has, I think, been picked up in other amendments that we have considered today. It would be good if the code of practice were also embedded in a much stronger statutory provision, to give it a real bite. We have seen examples
of guidance—I mentioned one involving central government issuing guidance on council tax collection methods—but such guidance does not work, because it is non-binding and only advisory. If there is a code, it should be embedded in the statute and people affected by it should be able to refer back to it to make sure that it works properly.
Secondly, the public body itself must believe that this is the way in which it needs to operate. Within the amendments are a range of issues that central government bodies might pick up that would match the best practice in utilities, banks, credit cards and store cards—all of which have been through the cycle of trying to get money out of individuals who owe them and other people money, and have recognised that you have to deal with people with multiple debts in a completely different way from those who just owe money directly. That is gradually changing the way people operate. There is further to go, but it is a lesson that should be learned. I hope that the codes can be adapted to reflect that.
Thirdly—this may be too much of an ask, but it should be recognised—this Bill applies only to public bodies, and their creditors, when they are seeking to use the data-sharing powers. The problem is, of course, wider than the data-sharing powers. Problems with central and local government debt collections are widespread: practices need to be reformed and this is not likely to relate only to places where data sharing is used. The Government should think ahead about this and try to set out an understanding for all their agencies that poor debt-collection practices can harm the rate at which they get their money back and the time it takes, and it will also harm the financially vulnerable people. Taking account of that across all their practices would be a very good thing.
These amendments, therefore, try to raise those points, but there is one other thing that the Government should try to do, which is in the first amendment. It is to take a lesson from Scotland—I am sure that the noble and learned Lord from Scotland will wish to pick this up and think harder about it—where, when you have a private or a public debt and seek guidance from the state agency that operates that scheme, you are given statutory protection from excess charges and your interest rates are frozen, providing you stick to your debt repayment plan. That means that people get a breathing space, time to organise their finances, think about their budgets and work out what they are going to do, without the terrible pressure from those who are owed money to start repaying it. It is only when all those issues have been brought together, and an agreement reached between the creditors and the agency, that repayment begins. That has a very much higher rate of success than any other scheme. England lags way behind on this, and it would be no skin off the Treasury’s nose if it took a leaf out of the Scottish Government’s book and brought in their procedures—with a statutory breathing space that gave some hope to people who want to repay their debts but cannot do so because the practices are not as good.