My Lords, I thank my noble friend Lord Blencathra for moving the amendment, but before I turn to the amendments I shall make some general remarks about the noble Lord, Lord Bird, and his Bill. I should state categorically that the Government’s position is not one of opposition to the purpose he seeks and which so many noble Lords have spoken very powerfully about, which is to ensure that people’s rent or credit history is taken into account when credit decisions are made. The question is about the means by which we achieve that, whether this legislation is the right way to do it and whether we should seek to mandate it.
My noble friends Lady Gardner and Lady Wheatcroft were right to point out that, in effect, the amendments would undermine the Bill because they would give to the Financial Conduct Authority discretion, which in many ways it has at present, to act in these ways should it so wish. The underlying concern is very real, and it is shared by John Glen, the new Economic Secretary to the Treasury, who is working very diligently on this, and it is shared by the Government. We recognise the very real concerns of people on low incomes seeking to access credit.
The report of the committee chaired by the noble Baroness, Lady Tyler, to which the Government have responded, called in its recommendations for having a Minister for financial inclusion, and that is something we have made some progress on. Financial inclusion is very important, and we are building upon a series of measures that we have sought to introduce, starting with the cap on payday lending, to stop the exploitation that was happening, with some of the horrendous interest rates that my noble friend Lady Wheatcroft referred to.
One of the problems was that a lot of the poorest people did not have bank accounts. Therefore, we introduced basic bank accounts, which are fee-free accounts, to get people into that area. Another initiative, which the noble Lord, Lord Desai, talked about, is the use of technology: he referred to blockchain and fintech solutions, which I shall come to shortly. We see great
potential in open banking, allowing people to share their bank records online—their payment history, their incomes and outgoings—with people from whom they might be seeking credit. Again, that may be something that helps in that area.
Several noble Lords talked rightly about the appalling way that the poorest in our society are preyed upon by illegal money lending—loan sharks, as they are referred to. In fact, John Glen, the Economic Secretary, announced less than a month ago, I think, that we will be putting another £5.5 million into the fight against illegal loan sharks in England, Scotland, Wales and Northern Ireland.
The noble Lord, Lord Hain—and, I think, the noble Lord, Lord Kennedy—made reference to credit unions. We see credit unions having a huge role to play in this area: that is one reason why the coalition Government introduced significant investment in credit unions and changed the way in which they can operate. Some £38 million was put into helping credit unions to form, to operate and to raise capital: we think they are a crucial part of seeking to tackle this type of exploitation.
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My noble friend Lady Wheatcroft mentioned the rent-to-own process, whereby many people are drawn into some appalling financial deals. This speaks to two problems. The first is that such firms need to be regulated—they are regulated, and that is why the Financial Conduct Authority levied the very heavy fine on them that was referred to, which meant that money went back to customers. The second problem is: where can people go to for advice? Where can they find what credit is available and whether they are paying too much? That was the purpose of trying to create a new single financial guidance body.
I come to the particular measure that is before us. I have to confess—and I am privileged to put on record a certain interest here—that the noble Lord, Lord Bird, is a hero of mine. I think what he has done for the poorest in our society is absolutely heroic, and I have great admiration for him and for what he is seeking to do through this Bill. I have really appreciated the opportunity to have a conversation with him and with the noble Baronesses, Lady Thornton and Lady Lister, to discuss ways to take this forward. One of the solutions we have come up with, since Second Reading in November, is the rent recognition challenge. The rent recognition challenge fund is an alternative if the legislation route is deemed too heavy and too costly. I take the point made by the noble Baroness, Lady Kramer, which I shall come back to, that we should not worry about the cost of collecting the data, but somebody has to pay and therefore if the cost of collecting the data increases, somebody has to pay for that. We thought through this particular problem and asked whether we could try to do this another way by trying to leverage technology. We came up with the rent recognition challenge, a £2 million fund which we announced following the Bill’s introduction.
I pay tribute to the noble Lord, Lord Bird, for persuading us to do that. I have often said to the noble Lord, as somebody who has spent a lot of time introducing Private Members’ Bills from the Back Benches in this House and not getting a great deal of traction, that he
should not underestimate the fact that he has managed to get £2 million out of the Treasury. The noble Baroness, Lady Thornton, says, “Already”. I agree: it is testament to his powers of persuasion.
I want to update the House on something I think is pertinent, because I want to share with noble Lords that we are taking this very seriously. We recognise that there is a problem; it has been identified not just by us. The Financial Conduct Authority published the High-cost Credit Review - Update at the end of January which carried a lot of information and highlighted a lot of the concerns that the noble Lord, Lord Davies, mentioned.
We announced six winners, six fintech firms, who will receive £100,000 each to come up with solutions and will have the opportunity to bid further in July. The first is Bud, which creates open banking technology for lenders to use in their existing apps. Canopy is a deposit-free renting service that replaces the deposit with an insurance policy. CreditLadder is the UK’s first tenant rent reporting service for the private rental sector; it has previously worked with the Big Issue. The META Labs project First Home Coach is an all in one home-buying companion for first-time buyers. Movem is a digital rental passport, allowing comprehensive tenant referencing. RentalStep is a new rental platform that connects landlords and tenants while helping tenants to boost their credit scores. These are real fintech start-ups with cutting-edge people. There was a huge amount of competition for that funding. They are working now to find those solutions.
One of the benefits of the solutions being proposed under the terms of the rent recognition challenge and where we are going with the fintech—I am trying to find my precise note on this; if I get it wrong I will correct it in writing—is precisely this point about what happens with the people who have a poor credit history and poor credit score. Will they get caught up and be doubly disadvantaged by this in seeking to access finance at a reasonable cost? That is why the solutions we are looking at would allow people to opt in to share their financial data or to keep it private. Again, we think that technology offers us some opportunity to do that.
In his powerful contribution, the noble Lord, Lord Best, talked about Generation Rent. We do not want that; we want generation home and we want to give as many opportunities as possible for that to happen. That is why the Government have announced £15 billion as an overall housing package to make that a priority. I am delighted that my noble friend Lady Williams has joined me on the Front Bench. She is now a Minister at the Ministry of Housing, Communities and Local Government. No?