Neil Parish (Tiverton and Honiton, Conservative): It is a pleasure to follow Mr Bain. He made an interesting point, especially when he talked about some payday loan companies charging up to 5,000% interest, for which there is simply no justification. However leafy our constituencies might be—mine is quite a leafy one—there are pockets of deprivation in them and people who really need credit, but they need it at a competitive rate.
I would like to go back to the basics. For three or four years, we have had a 0.5% base rate, and the Governor of the Bank of England is hopeful that that may well stay at that level for another three years. How can anybody, legally or illegally, offer loans at 5,000% or 6,000% interest? That has got to be wrong. The old adage that we can have an umbrella if the sun is shining but that it will be taken away from us if it starts to rain is, as far as finance is concerned, correct.
I feel hugely passionate about this issue. I welcome the comments of the Second Church Estates Commissioner, my hon. Friend Sir Tony Baldry about the involvement of the Church of England and the Archbishop of Canterbury. One thing that the Church of England certainly has got is a great deal of assets. If people have assets, they can borrow money at a very competitive rate. I would say in all honesty to the Church of England that there is a real role for it in credit unions and community banks because they can borrow money at an effective rate, and if they lend it out at a much more competitive rate, that will help people in need.
Many Members, certainly including my hon. Friend Justin Tomlinson, have spoken about the need for a levy on the industry, and I agree that we need such a levy so that people can have proper financial advice, as they often go from company to company and shop to shop, being charged enormous amounts as they do.
Robin Walker (Worcester, Conservative): I entirely agree with my hon. Friend. Does he agree that it is extraordinary, indeed outrageous, that there has to date been a levy on banks and a levy on credit unions, but not a levy on payday lenders? Does he not find that situation impossible to explain?
Neil Parish (Tiverton and Honiton, Conservative): I could not agree more with my hon. Friend. I would have thought that this wonderful Government of ours must be looking at such a levy—and if they are not, I am sure that they will do so immediately. We have got to do something about this problem. Yes, some might argue that we are saving people from themselves, but in this case, we have to do that. If people are in dire need of a loan to see them through to the end of the week or month, they should not be charged two or three times the value of that loan.
Of course, it is not just a question of whether the loan is repaid. People may reach a stage at which they are unable to repay it, and charges will then be levied for non-payment. The loan will be rearranged, another fee will be added, and they will end up paying five or six times the amount that they originally borrowed, or perhaps even more. That cannot be right. In any sort of capitalist system—or whatever system we have—there is a need for profit, but there is no need to extract money in a way that almost constitutes extortion. Someone who arrived in this world for the first time and observed that it was possible to charge such amounts of interest, or indeed—let me be blunt—to steal such amounts of money from people, would say that those who did that should be locked up. We must do something about it.
As well as the people who cannot repay their loans, there are people—although not so many—who are addicted to borrowing money, not just from payday loan companies but from, for instance, store cards that they can use in shops. They must be given more access to advice, and restrictions must be placed on the amount that they can borrow. If people are such a credit risk that they must be charged enormous amounts of interest because companies believe that that is the only way in which they can get their money back, we should ask whether we are helping those people by giving them the money.
A number of Members have rightly pointed out that, in this day and age, people need to be able to gain access to money online and from their mobile phones. Members may tell me that I am a little bit old-fashioned, but I am not certain that the ease with which credit can be obtained at any time of day or night, and regardless of people’s state of mind, is helpful. I think that it merely drives people deeper and deeper into debt.
I respect where the Government are coming from. When I last spoke about this issue, I went for the payday companies big time, and I still have them in my sights because I believe that they are making enormous profits at the expense of the very poorest members of society, but I also understand that there is a role for them. Nevertheless, they must be controlled. Their wings must be clipped.
Ian Lavery (Wansbeck, Labour): Does the hon. Gentleman agree that there should be a cooling-off period? The problem seems to be that many people who are desperate for finance can get hold of £500 on the internet before they have even put down their laptops and arrived at the hole in the wall. If there were a cooling-off period of, say—
Lindsay Hoyle (Deputy Speaker; Chorley, Labour):
Order. Interventions must be short. As the hon. Gentleman knows, the debate on the north-east will follow this one, and his intervention has eaten into the time for it by giving Neil Parish an extra minute.
Neil Parish (Tiverton and Honiton, Conservative): Ian Lavery has raised a good point. There are laws requiring a cooling-off period when, for instance, people buy shares in holiday accommodation, but that does not apply to loans of this kind.
There is a great deal that we can do. We must help people to obtain credit, but we must also help them to obtain advice. I agreed with much of what was said by my hon. Friend Guy Opperman, but I agreed particularly with what he said about community banks. We will not be able to cure everything by means of credit unions, however good they are and however important the part that they play may be. I agree wholeheartedly with the Archbishop of Canterbury on one point: we need to be able to compete the payday loan companies out of business.
We have had an extremely good debate, which has not been vastly political. I do not think that any Government has come out of this smelling of roses. We must do something about the problem, and we must do it on a cross-party basis, because at the end of the day, we want to help our constituents. We want to help them to get to the end of the week, or the end of the month, but we do not want to land them in greater debt and greater problems than they had before taking out their loans.
I am certain that Ministers are listening to what is being said, and I look forward to the summing up of the debate. It has been made clear this afternoon that we are hugely concerned about the interest rates and other penalties that are being levied by payday loan companies, and we look forward to hearing what the Government are going to do about it.