Bethan Jenkins explains why she is introducing legislation in the Senedd tomorrow to help people facing bad debt
It was around a year ago that I first wrote to Bridgend County Borough Council, asking it to block access to payday loan sites from its public library computers. I was told that this was nigh-on impossible to achieve – which was not encouraging, particularly since other local authorities such as Dundee have already done it.
Meanwhile, the present economic situation continues to push people on low incomes into debt they cannot afford from lenders who demand sky-high rates and use harassing methods to get their money back.
I become more and more concerned every time I hear of a constituent who has been through this process – especially when the reasons for going to a payday lender is to borrow for precious things, like children’s Christmas presents.
The extent of these problems is shown by the number of people with financial difficulties who are seeking help from Citizens Advice Cymru. Of those who approached it between April 2012 and March this year, 84 per cent had financial capability issues. Of these, 74 per cent continue to receive support.
How can people work and spend their income in the local economy if they are doomed to spend years repaying a company whose profits are most likely off-shored? Money management is likely to become a greater issue for those out of work as well, with the advent of Universal Credit and its switch to monthly payments. These will require a culture change for generations used to managing finances on a weekly basis.
Legislation I am proposing on the floor of the Senedd tomorrow will give people the tools to turn their lives around. Aimed at helping them make more informed choices about their finances, my Financial Education and Inclusion Bill is divided into two areas:
- Promotion of financial education to help future generations manage their money.
- Providing greater powers for local authorities to promote financial inclusion – to help people with their current debt problems.
At the heart of the Bill is a statutory duty placed on local authorities to promote financial inclusion. Statutory duties have come in for a fair bit of criticism in recent times. It has been said that they achieve little and are too open to abuse. But you can argue that about pretty much any poorly written piece of legislation or regulation. Provided we have in place the means to measure outcomes, I believe this could encourage local authorities to think outside the box at a time when finances threaten successful service delivery.
Properly implemented the proposals in the Bill will produce a greater co-ordination of services resulting in:
- One-stop internet shops that can provide visitors with the help they need – the Bill prevents local authorities from charging for internet access.
- Promotion of the Money Advice Service’s excellent tools and resources.
- Local authorities collaborating to produce an awareness campaign for Money Made Clear and for Welsh credit unions.
The Bill’s proposals have been welcomed by a range of organisations, including Community Housing Cymru, Swansea Council, Consumer Futures, Action for Children, Age Cymru, and Shelter Cymru. Individuals who are supporting the Bill include the Welsh Financial Inclusion Champion, and Martin Lewis, creator of MoneySavingExpert, who has run a long and high profile campaign to have financial education included in the curriculum in England.
It is encouraging that the Welsh Government has already taken steps in this area, particularly in financial education. However, poverty Minister Jeff Cuthbert recently told the Western Mail that “more needs to be done” on combatting payday lenders, while Education Minister Huw Lewis recently told me in the Senedd that there was “room for improvement” in financial education.
If my colleagues give me leave to take my Financial Education and Inclusion Bill forward I am sure we will be able to improve its proposals. AMs from all four parties have spoken with great concern on this issue. If we work together I believe we can produce legislation that will bring significant improvements in people’s lives. Indeed, the Bill is a great example of what the Assembly was created to do – to move decision making closer to the people it affects and, in this instance, giving them a better life away from bad debt.
Except this imposes a statutory obligation on local authorities without any resources for them to discharge it. And how will we know whether a local authority has discharged its obligation? What will be the measure of success? Are there any sanctions against local authorities if they fail to discharge the function? Legislation is sensible only if people are able to do what is required and if they are judged and penalized for not doing it. Telling people to do something they can’t and then taking no action when they don’t is worse than a waste of time.
Thanks for your comment.
This is the beginning – we hope – of a long process in which all of those questions will be asked and answered. At this stage it is about asking the Assembly to take the concept forward. If that happens today, then we can begin to shape the policies, and how that is paid for will of course be a major part of any future deliberations.
I agree wholeheartedly with your remarks abuor measuring success. Based on past examples, you would be forgiven for thinking this could be more of the same. Similarly, the size of the task probably magnifies those difficulties. But I don’t believe we should stop trying to address these issues because of the problems they pose. In fact, I’d go as far to say that addressing them is why we as AMs were voted into office, and why people in Wales gave us the powers to find ways to solve these problems.
If the Assembly agrees this afternoon, there will come a consultation period. I would like to encourage you and other CoW readers to take part, as this legislation will only benefit from your input.
Diolch yn fawr.
I’d like to see their rates capped to a sliding scale downwards over the time of the loan.